I have been investing Rs 4,000 each month in SIP -- Rs 1,500 in Mirae asset Emerging Bluechip Fund and Axis Midcap Fund and Rs 1,000 in SBI Smallcap Fund for the past five months. I am 28 years old, and my goal is to build a retirement corpus. I have high risk tolerance. Kindly advise if these funds are suitable for me to achieve Rs 80-90 lakh.
By Santosh Joseph, CEO and Founder, Germinate Investor Services LLP
It's good to note that you already have a grip of your financial matters and have a clear understanding of your retirement goals, risk tolerance as well as an ongoing monthly SIP. Your current strategy of investing in midcap and small cap funds with the timelines of 30-plus years is the right approach for the goals that you have. However, the retirement corpus of Rs 80-90 lakh mentioned here seems too low given the inflation. It's important to take inflation into account while setting a retirement goal.
If you were to keep at it and continue with these categories of aggressive funds, it can be extremely rewarding over a long period of time because we all know that small and midcap funds tend to give you better than market returns.
In terms of your monthly SIP amount, it's surely a good start. However, as you age in your career and grow your work profile, consider increasing your SIP amount consistently. Considering your high-risk tolerance, consistently increase your monthly SIP amount into good quality midcap and small cap funds and be invested for 20-30 years. This gives you a good chance of meeting your retirement corpus expectations.
One thing to keep in mind is the changing market conditions. Even though you have a long-time frame, high risk tolerance and you are starting out early, it's prudent to keep checking your portfolio to adjust to the changes in the market. It's good to keep an eye on the portfolio every 3-5 years so that you are able to reassess or top up/increase your SIP amount. You may also consider some new category of funds into your portfolio to have a more certain and stable retirement corpus build up. To summarise, keep at it and be disciplined. Good can only get better by sticking to discipline and by having a clear thought-out process.
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