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Rediff.com  » Getahead » Ask MF Guru: 'I want Rs 50 lakhs in 5 years'

Ask MF Guru: 'I want Rs 50 lakhs in 5 years'

By OMKESHWAR SINGH
September 09, 2021 08:54 IST
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'I have been investing Rs 60K per month since 2020. I need to create a corpus of Rs 50 lakhs in next five years.'

Illustration: Dominic Xavier/Rediff.com
 

Omkeshwar Singh, head, Rank MF, (external link) a mutual fund investment platform, answers your queries:


Gautam Gaurav: Hope you're doing well. I am new to mutual funds. I have a capital of Rs 20 lakhs. I am 21 years old. I want to grow my capital to Rs 1 crore in the next 10 years.

Can you suggest mutual funds for the same?

Also please mention the mode of investment -- lumpsum or SIP.

Omkeshwar Singh: Opt for SIPs or STP from debt fund to equity fund.

A few funds that may be considered are as under:

Axis ESG Equity Fund -- Growth
Motilal Oswal Focused 25 Fund -- Growth
UTI Flexi Cap Fund -- Growth
ICICI US Bluechip Fund -- Growth

 

Navneet Mehta: I am 41 years old and work in a private sector company. I will retire at the age of 58 years.

I have been making SIP investments as listed below.

My object is long term fund accumulation.

In my family I have parents, my wife and two kids (12 and 6 years).

Please guide for any further addition in SIPs upto Rs 8K to Rs 10K. Also advise if I should stop any of the SIPs.

Mutual Fund - Through monthly SIP SIP Per Month Number of yeas invested
1. SBI Small Cap Fund Regular Growth Rs 2,500 2
2. SBI Focused Equity Fund Direct Growth Rs 1,500 2
3. NIPPON INDIA VALUE FUND -- GROWTH PLAN  Rs 2,000 7
4. NIPPON INDIA LARGE CAP FUND -- GROWTH PLAN  Rs 2,250 4
5. ICICI Prudential Value Discovery Fund -- Growth Rs 2,000 2
6. HDFC Top 100 Fund -- Growth Rs 2,500 9
7. HDFC TaxSaver -- Growth Rs 2,000 9
8. HDFC Mid-Cap Opportunities Fund -- Growth Rs 1,500 5
9. HDFC Flexi Cap Fund Growth (Erstwhile HDFC Equity Fund) Rs 2,000 6
10. Franklin India Smaller Companies Fund -- Growth Rs 2,000 4
11. DSP Mid Cap Fund, Reg -- G Rs 2,000 5
12. DSP Focus Fund, Reg -- G Rs 2,000 2
13. DSP Equity Opportunities, Reg -- G Rs 2,000 2
14. Aditya Birla Sun Life Tax Relief '96 Fund (ELSS U/S 80C of IT ACT) -- Growth, Regular Plan Rs 2,000 4
15. Aditya Birla Sun Life Frontline Equity Fund -- Growth, Regular Plan Rs 2,000 1
16. Aditya Birla Sun Life Equity Advantage Fund - Growth, Regular Plan Rs 2,000 4

I have also made one time investment in the funds listed below. Please guide for any switching.

I also want to invest an additional Rs 80K to Rs 1 lakh. Please guide.

Mutual Fund One Time investment Investment
HDFC Low Duration Fund -- Growth Rs 50,245
HDFC Mid-Cap Opportunities Fund - Direct Plan -- Growth Option Rs 22,500
HDFC Small Cap Fund -- Regular Plan, Growth Rs 25,000
HDFC Housing Opportunities Fund -- Direct Plan, Growth Option Rs 20,000
Aditya Birla Sun Life Resurgent India Fund Series 6 -- Direct, Growth Rs 20,000
Aditya Birla Sun Life Low Duration Fund -- Regular Plan, Growth (formerly known as Aditya Birla Sun Life Cash Manager) Rs 79,578
Aditya Birla Sun Life Frontline Equity Fund -- Direct Plan, Growth Rs 44,000
ICICI Prudential Bluechip Fund -- Growth Rs 25,000
ICICI Prudential Value Fund Series 19 -- Direct Plan, Cumulative Rs 20,000
L&T Midcap Fund -- Growth Rs 25,000
SBI Focused Equity Fund Regular -- Growth Rs 25,000

Omkeshwar Singh: Your portfolio has too many funds, it's over-diversified.

Lumpsums can be continued.

In SIPs, you may continue with 1, 2, 5, 8 and 11.

 

Vivek Bhargava: We have made these investments in our family portfolio.

We would like to continue to invest for 15 years but want to reduce the number of funds.

