Am I investing in right mutual funds for my retirement goal?


I have one query regarding my investment. I am investing in the following mutual funds for the last three years via SIP:
ABSL Frontline Equity Fund- Rs 2,000/ per month
ABSL Tax Relief 96 Fund-Direct plan- Rs 3,000/per month
Axis Long Term Equity Fund-Direct plan- Rs 2,500/per month
Motilal Oswal Long Term Equity Fund-Direct plan- Rs 2,500/per month
SBI Small Cap Fund-Direct plan- Rs 3,000/per month
L&T Emerging Business Fund -Direct plan- Rs1,000/ per month
UTI Banking & Fin Services Fund Regular Plan-Growth plan- Rs 1,000/per month
ABSL Money Manager Fund-Direct Plan- Rs 2,500/per month.

I try to increase my investment by approximately 10% every year in total SIP values. Please let me know if this pattern of investing is okay to accumulate good corpus for my retirement.
I am currently 38 years old and plan to invest till my retirement unless there are any emergencies.
— Surajit N Natasha

Harshad Chetanwala, Co-Founder of MyWealthGrowth a mutual fund advisory firm, based out of Mumbai responds:



Assuming you would like to retire at the age of 60, you have a good 22 years to accumulate for your retirement goal. Evaluating retirement corpus works better when we look at it from current expenses perspective. However, if you plan to invest Rs 17,500 per month and increase your monthly SIPs by 10% every year, you will be able to accumulate approximately Rs 4.42 crore at an annual return rate of 12%. If we think conservatively at 10% p.a. return you will accumulate around Rs 3.60 crore. Just to give you a perspective, Rs 3.60 crore of retirement corpus will help you comfortably take care of your monthly retirement expenses of Rs 50,000 per month as per today’s cost and in case of Rs 4.42 crore you will have Rs 61,000 per month as per today’s cost; this is good, but it also depends on your present monthly household and other expenses.

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On your monthly investment through SIPs, you are investing close to 45% of your SIPs in tax saving funds at present. If this is to take care of your tax saving requirements along with equity investment then it is good to continue with your SIPs in ELSS, else you can switch to other funds. You can also consider stopping your SIP in Aditya Birla Money Manager Fund which is a money market fund where investors usually invest for short term. You can switch these SIPs into large cap, large & mid cap or flexi cap funds as per your comfort. You have 22 years for your retirement, and you would like to make the most from the investment by giving them more opportunity to grow. Another important thing, if you are keeping this investment for your retirement, you might want to segregate your investment for emergency needs. In case of emergencies, you shouldn’t rely on equity investments attached to other goals. This can derail your long term goals and equity might not be profitable when that emergency arises.



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