Rs 1 lakh monthly SIP at 24: Is your portfolio over-diversified; are you missing an Emergency Fund?

I am a 24-year-old salaried professional and have been investing in mutual funds for about three years. After switching to a new company six months ago, I’m now able to invest around ₹1 lakh per month in mutual funds. In addition, I invest ₹15,000 monthly in a gold accumulation scheme, where after 11 months I can purchase gold from a specific jeweller with zero making charges (GST applicable).

I began with a simple portfolio — one index fund, one large-cap fund and one small-cap fund — but over time I rotated funds and may have over-diversified. Currently, I’m running 10 active SIPs across small-cap, mid-cap, large & mid-cap, flexi-cap, sectoral, commodity and multi-asset funds. My risk appetite is medium-high to high, and my investment horizon is long term. However, I currently don’t have a formal emergency fund. I’m investing nearly 60% of my income and plan to build an emergency corpus over the next year by setting aside ₹10,000 per month in a savings account. I’m seeking advice on whether my portfolio structure is too fragmented and if I should consolidate funds across categories. Are sectoral and thematic funds appropriate at this stage, or should I focus more on core equity exposure? Also, is it prudent to continue aggressive investing while building an emergency fund gradually, or should the emergency fund be prioritised more strongly?

Advice by Subhendu Harichandan, Executive Director, Anand Rathi Wealth Limited

Hi, investor. You are currently 24 years old, investing ₹1 lakh per month across 10 mutual funds spanning equity, commodity and multi-asset categories, along with a ₹15,000 monthly gold accumulation plan. You intend to continue SIPs for the next 25 years and gradually build an emergency corpus by setting aside ₹10,000 per month.

At this stage, the objective should shift from adding more exposure to creating structure and balance. With a long investment horizon and a high savings rate, the foundation is strong — but portfolio efficiency, asset allocation clarity and emergency preparedness now become equally important as return maximisation.

Before adding more funds or increasing SIP amounts, the focus should shift from expansion to structure. Early-career investors often drift into thematic, sectoral, hybrid or commodity funds in search of higher returns, but these categories tend to be cyclical, volatile and harder to manage within a disciplined asset allocation framework.

Current Scenario:

• Hi, investor. You are currently 24 years old.
• You are investing 1 lakh SIP in 10 funds across equity, commodity & multi-asset, and a 15k monthly investment to accumulate gold.
• You wish to continue SIP for long-term assuming 25 yrs.
• You wish to create an emergency corpus with 10k SIP per month.

Portfolio Remarks:

1. Avoid investing in thematic/sectorial funds as they undergo cyclical performance.
2. Avoid investing in multi-asset/hybrid funds as they won’t give control over the asset allocation.
3. Avoid investing in commodity funds as they tend to undergo cyclical performance, are highly volatile, and less efficient than equity in the long term.
4. If you are investing in gold for consumption purpose treat it as separate from financial balance sheet, for investment purpose consider investing only in gold funds with a long-term horizon, and ensure it is not more than 5 to 10% of the overall portfolio.
5. For emergency planning, you can consider keeping a corpus worth 9 to 12 months of expenses in liquid instruments such as liquid funds, FD, short-duration funds, or arbitrage funds if you're in a higher tax slab.
6. For long-term investing, consider 80:20 across equity & debt. For equity MF portion consider diversifying across the diversified equity categories, such as market cap-based funds, strategy-based funds, such as value, contra, focused, and dividend yield.
7. Further, it is recommended to follow the market cap mix of 55:25:20 across large, mid, and small caps to maintain stability, liquidity, and ride across the market cycles.