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Ramalingam

Ramalingam Kalirajan  |6625 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 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
Deepjyoti Question by Deepjyoti on Apr 12, 2024Hindi
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Hi I am 20 years old from Delhi. I have earned around 2.5 crore by doing Remote jobs in Software engineering field and trading in stock market. Now I want to invest this entire amount of money in real estate and mutual funds for long term prospective around 15-20 years down the line. I can high risk now. But I want highest amount of return. So should either go for small cap funds or should diversified my portfolio in mid and small cap.

Ans: Congratulations on your impressive achievement, building a Rs. 2.5 crore corpus at 20 years old is fantastic! Let's discuss how to invest for the long term while managing risk.

Real Estate vs. Mutual Funds:

Real Estate: While real estate can be a good investment, it requires significant upfront capital, ongoing maintenance, and may have lower liquidity compared to mutual funds.

Mutual Funds: Offer diversification, professional management, and potentially high returns, especially with a 15-20 year horizon.

Considering Your Risk Tolerance:

High Risk, High Return: You're open to high risk for potentially high returns. This aligns well with your long-term investment horizon.
Building a Diversified Portfolio:

Don't Put All Eggs in One Basket: Spreading your money across asset classes (equity, debt) and within equity (large, mid, small cap) helps manage risk.

Actively Managed Funds: Since you're comfortable with high risk, actively managed funds with experienced professionals picking stocks could be suitable. Actively managed funds come with higher fees compared to passively managed funds.

Here's a Potential Portfolio Structure:

40% Large-Cap Funds: Provide a stable base and good growth potential.

30% Mid-Cap Funds: Offer higher growth potential than large-cap funds but with more risk.

30% Small-Cap Funds: Have the potential for the highest returns but also come with the highest risk.

Review and Rebalance:

Market Conditions Change: Periodically review your portfolio and rebalance as needed to maintain your target asset allocation.

Professional Guidance: A Certified Financial Planner (CFP) can help you design a personalized investment plan that considers your risk tolerance, goals, and tax implications. They can also recommend specific actively managed funds based on your risk profile.

Remember: Past performance is not a guarantee of future results. The stock market has inherent risks. Don't invest money you can't afford to lose.

Building wealth at your age is a smart move! A CFP can guide you in creating a diversified portfolio using actively managed funds to aim for high returns while managing risk.

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  |6625 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 2024

Money
im 38. have monthly income of 3.5 lakhs. recently closed plot loan of 36lakhs,i boughht home of around 18lakhs. ancestor property worth of 60lakhs. pf of 25lakhs. 10 lakhs in equity or shares directly. to close the housing loan i have closed couple of mutual funds. planning to invest in mutual funds. can you check my portfolio and suggest me the mutual funds. i dont have any plans to retire now.
Ans: Your financial discipline and strategic planning are impressive. It's clear you have a solid foundation, and it's wonderful to see you actively engaging in managing your portfolio. Given your goals and current situation, let's review your portfolio and suggest an investment plan that aligns with your objectives.

Current Financial Overview
Monthly Income: Rs 3.5 lakhs
Recently Closed Plot Loan: Rs 36 lakhs
Home Value: Rs 18 lakhs
Ancestral Property: Rs 60 lakhs
Provident Fund (PF): Rs 25 lakhs
Equity/Shares: Rs 10 lakhs
Recently Closed Mutual Funds: For housing loan repayment
Objectives
Rebuild Mutual Fund Investments
Grow your wealth through strategic investments
Plan for your daughter’s education
Secure your retirement
Build a diversified portfolio
Genuine Compliments
You’ve done exceptionally well in managing your finances, closing significant loans, and maintaining a robust income. Your proactive approach towards investing and securing your financial future is commendable. Now, let’s ensure your investments are optimized for growth and aligned with your goals.

Rebuilding Mutual Fund Investments
To rebuild your mutual fund investments, focus on diversification, risk tolerance, and time horizon.

