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MF portfolio doctor: Mehta's ambitious financial goals will require big increase in investments

When investing for multiple financial goals, starting early is the first and perhaps the most important step. The advice given is based on the performance of the funds, the risk profile of the investor as well as his financial goals.

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Last Updated: Dec 23, 2019, 09.53 AM IST
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You may need to downsize targets or increase investments periodically.
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Not many investors know whether they have invested in the right funds and if their fund portfolio is on track. The Portfolio Doctor assesses the health of the fund portfolio, examines the schemes and their suitability with regard to the goals and, if required, recommends corrective measures.

The advice given is based on the performance of the funds, the risk profile of the investor as well as his financial goals.

1. Bimal Mehta is saving for his son’s college, his business and retirement. Here’s the doctor’s advice:

Goals

27-1

Portfolio check-up

  • Started investing in equity funds about 4-5 years ago.
  • Holds too many funds. Needs to consolidate.
  • Goals too ambitious. May need to downsize targets or increase investments.
  • Son’s education is too near. Can’t invest in volatile equity funds.
  • Will need to take Rs 10 lakh loan for son’s education.
  • Holiday goal will have to be dropped, otherwise other goal will be impacted.

Investor’s existing portfolio

27-2

Note from the doctor

  • Don’t buy too many funds. It doesn’t really diversify the risk.
  • Avoid sector, thematic funds. Diversified funds are better.
  • Review investments and rebalance at least once in a year.
  • Reduce risk when goal is near so that you don’t miss the target.

2. Retirement target needs to be raised to provide decent income
Nirbhay Singh is investing in equity funds to build a retirement corpus. Here’s what the doctor has advised:

Goal

27-3

Investor’s existing portfolio

27-4

Portfolio check-up

  • Started investing in equity funds last year.
  • Retirement target too low, unless complemented by other investments.
  • Rs 1 crore will yield only Rs 22,000 per month at todays prices.
  • All SIPs must be hiked by 10% every year.
  • Review portfolio at least once a year. Change if any fund’s performance slips.
  • Reduce risk when goal is near so that you don’t miss the target.

Assumptions used in the calculations
I nflation
Education expenses: 10%
For all other goals: 7%

Returns
Equity funds: 12%
Debt options: 8%


(Portfolios analysed by Raj Khosla, Managing Director and Founder, MyMoneyMantra)

If you want your portfolio examined, write to etwealth@timesgroup.com with "Portfolio Doctor" as the subject. Mention the following information:
  • Names of the funds you hold.
  • Current value of the investment.
  • If you have SIPs running in any of them.
  • The financial goals for which you invested.
  • How much you need for each financial goal.
  • How far away is each goal.
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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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