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

September 09, 2021 08:54 IST

'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

OMKESHWAR SINGH