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Ramalingam Kalirajan |11135 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Mar 05, 2026

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Ashik on Mar 05, 2026

Hi Sir, i am Accountant, i am married , i have one kid with age of 3, now i am planing to add some funds in my portfolio, can you advice is this correct. 1 .icici produncial blue chip fund 2 . zerodha nifty 250 elss fund 3 . parag parik flexicap fund 4. axix gold and silver fund can i go long term this funds or need to rebalance my protfolio, if rebalance what fund you suggest.

Ans: You are thinking about adding quality funds at a young age. That itself is a very good step. As an Accountant, you already understand numbers. Now we must make sure your portfolio structure supports your family goals — especially with a 3-year-old child.

Let us review your selection carefully.

» Understanding the Current Fund Choices

You have selected:

– Large cap fund
– Nifty 250 ELSS fund
– Flexi cap fund
– Gold and silver fund

This shows you want diversification. That is good. But we must see whether the combination is efficient or overlapping.

» Large Cap Fund

A large cap fund gives stability. It invests in top companies.

– Suitable for long-term wealth creation
– Lower volatility compared to mid and small cap
– Good core portfolio fund

You can continue this for long term.

» ELSS Fund (Nifty 250 based)

This is an index-based ELSS fund.

Here I want to explain clearly:

Disadvantages of index-based funds:
– They simply copy the index. No active decision making.
– No downside protection during market fall.
– You will always get average returns, never better than index.
– In falling markets, no fund manager strategy to protect capital.

Benefits of actively managed funds over index funds:
– Fund manager selects quality stocks.
– Can reduce exposure to risky sectors.
– Can hold cash in extreme conditions.
– Aim to generate alpha (extra return over index).

Since you are investing for long-term goals like child education and retirement, active management is better suited.

So instead of index-based ELSS, you may consider an actively managed diversified equity fund (if tax saving is required, choose active ELSS only).

» Flexi Cap Fund

This is a strong category for long-term investors.

– Freedom to move between large, mid, small caps
– Dynamic allocation based on market conditions
– Good for 10+ year goals

You can continue this as core growth engine.

» Gold and Silver Fund

Gold and silver are not growth assets. They are hedging assets.

– Good for risk control
– Protects during equity crash
– But long-term return is lower than equity

Keep allocation limited. Around 5% to 10% of portfolio is enough. Do not over allocate.

» Portfolio Overlap & Balance

Current structure is heavy in large cap and diversified equity. That is fine.

But you are missing:

– Dedicated mid cap exposure
– Dedicated small cap exposure (if risk appetite allows)
– Debt allocation for stability

Since you have a small child, safety bucket is important.

You should structure portfolio like this:

– 50% to 60% core diversified equity (large + flexi cap)
– 20% to 25% mid cap fund (active)
– 5% to 10% small cap fund (only if you can tolerate volatility)
– 10% to 20% debt fund or safe instrument for stability
– 5% to 10% gold

This creates proper balance.

» Rebalancing Strategy

– Review once in a year
– If any category grows too much, bring it back to original allocation
– Rebalance slowly, not frequently

Also remember taxation:

– Equity LTCG above Rs 1.25 lakh taxed at 12.5%
– Equity STCG taxed at 20%

So avoid unnecessary churn.

» Important 360-Degree Checks

Before adding new funds, ensure:

– Emergency fund of at least 6 months expenses
– Adequate term insurance
– Health insurance for full family
– Child education goal planning
– Retirement planning

Investment is only one part of financial planning.

» Finally

Your fund selection shows maturity. Only small corrections are needed:

– Replace index-based ELSS with active diversified fund
– Add mid cap exposure
– Keep gold limited
– Add some debt stability

With disciplined SIP and annual review, you can comfortably build wealth for your child’s future and your retirement.

Stay consistent. Long-term wealth is created by discipline, not excitement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.