Will my mutual fund portfolio help me build Rs 20 crore?
Axis Long Term Shares (ELSS) – Rs 2,000
SBI Small Cap – Rs 4,500
Large Mirae cap – Rs 4,000
Mirae Emerging Bluechip – Rs 2,500
Midcap PGIM – Rs 3,000
Quant Active Fund – Rs 4,000
FOF Global Axis – Rs 3,000
Motilal NASDAQ – Rs 2,000 (as of last month)
VPF – Rs 2,600 h
EPF – Rs 2,600 h
FD – Rs 8,00,000 (can add 50k annually)
LIC Jeevan Labh – Rs 1,00,000 PA (3 bounties out of 3,00,000)
Now planning to invest in Tata Digital India Fund – Rs 2,000
Every year, I can increase the investments by 15%. Both PF based on salary increase, can expect (8-10%). Please suggest if I am in the right direction to reach my retirement corpus of Rs 20 crore. And since my time horizon is 25 years, can I expect 15-16% mutual funds.
You haven’t shared crucial details like your goals and risk profile. Focusing only on a major long-term goal like retirement won’t work. You will have other goals in life. And you will be forced to withdraw money from your retirement corpus and this will have a negative impact on your plans. Also, don’t guess how much you need for retirement or any other long-term goals. Work with real numbers. Find out the current cost to achieve the goal. Calculate how much the goal will cost in the future. You can use the inflation rate to calculate future value. Then you should know how much you need to invest each month. This will help you have realistic investment goals and plans.
Moving on to your mutual fund portfolio, you have too many schemes. You already have eight schemas and you plan to add another. Investing a small amount in too many plans will not help you maximize your returns. This will make it difficult to track your portfolio. This also often leads to portfolio overlap.
Try to have a targeted portfolio. Invest in two or three plans, including an ELSS, that match your risk profile. If you are unsure of your risk profile, take an online quiz. Try to precisely define your risk profile.
Assuming an annual return of 12%, you need to invest Rs 1.05 lakh every month to build a corpus of Rs 20 crore in 25 years. You can start investing what you have and continue to increase your investments each year. This will help you build a decent corpus.
It’s always best to assume that your equity investments will provide you with 12% returns. Going forward, yields may decline.