Will my SIP of Rs 40,000 be enough to get Rs 40 lakh?

Dear reader, 52-year-old investment enthusiast has been diligently contributing Rs 40,000 per month to diversified equity mutual funds for the past decade. With a wedding expense projected at Rs 40 lakh in approximately four years, the expert panel weighs in on the best course of action.

According to Dilshad Billimoria, MD and Chief Financial Planner at Dilzer Consultants, the inflation-adjusted cost of the wedding is estimated at around Rs 58.6 lakh. To mitigate risk, Billimoria suggests commencing a shift from equity to safer options, such as arbitrage funds or low-duration debt funds, roughly a year before the wedding.

This approach aims to preserve gains on long-term equity investments, which are taxed as long-term capital gains. Alternatively, redeeming directly from equity investments, given the investor's decade-long commitment, may also be a prudent choice.

Prableen Bajpai, Founder of FinFix Research and Analytics, offers a different perspective. She advocates for a balanced, periodic review of the investment portfolio, ideally every six months. This review serves to ensure that the schemes continue to meet the investor's goals, remain aligned with their risk profile, and are performing relative to their peers and benchmarks.

Major life events, such as marriage or the birth of a child, as well as significant corpus investments or withdrawals, also warrant portfolio reassessment.

Bajpai emphasizes that investors should focus on the time horizon and purpose of each investment when deciding to exit a scheme. Exit decisions may be warranted when nearing a financial goal, if the asset allocation strays significantly from the target (typically ±5%), or in response to policy or regulatory changes impacting the scheme's suitability.