Targeting Rs 2 crore in 15 years? Here’s how tweaking mutual fund SIP can get you there

Many investors dream of building a Rs 2 crore corpus for their long-term goals, whether it’s retirement, a child’s education, or financial freedom. But the difference between “hoping” for that number and actually achieving it often lies in how smartly you plan and tweak your mutual fund SIPs (Systematic Investment Plan)

That’s exactly what Sandeep, a 37 year old investor and viewer of The Money Show on ETNow, wants to accumulate in the next 15 years.

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The investor has a clear financial goal and began investing two years ago and now contributes Rs 40,000 per month through SIPs across multiple mutual funds. His current investments include some prominent names.

Sandeep’s current SIP portfolio is:

• Parag Parikh Flexicap Fund – Rs 9,000
  
• Motilal Oswal Midcap Fund – Rs 11,000
• Kotak Midcap Fund (Earlier known as Kotak Emerging Equity Midcap Fund) – Rs 11,000
• Quant Smallcap Fund – Rs 3,500
• Nippon India Smallcap Fund – Rs 3,500
• SBI Large & Midcap Fund – Rs 2,000

With 13 more years to go, his current portfolio looks promising, but can a few tweaks make his goal more achievable or are current holdings sufficient to make him achieve the target corpus.

Expert View: Strong Portfolio, Slightly High on Risk

According to financial planner Nisreen Mamaji, MoneyWorks Financial Services, Sandeep’s fund choices are solid. Parag Parikh Flexicap serves as a great core fund, offering both domestic and global exposure. His midcap picks — Kotak Midcap and Motilal Oswal Midcap — are top performers, though slightly concentrated. Two small cap funds from Quant Mutual Fund and Nippon India Mutual Fund add growth potential but come with higher risk. These two funds are aggressive, high return potential, and can be slightly volatile. SBI Large and Mid Cap Fund is a balanced addition to the portfolio.While the portfolio has strong performers, Mamaji says that currently the Rs 40,000 is flexicap about 22.5%, midcap 55%, smallcap 17.5%, and large and midcap 5%. This mix gives him exposure across market caps, but nearly 70% of his portfolio is in mid- and small-cap funds, making it more aggressive and prone to short-term volatility.

If the investor is ok with these funds and can handle short term volatility, he can continue with these funds for the total investment horizon, the expert recommends.

The expert further proposed an alternative plan where the investor could streamline the portfolio into just four equally proportioned funds. The suggested allocation includes Parag Parikh Flexicap as the flexicap fund with an investment of around Rs 10,000, and a large and midcap fund such as SBI Large & Midcap or ICICI Large & Midcap with an allocation of about Rs 8,000 (roughly 20%).

For the midcap category, the expert recommended continuing with Kotak Midcap and Motilal Oswal Midcap, investing around Rs 14,000 in total — which could be split equally at Rs 7,000 each or Rs 8,000 and Rs 6,000 respectively. In the smallcap segment, the investor could continue with Nippon India Smallcap (Rs 5,000) and Quant Smallcap (Rs 3,000).

Also Read | Want to build corpus of Rs 1.5 crore in 15 years? Experts reveal the right SIP strategy and amount

These minor adjustments would fine-tune the asset allocation to approximately 25% in flexicap, 20% in large and midcap, 35% in midcap, and 20% in smallcap funds, resulting in a more balanced and diversified portfolio.

This rebalancing reduces the exposure to mid- and small-cap funds from 70% to 55%, creating a more balanced and diversified portfolio.

How close is the investor to Rs 2 crore?

If Sandeep continues investing Rs 40,000 per month for the next 13 years:

• At a 12% annual return, his portfolio can grow to around Rs 1.4 crore.
• At a 15% annual return, it could reach Rs 1.77 crore.

To bridge the remaining gap and comfortably reach Rs 2 crore, Sandeep can step up or increase his SIP by 10% each year or whenever he has a bonus or any other lumpsum coming his way, say five to six lakh lump sum, he can keep on adding it into this investment account in order to meet the Rs 2 crore target corpus.

Key takeaway

Sandeep’s mutual fund selection is strong, and with a few adjustments, his portfolio can become more resilient and goal-oriented. Staying consistent with SIPs, stepping them up annually, and maintaining a disciplined asset allocation will help him achieve — and possibly exceed — his Rs 2 crore goal over 15 years.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)