Building a large long-term wealth corpus for goals such as children’s education, financial security, or retirement requires disciplined investing, proper diversification, and regular portfolio reviews. While higher-risk investments may offer faster wealth creation, aligning investments with financial goals and managing risk carefully remain important for long-term success.A similar query came from Ashish, a 37-years-old investor from Bangalore and viewer of The Money Show on ETNow. He has direct growth plans and has also recently invested in some index funds. His portfolio includes the Motilal Oswal Nifty 500 Momentum 50 Index Fund, SBI Smallcap, SBI Contra, Parag Parikh Flexicap, Kotak Midcap, and Canara Robeco Large Cap Fund. Monthly investments are almost Rs 78,000 which he is trying to increase whenever possible. Also Read |Can salary-linked SIPs transform mutual fund investing for salaried Indians? Experts weigh in For the index fund that he is investing in for his one-year-old baby girl, the time horizon is 15-plus years. Total investment value is almost Rs 28 lakh plus and current worth is almost Rs 41 lakh plus. He has also invested in NTPC shares. He has got some direct equities going on through SIP, and is also looking to build almost Rs 7 crore in 12-plus years. According to Pankaj Mathpal, MD, Optima Money Managers, the investor’s current strategy needs some alignment with long-term financial goals. “When I reviewed the portfolio, I felt the investments were not fully aligned with the goals and asset allocation needs some improvement,” he said.He suggested that the investor focus more on mutual funds instead of direct equity investing, especially if stock selection expertise is limited. “If Ashish invests more through mutual funds instead of direct stocks, it may work better for him,” Mathpal added.Target of Rs 7 crore - without step-up SIP and with step-up SIPBased on the current investment strategy, Mathpal estimated that the investor may accumulate around Rs 4.28 crore in 12 years assuming annualised returns of around 12%. However, achieving the Rs 7 crore target within 12 years may not be possible without increasing investments gradually.“With the current SIP strategy, it may take nearly 16 years to accumulate Rs 7 crore. But if he increases SIPs by 10% every year, the target may become achievable in around 13 years,” he explained.Mathpal further said that firstly he should invest more in mutual funds and not in direct stocks and secondly, he should step up his SIP by 10% every year. Index fund - a right choice for 15 year plus horizon?Mathpal also raised concerns about the investor’s allocation to the Motilal Oswal Nifty 500 Momentum 50 Index Fund. According to him, factor-based investing strategies such as momentum investing work well only during certain market phases and may not always suit long-term core portfolios.“Momentum is a factor strategy and such strategies work well only during specific market conditions, especially in rising markets,” he said. For long-term investing horizons of 15 years or more, Mathpal suggested broader market index funds instead of factor-based funds.Also Read | Planning SIPs for a car or house in 10 years? Experts recommend diversified equity funds for long-term goals “Instead of a momentum-based index fund, investors can consider a broader-based index fund such as a pure Nifty 500 Index Fund,” he added. He also noted that many retail investors enter factor investing without fully understanding how factor cycles work.Reduce small-cap exposure, increase diversificationThe expert further suggested reducing exposure to SBI Small Cap Fund and replacing it with Bandhan Small Cap Fund while lowering the monthly SIP allocation towards small-cap investing.Currently, the investor allocates around Rs 20,000 monthly to small-cap funds. Mathpal recommended reducing the allocation to Rs 10,000 monthly and redirecting some investments towards Kotak Midcap Fund, earlier known as Kotak Emerging Equity Fund.He advised increasing the SIP in Kotak Midcap Fund to Rs 15,000 per month. For diversification purposes, Mathpal also suggested considering a small allocation towards gold and silver through SIPs in Motilal Oswal Gold and Silver ETF Fund of Fund or alternatively investing in multi-asset allocation funds.However, he cautioned against taking aggressive lump sum exposure in precious metals at current levels. “For diversification, investors can consider small SIP allocations to gold and silver or multi-asset allocation funds, but excessive allocation may not be advisable right now,” he said.Mathpal reiterated that long-term investors should focus on diversified portfolios rather than taking concentrated bets in direct equities or highly specialised investment themes.(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 on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. 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