Streamlining Your ₹12 Crore Portfolio for Easier Management
A 42-year-old entrepreneur with a diversified portfolio worth ₹12 crore is seeking advice on simplifying their investments. With a mix of equity mutual funds, real estate, debt mutual funds, and savings account, they want to make their portfolio more accessible.
Breaking Down the Portfolio
Approximately ₹6.6 crore (55%) is invested in equity mutual funds, followed by ₹3 crore (25%) in real estate, and ₹1.8 crore (15%) in debt mutual funds with the remaining ₹0.6 crore (5%) in cash or other investments.
Streamlining Equity Holdings
- Remove Overlaps and Duplications: Identify and eliminate any duplicate investments across different funds.
- Consolidate Small Non-Core Investments: Consider merging small, non-core investments with other funds to simplify the portfolio.
- Gain a Clearer Picture: By consolidating and removing overlaps, you'll have a clearer understanding of your overall portfolio.
Reviewing Debt Holdings
- Short-Term or Liquid Options: Ensure that your debt investments are allocated to short-term or liquid options to maintain liquidity.
- Review Credit Quality: Carefully review the credit quality of your debt investments to minimize risk.
Bifurcating the Portfolio
Divide your ₹12 crore portfolio into goal-specific buckets and surplus wealth.
Assuming ₹7 crore is allocated to goal-specific buckets, you'll have approximately ₹5 crore as surplus wealth.
Surplus Strategy
- Capital Preservation (20% of surplus - ₹1 crore): Allocate ₹1 crore for emergency reserves, near-term liquidity, and stable assets.
- Wealth Growth (55% of surplus - ₹2.75 crore): Invest ₹2.75 crore in long-horizon equity and income-generating real estate.
- Legacy and Estate (25% of surplus - ₹1.25 crore): Designate ₹1.25 crore for assets earmarked for intergenerational transfer, including jointly held property and nominated instruments.
By implementing this straightforward strategy, you can create a more manageable portfolio that meets your current and future needs.
— Nehal Mota, co-founder and CEO of Finnovate, a financial planning app