Will increasing my mutual fund SIPs by 15% each year help me achieve my goals?

I have been investing in mutual funds through Systematic Investment Plans (SIPs) for 3 years now. My age is 37 years old. Currently, I have the following financial goals planned. One, I would like to have Rs. 65 lakh in 20 years from now for daughter’s upbringing and another Rs. 65 lakh in 23 years for her marriage. For my retirement, I would like to accumulate Rs. 2.5 crores in 25 years. Apart from this, I have two EMI loans of Rs. 6,000 in total for 2 years and I want to close them before July 2022.

I currently invest in the following funds through monthly SIPs – 7000 each in ICICI Prudential Bluechip Fund, Axis Bluechip Fund, Axis Focused 25 Fund and Aditya Birla Sun Life Tax Relief 96 Fund (ELSS), Rs. 6000 in Mirae Asset Emerging Bluechip Fund and Rs. 4000 in SBI Small Cap Fund. My current accumulated corpus is Rs. 12.5 lakh approximately via these funds. I also have 3 crore term life insurance for my family.

I have some questions. Is my portfolio sufficient for my goals? If there are changes required, can you please suggest what needs to be done? What steps do I need to take to close my liabilities listed above within one year? Should I invest more in the existing small cap fund or the large cap fund? I have increased my SIPs by 15% each year and will continue to do so. Is it enough to achieve my goals?

–Name masked on request

Given your current investment amount of 38,000 a month, you should be able to meet your financial goals with cash to spare. Your college and marriage goals related to your daughter require a total of 12,000 per month ( 7000 for education and 5000 for the wedding – all calculations assuming a 12% annualized portfolio return over the long term). For your retirement, a monthly investment of 14,000 is required, which is also well within your investment scope. Of course, to account for inflation, you must maintain your current level of investments. It is also a good idea to increase your investments by 15% per year. Since inflation is unlikely to be so high during this period, your annual increases will provide more than enough leeway to meet your financial goals, even after adjusting for inflation. .

As for the funds in your portfolio, you have an all-stock portfolio with two large-cap funds, one flexible-cap fund, one tax-saving fund, and two mid- and small-cap funds. It’s a good mix of categories to have in a portfolio. However, when it comes to large-cap funds, you would do well to move at least one of the two funds to an index fund such as one that tracks the Nifty 100 index.

The part about your responsibilities in your email forces me to make some assumptions. I’m going to assume that you plan to close it by July 2023 and would need an amount close to 72,000 ( 6000 x 12 months). If it’s such an amount, or anything in your existing corpus, you can go ahead and close it without affecting your wallet in any way.

And, for your last question, yes, it would be a good idea to review and adjust your portfolio every year. You may want to engage the services of a paid advisor who can do this for you and ensure that your portfolio progress matches your financial goals.

Srikanth Meenakshi is co-founder, PrimeInvestor. Send your questions to [email protected] and get answers from industry experts.

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