Many of the questions raised by these investors were discussed in detail during the show. In this article, we will go through those insights to understand the fund recommendations, if any, and learn how to plan investments and balance risk effectively when starting or continuing to invest at the age of 50.
Sukhwinder Singh from Mohali. He wants a portfolio review and plans to invest for 10-15 years. His current age is 50.
- ICICI Prudential Large & Mid Cap (lump sum): Rs 37,492
- Nippon India Nifty 50 (lump sum): Rs 10,000
- Quant Small Cap (monthly SIP): Rs 2500
- SBI Mid Cap (weekly SIP): Rs 500
- SBI Equity Hybrid (monthly SIP): Rs 2500
- DSP Large Cap (monthly SIP): Rs 2500
- Axis Gold & Silver Passive Fund of Fund (weekly SIP): Rs 1000
According to the expert, one positive aspect of a portfolio is that it has exposure to multiple asset classes, which is a good approach to diversification. His investment horizon of 10–15 years is also appropriate for equity investments.
However, the portfolio includes several overlapping or duplicate funds. For instance, there are two large-cap funds, and similar overlaps exist in other categories as well. To make the portfolio easier to manage and more efficient, it would be better to consolidate similar funds and limit the total number of funds to four or five.
The investor’s large-cap allocation is currently quite high, so it can be slightly reduced. He should consider keeping only one large-cap fund, either ICICI Large Cap or DSP Large Cap. Ideally, large-cap exposure should be around 30 per cent of the total portfolio.
At the same time, the investor can continue holding the following funds:
- ICICI Prudential Mid Cap
- Quant Small Cap
For diversification, gold allocation through the Axis Gold fund can be maintained at around 5-8 per cent of the portfolio. Given the current market environment, some allocation to gold is considered beneficial.
Since all three primarily invest in large-cap stocks and are likely to deliver similar returns, it would make sense to consolidate them into a single fund, such as the Nippon India Nifty 50 Index Fund.
Meanwhile, the investor can continue his SIPs in:
- SBI Mid Cap
- SBI Equity Hybrid
- DSP Large Cap
The main focus should be on simplifying the portfolio and ensuring that gold and silver exposure does not exceed 10 per cent of the total portfolio.
Neel Goswami from Delhi, age 48.
He has invested in seven mutual funds, including:
- Bandhan Small Cap
- Quant Small Cap
- Motilal Oswal Mid Cap
- Invesco Mid Cap
- Nippon India Large Cap
- Nippon India Multicap
- JM Flexi Cap
He wants to accumulate money for retirement within 10 years.
His portfolio value is around Rs 1 lakh, and he invests Rs 40,000 monthly via SIP.
The portfolio once again shows a similar issue: multiple funds within the same category, which leads to unnecessary overlap, said the expert.
For the SIP investment of Rs 40,000 per month, the allocation can be distributed across categories to maintain a balance between stability and growth. A slightly higher allocation can be given to large-cap funds for stability, while mid cap and small cap funds can provide growth potential.
If the investor continues this SIP strategy consistently for 15 years, the potential corpus could reach Rs 1.5-2 crore.
If the investor follows a step-up SIP strategy by increasing the investment amount by 10 per cent every year, the final corpus could become more than double, significantly improving long-term wealth creation.
- Nippon India Large Cap
- JM Flexi Cap
- Motilal Oswal Mid Cap
- Bandhan Small Cap
- Investor portfolio
- Mirae Asset Large & Mid Cap: Rs 1000
- Mirae Asset Mid Cap: 1500
- HDFC Nifty 50 Index: Rs 1500
- Axis Small Cap: Rs 1500
- Parag Parikh Flexi Cap: Rs 1500
- Nippon India Multicap: Rs 2000
The investor started investing in September 2021 and plans to continue for 12 years.
The expert recommended that the investor stop investing in Axis Small Cap and Mirae Asset Large & Mid Cap.
- Parag Parikh Flexi Cap (30% allocation)
- HDFC Nifty 50 Index
- Mirae Asset Mid Cap
- Nippon India Multicap
Also, continue SIPs with a 10 per cent annual step-up.
- Bandhan Small Cap
- Quant Small Cap
- HDFC Multicap
- ICICI Pru Technology Fund
- SBI small cap
- SBI Contra
- SBI PSU
- Parag Parikh Flexi Cap Fund (for lump sum equity exposure)
- Balanced Advantage Funds
- Short Duration Debt Funds
- Senior Citizen Savings Scheme (SCSS)
Given that the investor is about to retire, the current portfolio appears overly aggressive. At this stage of life, the primary focus should shift from high growth to capital protection and stability. A large allocation to small-cap and thematic funds can expose the portfolio to significant volatility, which may not be suitable when retirement is approaching.
To manage risk more effectively, the investor should consider exiting most small cap funds and avoiding highly concentrated thematic funds such as technology or PSU funds. Instead, the portfolio should gradually shift toward more balanced and relatively stable investment options that can provide moderate growth while protecting the capital.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