Equity Mutual Funds
Large-Cap Funds:
These funds invest in large, stable companies. Suitable for long-term growth and relatively lower risk.
Mid-Cap Funds:
Invest in mid-sized companies with high growth potential. Higher returns but with increased risk.
Multi-Cap Funds:
Diversified across large, mid, and small-cap stocks. Good for balanced growth.
Debt Mutual Funds
Short-Term Debt Funds:
Suitable for goals within 1-3 years. These funds offer better returns than savings accounts.
Long-Term Debt Funds:
Ideal for goals beyond 3 years. They provide stability and regular income.
Hybrid Funds
Balanced Funds:
Invest in both equity and debt. Suitable for moderate risk tolerance and balanced growth.
Dynamic Asset Allocation Funds:
Adjust equity and debt exposure based on market conditions. They provide a balanced risk-return profile.
Diversified Investment Strategy
Equity Investments
Continue with direct equity investments but diversify across sectors to manage risk. Regularly review your portfolio to align with market trends.

Provident Fund (PF)
Your PF is a solid component of your retirement corpus. Continue regular contributions to benefit from compounding and tax benefits.

Daughter’s Education Planning
Given your daughter’s age, you have ample time to build a substantial education corpus. Here are a few strategies:

Equity Mutual Funds through SIP:
Systematic Investment Plans (SIPs) in equity mutual funds can offer higher returns over the long term.
Child Education Plans:
These are specifically designed to accumulate funds for your child's higher education. They come with a lock-in period which ensures the fund remains untouched until required.
Recurring Deposits:
Open a recurring deposit to systematically save a fixed amount every month. This will add to your education corpus.
Retirement Planning
Although you don’t plan to retire soon, it’s essential to ensure your retirement corpus is growing.

NPS (National Pension System)
Increase NPS Contribution:
Enhance your contribution to NPS. It provides a mix of equity, corporate bonds, and government securities, offering market-linked returns.
PPF (Public Provident Fund):
Continue contributing to PPF for its tax-free returns and security.
Equity and Balanced Funds
Continue SIPs in Equity Funds:
Equity has the potential to offer high returns over a long investment horizon. This will help build a substantial corpus for retirement.
Balanced or Hybrid Funds:
These funds invest in a mix of equity and debt, providing moderate returns with relatively lower risk.
Portfolio Optimization and Reallocation
Reduce Savings Account Holdings
Large sums in a savings account are underutilized. Transfer a portion to short-term debt funds or recurring deposits for better returns.

Re-evaluate Fixed Deposits
While FDs are safe, consider diversifying into debt funds for potentially higher returns without significantly increasing risk.

Increase Equity Exposure
Given your long-term goals, slightly increasing your equity exposure could enhance overall portfolio returns. Balance this with your risk tolerance.

Regular Monitoring and Adjustments
Investments need regular monitoring. Periodically review your portfolio to ensure it aligns with your goals. Make adjustments based on market conditions and personal financial changes.

Tax Planning
Effective tax planning can enhance your net returns. Ensure you maximize tax-saving investments under Section 80C, 80D, and other relevant sections. Utilize the benefits of tax-efficient investment options.

Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of expenses. This fund should be easily accessible, kept in liquid funds or a savings account. It acts as a financial safety net for unforeseen circumstances.

Insurance Planning
Adequate insurance coverage is crucial. Ensure you have sufficient life and health insurance. Avoid investment-cum-insurance plans as they often provide lower returns. Opt for term insurance and separate investments.

Final Insights
You've built a solid foundation for your financial future. With systematic planning and disciplined investing, you can achieve your goals. Regularly review your investments and adjust them as needed to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6625 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Money
Hello sir I'm 30 yrs old I have 50lakh lumsum amount after selling house ..I want to invest in mutuals funds with moderate rish for 5-7 yrs .. I might take around 25% in next 3yrs to purchase new house and keep remaining as long as possible .. Can you suggest is it right time to invest of so jo much percentage I should allocate in larger mid small cap etc Thank you
Ans: You've mentioned having Rs 50 lakhs to invest after selling a house. You aim to invest with moderate risk for 5-7 years, potentially withdrawing 25% in the next 3 years for a house purchase. It's essential to approach this investment with a clear strategy to meet your needs.

Investment Horizon and Risk Assessment
Investing for 5-7 years allows you to take moderate risks. Given your time frame, a balanced approach in mutual funds can be beneficial.

Allocation Strategy
To align with your moderate risk appetite, here's a suggested allocation strategy:

Large-Cap Funds
Large-cap funds invest in established companies with a proven track record. These funds offer stability and moderate returns. Allocating 40% of your investment here provides a strong foundation.

Mid-Cap Funds
Mid-cap funds invest in companies with growth potential. They carry higher risks than large-cap funds but can offer higher returns. Allocating 30% to mid-cap funds can balance stability and growth.

