MF portfolio doctor: Mahajan should take inflation into account when setting future target

​​The Portfolio Doctor assesses the health of the fund portfolio, examines the schemes and their suitability with regard to the goals and, if required, recommends corrective measures. ​​The advice given is based on funds performance, goals, etc.

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You must avoid fixed deposits and go for debt funds for tax efficiency.
Not many investors know whether they have invested in the right funds and if their fund portfolio is on track.

The Portfolio Doctor assesses the health of the fund portfolio, examines the schemes and their suitability with regard to the goals and, if required, recommends corrective measures.

The advice given is based on the performance of the funds, the risk profile of the investor as well as his financial goals.


1. Chirag Dutta is saving for his children’s goals and his retirement. Here’s what the doctor advised:

Goals
27-1


Portfolio check-up

  • Investing in a mix of small-, mid- and largecap equity funds for the past 3-4 years.
  • Early start means even small 5% hike in SIPs can help achieve all goals.
  • Plans to retire early at 51, so Rs 10 crore won’t be enough. Corpus must last 30-35 years.
  • Portfolio has small and mid-cap bias so be ready for volatility.
  • Avoid fixed deposits and go for debt funds for tax efficiency.

Investor’s existing portfolio
27-2

Note from the doctor

  • Don’t buy insurance as investment. Ulips offer low returns due to high charges.
  • Review investments and rebalance at least once in a year.
  • Reduce risk when goal is near so that you don’t miss the target.

2. Take inflation into account when setting future target
Rohitash Mahajan is targeting a corpus of Rs 4 crore in 22 years. Here’s what the doctor has advised:

Goals
27-3

Portfolio check-up

  • Started investing in equity funds last year.
  • Holds a good mix of funds but mostly from same fund house.
  • Target of Rs 4 crore seems big but inflation will erode purchasing power.
  • Assuming 7% inflation, corpus will be worth only Rs 90 lakh after 22 years.
  • Will yield monthly income equal to Rs 30,000 for 25 years.
  • Review investments and rebalance at least once in a year.

Investor’s existing portfolio
27-4

Assumptions used in the calculations

Inflation
Education expenses: 10%
For all other goals: 7%

Returns
Equity funds: 12%
Debt options: 8%

(Portfolios analysed by Raj Khosla, Managing Director and Founder, MyMoneyMantra)

If you want your portfolio examined, write to etwealth@timesgroup.com with "Portfolio Doctor" as the subject. Mention the following information:
Names of the fund you hold.
Current value of the investment.
If you have SIPs running in any of them.
The financial goals for which you invested.
How much you need for each financial goal.
How far away is each goal.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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