I am a 31-year old IT professional with a monthly take-home salary of ₹1.9 lakh, I am currently focused on building a corpus of ₹2 crore within the next 7 years. My spouse and I plan to delay having children for another 2 years. My current investments are: ₹13 lakh in mutual funds (MFs), ₹8 lakh in stocks, ₹5 lakh in fixed deposits and about ₹2 lakh of additional savings.
My systematic investment plans (SIPs) are ₹22,000 in HDFC Index Fund, ₹15,000 in Axis Midcap, ₹13,000 in Nippon Small Cap, ₹15,000 in Parag Parikh Flexi Cap, ₹7,000 in Quant Tax Plan, ₹2,000 in Canara Robeco Equity Tax Saver, ₹10,000 in ICICI Balanced Advantage Fund, and ₹5,000 in Axis Bluechip Fund. My investment in the ICICI Balanced Advantage Fund is for a very long-term basis and I see it as my retirement fund in addition to my Provident Fund (PF) and Public Provident Fund (PPF). Should I consolidate my SIPs further.
—Name withheld on request
Out of your current investments, you can continue to hold ₹5 lakh in fixed deposits as contingency fund to ensure that no emergency derails your investments. The funds that you are investing in are good and have delivered good returns for their investors. You may consider replacing Axis Bluechip Fund as it has been underperforming recently. You can invest the same in SBI Large & Mid Cap or if you want to invest in a large-cap fund then ICICI Prudential Bluechip Fund could be a good alternative.
On the balanced fund, ICICI Prudential Balanced Advantage is a good fund. You can invest in equity funds for your retirement as your appetite to take risks and give more time for the money to grow. Your investment in PF and EPF is already playing the role of debt investment for your retirement corpus.
To accumulate ₹2 crore in 7 years, you need to invest ₹1.33 lakh per month or ₹1.2 lakh per month, if we assume returns of 10% p.a. and 12% p.a., respectively. It is also assumed that your existing ₹21 lakh ( ₹13 lakh in MFs and ₹8 lakh in equity) are invested for the same goal. You will have to increase your existing investment of ₹89,000 per month to build a corpus of ₹2 crore. If you increase your SIP amount by 12% every year, then you will be able to achieve your goals as well. This can be a good strategy as you can plan your future investments at the same time keep increasing SIPs as you grow in your career as well.
Harshad Chetanwala is co-founder at MyWealthGrowth.com
Updated: 25 Jul 2023, 10:46 PM IST
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