I am 30 years old and, presently, my spouse and I are investing ₹57,500 monthly in the following:
1) Bharat Bond FOF April 2023-Direct Plan Growth: ₹1,000
2) Edelweiss US Technology FOF-Growth: ₹3,000
3) Franklin India Flexicap fund growth: ₹1,000
4) HDFC top 100 fund regular plan growth: ₹1,000
5) HDFC balanced advantage fund-growth: ₹1,000
6) Nippon India Small Cap fund growth plan growth option: ₹1,000
7) US Equity opportunities fund: ₹1,000
8) Tata equity P/E fund regular growth: ₹1,000
9) VPF: ₹15,000 (excluding employer/employee EPF contribution)
10) Aditya BSL MNC Gr: ₹11,400
11) Aditya BSL Short Term: ₹5,600
12) ICICI Pru Value Discovery Gr: ₹3,000
13) PPF: ₹12,500
We want to accumulate ₹2 crore in the next 10-13 years. Is it achievable through the above portofolio?
With your current investment level and on the assumption of (a rather generous) 12% long-term market return, you stand a decent chance of reaching your goal in 12-13 years. However, the return assumption is on the higher side and, hence, you would do well to be flexible with your time frame or start augmenting investments through the course of the tenure. Regarding the portfolio, I see a rather conservative asset allocation considering your time frame of investments and your ambition. If it is in keeping with your risk tolerance level, then it’s fine, and you can leave the allocation as is; but you would then need to moderate your expectations. At this time, you are investing ₹27,500 in PF accounts, which are fixed-return investments that are unlikely to deliver double-digit returns over the next several years. You are also investing about ₹7,000 in debt instruments via mutual funds. In total, that represents 60% allocation to debt assets. The remaining 40% are going to equity assets through mutual funds, of which a lion’s share goes to a single MNC fund. The remaining amount is scattered among several funds, some investing in India and some overseas.
Overall, both the asset allocation and the fund choices are not in keeping with the aspirations that you have for this portfolio and need to be relooked. I would suggest that, if it agrees with your risk tolerance, you should go with a 70% allocation to equities (by toning down your VPF contribution, for example) and the rest to debt (PPF is fine). When it comes to equity allocation, please go with equitable allocation across different good funds and domestic equity fund categories in the Mint 50 list. Such a portfolio design has a better chance of getting you to your goal and would be more manageable over the next 10-12 years as well.
Srikanth Meenakshi is co-founder, PrimeInvestor.in