Could you please suggest which ones we should stop and which ones we should keep investing in?

Apart from Mirae Bluechip, the others are relatively new. Should we close or hold for three more years?

Category Mutual Fund Invested Current Value Total Gain SIP Amount
Large & Mid Cap Mirae Bluechip Rs 2,59,995 Rs 4,02,216 Rs 1,42,221 Rs 8,000
Aggressive Hybrid Mirae A Hybrid Equity Rs 52,997 Rs 56,757 Rs 3,760 Rs 1,000
Large Cap Axis Bluechip Rs 47,497 Rs 49,709 Rs 2,212 Rs 5,500
Contra Invesco India Contra Rs 29,998 Rs 32,419 Rs 2,421 Rs 1,000
Hybrid DSP Dynamic Asset Allocation Rs 26,998 Rs 27,800 Rs 802 Rs 500
Mid Cap Axis Midcap Rs 32,498 Rs 37,166 Rs 4,668 Rs 2,500
Aggressive Hybrid Canara Robeco Equity Hybrid Rs 30,998 Rs 33,796 Rs 2,798 Rs 2,000
Flexi Cap Parag Parikh Long Term Equity Rs 25,998 Rs 30,659 Rs 4,661 Rs 1,000
Equity-ESG Mirae ESG Fund of Fund Rs 25,998 Rs 27,430 Rs 1,432 Rs 2,000
Focused SBI Focused Equity Rs 17,500 Rs 19,890 Rs 2,390 Rs 500
Midcap DSP Midcap Rs 22,499 Rs 25,859 Rs 3,360 Rs 1,500
FoF Motilal Oswal Nasdaq Rs 34,998 Rs 36,164 Rs 1,166 Rs 5,000
Corporate Bond Kotak Corporate Rs 18,452 Rs 18,735 Rs 283 Rs 1,000
Small Cap SBI Small Cap  Rs 35,000 Rs 41,103 Rs 6,103 Rs 5,000
Value Quantum Long Term Equity  Rs 13,999 Rs 15,184 Rs 1,185 Rs 1,000
Equity ESG Quantum India ESG Equity  Rs 13,999 Rs 14,942 Rs 943 Rs 1,000
Flexi Cap Axis Flexi Cap Rs 11,999 Rs 12,643 Rs 644 Rs 500
Large Cap Aditya Birla Sun Life F Equity Rs 6,000 Rs 6,831 Rs 831 Rs 1,000
FoF Mirae Asset NYSE FANG+ ETF Rs 4,956 Rs 4,934 Rs -22  

Omkeshwar Singh: There are too many funds in your portfolio. However, most of the funds are decent. You may continue for three years.

 

Sanjeev Talwar: I am an investor since 2005. I am 49 years old and am working.

I have been investing Rs 60K per month since 2020. I need to create a corpus of Rs 50 lakhs in next five years.

I have been following a 2-step strategy -- SWP and SIP, ie taking out money on a monthly basis and re-investing it back into new different schemes. This is on since June 2020, when the market was at a low.

Following are SWP schemes, units and amount.

Please advise if I am going in the right direction to achieve my target or if some changes are required.

Schemes being redeemed Units in hand SWP
Aditya Birla Sun Life Frontline Equity Fund (G) 180 Rs 10,000
Franklin India Equity Fund (G) 25 Rs 5,000
HDFC Hybrid Equity Fund (G) 350 Rs 7,500
Nippon India Tax Saver (ELSS) Fund (D) 250 Rs 5,000
Nippon India Tax Saver (ELSS) Fund (G) 800 Rs 10,000
Nippon India Tax Saver (ELSS) Fund (G) 900 Rs 13,000
    Total: Rs 50,500
Schemes being re-invested Units in hand SIP
AXIS LONG TERM -- DIVIDEND PLAN 4,632 Rs 4,000
ADITYA BIRLA SUN LIFE TAX RELIEF 96 FUND -- DIVIDEND 687 Rs 4,000
AXIS BLUE CHIP FUND 1,851 Rs 10,000
MIRAE ASSET LARGE CAP FUND 942 Rs 5,000
HDFC BALANCE ADVANTAGE - REGULAR PLAN -- DIVIDEND 3361 Rs 5,000
HDFC MID-CAP OPPORTUNITIES-REGULAR PLAN -- DIVIDEND 4323 Rs 5,000
PARAG PARIKH LONG TERM GROWTH 1,654 Rs 5,000
KOTAK LEXI CAP FUND GROWTH 1,389 Rs 5,000
ICICI PRU LIFE BLUE CHIP FUND 4,497 Rs 5,000
DSP HEALTH CARE FUND 3,092 Rs 5,000
SBI BLUE CHIP GROWTH FUND 5,139 Rs 5,000
    Total: Rs 58,000

Omkeshwar Singh: SIP and SWP will not be required if good funds are selected for investment and you remain invested in the same schemes for a longer duration.

