personal finance

Am I investing in right mutual funds?


I am investing in mutual funds through SIP (Rs 1,000 each per month) from last year. My portfolio is as below:
SBI Bluechip Fund – growth
HDFC Aggressive Hybrid – growth
Mirae Asset Emerging Bluechip -growth
L&T Infrastructure Fund
L&T Emerging Bluechip Fund
ABSL Digital India Fund
Reliance Small Cap Fund

Kindly suggest on the same.

I am also investing Rs 1.5 lakh in PPF for last four years.

My investment horizon is between eight and 12 years.

I love to travel and that is my goal. I want to travel in India and some places around the world.

My family has simple life style, we do not spend more than Rs 10,000 per month on shopping and entertainment.

I am currently living in Pune on rent (Rs 11,000). I have no plans to buy a flat here.

I am also planning to save as much money for post retirement period. I am 32 years old and my income is Rs 65,000 per month.

I have a medical insurance of Rs five lakh, covering me and my spouse. I have a health insurance policy worth rs five lakh for my parents as well. I have a kid who is six months old. Kindly suggest what to do for my baby boy.
— દર્પણ પટેલ

Vivekh Pathak, Certified Financial Planner, responds:

With the limited information provided by you, I can share the below recommendations:

As per current life stage, you will retire in the next 28 years. Over these years you will have to ensure your growing expenses are taken care of well. Your kid will grow up and you would need more for his education and marriage (near your retirement). As the family grows, the expenses would also rise and you will have to allocate more funds for growing needs for other goals as shared below.

Lifestyle expenses:
Currently, your life style expense, 15.38% of income, are on a higher side and need to be curtailed. Since you like to travel and mentioned as a goal, you need to control your lifestyle expenses of Rs 10,000 and reduce it to Rs 5,000 per month or lower, and ensure you save more for your goal of travelling.

Medical insurance:
Include your kid in the medical policy immediately. Take a super top up cover and increase the total cover to at least Rs 15 lakh, preferably from the same insurer to ensure any claim is cash-less, if that facility is provided.

Investments:
PPF – Debt: Use debt funds for parking funds in debt instruments. If investments in PPF is used for tax savings, use Equity Linked Savings Funds (ELSS Funds), as PPF has a very long lock-in period. Also, if the investment is made to create a retirement corpus, you should try to use a mid of equity funds and debt funds with a proper allocation (allowing you flexibility in investments). It shall allow you a much lower lock-in period and provide the benefit of 80C deduction. Remember this is an equity-based instrument and hence prone to market risk. Make sure the asset allocation takes care of the risk aspect.

Scheme names Categories Recommendation
1 SBI Bluechip Fund Large cap Switch to Axis Blue Chip
2 HDFC Aggressive Hybrid -G Aggressive Hybrid Continue
3 Mirae Asset Emerging Bluechip -G Large and Mid Cap Continue
4 L&T Infrastructure Fund Sectoral-Infrastructure Continue
5 L&T Emerging Bluechip Small Cap Switch to HDFC Small cap
6 ABSL Digital India Fund Sectoral-Technology Continue
7 Reliance SMALL Cap Fund Small Cap Continue
8 PPF Debt Instrument Incase this is for Tax savings, switch to ELSS Funds (Axis Long term Equity + Aditya Birla Sun Life Tax Relief 96)

Financial goals:
Have smart goals (write them down). You have mentioned that your investment horizon is eight to 12 years. I would recommend you to clearly write down your financial goals to make them SMART Financial Goals. (Specific, Measurable, Achievable, Realistic, Time-bound.)

Here is an Example of SMART Financial Goals:

Smart Goals This is just an example. You should write down the goals like this and then prioritise them and then work on them. Preferably, meet a financial planner. Priority
Travel I want to travel every year and would need Rs 1.5 lakh per annum for next 10 years. 5
Retirement I want to accumulate a corpus for my retirement at the age of 60. Had I been retired today, my spouse and I would require 25,000 per month. My current life style inflation is 10% and expected post retirement inflation (assumed) would be 6 per cent. Life expectancy for my wife is 90 years and life expectancy for me is 85 years. I wish to park funds in a mix of equity and debt post retirement, generating inflation adjusted returns. Expected nine to 10 per cent CAGR over the years, post retirement. 2
Son’s – Higher Education I wish you save for my child’s higher education (graduation and post-graduation). He been 18 years old today, I would need 20 lakh for his graduation in India and 30 lakh for his post-graduation, overseas. Higher education inflation: 10 per cent (India), overseas (6-7 per cent) 3
Son’s Marriage I wish to accumulate a corpus of 40 lakh (current cost, i.e., had my son been of marriageable age today), when he is 26 years old, i.e., 25 years later. Marriage Inflation expected: nine to10 per cent per annum. 4
Contingency Reserve I wish to create a contingency reserve of 6 months of my monthly expenses, in case of any emergency, (apart from health/mediclaim) 1





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