I am 42 years old and earn Rs 90,000 per month. I have two daughters aged 12 and 6 years. I have a house and car but no loan. I have systematic investment plans (SIPs) in Franklin India Prima fund (Rs 1,500 from the last five years), Birla Sun Life Top 100 (Rs 2,000, five years), Franklin Prima Plus (Rs 2,000, five years), Reliance Diversified Power sector fund (Rs 2,000, three years), DSP Top 100 equity (Rs 3,000, two years), Reliance Equity Opportunity (Rs 4,000, six months), DSP Small and Midcap (Rs 5,000, six months), Reliance Gold (Rs 2,000, three months). I have funds worth around Rs 6 lakh. I have a recurring deposit of Rs 6,000 since two years. I have two Public Provident Fund (PPF) accounts. I contribute Rs 10,000 in them and have fixed deposits (FDs) of Rs 6 lakh. I have been paying Rs 25,000 for three unit-linked insurance plans (Ulips). I have traditional plans, too. I have a floater health plan. I want to accumulate Rs 1.5 crore by 2020? Is that achievable?
You have started investing with a long-term perspective which is good. However, you haven’t been keeping track of the performance of the schemes. Out of the eight schemes you have SIPs in, three are underperformers but were doing well when you started investing in these. These are Franklin Prima, Birla Sun Life Top 100 and Reliance Diversified Power.
Any investment needs active monitoring; the idea is to see their quarterly performance. In case of underperformance, ascertain the reason. For instance, maybe the fund manager did not take holdings in sectors that turned out to be multi-baggers. Such kind of one-time reason should not affect your decision as this can happen with any scheme. But if the scheme continues its under-performance for a few quarters compared with its peer group and the benchmark, you should consider changing the investment.
Also, it is better to stay away from thematic funds. It is not only about risk, but also about the rationale—any thematic fund will do well only in patches and hence making monthly investment in these is not recommended.
The other five funds have done well and you can hold them. The amount available after closing SIPs in the underperforming funds can be invested in these.
You should increase your deposit in PPF from the existing contribution of Rs 10,000. It is not very clear which kind of Ulip you have and since when. Evaluate the performance of these in view of the costs and then decide whether you want to continue them. Make sure you have adequate life cover; as a thumb rule have at least five times your annual income as cover. It is preferable to go for a term insurance plan. Family floater policy is a good option.
Lastly, there is no reason why you will be not able to reach the magical number of Rs 1.50 crore in the next 9-10 years. You need to make sure you are consistent and are aware of how your schemes are doing.
Surya Bhatia, certified financial planner and principal consultant, Asset Managers
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