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Ramalingam

Ramalingam Kalirajan  |8077 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 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
Rushiraj Question by Rushiraj on Mar 16, 2024Hindi
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I have a 10lakh mutual fund portfolio with monthly SIP of 50k since 5 yrs and some lump sum investments. Now I want to change my Regular MF to direct. Since my SIP is active until today, can i stop Regular MF SIP and transfer it to Direct plan or I will have to wait one year after stopping the SIP so that I dont attract STCG.

Ans: You have built a substantial mutual fund portfolio worth ?10 lakhs, with a consistent SIP of ?50,000 for the past five years. Transitioning from Regular to Direct mutual funds can seem appealing due to lower expense ratios. However, it’s important to weigh the benefits of staying with Regular plans.

Key Advantages of Regular Mutual Funds
While Direct plans have lower expense ratios, Regular plans offer several significant benefits, especially when you work with a competent Mutual Fund Distributor (MFD):

1. Professional Guidance
Expertise and Advice:

A good MFD provides expert advice tailored to your financial goals and risk appetite. This guidance can help optimize your investment strategy.
Regular Reviews and Rebalancing:

MFDs regularly review and rebalance your portfolio. This ensures your investments stay aligned with your financial objectives and market conditions.
2. Convenience and Support
Administrative Assistance:

MFDs handle the paperwork and administrative tasks associated with your investments. This convenience can save you time and effort.
Ongoing Support:

They offer ongoing support and answer queries, making the investment process smoother for you.
3. Access to Research and Insights
Market Research:

MFDs provide access to detailed market research and insights. This information can help you make informed investment decisions.
Fund Selection:

They assist in selecting the right mutual funds from a plethora of options, ensuring a well-diversified portfolio.
Evaluating Your Current MFD
If you feel your current MFD is not adding value, it’s crucial to reassess their services. Here are steps to consider:

1. Assess Their Performance
Review Your Portfolio:

Evaluate the performance of your portfolio. Compare it with benchmark indices and peer funds to gauge effectiveness.
Check Their Services:

Assess the range and quality of services provided by your MFD. Are they proactive in managing your investments?
2. Seek a Competent MFD
Research and Recommendations:

Look for MFDs with a strong track record and positive client testimonials. Seek recommendations from friends or family.
Professional Credentials:

Ensure the MFD has relevant qualifications and certifications. This can indicate a higher level of expertise and professionalism.
3. Transitioning to a Better MFD
Transfer Your Investments:

If you decide to switch, the new MFD can help transfer your existing investments seamlessly. They will handle the paperwork and formalities.
Set New Goals:

Work with your new MFD to set clear financial goals and strategies. Regular reviews and adjustments will keep your portfolio on track.
Conclusion
While Direct plans offer lower expense ratios, the benefits of staying with Regular mutual funds, especially with a proficient MFD, can outweigh the cost savings. Expert advice, convenience, and access to market insights are valuable advantages. If your current MFD isn’t meeting your expectations, consider transitioning to a more competent professional to ensure your investments are well-managed and aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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  |8077 Answers  |Ask -

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

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I am a mutual fund investor since 2010 by SIP & Lupsum , Now I am holding Funds Quant Small cap , Quant large & Mid cap , Hdfc 30 Foused fund , Aditya Birla psu equity Fund , & Sbi contra Fund all are direct plan Every month sip is 20000 each Fund shall I continue as it is or any changes
Ans: Kudos on your decade-long journey in mutual fund investments! It's impressive to see your commitment to building wealth through disciplined investing.

As a Certified Financial Planner, I understand the importance of periodically reviewing and adjusting your investment portfolio to ensure it remains aligned with your financial goals and risk tolerance. Here are some considerations regarding your current portfolio:

Diversification: Your portfolio appears to be well-diversified across different fund categories, which is commendable. Diversification helps spread risk and potentially enhance returns over the long term.
Performance Evaluation: Evaluate the performance of each fund in your portfolio relative to its benchmark and peer group. Ensure that the funds are consistently meeting your expectations and delivering satisfactory returns.
Fund Manager Track Record: Assess the track record and expertise of the fund managers managing your investments. Consistent and experienced fund management can significantly influence the performance of mutual fund schemes.
Expense Ratio: Keep an eye on the expense ratio of your funds, as lower expenses can directly impact your returns over time. Direct plans typically have lower expense ratios compared to regular plans, allowing you to maximize your investment returns.
Market Conditions: Stay attuned to prevailing market conditions and economic trends that may impact the performance of your investments. Consider consulting with a Certified Financial Planner for personalized advice based on the current market scenario.
Ultimately, the decision to continue with your existing SIPs or make changes depends on various factors, including your investment objectives, risk tolerance, and market outlook. Regularly reviewing your portfolio and seeking professional guidance can help you make informed investment decisions and stay on track to achieve your financial goals.

Keep up the good work, and remember that consistency and discipline are key to long-term investment success!

