Mutual fund SIPs not enough for Rs 3 crore goal in 12 years? Here’s how to bridge the gap

Planning for long-term financial goals through mutual funds requires not just consistency, but the right asset allocation and regular portfolio reviews. While many investors start early with SIPs, they often overlook the need to recalibrate their strategy as markets evolve and goals become clearer.

A similar situation was faced by Pankaj Panwar, a 32-year-old investor and viewer of The Money Show, who aims to build a Rs 3 crore corpus over the next 12 years. He recently sought advice on his portfolio, which includes a mix of large-cap, flexi-cap, small-cap and index funds, along with investments in PPF and traditional insurance plans.

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He has got HDFC BSE Fund, Kotak Equity Opportunity, Parag Parikh Flexicap, Axis Smallcap, and Axis Bluechip. He is also investing in PPF and LIC Jeevan Labh. However, concerns around the performance of a fund and the ability to achieve the target corpus have prompted a closer look at his strategy.

Can the current SIP achieve Rs 3 crore?

Based on current investments, the market expert, Shweta Rajani, Anand Rathi Wealth, said there is likely to be a gap in achieving the Rs 3 crore target. To bridge this, the investor has two options. One is to increase the SIP to around Rs 22,000 per month and adopt an annual step-up of 20%. Alternatively, if increasing the SIP immediately is not feasible, a higher annual step-up of around 30% would be required to reach the desired corpus.

Portfolio needs rebalancing

A closer look at the portfolio reveals a higher allocation to largecap funds, which may limit return potential over a 12-year horizon. A more balanced approach would be to keep around 55–60% in large caps and allocate the rest to mid and smallcap funds for better growth opportunities.

The expert said, “Some of the schemes that you have are very good; you can continue with those. A little bit of tweaking that is needed is one in terms of your market cap allocation, you are a little overweight largecaps, so you can bring that down and have maybe a 55-60% large in the portfolio and the rest between mid and small.”

Another key concern is concentration in a single fund house. Nearly half of the portfolio is invested in one AMC, with a significant portion in another. Diversifying across at least five to six fund houses can help reduce concentration risk and improve overall portfolio stability.

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Based on the allocation made per AMC, approximately 44% of the money is invested in Axis AMC, followed by PPFAS, which is again 30% plus.

What should change?

The investor has expressed dissatisfaction with the performance of a largecap fund. In such cases, stopping fresh SIPs in underperforming schemes and gradually reallocating to better alternatives can be considered. Similarly, exposure to certain smallcap and index funds may be reviewed, especially when the investment horizon is long and active funds may offer higher return potential.

To improve diversification and balance across market caps, adding a mix of large, multi, smallcap, and dividend yield funds can help. A more evenly distributed allocation across these categories can enhance both growth potential and risk management.

Fund not performing well and new additions

As the investor has concern over the performance of Axis Bluechip Fund or Axis Large Cap Fund, the expert said that I would say stop your SIPs here. If the amount is out of the exit load, remove that amount and invest in a new scheme.

Shweta Rajani further said that even with the Axis Smallcap Fund, you can stop your SIP there, and you have one index fund, HDFC Sensex Fund in the portfolio and as active funds tend to have a better return potential than passive and the investor is holding on for a longer time period, he can be in an active fund.

The investor is further advised to add Quant Largecap, Canara Robeco Multicap, Invesco Smallcap, and ICICI Prudential Dividend Yield as these funds will help to balance out the large, mid, and small exposure.

While fund selection and allocation are important, disciplined investing remains the cornerstone of long-term wealth creation. Increasing SIP contributions over time and avoiding frequent portfolio churn can significantly improve outcomes.

Investors should also review their portfolios periodically to ensure alignment with their goals and market conditions.

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Achieving a Rs 3 crore corpus in 12 years is possible, but it requires a combination of higher contributions, disciplined step-ups, and better portfolio diversification. A well-balanced approach across market caps and fund houses can help investors stay on track and navigate market cycles more effectively.

(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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