Should you stop mutual fund SIPs at 60? Expert outlines balanced portfolio strategy

As retirement approaches, investing is no longer just about chasing high returns. The focus shifts to capital preservation, steady growth, and maintaining liquidity when needed. Many investors around the age of 60 grapple with questions such as whether to stop certain SIPs, rebalance their mutual fund portfolio, or deploy a lump sum in a safer, more balanced manner.

This is the case of Neeraj Yadav, a 60-year-old investor and viewer of The Money Show on ET Now. He currently runs monthly SIPs of Rs 5,000 each across five mutual funds, taking his total SIP outflow to Rs 25,000 per month. His investments include SBI Gold Direct Plan, Motilal Oswal Large & Midcap Fund, Nippon India Large Cap Fund, ICICI Prudential Large Cap Fund, and Parag Parikh Flexi Cap Fund.

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The current value of his portfolio is Rs 26 lakh. He wants clarity on which fund he should stop investing in, where he can redeem money from, and how to deploy a one-time investment of Rs 50 lakh.

Addressing the query, market expert Anil Rego, Founder and CEO of Right Horizons, shared his perspective on how investors at this stage of life should approach their mutual fund strategy.

Rego emphasised the importance of first defining the purpose of the portfolio. At 60, an investor must determine whether the corpus is meant to support retirement expenses, generate regular income, or continue building long-term wealth. This distinction is critical, as it directly influences asset allocation, liquidity needs, and overall risk appetite. The portfolio, therefore, must be structured in a far more balanced and disciplined manner.

If the funds are likely to be used for regular expenses, the priority should shift toward stability and accessibility rather than aggressive equity exposure.

Reviewing the existing SIP portfolio, Rego noted that while it appears reasonably diversified, it remains heavily tilted toward equity. To improve balance and manage volatility, he suggested stopping the SIP in the Nippon India Large Cap Fund and redirecting that amount to the HDFC Balanced Advantage Fund.

He explained that balanced advantage funds offer better liquidity and, during volatile phases, can sometimes outperform pure equity funds. “They don’t compromise significantly on returns because when markets fall, these funds tend to protect the downside better and help investors recover over time,” he said.

On deploying the Rs 50 lakh lump sum, Rego cautioned against taking an aggressive stance without clarity on risk tolerance and cash flow needs. “We don’t have enough information on whether he needs a regular income or wants to take higher risk. If he does want to stay somewhat aggressive, he could consider topping up some of his existing diversified funds,” he noted.

Given the limited details on income requirements, Rego recommended a diversified approach rather than concentrating the entire amount in pure equity. A portion could be allocated to an existing flexi-cap fund to retain growth potential, while a meaningful share could go into a balanced advantage fund, which uses dynamic asset allocation to manage market risk.

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For additional stability, Rego also recommended considering a conservative hybrid fund, which typically carries lower equity exposure and focuses more on capital preservation and regular income.

He suggested allocating around Rs 15 lakh to the Parag Parikh Flexi Cap Fund. Another Rs 15–20 lakh could be invested in the HDFC Balanced Advantage Fund, a dynamic asset allocation fund. The remaining portion could go into the DSP Regular Savings Fund, a conservative hybrid fund that generally maintains up to about 25% equity exposure. The final split between these options, he noted, should depend on how aggressive or conservative the investor wants the portfolio to be.

Rego emphasised that while the allocation percentages may vary, the broader principle is clear: as investors approach retirement, portfolios should gradually become more balanced, prioritising liquidity, managing volatility, and aligning investments with real-life financial needs rather than market cycles alone.

Disclaimer: Recommendations, suggestions, views, and opinions expressed by the expert are his own and do not represent the views of The Economic Times.

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