Building long-term wealth through mutual funds often raises a key question for investors: how much is enough, and how realistic are large corpus targets? While disciplined SIP investing and step-ups can significantly accelerate wealth creation, outcomes ultimately depend on return expectations, time horizon, and portfolio strategy.
A similar query came from Sanjay, a 55-year-old investor from NCR and a viewer of The Money Show, who has built a mutual fund portfolio worth Rs 70 lakh with a monthly SIP of Rs 30,000. He is approaching retirement and plans to increase his SIP by 10% annually for the next five years and then stop contributions, while remaining invested for about two more years. His goal is to grow the corpus to over Rs 5 crore.
Also Read | Low-cost index funds & ETFs should form backbone of your portfolio: Vishal Jain, CEO, Zerodha Mutual Fund
His portfolio includes a mix of diversified equity-oriented schemes such as Parag Parikh Flexicap, HDFC Flexicap, HDFC Midcap, Bandhan Smallcap, ICICI Prudential Largecap, and ICICI Prudential Multi-Asset Fund.
According to Srikanth Bhagavat, MD, Principal Advisor, Hexagon Wealth, the portfolio selection is sound and aligned with an accumulation strategy. However, achieving the Rs 5 crore target depends heavily on realistic return assumptions.
“The key here is to put some numbers. We have to make some assumptions when we put numbers into the formula to figure out what the money could grow to,” the expert said.
Based on historical trends, equity portfolios in India have delivered around 13–14% annualised returns over long periods. At a 13% annual return, Sanjay’s portfolio could grow to around Rs 4.3 crore. If returns improve to 14%, the corpus may reach approximately Rs 4.75 crore. In both scenarios, the Rs 5 crore target remains slightly out of reach.
To bridge this gap, the expert suggests increasing the SIP contribution more aggressively. Instead of a 10% annual step-up, raising the SIP by about 25% could significantly improve the probability of reaching the desired corpus, assuming similar return expectations.
“So, if you just bump it up to 1.25 times whatever SIP you are doing, there should be a good probability of reaching the goal,” the expert said.
On the portfolio side, the current fund mix is considered well diversified and appropriate for growth. With exposure across flexi-cap, large-cap, mid-cap, small-cap, and multi-asset categories, the portfolio is positioned to capture market opportunities across segments. Importantly, it is a pure equity-heavy allocation, which is typical during the accumulation phase when investors aim to maximise long-term returns.
However, one key risk remains: timing the transition from growth to capital protection. Since Sanjay is close to retirement, the expert emphasises the importance of gradually reducing risk well before the withdrawal phase. Instead of waiting until retirement, investors should start rebalancing their portfolio 12 to 18 months in advance.
Also Read | Targeting 14% CAGR with mutual funds? Here’s how to fix your portfolio & boost outcomes
The suggested approach is to shift towards a more conservative allocation, such as 30% equity and 70% debt, to protect accumulated gains from market volatility. This phased derisking helps avoid situations where a market downturn just before withdrawal significantly impacts the final corpus.
The takeaway for investors is clear: while disciplined investing and a strong portfolio foundation are crucial, achieving ambitious financial goals often requires realistic expectations and timely strategy adjustments. Increasing SIP contributions, maintaining consistency, and planning a well-timed exit strategy can make a meaningful difference in long-term wealth outcomes.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions at ETMFqueries@timesinternet.in along with your age, risk profile, and Twitter handle.
