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.

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