Investment 101: Investment Planning Advise

Hi Asav,
I am an avid reader of your blog "My Journey To Billionaire Club". I am really getting lots of financial knowledge by reading your blog. Please keep up the good work.

 
I have few queries regarding my Investment and your response will be much appreciated.
I am a salaried person with a total income of RS. 5 Lakh per annum.

Following are my investments:
LIC: Rs. 62 thousand per annum.

Mutual Funds(via SIP): Rs. 72 thousand per annum.

SBI MAGNUM SECTOR FUNDS UMBRELLA CONTRA -GROWTH (Rs. 2000)
RELIANCE GROWTH FUND - GROWTH PLAN - GROWTH OPTION (Rs. 1500)
HDFC TOP 200 FUND - GROWTH PLAN (Rs. 1500)
BIRLA SUN LIFE FRONTLINE EQUITY FUND - GROWTH (Rs. 1000)

At present I have no liability but I am planning to take a Home Loan of Rs. 15 Lakh and I am a married person.
Please let me know am I doing the right investments and your suggestion.

Well, You have really done nice investments according to your Income. I like your Mutual Fund portfolio. Contra, Top 200 & Frontline Equity are the Large cap oriented mutual funds while Reliance Growth is a Mid cap oriented fund which adds aggression to the portfolio.

And all of the above funds are 5 star rated funds according to Valueresearchonline.com. So you can stay Invested in all of them.

What I like about your MF Portfolio is that, It’s perfectly “Diversified”. What most of the people do is, they consider MF as a stock and collect around 30-100 MFs in their portfolios. I have seen several people who have collected over 100 NFOs, MFs and sector funds. People fail to realize the fact that 1 MF consist of a portfolio of anywhere between 30-100 Stocks. So collecting several MFs is not the Diversification. You can just have 3-4 MFs and you can achieve optimal diversification.

Later on you can add 1 ELSS Fund & 1 or MAX. 2 Debt fund in this Portfolio. That’s it. No need to do anything to this portfolio for the next 20,30, 50 years.

According to your Income, you can go for a home loan of Rs.15 Lakh.

What I advise you that, write down your Financial Goals on the piece of paper and write down a year. Say for Example, if you want to achieve the early retirement in 2025 than What I advise you is that, 2-3 years before reaching your any Financial goals, shift your wealth from Equity to Debt Mutual Fund. This is the very important step. Most of the people know when to enter and how long to stay invested in the market but unfortunately they don’t know that when to exit.

Thus, Over all your Investment Strategy is Best. Stick to it.

Best of Luck for your Financial Future…!!!!