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Ramalingam

Ramalingam Kalirajan  |9189 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 10, 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 05, 2024Hindi
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Hi sir, I am 33.5 years old and want to built a corpus of 5 crore by the age of 40. My current investment are: Mutual funds - 37 lac Fixed deposits of around 50 lac PPF - 25 lac Gold and Gold bonds - 20 lac Indian stocks - 1 lac mainly HDFC US stocks - 7 lac mainly etfs This is my and my wifes combines portfolio For next 6.5 years we will be investing in Sip - 2 lac per month PPF - 25k per month Sovereign Gold - 12g every year Nifty 50 etf niftybees 30k per month only days when market is down. Please guide me.

Ans: It's impressive to see your proactive approach towards building wealth and securing your financial future. With a well-diversified portfolio and a systematic investment plan in place, you're on the right track to achieve your goal of reaching a corpus of 5 crore by the age of 40.

Your current investment mix demonstrates a balanced approach, encompassing various asset classes like mutual funds, fixed deposits, PPF, gold, and stocks, both domestic and international. Diversification is key to managing risk and maximizing returns over the long term.

Continuing with your SIPs, PPF contributions, and sovereign gold investments will further strengthen your portfolio's foundation. SIPs in equity mutual funds provide exposure to the equity market, offering the potential for higher returns over time. PPF and sovereign gold investments offer stability and act as a hedge against market volatility.

Your strategy of investing in Nifty 50 ETF during market downturns is commendable as it allows you to capitalize on market opportunities and accumulate units at lower prices, potentially enhancing your long-term returns.

Active vs. Passive Management:
While you've included both actively managed mutual funds and index funds (ETFs) in your portfolio, it's important to understand the differences between the two. Actively managed funds aim to outperform the market through active stock selection and portfolio management, while index funds passively track a specific index's performance.

Benefits of Actively Managed Funds:
Actively managed funds offer the potential for higher returns compared to index funds, especially during market inefficiencies or when skilled fund managers can identify lucrative investment opportunities. Additionally, active management allows for flexibility in portfolio construction and adjustments based on market conditions.

Potential Disadvantages of Index Funds:
While index funds offer low expense ratios and broad market exposure, they may lack the potential for outperformance compared to actively managed funds. Additionally, they're subject to tracking error, which occurs when the fund's performance deviates from the index it's designed to replicate.



Regularly review your portfolio's performance and rebalance as needed to ensure alignment with your financial goals and risk tolerance. Consider consulting with a Certified Financial Planner (CFP) to fine-tune your investment strategy and address any specific concerns or objectives you may have.

Stay disciplined with your savings and investment approach, and continue to monitor market trends and economic indicators. With patience, perseverance, and prudent financial management, you're well-positioned to achieve your target corpus by the age of 40.

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  |9189 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

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Hello, please advise. I want to create of corpus of 5 crores in 5 years, the value of my current portfolio is 50 lakhs. I am 44 years. My monthly SIP is around 2.25 lakhs. Rs. 1.25 lakhs in Franklin India US opps fund, Smaller companies, Tech fund, Axis Bluechip and small cap, Mirae Asset Blue chip, Canara Robeco Equity hybrid, Motilal Nasdaq 100 FOF, Parag Parikh long term equity. Started another Rs. 1 lakh last month in ICICI Prudential Mutual bank, DSP, Franklin India smaller companies, Kotak Emerging Equity, HDFC Flexi, HDFC Smaller Cap, Tata Digital India Fund. Please advise.
Ans: It's commendable that you're focused on building a significant corpus in a relatively short period. However, aiming for a corpus of 5 crores in just 5 years is an ambitious goal and may require a carefully crafted strategy and potentially higher investments.

Here are some considerations:

Investment Amount: Given your current portfolio value of 50 lakhs and monthly SIP of 2.25 lakhs, you may need to increase your investment amount to achieve your target. Consider whether it's feasible to increase your SIP amount or allocate additional lump sum investments.
Risk and Return: With a relatively short investment horizon, it's crucial to strike a balance between risk and return. Evaluate the risk profile of your investments and ensure they align with your risk tolerance and goals.
Diversification: Review the diversification of your portfolio across different asset classes, sectors, and market capitalizations. Consider diversifying further if needed to reduce concentration risk.
Regular Review: Given the short time frame, regularly monitor the performance of your investments and adjust your strategy as needed. Be prepared to make tactical changes based on market conditions and evolving financial goals.
Professional Advice: Consider consulting with a certified financial planner or advisor who can provide personalized guidance based on your financial situation, goals, and risk profile.
Remember, achieving such a substantial corpus in a short period requires disciplined savings, prudent investing, and realistic expectations. While it's essential to aim high, it's also crucial to maintain a realistic perspective and adapt your strategy as needed along the way.

