Want to invest in mutual funds but don’t know how to go about it?
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Q: 53-year-old Kulbir Singh Bindra writes to us from New Delhi. I am investing Rs 20,000 per month in HDFC Mid Cap; Rs 20,000 per month in Axis Mid Cap Fund - Growth Plan; Rs 10,000 per month in Canara Rebecca Emerging Equities Fund - Regular Growth; Rs 10,000 per month in Reliance Multi Cap Fund - Dividend Plan; Rs 5,000 per month in Reliance Value Fund - Growth Plan; Rs 20,000 per month in UTI Value Opps Fund - Growth Plan and Rs 15,000 per month in ICICI Pru Value Discovery Fund Growth. Now the accumulated value of my fund is Rs 1 crore (Investing Rs 1 lakh per month). I would like to know if my portfolio of mutual funds is good and if any changes need to be done. Secondly, since I now have a seven year time frame to retire from active job, should I continue to invest in mutual funds and thirdly, what should be an ideal corpus for maintaining the same standard of living as of today? My current household expense per month is around Rs 1.5 lakh.
A: It's great that you are going about this in a systematic way. Please take professional assistance in estimating your retirement corpus and the investment path to achieve that corpus. The present corpus of Rs 1 crore along with the monthly SIP of Rs 1 lakh can grow to around Rs 3.5 crore if return is around 11 percent per annum after tax. That is sufficient to provide a pension of around Rs 75,000 per month in today’s money for a period of 25 years after retirement. So obviously, you will need to increase the amount of SIP to around Rs 2.50 lakh per month from the current Rs 1 lakh per month. Second, the number of funds are far too many. Restrict it to two or a maximum of three funds. Maximum amount in a large cap fund such as ICICI Pru Nifty Next Index Fund Direct Growth Plan must be Rs 70,000 per month and balance equally in HDFC Mid cap Opportunities and Canara Rebecco Emerging Equities Fund.
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