Investing Rs 95,000 a month through mutual fund SIPs - Can it build a Rs 5 crore corpus in 15 years?

Building a large retirement or long-term corpus through SIPs is a common goal for many investors today, especially those with a long investment horizon. However, questions often arise about whether the current investment amount is sufficient, if the corpus is achievable, and whether holding too many mutual funds could dilute returns.

One such query is from Kedar Datte, an investor and viewer of The Money Show on ET Now. He is doing SIP of almost Rs 75,000 and his wife's SIP amount is Rs 20,000, making the combined monthly investment around Rs 95,000.

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His target corpus is Rs 5 crore, and his current mutual fund portfolio is valued at approximately Rs 30 lakh. He also mentioned that the total number of mutual funds across both portfolios is 16, though he did not share the names of the schemes.

Market expert Pankaj Mathpal shared insights on how investors can assess their progress and fine-tune their strategy.

Mathpal pointed out that the absence of scheme details makes precise analysis difficult, as expected returns depend heavily on whether the investments are in equity, hybrid, or debt-oriented funds. However, for estimation purposes, he assumed that the investments are largely in equity mutual funds, which is reasonable given the long 15-year time frame and the nature of the target.

Based on this assumption, Mathpal explained that if the existing Rs 30 lakh corpus and the ongoing SIP of Rs 95,000 per month grow at an average annual return of around 12%, the combined portfolio could potentially accumulate close to Rs 6 crore over the next 15 years.

“So, assuming at 12% if Rs 30 lakh have been accumulated by now and SIP Rs 75,000 in the account of Kedar plus Rs 20,000 in his wife's account, total Rs 95,000, so Rs 30 lakh the current portfolio Rs 95,000 SIP at 12% CAGR in 15 years we can expect around Rs 6 crore,” the expert said.

This suggests that Kedar is already well on track to meet, and possibly exceed, his Rs 5 crore goal, provided he stays invested in suitable equity-oriented schemes and maintains discipline.

While the investment amount itself appears more than adequate, Mathpal flagged one potential concern: the number of funds in the portfolio. Holding 16 mutual funds across two portfolios may be on the higher side, depending on the type and overlap of schemes. That said, he clarified that a higher number of funds is not automatically a problem. In some cases, investors hold different styles of funds within the same category, such as focused midcap funds alongside more diversified midcap funds, which can perform differently across market cycles.

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The expert assumed that two different portfolios might imply two different types of schemes.

“Sometimes it happens that you have two midcap funds, for example, one has a focus portfolio like Motilal Oswal Midcap Fund, another one is like HDFC Midcap Fund which is a diversified portfolio and you must have seen that in different cycles these schemes perform differently,” he further said.

The real issue, Mathpal noted, is not the number of schemes but their nature. If the portfolio includes too many thematic or sector-specific funds, it could increase risk and volatility. On the other hand, if the schemes are well diversified across market caps, investment styles, and objectives, the portfolio may still be reasonably balanced despite having a higher count.

He concluded by emphasising the importance of sharing complete portfolio details for meaningful guidance. Knowing the exact schemes would help determine whether any consolidation is required or whether the current structure aligns with the long-term goal.

One should always consider their risk appetite, investment horizon and goals before making any investment decision.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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