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Ramalingam

Ramalingam Kalirajan  |7163 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 2024

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
Asked by Anonymous - Apr 22, 2024Hindi
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Hi sir, I'm investing 3.5k in axis small cap fund and 3.5k Nippon small cap fund direct growth.. i have some doubts in these funds..is these funds are good or not, please advise me..how many years should I continue my investment for better growth?

Ans: Investing in small-cap funds like Axis Small Cap and Nippon Small Cap can offer high growth potential but come with higher volatility. Here's a breakdown:

Performance: Small-cap funds tend to outperform in bullish markets but can underperform in bearish phases. Monitor the funds' performance against their benchmarks and peers.

Investment Horizon: Small-cap investments are best suited for long-term goals, typically 5-7 years or more. This duration allows the funds to navigate market cycles and potentially deliver better returns.

Risk Tolerance: Ensure your risk tolerance aligns with the volatility associated with small-cap funds. If you're comfortable with market fluctuations and have a long-term horizon, continue investing.

Diversification: While small-cap funds offer growth potential, consider diversifying your portfolio with large-cap or multi-cap funds to balance risk and return.

Review: Regularly review your investments, at least annually, to assess performance and alignment with your financial goals.

Considering the above factors, if you have a long-term horizon and can tolerate volatility, continuing your investment in these funds could yield better growth. However, ensure to monitor and review periodically.
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.
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Ramalingam

Ramalingam Kalirajan  |7163 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

Asked by Anonymous - Apr 22, 2024Hindi
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Hi sir, since 3-4 months I have investing 7k in Mutual funds. 3.5k in axis small cap fund direct growth and 3.5k Nippon small cap fund direct growth.. are these funds are good to invest ..or should I drop .. I'm confusing, please advise..how many years should I continue my investment in these funds for better returns?
Ans: It's commendable that you're taking steps towards investing in mutual funds. Let's analyze your current investment in Axis Small Cap Fund and Nippon Small Cap Fund:
• Axis Small Cap Fund (Direct Growth): Small-cap funds like Axis Small Cap Fund invest in stocks of small-sized companies with high growth potential.
• Nippon Small Cap Fund (Direct Growth): Similar to Axis Small Cap Fund, Nippon Small Cap Fund focuses on investing in the stocks of small-cap companies. It's important to note that small-cap funds can be riskier due to their higher volatility, but they also have the potential for higher returns over the long term. Like with any equity investment, it's advisable to have a long-term investment horizon of at least 5-7 years to potentially ride out market cycles and benefit from compounding returns.

Investing in mutual funds directly (Direct Funds) can have some drawbacks compared to investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential. Here are the disadvantages of direct funds and the benefits of investing through an MFD with a CFP credential:
Disadvantages of Direct Funds:
1. Lack of Personalized Advice: When investing directly, you may not receive personalized financial advice tailored to your specific needs, goals, and risk tolerance.
2. Limited Research: Direct investors are responsible for conducting their own research on funds, which can be time-consuming and may not always lead to informed investment decisions.
3. Behavioral Biases: Direct investors may fall prey to emotional biases like fear and greed, leading to impulsive investment decisions that may not align with their long-term financial goals.
4. No Portfolio Review: Direct investors may not receive regular portfolio reviews and rebalancing recommendations, which are crucial for maintaining a well-diversified investment portfolio.
Benefits of Regular Funds Investing through MFD with CFP Credential:
1. Personalized Financial Planning: MFDs with CFP credential offer personalized financial planning services, helping you set clear financial goals and develop an investment strategy tailored to your needs.
2. Professional Guidance: MFDs can provide professional guidance and investment advice based on their expertise and market knowledge, helping you make informed decisions aligned with your financial objectives.
3. Access to a Wide Range of Funds: MFDs offer access to a diverse range of mutual funds across asset classes and investment styles, enabling you to build a well-rounded investment portfolio tailored to your risk profile and investment horizon.
4. Regular Portfolio Monitoring: MFDs regularly monitor your investment portfolio, review fund performance, and make necessary adjustments to ensure it remains aligned with your financial goals and risk tolerance.
5. Simplified Investing Process: Investing through an MFD streamlines the investment process, allowing you to consolidate your investments and receive consolidated reports for easy tracking and monitoring.

In conclusion, both Axis Small Cap Fund and Nippon Small Cap Fund can be suitable investment options if you have a long-term investment horizon and a high risk tolerance. However, it's essential to regularly monitor the performance of your investments and review your financial goals to ensure they align with your investment strategy.

While direct investing may offer lower expense ratios, the lack of personalized advice, limited research capabilities, and behavioral biases can outweigh the cost savings. Investing through an MFD with a CFP credential provides you with professional guidance, personalized financial planning, and ongoing portfolio monitoring, enhancing your chances of achieving your long-term financial goals.

