Mutual fund and retirement portfolio review of 26 year old working female

Jun 9, 2019

I am 26 years old female, married with no kids working in IT. I have been investing in MF since a year now and would like to get it reviewed.

My current investment in MF is 2,12,000 and has a monthly sip of 11,000. All plans are direct and growth. Sip structure is as below.

  • Liquid funds (Essel and Reliance) : 2500
  • Large cap (Axis blue chip) : 2000
  • Small cap(HDFC and L&T emerging business) : 1500
  • Multicap ( Mirae Asset Emerging) : 3000
  • Dynamic bond( Franklin India dynamic Accrual) : 2000.

Objective behind investments

  • Liquid funds are to hold emergency fund with a target of 2,50,000
  • Dynamic bond is towards a goal of saving a million in 5 years
  • Large cap, small cap and multi cap funds are towards to retirement goal of 1.75cr

Other investments

  • Apart from monthly sip I invest 12500 in PPF
  • EPF contribution is around 8k monthly including VPF.
  • I also contribute 5k towards a chit fund towards a sum of 1 lakh rupees. From the amount I got I invested 50k towards emergency fund. The rest was taken for expenses.
  • I also try to invest 10k towards RD if I have money to spare.

I also have gold assets worth around 15 lakhs. My monthly income is around 57k after income tax and EPF and VPF deduction.

3 Answers
Jun 12, 2019

It is nice to see youngsters taking interest in managing their money and learning from the very beginning.

It is a very good start, maintain the discipline.

Few tips for fine tuning.

  1. Park whatever additional surplus you can in the Liquid Funds and reach your Emergency Corpus milestone asap.
  2. To build a million in 5 years, you will need to increase the contribution to Rs. 14,000
  3. Retirement Goal Target of Rs 1.75 Cr needs to be checked, use retirement calculators available online and consider inflation 7 % or 8 %
  4. Keep reviewing your Financial Goals annually and take necessary action.

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Jun 12, 2019

I went through your question and investments made by you. And to me it looked something like this :

Everything good, in its own right and yet you don’t know where it all starts and finishes. So I am going to give you an alternative, which is this :

So we are going to peel things, one at a time.

This first objective is to have an emergency fund. I wish to congratulate you on it, this is a good step in the right direction. However, I am not sure as to when an emergency can strike, and I believe so are you, hence the need for the fund, in the first place. So don’t you think it would be better to set out on this goal and get it taken care of and put things to rest.

Think about it, on one hand you have a market that already at expensive valuations (Nifty P/E in 2008, before the crash was at 28.25, today it is at 29.49) and you are investing into Equity based funds. Given you also have mid and small caps, but bulk of your investments I suspect is in large caps, which Nifty is representative of.

So contrarian as I may sound, it pays to exert caution. You are young and would get ample opportunities ahead to participate in equity markets.

The second point you make is of wanting to save a million. I am not sure whether you mean accumulate a million, or save a million, and whether you mean a million rupees or a million dollars, and whether you are looking at reaching this figure of a million by investing in Dynamic Bond Fund alone, or through a mix of assets and dynamic bond fund happens to be one of them.

Assuming you are taking of accumulating in Indian Rupee terms, via Dynamic Bond Fund alone, you would need a miracle to reach the magic number in 5 years, if things continue at the current run rate of 2000 per month.

And the last objective you mention is of retirement. It gives me so much happiness to read this. Not the amount you are targeting but the sheer fact that you are thinking in terms of retirement at the age of 26, congratulations on it, take a bow.

The retirement corpus is quite small frankly, I am afraid it would not provide much sustenance into your blissful sunset years. You need to rework that.

All in all in my opinion you need a good financial planning consult, who can better guide you with your investment plans.

But heartiest congratulations once again on making an early start, wishing you all the very best for your investments.

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Jun 12, 2019

This is not an answer to your question, but a suggestion.

It is difficult to do a detailed review in a single Q&A. The answers posted over here will provide you with some guidance. In our opinion a detailed review by a planner will provide a better personalised solution after further interaction. Like all good things in life it will cost you some money (Rs 15,000 on an average. Varies from advisor to advisor).

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