Small-Cap Funds
Small-cap funds invest in smaller companies with high growth potential but come with higher risks. Allocating 20% to small-cap funds can boost potential returns, balancing with other lower-risk investments.

Debt Funds
Debt funds invest in fixed-income securities. They offer lower risk and steady returns, ideal for short-term needs. Allocating 10% to debt funds ensures liquidity for your potential house purchase in 3 years.

Timing Your Investments
Investing a lump sum amount can be daunting. Market volatility can affect your returns. Consider a Systematic Investment Plan (SIP) or a Systematic Transfer Plan (STP). SIPs allow you to invest regularly, reducing market risk. STPs let you transfer a lump sum from debt funds to equity funds gradually.

Withdrawal Strategy
Given your plan to withdraw 25% in 3 years, align your debt fund investments with this timeline. Debt funds provide liquidity with lower risk, ensuring your funds are accessible when needed.

Monitoring and Rebalancing
Regularly monitor your investments. Market conditions and personal goals can change. Rebalance your portfolio annually to maintain your desired asset allocation.

Advantages of Actively Managed Funds
While index funds may seem attractive due to lower costs, actively managed funds offer several benefits:

Professional Management: Actively managed funds are managed by experts who can adjust the portfolio based on market conditions.

Potential for Higher Returns: Fund managers aim to outperform the market, providing potential for higher returns.

Flexibility: Active funds can adapt to changing market scenarios, reducing risks.

Disadvantages of Direct Funds
Direct funds might save on commission costs, but there are drawbacks:

Lack of Professional Guidance: Direct funds require you to make investment decisions without expert advice.

Time-Consuming: Managing your investments requires time and effort, which may not be feasible for everyone.

Potential Mistakes: Without professional guidance, the risk of making poor investment choices increases.

Benefits of Investing Through a Certified Financial Planner
Investing through a Certified Financial Planner (CFP) offers several benefits:

Personalized Advice: CFPs provide tailored advice based on your financial goals and risk appetite.

Comprehensive Planning: CFPs consider your overall financial situation, including tax implications and future needs.

Ongoing Support: CFPs offer continuous support, helping you navigate market changes and adjust your investments accordingly.


It's commendable that you are planning your investments wisely. Your decision to seek advice demonstrates a proactive approach to financial management. Understanding your goals and aligning your investments accordingly is crucial for achieving financial security.


Investing a significant amount like Rs 50 lakhs is a substantial step towards building your financial future. It's important to appreciate your diligence in planning and seeking the best strategies to meet your needs.

Final Insights
Investing with a moderate risk approach for 5-7 years requires a balanced strategy. Diversifying across large-cap, mid-cap, small-cap, and debt funds can align with your goals. Regularly monitor and rebalance your portfolio to stay on track.

Investing through a Certified Financial Planner provides personalized advice, comprehensive planning, and ongoing support. Actively managed funds, despite higher costs, offer potential for higher returns and flexibility. Avoid direct funds unless you are confident in managing investments independently.

Your proactive approach and thoughtful planning set a solid foundation for achieving your financial goals. With the right strategy and guidance, you can navigate market conditions and make informed decisions.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6625 Answers  |Ask -

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

Asked by Anonymous - Jul 15, 2024Hindi
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Hello , I am in stock market since last 2 years and doing as primary sources of income. After doing very hard work I could only achieve 17% return per year in 2 years. However if I took more risk than could achieve more return but capital sefty is my priority. On other end many small cap and mid cap fund gave 50% per year means 100% return in last 2 years. So I'm highly doubting my skill and want to shift to 1 Mutual fund like small and mid cap 2 Debt fund with 8-10% return 3 FD under my parents account for 8-10% risk free returns , I'm preferring FD more as it's peace full investment and very safe compared to equity markets. Because MF can't give consistent returns and may dip 20-30% in covid like situation Will still invest 20% in equity or MF , current capital 50 L living with family owned house So please suggest what is good or any other good investments suggetion you have.. Thanks in advance
Ans: You've been in the stock market for 2 years. You achieved a 17% return per year. That's impressive, given market volatility. However, you seek capital safety.

Small and mid-cap funds have given 50% returns recently. It’s natural to doubt your skills when comparing. Let’s explore your options.

Investment Options and Analysis
1. Mutual Funds: Small and Mid-Cap Funds

These funds can offer high returns.

However, they come with high risk.

Market volatility can cause significant losses.

