Volatility shouldn’t faze young investors1 min read . Updated: 15 Apr 2020, 10:39 PM IST
The general rule of thumb is for a person to invest at least half of their monthly savings, if not more. So, you should consider increasing your SIP amount to, say, ₹15,000 and see if you can sustain it with disciplined budgeting
I am 29 and earn ₹70,000 a month (post-tax). My monthly expenses are around ₹40,000. I invest in the following funds through systematic investment plans (SIPs): Aditya Birla Sun Life Tax Relief ’96 ( ₹1,000), Axis LTE ( ₹2,000), Mirae Asset Emerging Bluechip ( ₹1,000) and Parag Parikh Long Term Equity ( ₹1,500). I have also invested lump sums of ₹50,000 in IDFC Tax Advantage, ₹20,000 in DSP Tax Saver and ₹30,000 in Nippon Tax Saver Fund. Is my portfolio balanced?
— Puneet Jain
You have invested significantly in tax-saving funds, both through lump sums and SIPs. More than half of your monthly SIPs are going into tax-saving funds, and I hope you are able to get the full tax deduction advantage from it. You are also investing ₹2,500 a month in a couple of diversified funds. They are both good funds, and you should continue investing in them.
However, the main issue with your portfolio is not where you are investing, but how much. Your monthly savings is around ₹30,000, but you are investing only ₹5,500. The general rule of thumb is for a person to invest at least half of their monthly savings, if not more. So, you should consider increasing your SIP amount to, say, ₹15,000 and see if you can sustain it with disciplined budgeting. If you do this, you can both increase your allocation to the non-ELSS funds, as well as add a couple of funds such as ICICI Prudential Bluechip, Kotak Standard Multi-cap and L&T Midcap to the mix. This would make it a high-risk portfolio, but as a young person investing, hopefully, for the long term, I hope you will remain unfazed by volatile markets like we are seeing at present.
Srikanth Meenakshi is co-founder, PrimeInvestor.in. Queries and views at firstname.lastname@example.org