The importance of having clearly articulated goals

By Morningstar |  17-05-19 | 
 

The Morningstar Investment Management team provides guidelines when it comes to your portfolio.

Points to note with regards to the mentioned suggestions:

  • When it comes to portfolio construction, the asset allocation-based approach should be followed as it is one of the key determinants of the portfolio’s performance, in terms of risk and return. A suitable asset allocation is typically based investment horizon and risk appetite. Generally, longer the investment horizon and higher the risk appetite, higher would be the allocation to equity.
  • Given the prevailing market scenario with regards to debt paper downgrades and defaults, we find it advisable to invest in Banking and PSU debt funds, as these have a mandate to invest at least 80% corpus in banks and PSUs, which are safer bets from a credit perspective.
  • We strong believe that one should consult a financial adviser before investing.

I invested Rs 1.5 crore in stocks: HDFC, HDFC Bank, TCS, Ambuja Cement, Grasim, Ultratec, AB Capital, Tata Steel, Sponge, Shriram Trans, ITC, Torrent Pharma, SBI, Swaraj Engines, Vedanta. My mother is not doing well. So, I would like to sell these stocks and invest the money to minimize market impact while maximizing returns. So where must I invest? 

- Yogesh

You have provided no information on the goal tenure and other investments.

Assuming a conservative risk profile (desire for minimum market impact), you may have an allocation of 20% to Equity and 80% to Fixed Income. The equity exposure can be entirely into large caps. The fixed income allocation of 80% can be across accrual fixed income categories such as Banking and PSU Debt Funds, ST Income Funds and Corporate Bond Funds with a high credit quality portfolio.

I am 41-years old. I am new to funds. I want to invest Rs 5 lakhs for 1 year. I want to invest another Rs 5 lakhs for 15 years. Finally, I want to invest Rs 30,000/month SIP through SIP. Where should I invest?

- Soumendra

Assuming a moderately-aggressive risk profile, for the long-term investments (Rs 5 lakhs and the SIP) you may have an allocation of 60% to Equity and 40% to Fixed Income.

You can invest about 50% into large caps and 10% in mid-caps for your equity exposure.

The fixed income allocation of 40% can be across accrual fixed income categories such as Banking and PSU Debt Funds, ST Income Funds and Corporate Bond Funds.

As your goal approaches (last 3 years), the allocation should shift around 10% each year out of equity into fixed income.

I am 34. I need to invest Rs 4 lakh for 10-15 years. Where and how? 

- Yasir

Given a horizon of 10-15 years and assuming a moderately-aggressive risk profile, you may have an asset allocation of 70% to Equity and 30% to Fixed Income. You can invest about 55% into large caps, 10% into mid caps and 5% into small caps for your equity exposure. The fixed income allocation of 30% can be across accrual fixed income categories such as Banking and PSU Debt Funds, ST Income Funds and Corporate Bond Funds. As your goal approaches (last 2-3 years), the allocation should shift around 10% each year out of equity into fixed income.

How can I get an inflation adjusted monthly income of Rs 40,000 from capital of Rs 75 lakhs?

- Apurva

As no details like age, risk-profile and goal horizon are mentioned; assuming a moderate risk profile and the required monthly income as pre-tax income requirement, you may have an asset allocation of 50% to Equity and 50% to Fixed Income.

The equity exposure can be about 45% into large caps and 5% into mid caps. The fixed income allocation of 30% can be across accrual fixed income categories such as Banking and PSU Funds, ST Income Funds and Corporate Bond Funds.

You can withdraw the required amount periodically via the SWP (systematic withdrawal plan) route to meet your income needs.

Post your query by accessing the Ask Morningstar tab. The Morningstar Investment Management team will endeavor to answer queries related to portfolio planning from our registered readers.

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