Financial planners generally recommend staggered investing and periodic portfolio reviews to manage market fluctuations and stay aligned with long-term financial goals.
Responding to a query by Shweta, a Bengaluru-based investor and viewer of The Money Show on ET Now, who wants to invest Rs 6 lakh in mutual funds and is looking for better options. She has invested a total of Rs 88,000 across mutual funds, including Parag Parikh Flexicap, Motilal Oswal ELSS Tax Saver, and SBI Contra. She now wants to maximise returns and is also considering adding exposure to gold and silver.
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Market expert Nisreen Mamaji said the investor was already off to a good start with existing investments in Parag Parikh Mutual Fund’s flexi cap fund, Motilal Oswal Mutual Fund’s ELSS fund, and SBI Mutual Fund’s contra fund. However, she advised that the focus should shift from “maximising returns” to building a well-structured and balanced portfolio.
According to Mamaji, investors often end up taking excessive risks or over-diversifying portfolios while trying to chase higher returns. Instead, she recommended maintaining a disciplined approach, controlling costs, and allowing the power of compounding to work over the long term.
“You are at a good starting point, but the focus could shift from maximising returns to building a structured portfolio, because when you try to maximise returns, it can sometimes lead to taking excessive risk and overdiversification,” the expert said.
Reviewing the investor’s current portfolio of around Rs 88,000, the expert described the Parag Parikh Flexi Cap Fund as a strong core holding that can continue in the portfolio. She also termed the Motilal Oswal ELSS Tax Saver Fund a good option for tax-saving and long-term growth, while the SBI Contra Fund could work as a satellite allocation following a value-oriented strategy.
For an aggressive investor with an investment horizon of more than five years, she recommended keeping around 80% allocation towards equity funds, while allocating the remaining 20% towards gold and silver.
Mamaji suggested that the proposed Rs 6 lakh investment could be spread across multiple categories. According to her allocation strategy, around Rs 1.8 lakh can be invested in a flexicap strategy, Rs 1.2 lakh in a midcap fund, Rs 1 lakh in a smallcap fund, along with exposure to a Nifty 50 index fund for stability and broader market participation.
She also recommended allocating approximately Rs 75,000 towards gold ETFs and around Rs 45,000 towards silver ETFs, and advised against investing the entire amount immediately. Instead, she suggested a staggered approach through the Systematic Transfer Plan (STP) route.
Investors can initially deploy around 40-50% of the corpus as a lumpsum, while gradually investing the remaining amount over the next three to six months, she added.
Staggered investing can help investors benefit from lower NAVs if markets decline further, and also reduce the impact of short-term volatility through rupee cost averaging.
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On expected returns, the expert said that over a long-term horizon of more than 10 years, equity mutual funds could potentially generate annualised returns in the range of 12-14%, while gold may deliver around 7-8% and silver around 9-11%.
Based on an estimated blended portfolio return of 12-13%, she said the proposed Rs 6 lakh investment could potentially grow to around Rs 18 lakh to Rs 20 lakh over the next decade.
However, she cautioned that expected returns are not guaranteed and stressed the importance of regularly reviewing the portfolio to ensure investments remain aligned with financial goals and risk appetite.
The expert also highlighted that many investors today struggle not because of a lack of investment options, but because of the overwhelming number of choices available in the market. According to her, continuously adding new funds often creates unnecessary complexity rather than improving returns.
She emphasised that a simple and well-structured portfolio, held patiently over the long term, can provide both stability and meaningful wealth creation without the need for excessive portfolio churn.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
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