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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on May 12, 2021

Mutual Fund Expert... more
Riddhi Question by Riddhi on May 12, 2021Hindi
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I am 26 years old. I don't have much knowledge on SIP and Mutual Funds. Currently I will be able to invest around rs. 5000-6000 per month and my goal is for purchasing a house in next few years. I wanted to know which Mutual funds should I opt for in terms of growth and high returns? Also please suggest if I need to increase the amount to invest. Please let me know with regards to SIP, as I won't be able to invest lumpsum amounts and can only invest via SIP.

Ans: Below are few funds that can be considered for monthly investment:

  1. UTI Flexi Cap Fund -- Growth
  2. Parag Parikh Flexi Cap Fund -- Growth
  3. Axis ESG Equity Fund -- Growth
  4. Motilal Oswal Focused 25 Fund -- Growth
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  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 04, 2024

Asked by Anonymous - Apr 25, 2024Hindi
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Hi. I am ready to invest SIP of 5000 per month for next 20 years and can step up 10% every 2 years. I'm looking for medium risk mutual fund as I'm going for long run. Kindly suggest me some mutual fund that gives some good returns. Quant active fund, mid cap fund, Parag Parikh flexi cap, ICICI prudential retirement fund, Edelweiss large & mid cap are the funds which I have chosen to invest in. Correct me with better plans if I am wrong. Thanks in advance.
Ans: Your investment approach of SIP with step-up every two years for the next 20 years reflects a disciplined and long-term perspective. Here are some insights and suggestions:

Medium-Risk Mutual Funds: Your selection of mutual funds like Parag Parikh Flexi Cap and ICICI Prudential Retirement Fund aligns well with your medium-risk tolerance and long-term investment horizon. These funds offer diversified portfolios across different market caps and sectors, reducing overall risk.
Quant Active Fund and Mid Cap Fund: While these funds may offer higher growth potential, they also come with higher risk due to their focus on mid-cap stocks or active management strategies. Ensure you're comfortable with the associated volatility and risk before investing.
Edelweiss Large & Mid Cap: This fund provides exposure to both large and mid-cap segments of the market, offering a balanced approach. However, review its performance and portfolio composition periodically to ensure it meets your investment objectives.
Review and Adjust: Regularly monitor your portfolio's performance and make adjustments if needed. Consider factors like fund performance, changes in your financial goals, and overall market conditions when reviewing your investment strategy.
Consider Professional Advice: Consulting with a financial advisor or Certified Financial Planner can provide personalized guidance tailored to your financial situation and goals. They can help you fine-tune your investment strategy and select the most suitable mutual funds.
Remember, investing in mutual funds involves risks, and past performance is not indicative of future results. Stay focused on your long-term goals, maintain a diversified portfolio, and invest regularly to maximize your chances of achieving financial success.

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 2024

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Dear Sir, I am 40 years old, happily married, have 2 daughters 7 years and 3 years old. My financials are 1. Real Estate 1.50 cr. Land and 2 houses (house value: 85 lakhs: Monthly rental yield 30,000) 2. ULIP 18,000 monthly for 5 years. (19 months completed. Corpus: 4 lakhs) C. Mutual funds 50,000 (just started). I can invest monthly 1.50 lakhs now. Please advice the best categories of Mutual Funds to invest as SIP. Also, thinking to sell the house of 85 lakhs value and put in SWP. Please advice.
Ans: You are 40 years old, happily married with two daughters aged 7 and 3. You have real estate worth Rs. 1.50 crores, including two houses (one valued at Rs. 85 lakhs with a monthly rental yield of Rs. 30,000). You have a ULIP with a monthly contribution of Rs. 18,000 for 5 years, with 19 months completed and a corpus of Rs. 4 lakhs. You have just started investing Rs. 50,000 in mutual funds. You can invest Rs. 1.50 lakhs monthly now.

