I have been investing in Mutual Funds through Systematic Investment Plan (SIP) since last 3 years. I am 37 years old. Currently I have planned the following financial goals. One, Rs. 65 lakhs, 20 years from now for daughter’s education and another Rs. 65 lakhs in 23 years for her marriage. For my retirement, I would like to deposit Rs. 2.5 crores in 25 years’ time. In addition, I have two loan EMIs of Rs. Total 6,000 for 2 years and I want to close these before July 2022.
I am currently investing in the following funds through monthly SIP – 7000 each in ICICI Prudential Bluechip Fund, Axis Bluechip Fund, Axis Focused 25 Fund and Aditya Birla Sun Life Tax Relief 96 Fund (ELSS), Rs. 6000 in Mirae Asset Emerging Bluechip Fund and Rs. 4000 in SBI Small Cap Fund. My current accumulated corpus is Rs. Around 12.5 lakhs through these funds. I also have a term life insurance of 3 crores for my family.
I have a few questions. Is my portfolio good enough for my goals? If any changes are required, can you please suggest what needs to be done? What steps should I take to close my liabilities as mentioned above within one year? Should I invest more in existing small cap funds or large cap funds? I am increasing my SIP by 15% every year and will continue to do so. Will this be enough to achieve my goals?
–Name aborted on request
Looking at your current investment amount 38,000 per month, you should be able to reach your financial goals with additional funds. Requires total for higher education and marriage goals related to your daughter 12,000 per month ( 7000 more for education 5000 for marriage – all calculations assume 12% annual portfolio return over the long term). For your retirement, a monthly investment of 14,000 which is also within the scope of your investment. Of course, to adjust for inflation, you need to continue with your current level of investment. It is also a good idea to increase your investment by 15% annually. Given that inflation is unlikely to be at that high during this period, your annual growth will provide enough buffer to meet your financial goals even after adjusting for inflation.
As for the funds in your portfolio, you have an all-equity portfolio with two large-cap funds, one flexi-cap fund, one tax-saver and two mid and small cap funds. This is a good mix of categories to keep in a portfolio. However, when it comes to large cap funds, you can move at least one of the two funds to an index fund, such as the one that tracks the Nifty 100 index.
I need to make some guesses about your liabilities in your email. I’m going to assume that you want to close it by July 2023, and you’ll need an amount close to 72,000 ( 6000 x 12 months). If it is such an amount, or anything in your existing corpus, you can go ahead and close it without affecting your portfolio in any way.
And, for your last question, yes, it would be a good idea to review and adjust your portfolio each year. You may wish to hire the services of a fee-only advisor who can do this for you and ensure that the progress of your portfolio is in line with your financial goals.
Shrikant Meenakshi is the co-founder of Prime Investor. Send your queries to mintmoney@livemint.com and get answers to them from industry experts.