I am 42 years old. I have been investing in three systematic investment plans (SIPs) for the last one year—L&T Emerging Business ( ₹2,000), Mirae Asset Emerging Business ( ₹2,000) and Reliance Small Cap fund ( ₹4,000). The goal is wealth creation of ₹1 crore for retirement. I also have lump sum investments since the last one year— ₹2 lakh in HDFC Mid-cap fund, ₹2 lakh in HDFC Balanced fund, ₹4 lakh in Aditya Birla Sun Life Frontline Equity and ₹81,000 in Motilal Most Focus 35 fund. Is my portfolio good? My horizon is 18 years.
At present, you have about ₹9 lakh invested in lump sum and you are doing an SIP of ₹8,000 in an aggressive portfolio of mid- and small-cap equity funds. Applying SIP return calculations and basic compound interest calculations on your SIP and lump sum investments, respectively, interestingly enough, it looks like they will both return pretty equal sums of money at the end of your investment tenure. If the markets behave and return in keeping with the long-term expectations (of 12% CAGR), you can expect to have a total of ₹1.2 crore in 18 years. If the market slackens a bit and returns 10% a year in this period, you will still make close to ₹1 crore at the end of the period. So, you are investing adequately.
Although, of course, if you can increase your SIP amount, you will be providing some cushion for yourself. The fund selections are fine—very aggressive, sure, but in keeping with your time horizon and return expectations.
I am a 20-year-old student. I have invested in one of the direct fund SIP but I want to start a couple of more SIPs so that I can maintain my portfolio with profit without taking losses. Please suggest a few schemes.
In mutual funds, there are no “profit-only" options or schemes. All mutual fund schemes carry an element of risk—depending upon the type of fund, the risk may be higher or lower—and none of them provide a “no-loss" guarantee. That said, if your concern is to mitigate risk in your portfolio and ensure that you are on the relatively safer side of investing, you should consider adding low-risk debt funds to your portfolio. Schemes from fund categories such as ultra-short bond funds and liquid funds will provide such sanctuaries. You can consider schemes such as Kotak Savings and DSP Liquidity funds to cater to your need.
Srikanth Meenakshi is co-founder, PrimeInvestor.in. Queries and views at firstname.lastname@example.org