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23-year-old earning 108k, is my investment strategy good?

Ramalingam

Ramalingam Kalirajan  |6971 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 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
Stats Question by Stats on Jul 16, 2024Hindi
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Hi, I am 23 years old earning a salary of 108k per month after all deductions. I am doing SIP of 21k per month in these following funds:- 1. Parag Parikh Flexi Cap Fund:- 3500 2. Quant Flexi Cap Fund:- 3500 3. Nippon India Large Cap Fund :- 3000 4. Motilal Oswal Mid Cap Fund:- 3500 5. Bandhan Small Cap Fund:- 2500 6. Axis Small Cap Fund:- 2000. 7. Motilal Oswal Nifty India Defence Index Fund:- 3000 Other than these combined contribution towards EPF (employee+employer) = 12800 per month. Please give a review of my portfolio. My investment horizon is for long terms. I will step up my investment depending on my salary increment

Ans: Your portfolio is well-diversified with a mix of flexi cap, large cap, mid cap, and small cap funds. This strategy spreads your risk across different market segments.

Flexi Cap Funds
Parag Parikh Flexi Cap Fund and Quant Flexi Cap Fund: These funds are flexible and invest across various market caps. They provide good diversification and stability.
Large Cap Funds
Nippon India Large Cap Fund: Large cap funds are stable and provide steady returns. They are less volatile compared to mid and small cap funds.
Mid Cap Funds
Motilal Oswal Mid Cap Fund: Mid cap funds offer higher growth potential. They are riskier than large cap funds but can provide better returns over the long term.
Small Cap Funds
Bandhan Small Cap Fund and Axis Small Cap Fund: Small cap funds have high growth potential. They are volatile and should be monitored closely.
Sector Funds
Motilal Oswal Nifty India Defence Index Fund: Sector funds focus on specific industries. They are riskier and should be a smaller part of your portfolio. Consider replacing with an actively managed fund for better returns.
EPF Contribution
EPF Contribution: Your EPF contribution is a good foundation for your retirement savings. It provides stability and tax benefits.
Investment Horizon
Your long-term investment horizon is ideal for your portfolio. It allows you to ride out market volatility and benefit from compounding returns.

Step-up SIP
Step-up SIP: Increasing your SIP amount with salary increments is a smart strategy. It will help you achieve your financial goals faster.
Final Insights
Your portfolio is well-structured for long-term growth. Consider replacing the index fund with an actively managed fund. Regularly review your investments to ensure they align with your 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  |6971 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 2024

Money
Hi, I am 23 years old earning a salary of 108k per month after all deductions. I am doing SIP of 19k per month in these following funds:- 1. Parag Parikh Flexi Cap Fund:- 4000 2. Quant Flexi Cap Fund:- 4000 3. Nippon India Large Cap Fund :- 3000 4. Motilal Oswal Mid Cap Fund:- 3500 5. Bandhan Small Cap Fund:- 2500 6. Axis Small Cap Fund:- 2000. Other than these combined contribution towards EPF (employee+employer) = 12800 per month. Please give a review of my portfolio. My investment horizon is for long terms. I will step up my investment depending on my salary increment.
Ans: t’s fantastic to see someone as young as you already planning for the future and investing wisely. Your SIPs and contributions towards EPF are commendable. Let's dive into your portfolio and see how it aligns with your long-term goals.

Understanding Your Current Investments
Monthly SIPs
Parag Parikh Flexi Cap Fund: Rs 4,000
Quant Flexi Cap Fund: Rs 4,000
Nippon India Large Cap Fund: Rs 3,000
Motilal Oswal Mid Cap Fund: Rs 3,500
Bandhan Small Cap Fund: Rs 2,500
Axis Small Cap Fund: Rs 2,000
EPF Contributions
Combined contribution (employee + employer): Rs 12,800 per month
Portfolio Review
Diversification
You have a good mix of large-cap, mid-cap, and small-cap funds, which is great for diversification. This approach balances risk and return, leveraging the growth potential of different market segments.

