Too many mutual funds, spoils your portfolio!

Investments in assets, especially, if those assets are Mutual Funds, promote a healthy growth of one’s portfolio. But how much of “many” are allowed? The answer is – not too many. The reason being having more than 5-6 mutual funds after a certain time does not give you the robust growth that your portfolio requires in order to generate good returns.

Although mutual funds are advised instead of direct stocks since it is not easy to watch the markets on a daily basis, if you are employed or have your own concern to run. In such scenarios, mutual funds are advised. But not too many. If you have 5 mutual funds in your hand, analyze the performance of each at the end of each investment period, and also observe their vulnerability in different market situations; as in how they perform during booms and busts. Once you get the information, try to shift your funds in to those assets who have been good performers for a long period of time rather than remaining invested in average or under performing assets. Doing so, your money in each excellently performing funds, is increased giving you greater returns for each unit for which you are invested in. Unlike investing in average or under performing funds where your returns may not grow or even decline, investing in good performing stocks is advised.

Loans like personal loan, car loan etc, are debts that you want to keep yourself away from if you have adopted the investing route. Having these kinds of debts diverts your funds into those activities that are not proving to grow your investments. So try opting for investing in those mutual funds that have been consistent performers in the last 2-3 years and are still doing well.

If you have received you Employee Provident Fund, which is received upon retirement, try to divert those funds into investment as well. If you are a retired person, consider taking a holistic view of your portfolio. Now it is the time to revamp your portfolio in order to finance your post retirement life or even better fund your business requirements if you plan to start any. Try investing about 60% of your corpus from what you receive from your employee’s fund. If you are a business man and are wondering where to invest, consider investing in MFs from various categories such as large-cap, diversified and mid-cap categories in the equity space. Balanced, MIP, debt and gold funds can also comprise your portfolio.

All in all make sure that you have about 6-7 funds in your portfolio and try not exceeding more than this limit. After assessing them over a period of time you can choose to add on some more to the same funds or switch to new schemes. Those funds that have been consistent under performers are best to be excluded from your portfolio. Apart from this make sure y pamper yourself with tax free returns. Invest about Rs70k in your PPF that will enable you tax free returns.

Once you are out of an organization, obviously your employee insurance scheme is retired along with it. So ensure that you opt for a pure life cover which is adequate enough to cover all your family needs in the wake of any disaster. Opt for a term cover so that you are benefited with low payments such that there is no need to pay huge premiums for the same. Also ensure that you buy a health insurance which covers your critical illness and other general health expenditures of not only yours but also your family’s. In this period of ever increasing hospital bills, this can help you a great deal.