..Read more

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Nayagam P

Nayagam P P  |3935 Answers  |Ask -

Career Counsellor - Answered on Nov 27, 2024

Ramalingam

Ramalingam Kalirajan  |7163 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 27, 2024

Asked by Anonymous - Nov 27, 2024Hindi
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Hi, sir I am a an 30 year old (single) engineer working with a MNC in Chennai, unfortunately till this day i haven't had any savings at all for my future (retirement, other short term or long term goals). Currently my take home salary after EPF and parental insurance is 53k ( EPF is about 4900/month - employee+employer) i haven't opted for Corporate NPS but is provided by the company without any additional contribution from company. I have company health insurance policy and have planned to take my own health insurance and term insurance plan. Adding to above I have zero emergency fund with me. How should I proceed with my investments?
Ans: You have taken the first step by recognising the need to plan. It’s essential to appreciate your intention to secure your financial future. Let’s look at how you can proceed to achieve your short-term and long-term goals.

Your current take-home salary is Rs 53,000, and your EPF contribution is Rs 4,900. However, you lack savings, investments, and an emergency fund. Here's a step-by-step strategy:

Build an Emergency Fund
Set aside funds to cover at least six months' expenses.

Start by saving 10-15% of your salary monthly into a high-interest savings account.

Use Recurring Deposits or Liquid Mutual Funds to maintain this fund for emergencies.

Secure Yourself with Insurance
Health insurance: Maintain your company health policy but add a personal health policy. Choose a policy offering a sum insured of Rs 10-15 lakh.

Term insurance: Buy a term plan covering 10-15 times your annual income. Keep the policy simple and avoid investment-linked insurance.

Budget Your Income
Allocate your income carefully for expenses, savings, and investments.

Use the 50-30-20 rule: 50% for needs, 30% for wants, and 20% for savings and investments.

Avoid unnecessary expenses to increase your saving capacity.

Start Investing Gradually
Short-term goals (1-5 years): Invest in debt funds or recurring deposits. Debt mutual funds are good for stable returns.

Long-term goals (5+ years): Invest in equity mutual funds for higher returns. Choose actively managed funds with consistent performance.

Avoid index funds. Actively managed funds have a better potential for higher returns through professional fund management.

Retirement Planning
Utilise the EPF for retirement. Your current contribution will grow over time with compounding.

Consider investing in diversified equity mutual funds for additional retirement savings.

Corporate NPS: You can explore NPS for its tax-saving benefits. However, don’t rely solely on it for retirement.

Tax-Saving Investments
Use Section 80C to save taxes up to Rs 1.5 lakh.

EPF, PPF, ELSS mutual funds, and life insurance premiums can qualify under this section.

Opt for ELSS funds for tax saving and wealth creation.

Review Existing Expenses
Evaluate and minimise unnecessary expenditures.

Avoid loans for discretionary spending like vacations or gadgets.

Advantages of Using a Certified Financial Planner
A CFP can help you plan holistically and ensure you stick to your goals.

They provide tailored strategies, ensuring proper fund allocation and monitoring.

Invest through a Mutual Fund Distributor with CFP credentials to access professional advice.

Key Steps for Discipline
Automate investments through SIPs in mutual funds.

Track your monthly budget and investment progress regularly.

Avoid direct funds. Regular funds offer professional guidance and fund distributor support.

Tax Implications
For equity mutual funds, LTCG above Rs 1.25 lakh attracts 12.5% tax.

STCG on equity funds is taxed at 20%.

Debt fund gains are taxed as per your income slab. Consider these while investing.

Final Insights
You are in the right direction by seeking advice now. Build a solid foundation with savings, insurance, and investments. Take small steps toward financial independence.

Remain consistent with your investments, and review your financial plan annually.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Mayank

Mayank Chandel  |1940 Answers  |Ask -

IIT-JEE, NEET-UG, SAT, CLAT, CA, CS Exam Expert - Answered on Nov 27, 2024

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Hello, i really have a serious issue regarding my studies as i am 24 yrs now and gave NEET 4times and i am still preparing for nxt year 2025 but at the back of my mind i am really tensed what if the same thing repeats in the neet 2025 also like paper leak and all, So now i am confused that should i take a full drop or partial drop. The mental pressure is really hitting hard and also its almost been 4years that i am still 12th pass only and my classmates have already completed their college and some are flight attendant and earning well, So this all things just hits so hard and also the hope in parents eyes as my father is already proud that i studied science so i would definitely become doctor. I wasted a lot of money in pg and coaching (fastrack) and this all things are hitting so hard that i really feel sad and have no ways to go.
Ans: Hi Bhima
I must say you have got perseverance & I appreciate your parent's trust in you. You have already appeared multiple times and you are going to appear again in 2025. By the time you will be 25 years old. They say there is no age to learn. But after getting admission you need another 10 years to practice as a qualified specialist. Make sure you take admission in the next session.

If higher cutoff & high fees of private colleges are an issue for you, then try exploring the MBBS abroad option, I can help with that too. Since NEXT is compulsory for Indian & Foreign graduates too it won't make a difference if you study in India or Abroad.

For time forget all the societal pressure and give your 100% and make your parents proud.

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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