I currently invest in the below funds through SIPs for my future, keeping a horizon of 15-20 years: ₹2,000 each in Tata India Tax Savings and DSP Tax Saver, ₹5,000 each in Aditya Birla SL Equity and HDFC Small Cap, ₹6,000 in Invesco India Contra, ₹6,500 in Mirae Asset Emerging Bluechip and ₹7,500 in Kotak Standard Multicap. Below are my various financial goals. Goal 1: ₹30 lakh after 10 years; Goal 2: ₹50 lakh after 15 years; Goal 3: ₹1 crore after 20 years.

I want to restructure my portfolio based on the above mentioned goals. Towards this, I am thinking of investing ₹12,000 a month in Mirae Emerging Bluechip for 10 years, ₹10,000 a month in Kotak Standard Multicap for 15 years and ₹7,500 a month each in Mirae Asset Large Cap and Invesco India Contra for 20 years. Is this allocation fine or do I need to change something to get the desired results? Please suggest.

Vaibhav

It is good that you have drawn up your goals clearly. You currently invest ₹34,000 a month across various funds and are willing to move it up to ₹37,000, based on the updates you have suggested. Before commenting on the funds or the allocation, it is important to know if the sums you are setting aside for investments is enough to reach your goals.

Assuming you start today and your investments earn a reasonable 12 per cent compounded annual return, you need to invest ₹12,912 a month to accumulate an amount of ₹30 lakh in 10 years. Similarly, investing ₹9,909 a month is needed to reach a goal of ₹50 lakh after 15 years; ₹10,009 a month will take you to ₹1 crore at the end of 20 years. The monthly investment required adds up to ₹32,830. Since you have already been investing ₹34,000 a month and have begun building a corpus, this should be sufficient. Your willingness to step up your monthly investment to ₹37,000 is welcome. This will come in handy if you later on feel that you need more towards your goals. Also, it could help make up for a shortfall, if any, due to lower-than-expected performance or outgo of taxes on sale of units.

That said, choosing to invest in only one fund for a goal is putting all your eggs in one basket. Your decision to invest ₹12,000 entirely in one fund — Mirae Asset Emerging Bluechip — for 10 years, as well as to invest ₹10,000 entirely in Kotak Standard Multicap for your 15-year goal needs a rethink. While both these funds have good performance track records, betting on only one fund pegs up the risk. You need to spread the risk across funds, like you are doing currently.

Since most of the funds you currently invest in have a good track record of performance over the long term, you can retain them. We are adding Axis Bluechip instead of Mirae Large Cap as suggested by you as you already hold another scheme from the same fund house. Invest ₹37,000 as follows: ₹7,500 in Axis Bluechip, a good large-cap fund; ₹6,500 in Mirae Emerging Bluechip (large- and mid-cap fund); ₹5,000 each in Kotak Standard Multicap, Aditya Birla Sun Life Equity and Invesco India Contra (multi-cap funds); ₹4,000 in HDFC Small Cap; and ₹2,000 each in Tata India Tax Savings and DSP Tax Saver (ELSS funds).

Note that we haven’t made watertight allocation of funds towards each goal. This is because all your goals have a horizon of 10 years and above. This gives enough time for all funds chosen by you to even out risks and deliver the assumed 12 per cent annual return. So, it gives you some leeway to cash out based on relative performance of all your holdings.

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