Investment in Mutual Funds
Equity Mutual Funds
Equity mutual funds are essential for long-term growth. They provide high returns over time. You can invest in large-cap, mid-cap, and small-cap funds. Large-cap funds are less risky. Mid-cap and small-cap funds offer higher returns but come with higher risks.

Debt Mutual Funds
Debt mutual funds provide stability to your portfolio. They invest in bonds and government securities. They are less volatile and offer regular returns. You can consider short-term and long-term debt funds based on your investment horizon.

Hybrid Mutual Funds
Hybrid funds invest in both equity and debt. They balance risk and return. They are suitable for moderate risk takers. They provide stability with some growth potential.

Tax-saving Mutual Funds
ELSS funds provide tax benefits under Section 80C. They have a lock-in period of 3 years. They offer good returns and help in tax planning. You can allocate a portion of your investments to these funds.

Selling the House and SWP
Selling the house worth Rs. 85 lakhs can provide a lump sum. You can invest this in a Systematic Withdrawal Plan (SWP). SWP offers regular income from mutual funds. It provides flexibility and better returns compared to rental income. Ensure to consult with a Certified Financial Planner (CFP) to align this with your financial goals.

Investment Strategy
Increase your SIP contributions to Rs. 1.50 lakhs monthly. Diversify your investments across equity, debt, and hybrid funds. Review your portfolio regularly to ensure it aligns with your goals.

Professional Guidance
Seek advice from a Certified Financial Planner (CFP). They can provide a tailored financial plan. Professional guidance helps achieve your financial goals efficiently.

Final Insights
Focus on long-term growth with equity funds. Maintain stability with debt funds. Balance risk and return with hybrid funds. Consider tax-saving ELSS funds. Review your portfolio regularly.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ravi

Ravi Mittal  |431 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 22, 2024Hindi
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A bit long story I'm 21 student preparing for medical competative entrance exam for past 3 years (21-24).2 year ago this phase I was in a long distance relationship for 4 months with a girl I met in my class .But it didn't last long due to the problems created due to distance as she couldn't understand myself and I couldn't understand herself.so there was a misunderstanding and I couldn't hold on as I was in heavy pressure by exams and financial problems.so I couldn't handle and I felt like too early and broke up with her by losing my mind.she was completely disappointed as I didn't speak to her for more than an year due to one more year preparation.i missed her very much but I didnt tell her.I missed govt seat in border mark and the same year she got into a relationship with another guy in her class.i don't blame her. But I feel like my entire life is shattered and I couldn't move on from that girl till now.I couldn't concentrate on my career too.im kind of person who is always confident in all aspects but I have totally lost my mind .I can see that in an danger situation as age is running and family pressure, everyone of my classmates are far ahead of me I couldn't withstand this situation and couldn't make proper decision in any aspect. Mam please help me out.
Ans: Dear Anonymous,
I understand your concerns. The first step is to focus on moving on; she has, and you should too. Prioritize your career, your family, and your future. Next, what has happened to your career progress has already happened. It's unfortunate, but there's no way to change that. But give yourself a second chance; work harder and achieve greater things than you even imagined before. Trust me, you are not the only person who is standing in a situation like this. Many have, and many more will. But the ones who have passed this time will give you the same advice that I did.

Best Wishes.

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Milind

Milind Vadjikar  |682 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 13, 2024Hindi
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Sir, I am 40yrs old. Having monthly takehome salary of 1.1 lakh and rental income of 36000. My investment are 2 flats worth of 1cr. 4 plots in Bhubaneswar worth of 2crs. EPF balance 50 lakh, LIC policies worth of 16 lakhs, NPS worth of 10 lakhs. My monthly saving commitments are - EPF (employee+employer) 28000 NPS 15000 MF 7500 Gold scheme 5000 Financial burden - HL emi of 24000 Monthly expanses 50000 I would like to retire at 50. Please advise for retirement plan with life expectancy of 80yrs.
Ans: Hello;

The value of your investments after 10 years;

A. EPF Corpus+Contribution: 1.6 Cr
B. NPS Corpus+Contribution: 53 L
C. MF(sip) + Gold(sip): 25 L
D. Real estate (land): 3.26 Cr

So sum of A, C & D gives us a corpus of 5.11 Cr

Since you will withdraw NPS before 60 age 80% of corpus will go into annuity while 20% will be available to you.

