MF portfolio doctor: Why Kapoor shouldn't let money idle in bank account and low-yield FDs

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.

Case I: Tanya Kapoor is saving and investing for her retirement. Here’s what the doctor has advised her:
Goal

Portfolio check-up

• Investing in equity funds, fixed income for past 3-4 years.
• Retirement target is low, as it must sustain for 30-35 years.
• Too much of portfolio lying idle in savings bank and in low-yield fixed deposits.
• Equity allocation is barely 18%. Must hike this to at least 40-50%.
• Increase equity SIPs by Rs 5,000 and hike by 10% every year.

Investment Portfolio

Note from the doctor

• Identify goals other than retirement and start saving for them.
• Don’t invest too much in tax inefficient fixed deposits.
• Review investments and rebalance at least once in a year.
• Reduce risk when goal is near so that you don’t miss the target.

Case II: Krish Kumar is saving to buy a house and for his kid’s education. Here’s the doctor’s advice to him:

Goals

Portfolio check-up

• Investing in mix of equity funds, stocks and fixed income for goals.
• Investments for house will grow to `42 lakh in five years. Take loan for the balance.
• Child’s education goal is on track. Continue SIPs in existing funds.
• Review mutual fund portfolio at least once a year. Change if any fund’s performance slips.
• Reduce risk when goal is near so that you TOTAL `17,71,427 `55,000 don’t miss the target.

Investment Portfolio

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)

Write to us for help
If you want your portfolio examined, write to etwealth@timesgroup.com with “Portfolio Doctor” as the subject. Mention the following information:
Names of the funds 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.