..Read more

Ramalingam

Ramalingam Kalirajan  |8077 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 19, 2024

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I have ~40L in my portfolio and all my MF`s are Regular funds since I have been investing thru ICICIDirect. Now I want to start investing into Direct funds since I realize that Direct funds have lower Expense ratio. So I want to invest thru MFcentral or Zeroda. Now, my quesiton is: Is it a good idea to cancel my existing MF`s (not redeeming) in ICICIDirect and start new direct SIP`s ? Will I be loosing compounding effect of my existing regular MF`s? I dont want to redeem the SIP`s since it will incurr large LTCG taxes
Ans: It may seem tempting to switch to Direct Funds for the lower expense ratio, but there are key factors to consider before making the switch.

Here are a few points in favor of continuing with Regular Funds through a Certified Financial Planner (CFP) or a professional Mutual Fund Distributor (MFD):

Value of Professional Advice
A professional MFD or CFP adds value by offering timely advice, portfolio reviews, and strategic changes based on market conditions and your financial goals. They help you stay focused on long-term plans and avoid emotional decisions.

Platforms like MF Central or Zerodha do not offer personalized advice. You’re left managing the complexities of your portfolio alone, which can be overwhelming and risky, especially during volatile markets.

Disadvantages of Direct Platforms
MF Central and Zerodha are DIY (Do-It-Yourself) platforms. While the lower expense ratio seems appealing, managing the portfolio on your own requires time, expertise, and market insight. Any wrong move could cost you more than you save in expense ratio.

MF Central is not user-friendly and does not offer real-time support for managing SIPs, rebalancing, or tracking your overall portfolio’s health.

Zerodha is a trading platform, but it doesn’t come with personalized advice. It lacks the long-term relationship benefits that an MFD or CFP provides, including goal-based planning and tax-efficient strategies.

Compounding Effect & Tax Implications
Cancelling your existing SIPs and switching to direct funds will not directly affect the compounding of your current investments. However, starting new SIPs in Direct Plans could lead to a disjointed investment strategy. You may also lose out on expert guidance that helps optimize the compounding effect through proper fund selection and market timing.

Switching to direct funds might seem cost-effective in the short run but could result in higher LTCG (Long Term Capital Gains) taxes if you later decide to rebalance your portfolio on your own without professional help.

Avoid Disruption
Switching platforms might disrupt your current portfolio management process like consolidated reports and capital gains tracking, which helps during tax filings. On DIY platforms, you will have to manage all of this yourself.

If you are not satisfied with ICICIDirect's services, you can always switch to another professional MFD or Certified Financial Planner (CFP). A good MFD will still provide the benefits of seamless portfolio management, including consolidated reports, capital gains tracking, and regular reviews, which are critical during tax filings and for keeping your investments aligned with your goals.

Final Thought
Instead of switching to direct plans, continue with Regular Plans through a professional MFD or CFP. The personalized advice you receive will often outweigh the slight difference in expense ratio. Regular reviews, goal setting, and rebalancing help ensure your portfolio remains aligned with your long-term objectives.

Making hasty decisions based on expense ratio alone can lead to missed opportunities and higher risks in the long run.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Hi Mam, Hope you are doing well. I am very worried about my son who is now 12.5 years old and studying in 7th standard in a very reputed school. Since childhood, he has no interest in studies, unless we doesn't seat in front of him, he doesn't study. Every teacher from his kindergarten days upto now has the same complaint that he is doesn't pay attention in class and the result is he doesn't get good marks in the exam. When we scold him for studies, he does it for that particular time only and then get back to his non-interest mode again and start to run from studies. He will play video games, goes to play around with his friends, he will find some or the other reason for not doing studies or homework. The irony is that he is not interested in any sports or any other kind of activities. In every summer holidays, we make him to join some sports or music classes, but there also he doesn't show interest and do things just for the sake of showing. From last year, we have started sending him to tuitions also, but no change in attitude. This year we have found a teacher of his reputed school who is retired and taking tuitions, we are sending him to her and she is charging a big amount for tuitions. please guide how can we change his attitude and make him more serious in any activity he does as he doesn't have interest in anything (we have observed doing everything we can).
Ans: Hello Sunil!!

I am doing great, thank you for asking, God bless you!

I can totally understand when you say you are worried.

Your son is 12.5, he will soon be a teenager. There will be different challenges, I want you to read up on parenting a teenager and be ready to handle him well.

The problem as I see it is that everyone of you, his teachers included have made studies like a burden for him.... and subjected the young child to a lot of anxiety, he just wants to run away form it....
"Every teacher from his kindergarten days upto now has the same complaint that he is doesn't pay attention in class".... this statement of yours... it is the teacher's duty to ensure the child listens to him/her, how can she start labeling a child like this. From a young age your son has been conditioned to believe that he is not not good in studies, he doesn't focus and he doesn't sit in one place. All my sympathies are with your son...every child comes with immense potential and it's our duty as parents and teachers to nurture the child.

The following is what I propose so that we bring him back to loving to learn ( not score marks, that should never be the barometer)-
1. Love your child the way he is now
2. Give him lot of positive strokes
3. Have one on one sessions for any activity you plan for him... let him choose the activity, empower him
4. choose a teacher, who can get along with him and help him develop a positive attitude towards studies and life in general
5. look for a school where they nurture him... not just a reputed one...less number of students and a teacher who is invested in her/ his students,

If you can connect with me, I can help him. Have had many a students in this kind situation.
This is my website..
https://transformme.co.in/

Loads of best wishes to the whole family..

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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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