Flexi Cap Funds
Flexi Cap Funds are versatile, investing across market capitalizations. Your allocation in Parag Parikh and Quant Flexi Cap Funds is a smart move, providing flexibility to capitalize on market opportunities.

Large Cap Funds
Large Cap Funds like Nippon India Large Cap Fund offer stability with moderate returns. These funds invest in well-established companies with a proven track record.

Mid Cap Funds
Mid Cap Funds, such as Motilal Oswal Mid Cap Fund, strike a balance between risk and return. They invest in companies with high growth potential but are relatively riskier than large caps.

Small Cap Funds
Small Cap Funds, including Bandhan and Axis Small Cap Funds, are high-risk, high-reward investments. They invest in smaller companies with significant growth potential but also higher volatility.

EPF Contributions
Your EPF contributions are excellent for long-term savings and tax benefits. EPF offers a stable, risk-free return, complementing your more aggressive mutual fund investments.

Evaluating Your Portfolio
Advantages
Diversification: Your portfolio is well-diversified across market capitalizations, reducing risk.
Long-Term Horizon: Investing for the long term allows you to ride out market volatility and benefit from compounding.
Regular Investment: SIPs ensure disciplined investing, averaging out market highs and lows.
Areas of Improvement
Overlapping Investments: Flexi Cap Funds may have overlapping stocks with your other funds. Review fund portfolios to avoid redundancy.
Risk Management: High allocation to small and mid-cap funds increases portfolio risk. Ensure it aligns with your risk tolerance.
Certified Financial Planner's Recommendation
Review Fund Performance: Regularly review the performance of your funds. Replace consistently underperforming funds with better options.
Monitor Overlap: Use tools to check for overlapping holdings in your funds. Diversify to reduce concentration risk.
Rebalance Portfolio: Periodically rebalance your portfolio to maintain your desired asset allocation.
Steps to Enhance Your Portfolio
Increase SIPs with Salary Hike
As your salary increases, step up your SIP contributions. This leverages the power of compounding and accelerates wealth creation.

Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses. This provides financial security during unforeseen circumstances.

Tax Planning
Invest in tax-efficient instruments to maximize your returns. Utilize sections like 80C, 80D for tax deductions.

Health and Life Insurance
Ensure adequate health and life insurance coverage. This protects your family and financial goals in case of emergencies.

Avoid Over-Reliance on One Category
Avoid over-relying on one fund category. Maintain a balanced approach with a mix of equity, debt, and other instruments.

Power of Compounding
How Compounding Works
Compounding is earning returns on your returns. The longer you stay invested, the more your investments grow exponentially.

Example
If you invest Rs 10,000 monthly at an annual return of 12%, in 20 years, it could grow to approximately Rs 1 crore. Starting early and staying invested is key.

Benefits of Early Investing
Starting early gives your investments more time to grow. Even small amounts can accumulate significantly over time.

Actively Managed Funds vs. Index Funds
Actively Managed Funds
Professional Management: Actively managed funds are managed by experts who make investment decisions based on market research.
Potential for Outperformance: These funds can outperform the market by selecting high-potential stocks.
Disadvantages of Index Funds
Lack of Flexibility: Index funds simply track a market index, offering no flexibility to capitalize on market opportunities.
Average Returns: Index funds provide market-average returns, which may not meet your financial goals.
Why Choose Actively Managed Funds?
Actively managed funds offer potential for higher returns through expert stock selection and market timing. They provide a dynamic approach to investing.

Regular vs. Direct Funds
Regular Funds
Advisor Support: Investing through a Certified Financial Planner (CFP) provides guidance and expertise.
Convenience: Regular funds offer ease of investment, portfolio reviews, and rebalancing.
Disadvantages of Direct Funds
No Advisory Support: Direct funds require you to make investment decisions without professional guidance.
Time-Consuming: Managing direct funds can be time-consuming, requiring regular monitoring and analysis.
Benefits of Investing Through CFP
A CFP helps you create a personalized investment plan, ensuring your portfolio aligns with your financial goals and risk tolerance. They provide valuable insights and adjustments as needed.

