Mutual Fund Corner: Will these schemes take care of my retirement?

Currently, we are wholly invested in equity mutual funds for our retirement planning, apart from EPF contributions of Rs 25,000 per month from our salaries (including employer contribution). Is this a good strategy as of now as it becomes 67:33 equity to debt composition of my portfolio of investments (assuming EPF contributions are debt investments). The websites of mutual funds and other news articles quote "annualised returns" on funds. Is this the same as compound annual growth rate (CAGR) or is it different? If not then how different is it. Please suggest a site that shows CAGR returns of funds for monitoring performance. Also, is there any place where I can track if the fund manager of the funds I have invested in changes?

A: At the very outset, it's good that you have a comfortable head start to accumulate for your retirement. However, the portfolio is relatively conservative. Understanding that you have a household with dual income, age on your side and a pretty long-term horizon, you can afford being more aggressive.

Also notably, there’s quite an underlying overlap in your portfolio. While it may not be of utmost importance, but couldn’t help but notice that both your Birla funds are managed by the same fund manager (similar philosophy and mental bias). Your current exposure to mid and small cap is 30 percent. Given your long horizon, you can increase allocation to small and mid-caps for better returns over a long period. Do note, this is an aggressive portfolio and the quality of funds matter more than simple diversified equity portfolios. Do consult a financial adviser or just give us a call at Fisdom to get the right guidance.

Assuming NPS is Rs 50,000 for the both of you and especially for a tax-break, it looks fine. NPS is a good option if you’ve exhausted your 80C limit (within which ELSS mutual fund is the optimal avenue). EPF also looks good. Typically, websites using ‘annualised returns’ as a nomenclature imply CAGR. You can track fund CAGRs on the Fisdom app. I would like to highlight a few things that may not have been a part of your question.

1. Ensure you have a good term insurance for you and your wife. This will help ensure in case of any unfortunate event, your financial goals stay on track.

2. Your target of Rs 7.5 crore, in today’s terms it would be Rs 1.4 crore. While it is doubtful if this would suffice your financial needs during retirement, it is advisable to consult a financial adviser and check if the target is adequate. However, given the information suggest you step up your SIPs as your income increases to secure.