Review your portfolio often to keep investments on track
It is imperative for investors to review their portfolio on a regular basis to check whether their investments are performing well. “If investors have more money, would they put money in those schemes? If the answer is no then I think the logical step would be to exit these funds and enter into something, which is stronger and more stable,” advises Lovaii Navalakhi, Chief Financial Planner & MD, International Money Matters.
Below is an edited transcript of his interview. Also watch the accompanying video.
Q: An investor can invest Rs 1000 per month. He has invested Rs 1000 in SIP in HDFC Equity Fund and a gold ETF. His timeframe is three years. How should he allocate the money?
A: If he has just Rs 1000 per month type of investment to make, I would first start of with having something in the large cap fund space like a DSP Blackrock Top 100. He mentioned of having invested in some funds, earlier they were making good return, he didn’t book profits but they are not making profit now, he is not exiting.
All investors must look at where they have invested and see whether those particular investments are good or not at this point in time. If they had more money would they put money in those schemes and if the answer is no then I think the logical step would be to exit these funds and enter into something, which is stronger and more stable. I think that’s very important.
Q: An investor can invest Rs 3000 per month. He is planning to build up a corpus after 15-20 years of Rs 1 crore. He is currently invested in HDFC Top 200 which is in SIP for Rs 2000 a month and other mutual fund which is Birla Frontline for Rs 1000 a month. How should he allocate the money?
A: The two funds that he is currently invested HDFC Top 200 and Birla Frontline Equity are good; the first one is a large cap and the other one is a multicap. Since he is only 23 and he has a maybe a 20 year time horizon, if he steps up his investment by maybe around another Rs 3000 or Rs 3500 a month in 20 years time, he should be able to hit close to Rs 1 crore.
Logically, when he is 23, the amount that he is putting aside today will keep on increasing as his savings increase. But assuming a flat Rs 3000 or Rs 3500 per month today, for the next 20 years he should get close to his goal. Possibly look at adding a HDFC Midcap Opportunities midcap fund into his portfolio and maybe slightly increase his amount in the large cap which is in the Top 200 by Rs 1000 and then add the Rs 2000 or Rs 2500 in Midcap Opportunities.