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Business News/ Money / Personal Finance/  What is the right mix of funds if I want to retire early?
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What is the right mix of funds if I want to retire early?

Consult a financial planner and plan accordingly

istockPremium
istock

I am 32 and married with one baby girl (1.5 years old). I am investing in mutual funds (MFs) since last four years and has a very handsome gain of more than 25% in my overall portfolio. My goal is to retire early and become financially free by 2034-35. This is the break up of my portfolio: Nippon India Smallcap Fund- 5k, SBI Smallcap Fund- 5k, SBI Focused Fund- 5k, Axis midcap Fund- 10k, Axis LT equity Fund- 10k, PPFAS Flexicap Fund- 10k, Mirae Asset Emerging Bluechip Fund- 2.5k. Do you think this is the right mix of funds to achieve my goal and do I need to add an index fund (preferably UTI Nifty 200 momentum 30 index fund) in my portfolio? I have no loans of any type.

Name withheld on request

 

Given your present investment amount and rate of monthly SIPs, you are on target to achieve a corpus of about 2.5 crore in 13 years. That would be able to support you for 20 further years of livelihood at 75,000 per month of living expenses (in today’s money), assuming a long-term inflation of 6% and portfolio returns of 12% annually. Apart from this, you also have to ensure that you can support your daughter’s higher education needs in about 15 years. Calculating using a rough estimate of 8 lakh per year (in today’s money), you would need an inflation adjusted corpus of 75 lakh in 13 years to support this goal. Consult a financial planner to understand these numbers properly and plan accordingly. Coming to your portfolio, you are investing mostly in broad-market diversified funds (flexicap, focused, tax-saving). About 58% of your portfolio are in such funds with the remaining going to mid and smallcap allocations. So, yes, you would do well to add an index fund to your portfolio. The UTI Nifty Index fund will fill this gap and also add a stable large-cap fund to the mix. Also, you can consider either adding or replacing (a smallcap fund) with an overseas fund (as and when these funds open back up for subscriptions) such as Motilal Oswal S&P 500 index fund.

Srikanth Meenakshi is founder, PrimeInvestor.in.

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Published: 16 Feb 2022, 11:06 PM IST
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