Prableen Bajpai, Founder FinFix® Research & Analytics replies, “The foundation of your portfolio should be built on the principle of asset allocation, which means holding the right mix of different asset classes. Your goal of building a corpus of Rs 1 crore in the next 10 years will require a monthly investment of roughly Rs 50,000 assuming a 10% compounded annual growth rate (CAGR). As you have just begun investing, it is important to create a safety net. Build a contingency fund which is equivalent to at least six months of expenses, and eventually increase it to 12 months. This amount should be parked in a liquid mutual fund or a sweep-in fixed deposit (FD). Next you should divide your monthly investments into equity mutual funds and fixed income products such as EPF and debt funds. Decide the amount of investment in tax-saving mutual funds based on EPF allocation. In addition, consider adding a flexi cap, large cap index, and an international fund. Your equity mutual funds and EPF will be the tools for long-term wealth creation. Some investments in debt mutual funds, FDs or conservative hybrid funds will come in handy for near-term goals. An exposure of 5-10% can be in gold in electronic form. Decide the final allocations based on your goals, risk appetite and time horizon.”
My equity MF portfolio comprises Rs 4.8 lakh in HDFC Top 100, Rs 4 lakh in HDFC Equity, Rs 1.2 lakh in HDFC Housing Opportunities, Rs 5.4 lakh in HDFC Hybrid Equity, Rs 3.7 lakh in HDFC Midcap Opportunities, Rs 3.8 lakh in BSL Dividend Yield, Rs 2 lakh in BSL MNC Fund, Rs 2 lakh in IDFC Flexicap, Rs 1 lakh in FI Flexicap, Rs 2.5 lakh in Parag Parikh Flexicap, Rs 37,000 in Kotak Flexicap, Rs 27,000 in FT Focused Equity and Rs 3.4 lakh in ICICI Pru Equity Savings Fund. How do I prune the number of funds I hold? I am retired but want to remain in equity funds only.
Raj Khosla Founder and Managing Director, MyMoneyMantra.com replies: Given you are retired, the portfolio should be rebalanced for capital protection and liquidity while ensuring a balanced growth. Currently, you hold Rs 34.44 lakh in 13 schemes and pruning the number of funds is strongly recommended. Stick with 4-5 funds. Since you want to remain invested in equity, you should divide your funds into 20:60:20 ratio in large cap, flexi cap and small cap funds respectively. The recommended funds are: HDFC Top 100, Parag Parikh Flexicap, HDFC Flexicap Fund, Axis Midcap and SBI Smallcap. This will diversify your portfolio. Do review the portfolio annually basis your cashflow requirements.
