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Ramalingam Kalirajan9383 Answers |Ask - Follow
Mutual Funds, Financial Planning Expert - Answered on May 24, 2025
Asked on - May 23, 2025
Hello sir, I have total mutual funds of around 40 lacs. Active Sips are Nippon India Small Cap - 8K/M, Kotak Mid Cap Fund - 6k/M, Canara Robecco Bluechip fund - 5k/M and ICICI Prudential nifty 250 small cap index fund - 6k/M. Also I have ICICI Prudential Value Discovery fund - which has grown from 1.7 to 4.2 lacs and DSP ELSS Tax Saver fund grown from 3.4 to 7.2 lacs. I want to redeem the amounts from ICICI Prudential Value Discovery fund and DSP ELSS tax saver fund and invest somewhere else as they have given return more than 150%. I am looking for duration of next 5 years and corpus amount of 1 cr. However my banker from HDFC securities are pushing me to invest in HDFC Life click to invest ULIP's which comes with lock in period. And I don't want a product with lock in period as I already have PPF and LIC as well. Could you please suggest if I should hold these funds or any change is required?
Ans: Your disciplined approach to investing, especially in mutual funds, is commendable. With a current corpus of Rs. 40 lakhs and a goal to reach Rs. 1 crore in the next 5 years, it's crucial to evaluate your existing investments and potential changes carefully. Let's delve into a comprehensive analysis to guide your financial journey.
1. Evaluating Your Current Portfolio
a. ICICI Prudential Value Discovery Fund
This fund has shown significant growth, moving from Rs. 1.7 lakhs to Rs. 4.2 lakhs.
It primarily invests in large-cap stocks, offering stability and consistent returns
Given its performance, it aligns well with long-term investment goals.
b. DSP ELSS Tax Saver Fund
This fund has also performed admirably, growing from Rs. 3.4 lakhs to Rs. 7.2 lakhs.
As an ELSS, it offers tax benefits under Section 80C but comes with a 3-year lock-in period.
Its consistent performance makes it a valuable component of your portfolio.
c. Active SIPs
Your ongoing SIPs in small-cap, mid-cap, and blue-chip funds provide a diversified exposure to the equity market.
This diversification is beneficial for balancing risk and returns.
2. Assessing the Proposal for HDFC Life Click 2 Invest ULIP
ULIPs combine insurance and investment, often leading to higher charges and complexities.
HDFC Life Click 2 Invest ULIP has a mandatory lock-in period of 5 years, restricting liquidity.
Given your existing commitments to PPF and LIC, adding another locked-in product may not be ideal.
ULIPs often have higher costs compared to mutual funds, which can erode returns.
3. Recommendations for Portfolio Adjustment
a. Retain High-Performing Funds
Both ICICI Prudential Value Discovery Fund and DSP ELSS Tax Saver Fund have demonstrated strong performance.
Consider retaining these funds to continue benefiting from their growth potential.
b. Rebalance Portfolio for Goal Alignment
Evaluate the proportion of investments across different fund categories.
Ensure that your portfolio aligns with your risk tolerance and the 5-year investment horizon.
c. Avoid Additional Lock-In Products
Given your preference for liquidity and existing locked-in investments, refrain from adding products like ULIPs.
Focus on investments that offer flexibility and align with your financial goals.
4. Tax Considerations
Long-term capital gains (LTCG) on equity mutual funds above Rs. 1.25 lakh are taxed at 12.5%.
Plan redemptions strategically to minimize tax liabilities.
Consider spreading out redemptions over multiple financial years if necessary.
5. Monitoring and Review
Regularly review your portfolio to ensure it remains aligned with your financial objectives.
Stay informed about market trends and fund performance.
Consult with a Certified Financial Planner periodically for personalized advice.
Finally
Your current investment strategy has yielded impressive results. By maintaining a diversified portfolio, avoiding high-cost products with lock-in periods, and staying informed, you are well-positioned to achieve your goal of accumulating Rs. 1 crore in the next 5 years. Continue to monitor your investments and make informed decisions to ensure continued financial growth.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
1. Evaluating Your Current Portfolio
a. ICICI Prudential Value Discovery Fund
This fund has shown significant growth, moving from Rs. 1.7 lakhs to Rs. 4.2 lakhs.
It primarily invests in large-cap stocks, offering stability and consistent returns
Given its performance, it aligns well with long-term investment goals.
b. DSP ELSS Tax Saver Fund
This fund has also performed admirably, growing from Rs. 3.4 lakhs to Rs. 7.2 lakhs.
As an ELSS, it offers tax benefits under Section 80C but comes with a 3-year lock-in period.
Its consistent performance makes it a valuable component of your portfolio.
c. Active SIPs
Your ongoing SIPs in small-cap, mid-cap, and blue-chip funds provide a diversified exposure to the equity market.
This diversification is beneficial for balancing risk and returns.
2. Assessing the Proposal for HDFC Life Click 2 Invest ULIP
ULIPs combine insurance and investment, often leading to higher charges and complexities.
HDFC Life Click 2 Invest ULIP has a mandatory lock-in period of 5 years, restricting liquidity.
Given your existing commitments to PPF and LIC, adding another locked-in product may not be ideal.
ULIPs often have higher costs compared to mutual funds, which can erode returns.
3. Recommendations for Portfolio Adjustment
a. Retain High-Performing Funds
Both ICICI Prudential Value Discovery Fund and DSP ELSS Tax Saver Fund have demonstrated strong performance.
Consider retaining these funds to continue benefiting from their growth potential.
b. Rebalance Portfolio for Goal Alignment
Evaluate the proportion of investments across different fund categories.
Ensure that your portfolio aligns with your risk tolerance and the 5-year investment horizon.
c. Avoid Additional Lock-In Products
Given your preference for liquidity and existing locked-in investments, refrain from adding products like ULIPs.
Focus on investments that offer flexibility and align with your financial goals.
4. Tax Considerations
Long-term capital gains (LTCG) on equity mutual funds above Rs. 1.25 lakh are taxed at 12.5%.
Plan redemptions strategically to minimize tax liabilities.
Consider spreading out redemptions over multiple financial years if necessary.
5. Monitoring and Review
Regularly review your portfolio to ensure it remains aligned with your financial objectives.
Stay informed about market trends and fund performance.
Consult with a Certified Financial Planner periodically for personalized advice.
Finally
Your current investment strategy has yielded impressive results. By maintaining a diversified portfolio, avoiding high-cost products with lock-in periods, and staying informed, you are well-positioned to achieve your goal of accumulating Rs. 1 crore in the next 5 years. Continue to monitor your investments and make informed decisions to ensure continued financial growth.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - May 24, 2025 | Answered on May 24, 2025
Thanks a lot sir for the detailed response. As suggested I will retain both the funds for long term.
Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment