I am 63. My goal is to have ₹1 crore in six years. I invest ₹5,000 per month via systematic investment plans (SIPs) in each of the following funds: SBI Blue Chip, ICICI Prudential Blue Chip, Mirae Large Cap, Aditya Birla Equity, Mirae Emerging Equity, Franklin India Prima, Kotak Emerging, Aditya Birla 96 and Mirae Tax Saver. I have also invested a lump sum of ₹5 lakh in Franklin Savings, Kotak Savings and Kotak Corporate. Should I make any changes?
—Name withheld on request
The investment arithmetic shows that in order to create a corpus of ₹1 crore in six years, you would need to save and invest close to ₹90,000 every month (and that is assuming a high annual return of 12%, and after factoring in your one-time investment). You are investing half that amount at present. Hence, the first thing that you need to do is moderate your return expectations or goal corpus, or increase your monthly investment significantly.
When it comes to your portfolio, typically there are two ways to analyze a portfolio composition—one, from the perspective of your goal and time frame; and two, from your individual life situation. Usually, portfolios created for a person over 60 years would not be as aggressive as the 100% equity portfolio that you have. They would have more components to generate regular income and protect capital.
Assuming that you have taken care of your income needs and that you have surplus corpus you have kept aside, we can look at the portfolio with regard to your goal time frame. In that case, having an aggressive all-equity portfolio is still not advisable for a six-year investment horizon. Chances are moderate to high that the long-term average return would fall victim to the vagaries of volatility in the market.
All the funds in your portfolio are of good quality. But it appears that you are betting on this high-quality, high-risk portfolio to give you a very high annual return in the medium term of six years. If you are fine with the risk level of the portfolio, my suggestion would be to lengthen your time frame or moderate your returns expectations.
Srikanth Meenakshi is co-founder, PrimeInvestor.in