Dear Sree,
Many thanks for answering my previous queries. Now I have collated all my queries and need your review.
My Goal:
1. Need to have one crore for my retirement in 20 years
2. Need 40 lakh for Girl child education and marriage in span of 15-20 years
Risk ability: Moderate
Investment horizon: 20 years
Debt-Equity ratio: 30-70% (investing last 6 months)
Emergency fund: Keeping 3-4 months of monthly income
Medical coverage: Have term plan of 50L, will need to take for my parents.
Current Debt portfolio: PF – 1500 & RD – 2000 per month
Current Equity portfolio: (all Direct Growth plan monthly SIP for 3 years)
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SBI bluechip – Rs 2000
ICICI value discovery- Rs 1000 –> Need to remove this multi cap as I am planning to add one ELSS(multi cap)
DSP BR Micro Cap – Rs 1000
Franklin smaller comp- Rs 1000
I was having two small caps as their portfolio overlap is 15%.
———————————————————————————————————————
Now I am planning to refine my portfolio after reading number of mutual fund forums/blogs/articles considering my below requirements/understandings.
a) I need to diversify my portfolio and remove the small cap ratio to some extent considering future corrections.
b) I need to accommodate ELSS funds(multi caps) to my portfolio to get tax exemption as well as Growth creation (same 20 years).
c) Since bank FDs not in favor of good interest rates, I am planning to move to Debt funds to replace my FDs.
d) Further I want add one mid cap to diversify my equity portfolio to have each category of Large cap, Mid cap, small cap and multi cap(ELSS).
Now my queries are,
1. Are my understandings are correct?
2. Is that okay if I invest Debt funds through monthly SIP? or Lump sum is recommended for Debt funds?
3. Is the below portfolio looks fine?
SBI Magnum Short term gilt fund(Debt) – Rs 4000
SBI Blue chip (Large Cap) – Rs 3000
Franklin smaller companies(small) – Rs 1000
Mirae Asset Emerging blue chip (Mid) – Rs 3000
DSPBR tax Plan(ELSS/Multicap) – Rs 4000 –> Large cap oriented ELSS or Birla tax relief96 --> which one to choose as per my portfolio?
If my Pf is not good, suggest pls..
Many thanks in advance.
7 Answers
Dear Hari,
1 - Do you have Disability cover in the form of Rider to your Term plan (or) as a stand-alone Accident cover plan?
Kindly read :
https://www.relakhs.com/best-personal-accident-insurance-policies-in-india-details-comparison/
2 - Do you have Health cover for self/family?
3 - Is RD for building Emergency fund corpus?
4 - " I need to diversify my portfolio and remove the small cap ratio to some extent considering future corrections. " - What do you mean by 'considering future corrections'?
5 - ELSS fund can be added. DSP or Birla ELSS funds, both are decent ones.
Read :
https://www.relakhs.com/best-elss-funds-2017-2018/
6 - Debt funds can be a better alternative to FDs. You may consider Dynamic bond fund (or) even MIPs. There is no right or wrong answer to SIP Vs lump sum.
Read :
https://www.relakhs.com/best-monthly-income-plans-india-mutual-funds/
https://www.relakhs.com/sip-systematic-investment-plan/
Dear Sree,
Sorry for the delayed response. I was not in the city. My responses for your queries below.
1 – Do you have Disability cover in the form of Rider to your Term plan (or) as a stand-alone Accident cover plan?
<Hari>Its accidental cover plam
2 – Do you have Health cover for self/family?
<Hari> No, I have for me, my wife and Kids. Dad is working in BSNL and so he is having from his department. As soon as he retires, I will add him as well. 3 – Is RD for building Emergency fund corpus?
<Hari> No, I have emergency fund in Savings account. Rd is a debt component 4. need to diversify my portfolio and remove the small cap ratio to some extent considering future corrections. ” – What do you mean by ‘considering future corrections’?
<Hari> I understand that experts are expecting a correcrtion in small and mid caps considering market is moving i PE22. So I just thought of reducing risk by reducing small cap ratios so that portfolio is less volatile. Please advise on my understanding 5 – ELSS fund can be added. DSP or Birla ELSS funds, both are decent ones.
<Hari> Thanks , which one to add? DSP is a Large cap ELSS and Birla is Mid cap one? – Debt funds can be a better alternative to FDs. You may consider Dynamic bond fund (or) even MIPs. There is no right or wrong answer to SIP Vs lump sum.
