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MF portfolio doctor: Why Singhvi should avoid investing in fixed deposits

The Portfolio Doctor assesses the health of the fund portfolio, examines the schemes and their suitability with regard to the goals and recommends corrective measures.

ET CONTRIBUTORS|
Jun 10, 2019, 06.30 AM IST
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Singhvi should review investments and rebalance at least once a year.
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: Manoj Singhvi invests in equity funds and debt options. He wants to set up an emergency fund and save for his retirement. Here’s what the doctor has advised him.

Goals
Manoj's-Goals

Investor’s existing portfolio
Manoj-Portfolio

Portfolio check-up
  • Invests in a mix of equity funds and fixed income options.
  • Early start and regular investing has helped amass a large corpus already.
  • Invested a large amount in FMP and fixed deposits after plans to buy house got junked.
  • Small 5% annual hike in equity fund SIPs will help reach goals comfortably.
  • Has opted for dividend plan in some funds. Need to shift to growth option for long-term growth.
Note from the doctor
  • Fixed deposits not taxefficient. Use liquid funds to avoid high tax.
  • Instead of investing in PPF and FDs, hike contribution to the Provident Fund.
  • Review investments and rebalance at least once a year.
  • Reduce risk when goal is near so that you don’t miss the target.

CASE II: Narayana Sastry wants to amass Rs 10 crore in the next 15 years. Here’s what the doctor has advised:


Goals
Narayana-goals

Investor’s existing portfolio
Narayana-portfolio

Portfolio check-up
  • Holds a good mix of large-cap and multicap funds.
  • Goal is ambitious and monthly SIPs will have to be increased by Rs 40,000 to reach it.
  • If goal is deferred by three years, a small 10% annual hike in SIPs will help reach it.
  • 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 don’t miss the target.

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.
  • How far away is each goal
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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