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Ramalingam

Ramalingam Kalirajan  |3754 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 24, 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 - May 23, 2024Hindi
Money

Hi Sir/Mam i am 24 i earn around 70000 per month with 10% increment every year i am looking to build a 5 crore investment amount in either 15 or in between 15 to 20 years what should be my investment strategy for step up sip i am open to any suggestions and i want to know how much i need to invest now and where to invest exact mutual fund name and you can suggest the exact details please

Ans: Building a Rs. 5 Crore Corpus: Your Investment Strategy
Your goal of accumulating Rs. 5 crore in 15 to 20 years is ambitious but achievable with a disciplined approach. Let’s outline an effective investment strategy for you.

Understanding Your Financial Goals
You earn Rs. 70,000 per month with a 10% annual increment.

You aim to build a corpus of Rs. 5 crore over 15 to 20 years.

Your willingness to invest and increase contributions regularly is key to success.

Importance of a Step-Up SIP Strategy
Step-up SIPs allow you to increase your investment amount periodically.

This aligns with your salary increments and inflation adjustments.

Regularly increasing your SIP amount accelerates wealth accumulation.

Assessing Your Risk Appetite and Time Horizon
You are young, so you can take higher risks for potentially higher returns.

A mix of equity and debt funds can balance risk and reward.

Your long-term horizon allows for market fluctuations to even out.

Investment Allocation Strategy
Equity Mutual Funds
Equity funds should form a significant part of your portfolio.

They offer higher returns over the long term compared to other asset classes.

Invest in a mix of large-cap, mid-cap, and small-cap funds for diversification.

Debt Mutual Funds
Debt funds provide stability and lower risk.

They are less volatile than equity funds and ensure capital preservation.

Allocate a smaller portion to debt funds for balanced growth.

Balanced or Hybrid Funds
Balanced funds invest in both equity and debt.

They offer a balanced approach with moderate risk and return.

These funds are suitable for steady and consistent growth.

Implementing the Step-Up SIP
Starting with an Initial SIP Amount
Determine your initial SIP amount based on your monthly income.

A good starting point is investing 20-30% of your income.

You can start with an initial SIP of Rs. 14,000 to Rs. 21,000.

Annual Increase in SIP Amount
Increase your SIP amount by 10-15% annually, aligning with your salary hike.

This helps in compounding your returns effectively.

Reviewing and Adjusting
Review your investments annually to assess performance.

Adjust your SIP amounts and fund allocations as needed.

Fund Selection and Diversification
Large-Cap Funds
Large-cap funds invest in well-established companies.

They offer stability and moderate returns.

Choose funds with a strong track record and consistent performance.

Mid-Cap and Small-Cap Funds
Mid-cap and small-cap funds invest in emerging companies with high growth potential.

They are riskier but offer higher returns over time.

Diversify across a few mid-cap and small-cap funds to spread risk.

Multi-Cap or Flexi-Cap Funds
Multi-cap funds invest across market capitalizations.

They offer flexibility and diversification.

These funds adjust their portfolios based on market conditions.

Debt Funds
Invest in short-term and long-term debt funds for stability.

Choose funds with good credit ratings and consistent returns.

Hybrid Funds
Hybrid funds offer a balanced approach by investing in both equity and debt.

They are suitable for moderate risk-takers.

Calculating the Required Investment
Target Corpus
Your target corpus is Rs. 5 crore.

Investment Horizon
Your investment horizon is 15 to 20 years.

Expected Returns
Assume an average annual return of 12-15% from your investments.

SIP Calculation
Use SIP calculators to estimate the required monthly investment.

Adjust the SIP amount annually to match your increment.

Example of SIP Calculation
For a corpus of Rs. 5 crore in 20 years at 12% annual return:

You need to start with a SIP of approximately Rs. 21,000 per month.
For a corpus of Rs. 5 crore in 15 years at 12% annual return:

You need to start with a SIP of approximately Rs. 35,000 per month.
These amounts should be adjusted annually with a step-up SIP strategy.