<Hari> this is for my debt portfolio asset allocation.If i add MIP, again 20-25 % of the allocation is in equity. Is that okay? If ok, I am going to choose Birla MIP-ii which is now recntly adding Real estate and Infra shares in it. Is that a wise option?
<Hari> No, I have for me, my wife and Kids. Dad is working in BSNL and so he is having from his department. As soon as he retires, I will add him as well. 3 – Is RD for building Emergency fund corpus?
<Hari> No, I have emergency fund in Savings account. Rd is a debt component 4. need to diversify my portfolio and remove the small cap ratio to some extent considering future corrections. ” – What do you mean by ‘considering future corrections’?
<Hari> I understand that experts are expecting a correcrtion in small and mid caps considering market is moving i PE22. So I just thought of reducing risk by reducing small cap ratios so that portfolio is less volatile. Please advise on my understanding 5 – ELSS fund can be added. DSP or Birla ELSS funds, both are decent ones.
<Hari> Thanks , which one to add? DSP is a Large cap ELSS and Birla is Mid cap one? – Debt funds can be a better alternative to FDs. You may consider Dynamic bond fund (or) even MIPs. There is no right or wrong answer to SIP Vs lump sum.
<Hari> this is for my debt portfolio asset allocation.If i add MIP, again 20-25 % of the allocation is in equity. Is that okay? If ok, I am going to choose Birla MIP-ii which is now recntly adding Real estate and Infra shares in it. Is that a wise option?
Dear Hari,
1 - You may take separate mediclaim plan for your Father and do not add to your insurance plan.
2 - Regarding RD : There can be better options than FDs/RDs as debt component.
Kindly read :
https://www.relakhs.com/avoid-fixed-deposits-rds-for-long-term/
3 - If at all there is a correction, may its time to buy more for long term..what do you say? (This is my view).
Point is, no one can TIME the markets. (I have balanced fund in my portfolio and I do allocate good amount to this fund through out the year, this gives a balanced weightage).
4 - Kindly go through my article on ELSS funds. The portfolio of these funds can vary year on year. So, most of the ELSS funds can be treated as typical diversified equity funds.
5 - Yes, MIP funds (especially the aggressive ones) are now bit riskier ...if you want pure debt funds, as suggested you may consider Dynamic bond funds or Floating rate Funds.
Thanks for the prompt response Dear Sree!
I am a long term investor and refining my portfolio now , hence the above query has came out during analysis.
My existing equity portfolio funds are below.
Large cap – SBI bluechip (20%)
Mid cap – Mirae Asset emerging bluechip (30%)
Equity Multi cap - ICICI value discovery -> Exiting from this as I am adding ELSS for tax benifits
Multi cap ELSS – Kindly advise based on below queries. (allocation is 30%)
Small cap – Kindly to advise based on below queries. (allocation is 10%)
I already have Rs 28000 + 2.5 years of future SIPs in DSP Micro cap and I have 14000 + 2.5 years of future SIPs in Franklin small.since the portfolio overlap was 16% of these funds, I kept both.
Now as part of the portfolio refining, I am planning to exit out from one small cap fund.
In that case which option you suggest?
a) Keepig both
b) Franklin Small companies
c) DSPBR micro cap
Also as mentioned in previous query, I need to have ELSS requirement for tax purpose for coming years. My ELSS selection was DSPBR tax plan.
a)If you suggest to keep both funds, I will start new investments in DSPBR tax plan.
b)If you suggest to keep DSPBR micro cap, I will do SWP Franklin smaller comp fund amount and will invest in DSPBR tax (or) Can I do STP to Franklin tax?
c)If you suggest to keep Franklin small companies, I will do STP from DSPBR micro cap to DSPBR tax.
Also comment on exiting Value discovery fund. This I am doing purely to stick with one multicap fund.
My sincere apologies for raising more sub queries and thanks in advance for your responses.
Dear Hari,
1 - Both these Small-cap funds have been doing well over the last few years. Their portfolios overlap is also on the lower side. As you are investing for long-term, you may keep both of them in your portfolio.
2 - I too believe that most of the ELSS funds can be treated as regular mutli-cap funds. DSP tax saver is a decent fund.
Kindly read :
https://www.relakhs.com/best-elss-funds-2017-2018/
3 - STP can be set up between two MF schemes which belong to the same Fund house only.
Thanks Sree. Please provide your feedback on exiting value discovery fund. I want to add one ElSS as stated already.
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