Starting financial planning at a young age always pays in the long run Investment Opportunity. The power of compounding and a systematic approach to investments (especially in equity related instruments) would help you achieve your goals with ease. But one needs to be realistic and patient when it comes to creating wealth.
The compounding effect on your investments would do wonders only when you remain invested for a long time (at least 5-7 years). As you have started investing recently, some quick changes to the portfolio right away would go a long way in wealth creation.
The monthly systematic investment plans (SIPs) of Rs 12,000 has been divided between 10 funds. These include three tax saving funds. Ideally, a portfolio for such an amount should have a maximum of 4-5 funds.
So many funds have led to over diversification of the portfolio. The overall corpus is invested in 237 stocks; 216 of these have a meagre portfolio allocation of less than one per cent.
It seems many funds have been selected solely on the basis of the huge returns generated by them in 2007. Funds like Reliance Diversified Power, Investment Opportunity Reliance Banking and Principal Tax Savings are some of the examples.
Funds like Reliance Growth and Fidelity Tax Advantage have a negligible portfolio allocation of four per cent. Further, seven of the 10 funds have a portfolio allocation of less than 10 per cent.
The portfolio has no debt component and doesn’t consist of any balanced fund. However, the portfolio is somewhat stable because of the dominance of large-cap stocks. Investment Opportunity About 56 per cent of the portfolio consists of large-caps and 33 per cent is allocated to mid-caps.
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