SWP will have exit loads and the STCG component that may reduce the total returns.

 

Himanka Goswami: I have the following questions:

1. It has been historically said that to create a good corpus, the investment horizon has to be 10-15 years. But we keep seeing advice to switch to different schemes when a downturn is there.

What should be the correct way?

Do we keep investing in the same scheme or actually switch?

2. If we switch, then how will the long horizon of 10-15 years be achieved?

3. After having switched (if done), is the old scheme to be monetised immediately or kept as it is?

Omkeshwar Singh:

1. The main consideration for selecting mutual funds is the quality of the portfolio and the margin of safety. If these are fine, there is no need to change the schemes or switch.

2. The total investment horizon remains the same. Markets have cycles and if the investment horizon is 10-15 years, it is important to stay invested for the entire duration.

3. Ideally, it should be monetised and switched to better funds.

 

Manoj Gupta: I am 54 years old. My risk profile is growth/aggressive.

I have surplus of Rs 35 lakhs which I want to invest for five years. I'm okay with lumpsum or STP/SIP.

Please suggest a good MF scheme. I have shortlisted a few below:

1- UTI Flexi Cap Fund-Direct Rs 15 lakhs
2- IIFL Focused Equity Fund Rs 15 lakhs
3- Mirae Asset Tax saver (ELSS) Rs 5 lakhs

Omkeshwar Singh: These are good funds. Please continue. It's better to opt for SIP or STP route.

 

Adish Pillai: I am 38 years old and have been investing in equity mutual funds since 2012.

These are my investments in equity till date. I have stopped my SIPs this month, except for Mirae Emerging Bluechip.

I also have life insurance (Rs 38,634 per annum) and Mediclaim (Rs 19,000 p a).

1. I want to invest an additional lump sum of Rs 1 lakh and start 3 new SIP of Rs 2,500 per month.

Can you suggest where I should invest -- in the funds I am already invested in or in any new category?

2. I have not been able to make up my mind on debt investment since I am not sure about gains (4-8 per cent) and then pay capital gains tax from debt investment, compared to money parked in a savings account (interest at 3.5 per cent).

These are my current investments. Your response would be appreciated. 

ELSS (Mirae Asset & Quant) Rs 4,40,000
Flexi Cap (Parag Parikh & UTI) Rs 1,60,000
Index (HDFC Sensex) Rs 30,000
Large & Mid (Canara Emerging Equities & Mirae Emerging Bluechip (SIP-7500)) Rs 4,31,000
Large Cap (Mirae Large Cap) Rs 99,100
Multi Cap (Nippon India) Rs 30,000
Sectoral/Thematic (SBI Magnum) Rs 27,000/-

Omkeshwar Singh:

Answer 1.

Axis ESG Equity Fund -- Growth
Motilal Oswal Focused 25 fund -- Growth
UTI Flexi Cap Fund -- Growth

Answer 2. You may consider short duration funds, corporate bond funds and banking and PSU funds for debt investments

 

Aurobindo Saha: What is your advice for rebalancing asset allocation in the situation below?

In a Rs 1.1 crore portfolio, I have 87 percent equity (Rs 97 lakhs, mostly MFs) and 13 per cent (Rs 15 lakhs) debt. I want to bring it to 60 per cent equity and 40 per cent debt. I have identified six mutual funds which currently have Rs 35 lakhs long term profit.

Selling equity MFs for profit booking at one go has tax implications and may not be the right strategy. But if I can move this Rs 35 lakhs profit to debt funds, it will help to balance my asset allocation.

What is the most tax efficient and sensible way to do the rebalancing?

I am making future investments in SIP mode in conservative funds such as Mirae Asset Hybrid Equity. I have a 10 year investment horizon.

Omkeshwar Singh: Rebalancing would require you to exit equity and get into debt or hybrid funds.

LTCG on equity funds are taxed at 10 per cent; the trade-off is between saving taxes and a potential drop in value if the markets correct. It is advisable to book profits and pay 10 percent taxes and do the rebalancing.

Additionally, you may consider taking advice from a tax expert.

 


If you want Mr Singh's advice on your mutual fund investments, please mail your questions to getahead@rediff.co.in with the subject line, 'Ask MF Guru', along with your name, and he will offer his unbiased views.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

Feature Presentation: Ashish Narsale/ Rediff.com

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