Monitoring and Rebalancing
Regular Monitoring
Monitor your portfolio regularly to track performance.

Ensure your investments align with your financial goals.

Rebalancing
Rebalance your portfolio periodically to maintain the desired asset allocation.

This involves shifting funds between equity and debt based on performance and market conditions.

Professional Guidance
Certified Financial Planner (CFP)
Consult a CFP for personalized advice and strategies.

They can help you create a comprehensive financial plan.

Financial Education
Stay informed about market trends and investment strategies.

Knowledge empowers you to make informed decisions.

Conclusion
Your goal of building a Rs. 5 crore corpus is achievable with disciplined investing.

Implement a step-up SIP strategy, diversify your portfolio, and regularly review your investments.

Stay committed to your financial goals and make adjustments as needed.

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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Asked by Anonymous - May 05, 2024Hindi
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Hi Im 36 years old. Started SIP recently from last month. 5k each in parag Parikh growth and quant small cap. Looking for 3-4 crore corpus by end of 60 years. Looking for another sip or lumpsum investment. Preferrimg to stepup sip in coming years. I need advice how to build my portfolio. Annual income around 40L. Looking to start NPS this year. I realised importance of investment quite late
Ans: It's great that you've started your investment journey and are proactive about building wealth for your future. Let's craft a strategy to optimize your portfolio and work towards your goal of accumulating 3-4 crore by the age of 60.

Diversified Portfolio Approach
Current SIP Investments: Your current SIP investments in Parag Parikh Growth and Quant Small Cap funds demonstrate a balanced approach with exposure to both growth and small-cap segments. These funds offer diversification and growth potential in different market environments.

Additional SIP or Lumpsum Investment: Considering your goal and income level, you can further diversify your portfolio by adding SIPs or lumpsum investments in other categories such as large-cap, mid-cap, and balanced funds.

Step-up SIP Strategy: Implement a step-up SIP strategy to align with your increasing income over time. This approach allows you to gradually increase your SIP contributions annually, harnessing the power of compounding for accelerated wealth accumulation.

Portfolio Recommendations
Large-Cap Fund: Start a SIP in a reputable large-cap fund such as Mirae Asset Large Cap Fund or Axis Bluechip Fund. These funds provide stability and consistent returns by investing in established companies with strong fundamentals.

Mid-Cap Fund: Consider adding a mid-cap fund like Kotak Emerging Equity Fund or HDFC Mid-Cap Opportunities Fund to your portfolio. Mid-cap funds offer high growth potential by investing in emerging companies poised for expansion.

Balanced Fund: Include a balanced fund like ICICI Prudential Equity & Debt Fund or HDFC Hybrid Equity Fund for added diversification. These funds invest in a mix of equities and debt instruments, providing stability while capitalizing on growth opportunities.

NPS Investment
Starting NPS this year is a prudent decision, as it offers tax benefits and retirement savings accumulation. Allocate a portion of your annual income towards NPS contributions, considering your risk tolerance and retirement goals. Opt for the Active Choice option to have control over asset allocation and fund selection based on your risk profile.

Regular Review and Adjustment
Periodically review your portfolio's performance and make necessary adjustments based on market conditions, financial goals, and risk tolerance. Rebalance your portfolio to maintain the desired asset allocation and ensure alignment with your long-term objectives.



It's never too late to start investing, and your proactive approach towards financial planning is commendable. By building a diversified portfolio, adopting a step-up SIP strategy, and incorporating NPS for retirement planning, you're laying a strong foundation for future financial security. Stay disciplined, stay informed, and keep moving forward towards your goals.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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All The BEST for your Son’s Bright Future.

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All The BEST for your Bright Future.

