I started investing four months ago. My Goal is to build a corpus of Rs 2.5 crore in the next 20 years or so from mutual funds. I have a four-year-old daughter and this corpus is for her education and marriage. It is unfortunate that I did not start investing in mutual funds in my mid or late 20s but I was investing in other schemes. The details are as below:
Tata India Tax Savings Fund (Direct, Growth): Rs 1,000 per month
Mirae Asset Tax Saver Fund (Direct, Growth): Rs 1,000 per month
Axis Bluechip Fund (Direct, Growth): Rs 5,000 per month
HDFC Index Fund Nifty 50 Plan (Direct, Growth): Rs 1,500 per month
Mirae Asset Emerging Bluechip Fund (Direct, Growth): Rs 1,000 per month
Axis Focused 25 Fund: Rs 1,000
IIFL Focused Equity Fund (Direct, Growth): Rs 1,000 per month
Parag Parikh Long Term Equity Fund (Direct, Growth): Rs 2,000 per month
Axis Midcap Fund (Direct, Growth) Rs 1,500
SBI Equity Hybrid Fund (Direct, Growth): Rs 2,000
Mirae Asset Hybrid Equity Fund (Direct, Growth): Rs 1,000
Axis Small Cap Fund (Direct, Growth): Rs 1,500
ICICI Prudential US Bluechip Equity Fund (Direct, Growth): Rs 500
Motilal Oswal Nasdaq 100 FoF (Direct, Growth): Rs 500
JM Tax Gain Direct Plan (Growth): (Rs 13,000 invested)
Motilal Oswal Long Term Equity Fund (Direct, Growth): (Rs 7,000 invested)
My other investments:
I do invest Rs 1.5 lakh every year in Public Provident Fund. I started the PPF account eight years ago. It has a total corpus of around Rs 13 lakh till date. I am planning to continue to invest Rs 1.5 lakh, each year in this instrument for the next 10 years. I've also savings of nearly Rs 20 lakh in fixed deposits which I would like to continue for the next 10 years. I have also invested in Sukanya Samriddi Yojana for my daughter where I have been trying to invest Rs 70,000 every year for the last four years, as of now the total corpus in it is Rs 2.4 lakh. I am planning to start investing Rs 1.5 lakh from the next financial year for the next 10 years to get full benefit of EEE.
I wanted your expert advice on these questions:
a) During these last four months, I bought four ELSS funds as you can see in the above table. I now realize that I should not have brought more than two. Also, I have stopped my SIPs in JM Tax Gain Direct Plan - Growth and Motilal Oswal Long Term Equity Fund Direct - Growth.
I wanted to know which two ELSS funds should I continue with via SIPs?
b) Currently, my total SIP investment is Rs 20,500 per month. I can immediately invest an additional amount of Rs 4,500 per month to make it to Rs 25,000. What do you think about my portfolio in terms of quality of mutual funds/category allocation and the percentage allocation to these funds? Do you recommend discontinuing investing in any of the above mentioned funds/category? Or, do I need to add a new fund?
Also, where should I allocate the additional Rs 4,500 per month?
My risk appetite is medium to high.
Here are a few quick observations. One, you need to define your risk profile sharply. It is very difficult for anyone to guess how much extra returns you want to take when you say medium to high. Once you assess your risk profile, ensure that the schemes are in in with your profile. At a quick glance, it is clear that you have some schemes in your portfolio - for example, mid cap and small cap schemes - that may not match your risk profile. These schemes are meant for aggressive investors with a very high tolerance for risk and volatility. If you have a marginally higher risk appetite than a moderate investor, you may take a small exposure to mid cap scheme.
Two, there are too many schemes in your portfolio - you are investing around Rs 20,000 in 14 schemes. A general investor need only two to four schemes, including ELSS schemes. If you are a moderate investor, you just need one or two good diversified multi cap schemes in your portfolio. If you want to add more risk, you may take a small exposure to mid cap scheme.
Here are the links to some useful stories:
Do not add too many schemes to your mutual fund portfolio
Assuming an annual return of 12%, you may be able to create a corpus of Rs 2.5 crore by investing Rs 25,000 every month for the next 20 years. A word of caution: try to quantify your goals and provide for annual inflation to reach a realistic target corpus. If you take the current cost of your goal as the target corpus, you would find that the money will not be enough to take care of the goal after 20 years. The same goal would cost many times the current cost after 20 years. As you know, inflation eats into the value of money.