So you may expect monthly income of around 21 K from annuity(42.4 L).

Balance 10.6 L get added to 5.11L taking your total corpus to ~ 5.2 Cr.

If you invest 5 Cr in a conservative hybrid debt fund and do a SWP at the rate of 3%, you may expect a monthly income of around 1.1 L(post-tax).

Add your monthly rental income of 36 K(No growth factored) and annuity income of 21 K to this and you have total monthly income of 1.67 L after 10 years.

Your current monthly expenses of 50 K after 10 years would be around 90 K and 1.6 L after 20 years.

Considering return of around 7-7.5% from the conservative hybrid debt fund you will still generate inflation adjusted return at 3% SWP after 80 years of age.

Assumptions:
Inflation rate-6%
Return from EPF-8%
Return from NPS-9%
Return from MF-10%
Return from gold-7%
Return from Land-5%
Annuity rate-6%

The spare flat is not considered in this because it will continue to yield you rental income in retirement.

Since real estate(land) returns may fluctuate over 10 years suggest to increase MF sip(6X) as a back-up, also in this case you may decide to retain & invest in NPS upto 60 age.

Of course MF returns are also not assured but you are improving the odds by backing two appreciable assets(RE & equity) over long-term.

Happy Investing;
X: @mars_invest

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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 22, 2024

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My age 62, male, getting rental income Rs. 90k nett. Already subscribing 12.5k in PPF for the past 2 1/2 years. No other investments. My target is 5 crores in 10 years. I already have Mediclaim Rs.50 lakhs for me & wife . Please advice me what to do.
Ans: Your current financial foundation is strong and shows promise:

A rental income of Rs. 90,000 per month provides consistent and predictable cash flow. This stability can serve as the backbone for your investment strategy.

PPF contributions of Rs. 12,500 per month for 2.5 years reflect disciplined saving. However, its returns may be insufficient to achieve a high-growth target like Rs. 5 crores in 10 years.

A robust Mediclaim policy of Rs. 50 lakhs for you and your wife ensures adequate health coverage. This safeguard allows you to focus on wealth-building without worrying about medical emergencies.

Despite these positive factors, achieving Rs. 5 crores in 10 years requires a carefully crafted and growth-oriented strategy.

Defining and Prioritising Your Financial Goals
Achieving Rs. 5 crores is ambitious yet achievable with a focused approach:

Define this target as your primary financial goal over the next decade.

Break it into manageable milestones: for example, Rs. 50 lakhs every 1-2 years in cumulative investments and growth.

Prioritise high-return investments that align with your risk tolerance and financial capacity.

Optimising Existing PPF Contributions
While PPF is a secure investment, its growth potential is limited:

Returns: PPF currently offers an interest rate of approximately 7-7.5%, which barely outpaces inflation.

Contribution Review: Consider capping your PPF contributions at Rs. 1.5 lakh annually (to utilise the Section 80C benefit). This ensures that excess funds are redirected to higher-return investments.

PPF can serve as a low-risk component of your portfolio but should not dominate your investment strategy.

Building a Diversified Investment Portfolio
A diversified portfolio will provide a balance of risk and reward. Include the following components:

1. Equity Mutual Funds for Growth
Equity mutual funds are essential for achieving high returns over the long term:

Large-Cap Funds: These invest in established companies and offer stability with moderate growth. They are ideal for a portion of your portfolio to reduce risk.

Multi-Cap or Flexi-Cap Funds: These provide exposure to companies of all sizes, offering growth and diversification.

Sectoral and Thematic Funds: Avoid these unless you have a high risk tolerance and understand market dynamics.

ELSS Funds: These not only provide tax savings under Section 80C but also deliver market-linked returns.

Why Avoid Index Funds?

