Sometimes, lessons are best learnt the hard way. Luckily for you, in a short span of a year the equity market has zoomed past the 12000 mark to hover around 15000 levels.

Where you have done well

You have been wise in opting for an SIP. Sometimes, people burn their fingers and then exit from equities totally. You have made an astute move by not exiting but investing systematically. Also, you have smartly identified your short- and long-term financial goals, the very first step in financial planning.

Where you have gone wrong

While, you have been wise in choosing SIP as the medium to invest, your strategy is awry.

Your current choice of funds is aimless because you attempted to de-risk your portfolio by going for numbers. Instead, inculcate a habit of investigating the fund's objective before investing. The absence of this exercise has landed you with a high-risk portfolio of predominantly mid- and small-cap firms.

Second, while you have identified your financial goals, your investments are not targeted to meet these goals. The investments made so far are haphazard. Learn to align your investments to your goals. For instance, your current strategy of meeting miscellaneous annual expenses through dividends is unwise.

It amounts to dipping into profits which have been set aside for a different purpose. Moreover, mutual funds are not under any obligation to declare dividends.

Switch to growth options

Asset management companies do not charge investors for switching between the growth and dividend option of the same fund. So our advice is to switch to the growth option, unless you find more lucrative options of reinvesting the dividends earned. Avoid using dividends to meet other expenses.

If you still insist on receiving money through dividends, then restrict this to the dividend proceeds from your tax planning and close-ended funds. Since you cannot redeem these funds, you can at least take away the dividends.

Alternative source for short term needs

Make a reasonable estimate of your miscellaneous annual expenses. On the basis of this, you can start an SIP in a liquid fund. Another option could be to institute a recurring bank deposit.

Restructuring the portfolio

The suggested portfolio will be achieved after one year. Instead of churning the current portfolio, we have redirected your SIPs to restructure your portfolio. This will minimise the cost of restructuring by reducing entry loads.

In our revamped portfolio, we have dropped sector funds in favour of large-cap oriented equity diversified funds. We have also done away with funds that have a marginal allocation. Instead of 11 monthly SIPs, your objective can be met by just four funds. Maintain it for a year after which you can review them and preferably choose a multi-cap fund.

You can look at funds from Fidelity and Franklin for this. We would have ideally recommended Magnum Contra and Magnum Global for future SIPs, but your exposure to SBIMF's funds is already very high.

We remain skeptical about your investment in SBI [Get Quote] One India Fund whose performance has been nothing to write home about.

The only reason for remaining invested here is the large exit load payable. Talking of exit load, sell only those funds that have been held for more than a year to avoid incurring short-term capital gains tax.

Meeting your goals