Long Term savings plan using SIP – Views please

POSTED BY shyam menon ON December 8, 2012 11:17 am COMMENTS (14)

Hi All,

       I have recently setup an SIP portfolio and would love your opinions on the monthly distribution i have setup for my wife and myself (no kids yet). I plan to periodically review it once a year for the next 20 years. Have set aside FD, real estate and gold investments and have good health coverage and term plan.

– Quantum Long Term Equity – 8000

– IDFC Premier Equity – 5000
– HDFC Midcap –  5000

– ICICI Pru Focussed Bluechip – 8000

– HDFC Balanced – 8000

– Canara Robeco Tax Saver – 8000

Thank You so much,

SD

 

14 replies on this article “Long Term savings plan using SIP – Views please”

  1. shyam menon says:

    Thank you so much Ramesh. Your advice has been very helpful. I plan to check in every year and if funds start underperforming, to pick the best in class in that category (base on reviews at value research online etc..) and replace the underperforming ones.
    Hope that works.
    Take Care,
    SD

    1. Ramesh says:

      You are welcome.
      I digress from the general opinion of checking the fund quantitative performance using VRO or any star rating system. You can check the qualitative assessments of morningstar. If you have selected decent funds, then it is rare to have a genuine reason to change them. Keep investing and learning. πŸ™‚

  2. shyam menon says:

    Dear Ramesh,
    Thank you so much for this reply. I appreciate it. Based on your recommendations, here would be a monhly allocation i would attempt. Please so let me know your thoughts –

    – Franklin Bluechip Equity– 10000
    – HDFC Balanced – 10000
    – Quantum Long Term Equity – 12000
    – IDFC Premier Equity – 8000

    Thank you,
    SD

    1. Ramesh says:

      This looks good. But what you will do, say 6months, 2 years down the line, you should be clear about that Now.

      If you want, you can also change to Franklin Bluechip – 20k, Qltef=12k, IDFC=8k.
      Even, a combo of 20k in HDFC Equity and 20k in Qltef is nearly equivalent (both free for all multicap funds). With SIP investments, it will not matter too much over a long period of time, between any of these combinations.

  3. shyam menon says:

    Hi Ramesh,
    I am no investment whiz but i thought it will be good to have
    1 Large Cap Equity fund and 1 Balanced Fund to anchor the monthly SIP and chose ICICI Pru Focussed Bluechip and HDFC Balanced with Rs 9000 each
    Then i chose couple of multicap funds QLTF and HDFC Equity and 1 Mid/Small Cap fund IDFC Premier Equity with smaller amts to provide risk diversification, potential higher upside because of the midcaps and because of good buzz bout these funds, all seemed to be well rated by Value research online as well.

    Do you think it is too many funds or too risky a portfolio to provide the end goal of a 10-12% potential annual growth? All thoughts welcome…
    Thank You,
    SD

    1. Ramesh says:

      With your thought process, I will go like this:

      1. 1 large cap equity and 1 balanced fund as the main part of my portfolio (and SIP). My selection will be Franklin Blue Chip Equity and HDFC Balanced. ICICI Focussed fund is a very concentrated fund and it will in general have more volatility as compared to say the Franklin fund or DSP Top 100.
      I would even say, you can just choose a single fund out of the two. (50%)

      2. A mid-small cap fund like IDFC Premier Equity because it will have an exposure quite different from the above 2 funds. (20%)

      3. To balance across, a multicap fund. (30%).

      the trick will be to set them according to your initial allocation pattern. OR even like this- 4 equal sizes- 25% in each.

      So your normal SIPs go into them, but periodically, you put some extra money in the funds which are performing lesser. So suppose, after 6 months, your franklin fund is showing a value of 23%, you put some more money in it, to make it 25% of the total. This will maintain your core portfolio at 50% and so on.

  4. shyam menon says:

    Hi Raj,
    Thank you so much. Here is a slight tweak i just did to the monthly SIP distribution. Please do let me know your views. I have medium risk appetite.
    – HDFC Equity – 7000
    – ICICI Pru Focussed Bluechip – 9000
    – Quantum Long Term Equity – 8000
    – IDFC Premier Equity – 7000
    – HDFC Balanced – 9000
    Thank you so much,
    SD

    1. Ramesh says:

      Explain why you have got these funds, and in these quantities. This will help you in future, when you will be reviewing.

      Why 5-6 funds, and why not 2 or 10 funds.

  5. Raj says:

    Try Morningstar’s instant X-ray – http://lt.morningstar.com/dk7pkae7kl/xray/editholdings.aspx – it should give you a fair idea.

    I think introduction of two multi-caps has reduced small and mid-cap allocation. But I guess its still an aggressive portfolio and you may have to revisit your risk taking capabilities before you finalize.

  6. shyam menon says:

    Hi Raj,
    Fair comment, i too was beginning to think the same, how about it now –
    I have replaced HDFC Midcap with HDFC Equity. Is this a more balanced portfolio? Would you recommend an addition or deletion or rebalancing of the portfolio? I do put a lakh each in PPF for my wife and me as well.

    – HDFC Equity – 8000
    – ICICI Pru Focussed Bluechip – 8000
    – Quantum Long Term Equity – 8000
    – IDFC Premier Equity – 8000
    – HDFC Balanced – 8000

    Thank You so much,
    Shyam

  7. Raj says:

    You have around 51% allocation for Small and Mid-caps. Is this intended equity allocation? Also remember that Quantum LTE is kind of multi-cap fund so Small/Mid-cap exposure could go even high depending on fund management style. This looks like an aggressive portfolio to me.

  8. shyam menon says:

    Thank you so much. Maybe i should change the proportion to
    – Quantum Long Term Equity – 8000
    – IDFC Premier Equity – 8000
    – HDFC Midcap – 8000
    – ICICI Pru Focussed Bluechip – 8000
    – HDFC Balanced – 8000

    Does this look OK or should i look at redistributing amongst these funds?
    thank you,
    SD

  9. TheZionView says:

    I am not fab of having six funds.But if you can manage i dont have anything else to say.

    You are putting in 8K in tax saver which will be 96000 for a year. Dont you have term insurance/epf that is already covering 80C then why this 8K in tax saver? better reduce and spread accordingly

    otherwise funds are good

  10. your funds are good. You have enough of large mid and small cap exposure. SIPs in tax savers are painful since each sip has a lock-in of 3 years. You cant move all your money out of an underperforming fund in one shot.

    So you might want to reconsider that.

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