I am a 33-year-old NRI working in the US. My wife and our two-year-old child live in India. I have the following monthly SIPs— ₹ 5,000 each in DHFL Pramerica Large Cap-G, HDFC Mid-Cap Opportunities-G, Tata Hybrid Equity Reg-G and UTI Value Opportunities Reg-G; ₹ 15,000 in Birla Sun Life Frontline Equity Fund-G Direct Plan; and ₹ 2,500 in SBI Blue Chip Fund-Reg. Our financial goals are child’s education and retirement. We spend about ₹ 50,000 a month now and want to continue the same lifestyle post-retirement. Will my current SIP allocation work? We have around ₹ 50 lakh in NRE fixed deposit (average interest of 6.5%) which I am moving into equities as they mature. Should I invest in debt funds instead of FDs? How much should we invest in gold?
The current monthly investments done via SIP are for ₹ 37,500 over six schemes. Four out of six funds being large-cap biased. You need to prune down the number of schemes in the large-cap category due to performance as well as the number of funds, and increase exposure in mid-caps and multi-caps. Since your financial goals of child’s education and retirement are long term, within equity, the level of risk can be increased.
You can continue with Birla Frontline equity or SBI Blue Chip Fund and the remaining SIPs in large-cap funds can be stopped and once they become exit load-free as well as long-term, they can be reinvested in the existing large-cap funds. In addition, you can stop your balanced fund.
The funds which can be considered in the mid-cap space are IDFC Sterling Equity along with your HDFC Mid Cap Opportunities. In the multi-cap space, where you don’t have any exposure, you can consider Axis Focused 25 Fund.
You also need to increase savings whenever there is an increase in your income to counter inflation as well as provide for other financial goals.
You need to ensure that there is sufficient corpus for short-term needs, which can be invested in debt mutual funds in ultra short-term and short-term funds.
Gold as an asset class does not have any intrinsic value. However, gold can always form part of the portfolio with the overall exposure not exceeding 5-7% as it also acts as a hedge against uncertain times as well as equity asset class.
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Surya Bhatia is managing partner of Asset Managers
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