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Hi,My son got sandip University nashik cse (AIMl) is it good college to go for his studies or else need to try another colleges in Bangalore??
Ans: Raju Sir, you have asked the need for Bengaluru Colleges. If your son has appeared for COMEDK or any other Private Colleges' its own entrance exams, better he tries through them. It depends upon your son's Rank / Score & the streams he prefers. Recommended before your son goes for Sandip University (if he has no other option, as time is very less now). Whatever Institute / University & Branch your Son chooses, he should keep upgrading his skills from his 1st year itself till his Campus Placement during his last year, from LinkedIn, Coursera, NPTEL, Internshala etc. and / or any other online platforms, recommended by his College Faculties, to be COMPETENT among other Students.

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Ramalingam

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Mutual Funds, Financial Planning Expert - Answered on Jun 17, 2024

Asked by Anonymous - Jun 17, 2024Hindi
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I want to invest in 10 L lumpsum for 3-5 years. What is the best strategy for getting good returns (at least 12-15 %)? I want to use this money further for my own business.
Ans: Understanding the Investment Landscape
Investing a lump sum of Rs 10 lakh with the goal of achieving good returns requires a thorough understanding of the investment landscape. Given your objective to use this money for your own business in 3-5 years, it's important to choose a strategy that balances potential returns with acceptable levels of risk.

The Importance of Time Horizon
Your investment time horizon significantly impacts the type of investment strategy you should adopt. While you are considering a 3-5 year period, achieving a 12-15% return may require a slightly longer horizon.

Investing for at least 7 years could better align with your return expectations and allow your investment to ride out market volatility.

Embracing Market Volatility
Investing in the market inherently involves dealing with volatility. Market fluctuations are natural and can impact short-term investment performance.

However, historically, equity markets have shown growth over longer periods, offering potential for substantial returns. Embracing this volatility is crucial to achieving your financial goals.

Benefits of Mutual Funds
Mutual funds offer a diversified investment option that can help mitigate risks while providing exposure to growth opportunities. Actively managed funds, in particular, are managed by professional fund managers who aim to outperform the market by making strategic investment decisions.

Advantages of Actively Managed Funds
Professional Management: Skilled fund managers actively monitor and adjust the portfolio, aiming for higher returns.

Diversification: Mutual funds invest in a variety of assets, reducing the risk associated with individual investments.

Liquidity: Mutual funds offer liquidity, allowing you to redeem your investment when needed.

Transparency: Regular updates and reports keep investors informed about their investments.

Disadvantages of Index Funds
Market Mimicry: Index funds aim to replicate the performance of a specific index, limiting their potential to outperform.

No Active Management: Lack of professional management can lead to missed opportunities in dynamic market conditions.

Limited Flexibility: Index funds follow a predetermined strategy, offering little flexibility in response to market changes.

Benefits of Investing Through Certified Financial Planners
Investing through a Certified Financial Planner (CFP) ensures that your investments are aligned with your financial goals.

CFPs offer personalised advice and can help navigate the complexities of the financial markets.

Advantages of Regular Funds
Expert Guidance: MFDs with CFP credentials provide valuable insights and strategic advice.

Tailored Solutions: Regular funds offer customised investment strategies based on individual goals and risk tolerance.

Support and Service: Professional support for investment decisions and portfolio management.

Holistic Planning: CFPs consider your overall financial situation, ensuring comprehensive financial planning.

Understanding Investment Risks
Every investment carries a certain level of risk. It's crucial to understand and accept these risks when aiming for higher returns.

Types of Risks
Market Risk: The risk of investments declining due to market fluctuations.

Interest Rate Risk: The risk of interest rate changes affecting investment values.

Inflation Risk: The risk of inflation eroding purchasing power over time.

Importance of Staying the Course
Investing with a long-term perspective requires patience and discipline. Market volatility can be unsettling, but staying the course is essential for achieving your investment goals.

Strategies for Staying the Course
Avoid Emotional Decisions: Base your investment decisions on facts and long-term goals, not short-term market movements.