Index funds may offer simplicity and lower expense ratios, but they lack flexibility. They cannot adapt to market conditions or capitalise on outperforming sectors. Actively managed funds, on the other hand, have the potential to outperform the market, especially in a developing economy like India.

Start with a Systematic Investment Plan (SIP) in selected funds to build wealth steadily.

2. Debt Mutual Funds for Stability
Debt funds add stability to your portfolio and reduce overall risk:

Choose funds with low credit risk and moderate duration to ensure safety and predictable returns.

Debt funds are suitable for short- to medium-term goals or as a fallback during market corrections.

Taxation Note: Both LTCG and STCG on debt funds are taxed as per your income tax slab. This should be factored into your planning.

3. Balanced Advantage Funds
Balanced advantage funds (BAFs) dynamically allocate assets between equity and debt. They:

Provide exposure to equity while minimising downside risk.

Offer a suitable option for someone nearing retirement but seeking growth.

4. Gold Investments for Diversification
Allocate a small portion (5-10%) of your portfolio to gold:

Gold serves as a hedge against inflation and currency depreciation.

Choose gold ETFs or sovereign gold bonds for ease of liquidity and better returns.

Emergency Fund Creation
Having an emergency fund is non-negotiable:

Maintain at least 6-12 months of expenses in liquid investments like liquid mutual funds or high-interest savings accounts.

This ensures liquidity for unforeseen events without disturbing your long-term investments.

Focus on Retirement Planning
At 62, balancing growth and safety becomes critical:

Estimate your monthly retirement expenses, considering inflation over the next 10-15 years.

Your target of Rs. 5 crores should primarily serve as your retirement corpus.

Allocate assets thoughtfully:

60-70% in equity funds for growth.
30-40% in debt funds for stability.
Periodically rebalance your portfolio to maintain this allocation.

Strategic Tax Planning
Tax efficiency can significantly impact your returns:

Continue using Section 80C to its full potential, including ELSS funds and PPF.

Consider the National Pension System (NPS) for an additional Rs. 50,000 deduction under Section 80CCD(1B).

Be mindful of the new taxation rules for mutual funds:

Equity Mutual Funds: LTCG above Rs. 1.25 lakh is taxed at 12.5%; STCG at 20%.
Debt Funds: LTCG and STCG are taxed as per your income slab.
Consult a Certified Financial Planner to optimise your tax strategy.

Regular Portfolio Monitoring and Rebalancing
Investing is not a one-time activity:

Review your portfolio every six months or annually to track performance.

Rebalance your asset allocation periodically to align with your financial goals and risk appetite.

Stay committed to SIPs even during market downturns, as this ensures cost-averaging.

Additional Suggestions
Avoid Over-Reliance on PPF
While PPF is safe, it is not sufficient for wealth creation. Shift excess contributions to equity-based investments for better returns.

Avoid Direct Stocks
Direct equity investing requires time, expertise, and constant monitoring. It carries higher risk and may lead to losses without proper research. Instead, rely on equity mutual funds managed by professionals.

Avoid Mixing Insurance and Investments
Do not invest in ULIPs or endowment plans, as they offer suboptimal returns. Stick to pure insurance products for protection and mutual funds for growth.

The Role of a Certified Financial Planner
To achieve Rs. 5 crores, a well-crafted financial plan is essential. A Certified Financial Planner (CFP) can:

Analyse your current investments and recommend improvements.

Design a customised strategy tailored to your income, expenses, and goals.

Provide periodic reviews to ensure you stay on track.

Finally
Achieving Rs. 5 crores in 10 years is a realistic goal if you adopt a disciplined and diversified approach.

Optimise your PPF contributions and channel excess funds into higher-growth investments.

Build a diversified portfolio with equity and debt mutual funds.

Include a small allocation to gold and maintain an emergency fund.

Stay consistent with your SIPs and review your investments regularly.

Work with a Certified Financial Planner to create a personalised roadmap.

By following these steps, you can secure your financial future and meet your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...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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