Disadvantages of Index Funds:

Lack of active management.

May not outperform the market.

Better to opt for actively managed funds.

2. Debt Funds with 8-10% Returns

Debt funds provide stability and regular income.

They are less volatile compared to equity.

Suitable for risk-averse investors.

3. Fixed Deposits (FD) in Parents’ Accounts

FDs are very safe.

They offer guaranteed returns.

Returns might not beat inflation.

4. Direct Funds vs Regular Funds

Direct funds have lower costs.

But they lack professional management.

Regular funds through a Certified Financial Planner (CFP) are better.

CFPs provide expertise and regular reviews.

Suggested Investment Plan
1. Maintain a Balanced Portfolio

Continue with 20% in equity or mutual funds.

Equity provides growth potential.

Choose actively managed funds for better returns.

2. Allocate to Debt Funds

Invest a significant portion in debt funds.

They offer stability and moderate returns.

Ideal for your capital safety goal.

3. Use Fixed Deposits Wisely

FDs are good for risk-free returns.

Keep a portion in FDs for peace of mind.

Consider splitting FDs for liquidity.

Actionable Steps
1. Diversify Investments

Mix equity, debt, and FDs.

This balances risk and returns.

2. Increase Financial Knowledge

Learn more about market trends.

Understanding helps in better decision-making.

3. Consult a Certified Financial Planner (CFP)

A CFP can guide you effectively.

They offer tailored advice.

4. Regular Reviews

Review your portfolio every six months.

Adjust based on performance and goals.

Final Insights
Your dedication to stock trading is commendable. Safety of capital is crucial. Balancing your portfolio with mutual funds, debt funds, and FDs is wise. Actively managed funds can outperform index funds. Consulting a CFP can provide expert guidance.

Investing in FDs under your parents’ accounts is a safe bet. Debt funds provide stability. Continue a small portion in equity for growth. Regular reviews and adjustments are essential for long-term success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Hello Madam, i am 38 year married women, having a 15year 1 kid boy ( but my husband not loving me even he is not talking with me from the last 8 years but we r leaving together due to our son, he fulfilled the need with the responsibilities of our home and our son but as wife he is not talking and even not caring to me ,but before 2 years back one married man come to talk with me he is my official colleague and we both attached a lot with each other after some days he proposed me and said that he is loving me many years ago but he thought that i am very Strick person will not response him, but now he is saying that he wants me as a life partner me also every time he treat me like a wife very much caring and loving nature now i introduce him to my family as a friend and family members also very happy with taking to him, we are from 2 year together is it good or what should i do further?
Ans: Dear Ruta,
You want to get into a relationship with a married man? Will that not complicate your already complicated life?
You certainly deserve to be loved and taken care of BUT do not jump towards a married man...you do understand that his priorities will lie with his first family and this will hurt you again and you will feel neglected AGAIN...

What is he planning with his marriage? Does his wife know about your relationship? Is he going to end his marriage and then marry you? These questions need answers and then you can decide for yourself keeping in mind that you need to take of yourself emotionally in this second association.

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Milind

Milind Vadjikar  |426 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 15, 2024

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Dear Sir, My Age is 59 and investment is as follows: Stock market 1.2 Cr MFI 2.0 Cr Expectied pension from 2026 1,4L per month House : own house Loan liability is zero Responsibility: Marriage of two sons who finished PG My question is " above fund sufficient to take over for me and my wife for next 30 year (assuming life expectancy is 90 Years) Regards Srinivasan
Ans: Hello;

You may invest 20 L in Arbitrage type of mutual fund(low risk) earmarked for marriage of your sons.

Also you may invest 3 Cr into equity savings type mutual fund (moderate risk).

After 3 years it may grow into a sum of 3.89 Cr considering modest return of 9%.

I suggest that you redeem this corpus by paying LTCG(~11 L) and buy an immediate annuity for balance corpus of 3.78 Cr from a life insurance company.

I am not recommending you to do an SWP because for your required monthly income SWP rate will have to be 4.5%+ annually and I ran this on an swp calculator which shows depleted corpus of less then 1 Cr after 30 years.

Considering annuity rate of 6% you may expect to receive monthly payment of 1.89 L(pre-tax).

Seek joint annuity for yourself and your spouse with return of purchase price to your nominees.

Some life insurers offer increasing annuity at fixed intervals to account for inflation.

Also if you shop around and negotiate you may get a better annuity rate.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

...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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