At the end of the day, it would be good to have an allocation that is 30% in debt instruments (post office, PPF and 25% of NPS allocation), 10% in alternative assets and the remaining in domestic equity linked instruments
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I’m 30 years old. I have been investing in the following mutual funds for the past three years: SBI Bluechip (SIP ₹2,000), HDFC Small Cap (SIP ₹2,000), L&T Emerging Businesses (SIP ₹2,000), ABSL Flexi Cap (SIP ₹2,000) and Tata Digital Fund (lumpsum whenever I have some cash in hand).
Apart from the above equity exposure, I invest every month in PPF ( ₹3,000), NPS ( ₹3,000) and digital gold ( ₹1,000).
I want to make some modifications to my portfolio: 1. I’m planning to stop investing in PPF and gold and move everything to NPS. 2. I want to add one international mutual fund (either Nasdaq or S&P).
Am I making the right moves considering that I’m a conservative investor?
For a conservative investor, there is quite a bit of market exposure built into your portfolio presently. You are investing at least ₹15,000 a month and of that, more than half is going to equity instruments. If you factor in the equity portion of your NPS investment, it would be further more. There is nothing wrong with that, and in fact, it would be appropriate considering your young age. However, I want you to be cognizant of the fact that there is potential for notional losses in your portfolio from time to time due to market movements and you should be mentally ready for that.
At this time, you are considering moving from the lone fixed income option in your portfolio (PPF) as well as gold and investing in NPS. Assuming you have an automatic asset allocation in NPS, you will be investing 75% of the money in passive equity funds linked to the market. Additionally, you are also seeking to add an international fund.
Neither of these moves are inherently bad for your age. Assuming that you are investing with a long-term horizon, both these moves would be suitable. However, since you have self-identified as a conservative investor, it is important that you realize that these moves will result in increasing the risk in your portfolio. You will effectively be investing more than 85% of your monthly investments in equity linked instruments. And that would be a high-risk portfolio.
If you are fine with assuming these additional risks and are confident that you will not allow the market movements to dictate your investment moves, then you can confidently do as you are planning to do. On the other hand, if you want to have a moderate portfolio, I would suggest leaving the PPF investment in place and just shift the gold investment to an international fund. If you have additional money, you can consider adding to your NPS fund, which will be locked for the long term.
I’m a 31-year-old businessman based in Kolkata. I want to build a big enough corpus by the time I turn 65. My investment playbook is as follows: NPS: ₹10,000 monthly in auto mode; Post office: ₹15,000 in monthly income scheme (MIS); PPF: ₹15,000 yearly; Cryptocurrency: ₹15,000 per month in different coins; Stocks: As I don’t have time to research fundamentally or technically, I invest only in IPOs based on GMP review; Mutual funds: SIPs with a 10% top-up yearly as follows: ₹1,000 weekly in an index fund; ₹1,000 weekly in an ELSS fund; ₹1,000 weekly in a mid-cap fund and ₹2,000 monthly in a small-cap fund. Apart from the above, I have Mediclaim and life insurance policies.
Please review my portfolio and let me know if it needs any alterations.
—Rajendra Lal Ghosh
If you look at the profile of your monthly investments, you are investing ₹12,500 in domestic stock market linked instruments ( ₹5,000 in SIP and ₹7.500 in NPS auto mode), ₹30,000 in debt instruments ( ₹12,500 in PPF, ₹15,000 in PO MIS and ₹2,500 in NPS debt allocation), and ₹15,000 in alternative asset classes (cryptocurrencies).
You are a young person saving for a retirement corpus over the next 35 years. As such, it would be appropriate for you to have an aggressive portfolio. However, aggression should be measured and well-understood. Risk in the domestic equity markets is something that we have a track record for, while risk in crypto investments is something very new (especially for newer currencies). I’m not saying that you cannot speculate in such instruments, but in the scheme of things in your portfolio, the allocation is on the higher side, especially considering the low MF allocation.
My advice would be to lower the alternative assets investments to ₹5,000 a month and move ₹10,000 to your MF portfolio (in the same proportion as now). That would change the profile of your portfolio to be a bit more conventional. Even then, your portfolio would have 50% in debt instruments on a monthly basis, which is probably on the high side considering the time frame of your investments. You can address that by moving some amount, say ₹5,000 from your PO MIS to your MF portfolio as well.
At the end of the day, it would be good to have an allocation that is 30% in debt instruments (post office, PPF and 25% of NPS allocation), 10% in alternative assets and the remaining in domestic equity linked instruments.
Srikanth Meenakshi is the founder of Primeinvestor.in.
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