MF portfolio doctor: Why Madan shouldn't invest in equity mutual funds for short-term goals

Not many investors know whether they have invested in the right mutual 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. Sundeep Madan invests in equity funds for multiple goals. Here’s what the doctor has advised him:

Goals

Portfolio check-up

• Investing in equity funds for the past 3-4 years.
• Most goals are very near. But money locked up in equity funds.
• Take loans for goals as redeeming funds now will be a mistake.
• Started SIPs in four new funds last month. All in deep losses.

Investment portfolio

Note from the doctor

• Invest in equities only if goal is more than 5-6 years away.
• Use debt funds and bank deposits to save for short-term goals.
• Review investments and rebalance at least once in a year.

2. Scale down goals or hike monthly investments
Varun Gupta is saving for his child’s education and retirement. Here’s what the doctor has advised

Goals

Portfolio check-up

• Investing in equity funds for past two years.
• Goals are very ambitious and require big increase in monthly investments.
• SIPs will also have to be increased by 10% every year.
• Also invests in equities to pay off home loan. Should increase EMI amount instead.
• Review investments and rebalance at least once in a year.
• Reduce risk when goal is near so that you 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)

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.
• How far away is each goal.