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Photo: iStock

Don’t take extra risk in the hope of extraordinary returns

In the desire to achieve extraordinary return, don't try to take extra risk, especially as you have low or moderate risk appetite

I have invested lump sums in L&T emerging Business Fund Reg (G) ( 5,000); Principal Emerging Bluechip Fund (G) ( 10,000) and Tata India Consumer Fund – Reg (G) ( 15,000). I have an SIP in Mirae Asset Emerging Bluechip Reg (G) ( 1,000). I have a LIC Jivan Anand policy for which I pay 29,598 per year; it has a sum assured of 6 lakh. I opened a PPF account in 2016. My short-term goal is saving 50,000 for my marriage (7-8 months away), and my long-term goal is wealth creation with moderate risk. I want to accumulate 6 lakh in three years. I can invest 10,000 per month for that. I earn 34,000 per month.

—Rajdip Gupta

Your portfolio includes investments in mutual funds, PPF and insurance policy. You have exposure in two large-and-mid-cap, one small-cap and one thematic fund. Your SIP of 1,000 is in the large-and mid-cap category. This is an aggressive portfolio, but PPF gives you fixed income exposure.

However, you have not provided for any contingencies or your short-term goal/s. You should plan for the funds you need for your marriage. In addition, you also need to create a corpus over three years where you can save 10,000 per month. Your principal savings would be 3.60 lakh and assuming an annualised return of 12%, the portfolio value will be 4.35 lakh. Even if you consider an annualised return of 15%, the value will be 4.57 lakh.

In the desire to achieve extraordinary return, don’t try to take extra risk, especially as you have low or moderate risk appetite. It is recommended that you start investing for the long term and aim for reasonable returns based on your risk profile. You can consider taking exposure to risk via equity funds for long-term goals.

Also, consider having a medical insurance for yourself and your dependants as well as term insurance. The existing insurance policy is an endowment-cum-whole life plan.

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com

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