MF portfolio doctor: Kumar should redeem laggard mutual funds for downpayment of house

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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: Sudhir Kumar is saving for a house, his kids’ education and retirement. Here’s the doctor’s advice.
Goals

Investor’s existing portfolio

Portfolio check-up

  • Investing in funds for past 2-3 years.
  • Most funds are doing well, but a few have underperformed.
  • Goals are ambitious and require big increase in SIPs.
  • Switch from equity to debt funds to buy house in two years.
  • Surge in markets offers a good opportunity to get out of laggards.
  • The two other goals are long term, so focus on equity funds.

Note from the doctor

  • Target of Rs 40,000 for retirement seems low. Consider raising it.
  • Other savings like PF and insurance plans not mentioned.
  • 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: Harman Brar is saving for his children’s goals, a house and retirement. Here’s what the doctor says.
Goals

Investor’s existing portfolio

Portfolio check-up

  • Investing in equity funds for the past 2-3 years.
  • Early start and regular investing have helped, but goals are too ambitious.
  • SIP amount will have to be doubled to reach targets.
  • 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.