I am 28 and an IT consultant. I am working with an IT major in a Tier-II city. I earn nearly ₹8 lakh a year and I am getting married the coming summer. For the last one year, I have been regularly investing in the following vehicles.

Mutual funds: Franklin India Tax Shield ₹6,000, Franklin India Opportunity Fund ₹2,000, HDFC Mid Cap Opportunities Fund ₹2,500 and ICICI Pru Value Discovery ₹3,000; Provident fund: PPF ₹5,000 and EPF ₹3,800; Recurring deposit: ₹4,000; NPS: ₹4,000.

I also have a term insurance plan for which I pay a premium of ₹15,000. I have ₹2,000-3000 as surplus to invest.

Can you please tell me if my portfolio is good? I would like to have ₹2-3 lakh corpus in the next two years that I can use on a foreign tour.

I will also be moving to Bengaluru in the next few years; I would need corpus to buy a small plot of land or house/apartment five to six years down the line.

I am assuming that my salary will grow at 7 per cent per annum and I will be staying in India.

Ranjan Sham

It is good to see you taking a very well-planned approach to your monthly investments. As of now, your investment pattern would result in an asset allocation of about 44 per cent towards equity MFs, about 30 per cent towards PPF and EPF and the rest towards your recurring deposit and NPS. This is quite a conservative allocation for somebody your age and you can afford to bump up your equity SIPs.

It would be best to retain that RD towards any emergency expenditure. Having made an early start towards saving for retirement, it would also be unwise to tap into your EPF, PPF or NPS investments any time before retirement age.

That would leave you with the corpus built out of your mutual fund investments for your goals such as foreign travel and purchase of land in three and six years, respectively.

You have presently invested ₹13,500 across equity MFs through SIPs. It isn’t clear from your query when you started these investments. If you started them recently, withdrawing them within three years may not give the investment enough time to pay off sufficiently.

But if the investments are already two to three years old, you can hope to exit with a reasonable return.

Having said this, ₹13,500 that you are investing every month in equity MFs is quite adequate to get you to a corpus of ₹3 lakh in three years, with a significant surplus likely to be left over for buying land too.

Assuming a return of 10 per cent per annum from your equity investments (the usual assumption is 15 per cent, but as we are counting from a market high, it is best to be conservative) over the next three years, an SIP of ₹7,200 that yields a 10 per cent CAGR can get you to ₹3 lakh in three years.

You can devote the rest of your SIPs towards your other goals — that of buying land or making a down payment on a flat. After adding in the additional ₹3,000 per month that you can save, you will have ₹9,300 a month to devote to this goal.

Over a period of six years, a monthly investment that yields about 12 per cent annual return would get you to a corpus of ₹9.7 lakh.

This may appear quite good enough for that down payment. But it is essential for you to set aside more savings towards long-term investment goals like retirement. Therefore, do not stop with your current SIPs and do step them up every year with a rise in your income.

Your choice of funds is quite reasonable, except for Franklin India Opportunities Fund. We suggest you invest in Franklin India High Growth Companies Fund in place of this fund due to the latter’s superior long-term record.

Use your investments in Franklin India Taxshield (subject to the three-year lock-in) for your foreign trip.

Send your queries to mf@thehindu.co.in

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