Regular Reviews: Periodically review your investment portfolio to ensure it aligns with your goals and risk tolerance.

Rebalancing: Adjust your portfolio to maintain your desired asset allocation.

Reinvestment Strategies
If you hold LIC, ULIP, or investment-cum-insurance policies, consider evaluating their performance.

Surrendering underperforming policies and reinvesting in mutual funds can potentially yield better returns.

Benefits of Reinvestment
Higher Returns: Mutual funds typically offer higher returns compared to traditional insurance policies.

Flexibility: Reinvestment in mutual funds provides more flexibility and control over your investments.

Cost Efficiency: Mutual funds often have lower costs and fees compared to insurance policies.

Strategic Asset Allocation
Asset allocation is crucial for managing risk and achieving your desired returns. A well-balanced portfolio should include a mix of equity, debt, and other instruments.

Suggested Allocation
Equity Funds: Allocate a significant portion to equity funds for growth potential.

Debt Funds: Include debt funds for stability and regular income.

Hybrid Funds: Consider hybrid funds for a balanced approach to risk and return.

Regular Monitoring and Adjustments
Continuous monitoring and adjustments to your portfolio are necessary to ensure it remains aligned with your financial goals.

Benefits of Regular Monitoring
Performance Tracking: Monitor the performance of your investments regularly.

Timely Adjustments: Make necessary adjustments to optimise returns and manage risks.

Goal Alignment: Ensure your investments remain aligned with your evolving financial goals.

Final Insights
Investing a lump sum of Rs 10 lakh requires careful planning and a strategic approach.

Understanding the investment landscape, embracing market volatility, and opting for actively managed mutual funds are key steps towards achieving your financial goals.

Staying the course, regularly reviewing your portfolio, and seeking professional guidance from a Certified Financial Planner can enhance your investment experience and outcomes. By focusing on a balanced and diversified investment strategy, you can work towards achieving your desired returns while preparing for your business ventures.

Invest wisely, stay informed, and be patient to see your investments grow.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Nayagam P

Nayagam P P  |390 Answers  |Ask -

Career Counsellor - Answered on Jun 17, 2024

Asked by Anonymous - Jun 17, 2024Hindi
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Career
Please include one more choice in the selection criteria 1. Vit Vellore CSE in 4th category 2. Pes ec campus CS 3. MIT BANGALORE CSE We are staying in Bangalore, which choice is better and please help with reasoning?
Ans: You have not mentioned in which-all Entrance Exams you appeared (COMEDK \ KCET etc.)? However, order of Preference (1) PES (Electronic City) (2) MIT-Bengaluru (here, however, please note, for some students this is not suitable due to its culture (non-academic / psychological factors). (3) VIT-Vellore (check the fee structure of all 4-years for affordability). If you have appeared in COMEDK & KCET also, find out 1-2 options even the colleges belong to Tier 2 category. Whatever Institute / University / Branch / Domain you choose, keep upgrading your skills from 1st year itself till your Campus Placement during your last year, from LinkedIn, NPTEL, Coursera, Internshala etc. and / or any other online platforms, recommended by your College Faculties, to be COMPETENT among other Students, for jobs.

All The BEST for your Bright Future.
To know more on ‘ Careers | Education | Jobs | Resume Writing | Profile Building | Salary Negotiation Skills | Building Professional LinkedIn Profile | Choosing Right School Board (State | Matriculation | CBSE | ICSE |International Board) | Student Psychological Counselling | Exam Preparation Techniques (Board | Entrance & Competitive)| Strategies to Attempt Exams | Job Interview Skills | Skill Upgrading | Parenting & Child Upbringing Skills | Career Transition | Abroad Education | Education Loan (India | Abroad) | Scholarship (India | Abroad) | SOP Writing Tips’, please FOLLOW me in RediffGURU here.

Nayagam PP |
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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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