I am 37 years old and I will need 50 lakhs for daughter’s education after 10 years. my monthly salary is 70,000 I am investing in mutual funds through Systematic Investment Plan (SIP). These include SBI Bluechip Fund ( 3,000 per month, further increasing it 1,000 every year), 3,000 each per month in Parag Parikh Flexi Cap Fund, Kotak Equity Opportunities Fund, SBI Small Cap Fund and Axis Mid Cap Fund. I’m investing too 3,000 per month in PPF. I have fixed deposit value 3 lakhs. I can increase my SIP amount by 10% every year across all the schemes. Also I invest 15,000 every month in shares also. Please suggest if I should make any changes in my portfolio.
—Name withheld on request
Your outlook of investing around 50% of your monthly income for long term goals is great. One needs a lot of discipline to follow this approach.
Currently, you are investing around With 30,000 every month in Equity through Direct Stock and Equity MFs 3,000 in PPF without any annual increase. These investments will enable you to achieve your daughter’s education goal. If we assume 10% p.a. return on equity and 7.5% p.a. on PPF, the corpus can be approx. 65 lakhs after 10 years. I suggest that along with your daughter’s education, you also consider working on goals like retirement and wealth creation as you intend to increase the investment by 10% per annum. Keep the FD amount as a contingency fund, if required.
All the mutual funds you are investing in are good and you can continue with them in our opinion. You should review the progress of your direct equity investments and see if you have enough time to manage them since investing 15,000 per month, a fair proportion of your investment. If you get less time to monitor the stock market regularly then you can always invest more through MFs.
Harshad Chetanwala is the co-founder of MyWealthGrowth.com.
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