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Photo: iStock

Sort your investments into separate portfolios for easier tracking of goals

Assuming you do have debt exposure in some form, you can add a mid-cap fund to your present portfolio since you don’t have a mid-cap exposure

I am 31 years old with a small child, and I earn 55,600 per month. My goals are retirement in 2048 and my child’s higher education in 2037. My monthly mutual fund investments are 7,000 in Axis Long Term Equity, 10,000 in Kotak Standard Multicap (direct growth) and 5,000 in SBI Magnum Multicap (direct growth). I want to invest another 6,000 per month. Should I choose a mid-cap or an index fund? Also, please review my portfolio.

—Santu Mondal

Please make sure that you earmark the investments and the funds separately into portfolios for retirement and education for easier tracking of your goals. You hold good quality funds. We hope you have exposure to traditional debt options such as fixed deposits (FDs), the Employees’ Provident Fund (EPF), the Public Provident Fund (PPF) or in debt funds. If you don’t, then have at least 25-30% exposure in those. You should invest towards that first.

Assuming you do have debt exposure in some form, you can add a mid-cap fund to your present portfolio since you don’t have a mid-cap exposure. You can go with DSP Midcap Fund. However, if you don’t want too much of an aggressive approach, then mid-caps won’t suit you. In that case, you can go with a Nifty Next 50 index fund that will invest in the next 50 stocks after Nifty50 and are considered emerging bluechip. They do have a much more aggressive risk profile than large-caps but not as much as mid-caps.

I am 26 years old and I am investing 35,000 per month. Of this, I invest around 15% in the US-based funds. I have systematic investment plans (SIPs) of 5,000 each in Motilal Oswal Multicap 35, Kotak Standard Multicap, UTI Nifty Index and ICICI Prudential Nifty Next 50 Index; and 2,500 each in Axis Long Term Equity, ICICI Prudential Long Term Equity, Franklin US Opportunities and Motilal Oswal Nasdaq 100 ETF. I also invest 5,000 in National Pension System (NPS). I want to build a corpus of 7 crore in 20 years. Will my portfolio achieve this goal or do I need to modify it? I also plan to step up SIPs every year by 10%.

—Ashish

Your choice of funds is fine. You should not go for equity-linked savings scheme (ELSS) other than for tax-saving purpose. Your return expectation seems to be around 12-13% per annum, if you want to reach 7 crore in 20 years. While this return expectation may seem normal today, you should remember that as the economy matures, both inflation and economic growth may not be high. Bank interest rates, too, may not be high. In that scenario, your equity return expectations too need to be toned down. Anything you get over and above would be a bonus.

If you keep your return expectation at 9-10%, then you should increase your SIPs by about 14% annually to achieve your corpus. You may try to increase SIPs after a few years when your pay package is higher if it is a stiff amount to save in your initial years.

Srikanth Meenakshi is co-founder, PrimeInvestor.in. Queries and views at mintmoney@livemint.com

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