Final Insights
Stay Disciplined
Stick to your investment plan, regardless of market fluctuations. Regular investments and patience are crucial for long-term success.

Educate Yourself
Keep learning about different investment options and market trends. This helps you make informed decisions and optimize your portfolio.

Review Regularly
Regularly review and adjust your portfolio based on performance and changing financial goals. This ensures your investments remain aligned with your objectives.

Seek Professional Advice
Consult a Certified Financial Planner for personalized advice. They provide valuable guidance to optimize your investment strategy and achieve your goals.

By following these steps and staying committed to your financial plan, you’re well on your way to securing a prosperous future. Keep investing, stay informed, and watch your wealth grow!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Hi, Me(M38) and wife(F37) happily married for 12 years and blessed with one daughter. Partner(F28)continuing friendship with a person[M] who had crush on her before marriage considered emotional infidelity? Me(M38) and wife(F37) happily married for 12 years and blessed with one daughter. My wife is having friendship (strictly platonic) with a guy from her 10tlh grade (same class). Before our marriage (she may be doing her college, our relationship just started may be 2 weeks) this guy told her he has genuine interest in her and he want to take the relationship further if she wants, she said she is not interested in a relationship and she got committed, she always saw him as a friend, no other feelings for him and we can be friends if you don't bring any romantic interest again. He never took this talk again ever after and happy to be a friend. They are talking as friends. She got married to me. He also got married. They still do chats once in a month. She introduced me to him and visited his home when we visited his city. He also came to our home once (me and my family was there). She used to update me with chat she had with him and the content they are chatting. I am ok with that When we were talking about our school life and college life 2 years before. She said this guy had crush on her during her college days. I asked her, why did not she tell me this info till now. She said it is not purposely, she does not feel the need to do as the person is not in-appropriate with her and continuing as good friend as promised after she rejected his proposal. I don’t want to create any unnecessary issues as I don’t have any felling or so with him. That time I checked their chats completely, it’s about update about their common friends, their recent travel, their job, meditation courses and the books they read recently. I haven’t seen any flirting or romantic message from either of them. So I am perfectly fine with it and had no problems. I recently came to know about the concept of emotional cheating which is very new to me. Before that cheating to me is only flirting, sexeting and physical sex. I have asked for advice in redddit.com in infedility sub forum about emotional cheating/ emotion affair. There persons are advising like even having friendship with someone who had crush on you is emotional cheating as it is indirectly leading them on you. So with an omission of lie he had crush on her and indirectly leading him on you wife was emotionally cheating on you. This is very much equal to cheating. I do have lots of friends in other gender, but no one had crush on me. Does this count as emotional cheating/affair as she did not mention he had crush on her before marriage? I am little depressed and not able to spend quality time with my wife who is in postpartum depression and take care of our daughter properly as before. Do you guys advise me how to navigate this situation?
Ans: Dear Anonymous,
Are you really going to ruin your happy relationship based on some new term you have learned recently? Emotional cheating and many more terms of the kind will come and go, what truly matters is the truth. She is merely friends with this guy and for your peace of mind, you have even checked their conversations- what part of it looks like cheating to you? If tomorrow, some random person projecting their own insecurities claims that a man speaking to a woman is some "new form" of cheating, would you start believing that? My point is that these are just random opinions of some people- it isn't the ultimate truth. The entire context matters. This man had a crush on your wife, she rejected it, and now they are just friends. I find absolutely no misconduct or infidelity in this. The fact that none of your friends had a crush on you does not factor in at all. Moreover, your wife is in postpartum depression- that should be your biggest concern but here you are, giving more importance to the random 2 AM thoughts of some people you don't even know. Please rethink if you are being fair to your wife- the mother of your child.

Best Wishes

...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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