Reduce SIP in Small Cap Funds to reduce risk

1. HDFC Small Cap Direct Growth = ₹2000

2. HDFC Hybrid Fund = ₹1500

3. Aditya Birla Frontline Equity Mutual Fund= ₹1000

4. Aditya Birla Focused Equity Fund= ₹1500

my goal is to get a fund of ₹50 lakhs in 15 years for my daughter’s higher education and also some amount for my son’s higher education (he is currently 3 months old)

I am also investing in the below funds from March 2021 onwards (SIP per month)

1. HDFC Mid Cap Opportunity Funds Direct Growth= ₹400

2. ICICI Balanced Advantage Fund Direct Growth= ₹1500

aim to achieve ₹50 lakhs in 15 years for my retirement

Name withheld on request

The three goals you are planning to work on are long term and mutual funds can play a vital role in working towards these goals. you are investing ₹6,000 per month for your children’s education from 2017 and if we assume the present value of this investment ₹4 lakhs till now, so you will be able to reach one of your funds ₹50 lakh in 15 years by continuing SIP of ₹Here 6,000 per annum at a growth rate of 12%.

Similarly for your retirement, the current investment of ₹2,000 per month will help you deposit approx. ₹9.5 lakhs after 15 years at 12% return per annum. This amount may not be enough for you to retire as the post-retirement life in India is usually 20 to 25 years. You will need a reasonable amount every month to take care of your post retirement life. Therefore, you may have to significantly increase your monthly investments for retirement or postpone your retirement by a few years.

You can consider making some changes in the fund you are investing in, so that it can be made better if it suits your profile. Since your investment tenure is 15 years for all your goals, you can consider SIP investments in large cap equity funds instead of balanced or hybrid funds.

In all your SIPs, you are investing 25% in one small cap fund which carries higher risk as small cap companies are more volatile. You can reduce the allocation in small-cap funds by adding your future SIPs to large-cap oriented funds or reduce the current SIP amount of small-cap funds and invest it in large-cap or Nifty index funds. Ideally, try to limit your allocation to small cap funds between 5% and 10% of your total investment as these investments carry high risk.

Harshad Chetanwala, founder of MyWealthGrowth.com, replied