Portfolio review

POSTED BY kalyan ON November 15, 2011 7:26 pm COMMENTS (9)

Hi,
Right now this is my portfolio, I am doing SIP in
HDFC Top 200 – 2000 per month
HDFC Prudence – 3000 per month
PPF for tax saving for about 50k per year.
1. I dont want to add debt MF to my MF portfolio…!! Is this correct..?
2. Now i want to start a SIP(3000). Which one of the following will fine tune my portfolio for better returns and reducing risk..?
option 1: Add a diversified equity fund to the portfolio.
option 2: Add a the 3000 to the existing fund in the portfolio.
option 3: Add a small cap / mid cap fund to the portfolio.
option 4: As i am still learning, you want to give your suggestion as option 4.
Thanks a lot.
Special thanks to manish, ashal and many more.
Kalyan

p.s:- I am looking at a long term perspective of more than 5 years.

9 replies on this article “Portfolio review”

  1. Dear Kalyan, no need to add more funds just for sake of having different funds for different goals. You may invest in your existing funds + DSP Eq. for your own retirement + kids’ education needs.

    Thanks

    Ashal

  2. kalyan says:

    Thank you TheZionView, justgrowmymoney, Lokesh Jain and ashal.
    Thanks to manish for giving such a platform.

    Ashal, thanks for the help. I think making changes suggested by you will help me.

    1.Retirement & kid’s education need after the emergency fund:- i got clarity.

    2. Purchase a house after 2-5 years with 5k SIP for downpayment:- which type of funds and how should i plan this part..? Also if you can give some names of the funds that will be great.

    3.Moving the emergency fund to my wife account is a great idea thanks.

  3. TheZionView says:

    Yes ,The option 1 and 3 adds additional risk(which does not always means higher returns) as they are more volatile. So choosing them will depend on how aggressive you want to be

  4. Dear Kalyan, as your mly income is 50K Rs., the emergency fund is roughly 4 month expenses. I think it’s somewhat short of your actual need. My take, start investing 5-10K mly in a short term debt fund. As of now your wife is not working but has the potential & the son is just 1Y old, I assume earlier your wife was working before birth of the son, in this case you may divert a part of the emergency fund under her name in a sweeping Fd account.

    No own house indicate – living on rent & may purchase a house after 2-5 years as & when you have enough money to pay as down payment of your home. Start saving for this goal with 5K mly SIP.

    Most importantly, out of your remaining 10K amount to be invested, invest it for your retirement purpose. Once the emergency funding part is over, divert that amount for your kid’s education needs.

    For your retirement & kid’s education need, please invest in Existing fund with addition of DSP Eq. fund.

    Thanks

    Ashal

  5. kalyan says:

    Thanks every body for the useful responses.

    @Lokesh Jain

    I do not invest in equities directly because i am still learning basics. But i do want to start in that once i understand the basics of it.

    I do have a question on your suggestion of splitting the 3k, does this reduce the risk of my profile and fine tune it to maximize my returns…? I am very much interested to learn this.

    @TheZionView

    From your response, your wanted to say that option1 and option3 does not meet my requirement of fine tuning my portfolio for better returns and reducing risk..and option2 will keep it as it now.
    Did i understand your view correctly…?

    @justgrowmymoney

    option4: thanks for this option, i will start understanding more about thematic funds and will make decision on this.
    Yup, STP looks good option for my lumpsum. Thanks.
    Both of your assumptions are true.

    @ashsal

    Thanks for the questions.

    The other 50k is covered by term insurance and hdfc tax saver(ELSS).
    No loans, no dependents, no other liabilities.
    No own house. I have health insurance.

    My family consists of Me (31) 🙂 my wife(29) and my son(1) only.
    I earn 50k per month and my wife will start working in the end of 2012 and has the potential of adding 25k per month to the family income.No other income.

    My monthly expenses are 20 to 25k and i have an emergency fund of 1 lac in savings bank
    with auto sweep.

    Once again thank you all and hoping to here more.

  6. Dear Kalyan, before commenting on your portfolio, I want to know for the other 50K that you are investing for tax saving purpose.

    Please also tell us about your existing loan liabilities, insurance covers, future financial liabilities, family size & no. of dependents.

    Thanks

    Ashal

  7. Kalyan – These investments are good from a long term perspective.

    Few points:

    Option4: Drop option 3 and go for a thematic fund like Reliance Banking/Reliance Pharma. The former is beaten down but any market movement will usually be lead by financials, hence a good bet. That is if you can take more risk.

    Debt fund: Instead of doing a SIP from your savings account move the monthly SIP amounts to a Debt fund at the beginning of each month and do a STP. The returns will be marginally higher. Also park any money needed for the short term here than in the savings account.Choose a monthly dividend option as it is tax efficient.

    Assumptions:
    1) I assume you have taken enough insurance for yourself – Term insurance, Health insurance and Critical care insurance
    2) I assume you dont have any high cost loans – car loan, personal loan, credit card debt etc. If so I recommend paying them down before you start investing.

  8. TheZionView says:

    option 1 if you fine with some additional risk

    option 2 I would suggest this option

    option 3 If you are aggressive

  9. Lokesh Jain says:

    Hi Kalyan,

    Answers as you have asked.

    1. You dont need debt fund in your portfolio as your last note itself answers your question. You have long term horizon of 5 years. So investing in equity fund makes sense.

    2. If u want to start SIP of 3000, I would suggest you split it up in 2 parts of 1500 each, one in Reliance Equity Opportunities (Diversified Fund) / Birla and 1 in IDFC Sterling Fund (Small and Midcap Fund) considering your long term horizon.

    I do not know any further details as you directly invest in equity or not. So i am suggesting you these options. Any other investment is not warranted as you are already doing PPF and also you have a pretty long term horizon. In case you have a lumpsum amount you can go in for Corporate FDs providing yield of approx 11-12% p.a.

    Hope it answers you question. Any queries do let me know.

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