Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on November 04, 2018 Published on November 04, 2018

I am 31, and my wife 28. We both work in the private sector. We individually have monthly SIPs : ₹2,000 each in Axis Long Term Equity, Axis Focused 25, HDFC Hybrid Equity, Kotak Emerging Equity and PPFAS Long Term Equity in my name; ₹3,000 each in ABSL Tax Relief ’96 and Invesco India Growth Opportunities, and ₹2,000 each in HDFC Small Cap and Axis Long Term Equity, in my wife‘s name.

We also regularly invest small amounts in PPF, NPS and sovereign gold bonds. We park our contingency funds in liquid funds. We are also adequately insured. I pay a monthly EMI of ₹16,000 towards housing loan. I prepay as and when additional funds are available.

We intend to create a retirement corpus of ₹5 crore in 25 years, fund our vacations and close the loan through additional investments. We also have provision for further investments of ₹. 20,000 per month, with moderate to high risk appetite. Please advise on the current portfolio structure and suggest means to achieve the aforementioned goals.

Prateek Haldipur

You have not stated when you/your wife began the SIPs and what the present market value of your corpus is. Assuming you have just started, if you need ₹5 crore in 25 years, you will need to invest about ₹30,000 per month. This calculation is based on the assumption that your portfolio will fetch a compounded annual return of 12 per cent during this period. Together, you and your wife currently invest ₹20,000 per month. You have stated that you can increase your SIPs by another ₹20,000. Hence, you can redirect ₹10,000 from this additional amount towards your retirement goal.

The remaining ₹10,000 can be created as a separate portfolio directed towards your other medium-term goals —– funding vacations and prepayment of home loan. You have not mentioned the exact timeline or the amount you want to save for these goals. Hence, it is not possible to deduce whether the ₹10,000 is sufficient or not.

However, towards both these goals, you can increase your savings as and when your income/surplus increases. Besides, you also have other savings in debt/gold to fall back on.

As an aside, keep in mind that while being debt-free is definitely a good thing, you can also consider retaining the loan from the point of view of the tax benefit that is available on interest payment.

Coming to the funds, we have assumed that both you and your wife can spread the additional ₹20,000 equally. Thus, each of you will now invest ₹20,000.

As far as your portfolio goes, since you have stated that you have a moderate to high risk appetite, you can consider replacing HDFC Hybrid Equity with diversified funds such as Mirae Asset Emerging Bluechip (large- and mid-cap fund) or SBI Bluechip ( large-cap fund).

You can continue investments in the rest of the funds as they are good performers. Put ₹4000 in each of the five funds instead of the current ₹2,000.

As far as your wife’s investments go, since she is already investing in a tax-saving fund, ABSL Tax Relief ’96, she can redirect the SIPs in Axis Long Term Equity towards ICICI Pru Bluechip. She can also add Kotak Standard Multicap.

Her ₹20,000 can be equally spread across these five funds: ABSL Tax Relief ’96, Inveso Growth Opportunities, ICICI Pru Bluechip, HDFC Small Cap and Kotak Standard Multicap.

Published on November 04, 2018

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.