..Read more

Ramalingam

Ramalingam Kalirajan  |9189 Answers  |Ask -

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

Money
Dear Sir, I am 36-year-old male and want to achieve a corpus of 8 cr at the age of 55 to retire. My current financial situation is as below: *Monthly earnings after taxes: 1.5 Lakh *Monthly expenses: 60-70000 + some times uncalled ones too My portfolio is : *EPF: 8 lakhs *Mutual Funds: 14Lakhs *PPF: 7.5 Lakhs *FD and RD: 4 Lakhs *Stocks: 3 Lakhs *NSC: 1.5 Lakhs Ongoing investments: *35,000 monthly SIP across multi cap, large cap, frontline Equity, Infra and Energy * 20,000 RD at 7.1 % * EPF 30,000/per month * Yearly PPF 1.5 lakhs Stocks are as per the market. So, my goal is to retire by the age of 55 and by then I want a sizable amount of corpus after taking care of my kid's education and marriage.
Ans: At 36 years old, you have set a clear goal: to accumulate a corpus of Rs. 8 crores by age 55. Your current financial situation reflects a disciplined approach, with a good balance between investments and savings. However, achieving an Rs. 8 crore corpus in the next 19 years will require strategic planning and disciplined execution.

Let’s break down your current portfolio and ongoing investments:

EPF: Rs. 8 lakhs
Mutual Funds: Rs. 14 lakhs
PPF: Rs. 7.5 lakhs
FD and RD: Rs. 4 lakhs
Stocks: Rs. 3 lakhs
NSC: Rs. 1.5 lakhs
Total: Rs. 38 lakhs

You are also making ongoing investments:

SIP: Rs. 35,000 per month
RD: Rs. 20,000 per month at 7.1%
EPF: Rs. 30,000 per month
PPF: Rs. 1.5 lakhs per year
Stocks: Market-based investments
Your total monthly income is Rs. 1.5 lakhs, with expenses ranging from Rs. 60,000 to Rs. 70,000. This leaves you with a significant surplus to invest towards your retirement goal.

Reviewing Your Investment Strategy
Mutual Funds
You are currently investing Rs. 35,000 per month in various mutual funds, including multi-cap, large-cap, frontline equity, infra, and energy. This is a strong start, but let’s refine it:

Diversification: Ensure your portfolio is diversified across different sectors and market caps. Avoid overlapping funds that invest in similar stocks.

Focus on High-Growth Funds: Consider allocating more to funds with a history of higher returns, especially those focusing on emerging sectors and mid/small-cap companies. However, don’t overexpose yourself to high-risk funds.

Review Regularly: The market is dynamic. Regularly review and rebalance your mutual fund portfolio to stay aligned with your goals.

Public Provident Fund (PPF)
Your yearly investment in PPF is Rs. 1.5 lakhs, which is a secure and tax-efficient investment. However:

Limited Growth Potential: PPF offers safety, but the returns are moderate. While it’s a good component of your portfolio, it shouldn’t dominate your long-term strategy.

Continue as a Safety Net: Maintain your PPF contributions for stability and tax benefits, but focus more on higher-growth investments for wealth accumulation.

Employee Provident Fund (EPF)
You contribute Rs. 30,000 per month to your EPF, which is a strong foundation for your retirement corpus. EPF provides:

Steady Returns: EPF offers safe and steady returns with tax benefits. It should remain a core part of your retirement planning.

Long-Term Focus: Continue maximizing your EPF contributions, as it’s a low-risk, long-term investment that will grow significantly over 19 years.

Recurring Deposit (RD)
You are investing Rs. 20,000 per month in an RD at 7.1%. While this is a safe option:

Low Return on Investment: RD offers safety but with limited returns. It’s good for short-term goals but might not be the best for long-term wealth accumulation.

Reallocate to Higher-Growth Options: Consider reducing your RD contributions and reallocating the surplus to higher-growth mutual funds or stocks.

Stocks
You have Rs. 3 lakhs invested in stocks and continue to invest as per market conditions. Stocks are:

High-Risk, High-Reward: Stocks offer higher returns but come with higher risks. Ensure you are investing in fundamentally strong companies with growth potential.

Regular Monitoring: Actively monitor and manage your stock investments to capitalize on market opportunities.

National Savings Certificate (NSC)
Your Rs. 1.5 lakh investment in NSC is a low-risk, fixed-return option. While NSC is safe:

Low Growth: Like RD and PPF, NSC offers safety but with limited growth. It’s suitable for conservative investments but should not be a significant portion of your retirement corpus.
Setting a Path to Achieve Rs. 8 Crores
To achieve Rs. 8 crores in 19 years, a well-rounded strategy is essential. Here’s how you can plan:

Increase Equity Exposure
Higher Allocation to Equity: Given your long-term horizon, consider increasing your exposure to equity mutual funds. Equities have the potential to outpace inflation and offer higher returns over the long term.

Balanced Portfolio: Maintain a balanced portfolio with a mix of large-cap, mid-cap, and small-cap funds. This will help in capturing growth across different segments of the market.

Consider Systematic Transfer Plans (STPs)
STPs for Rebalancing: As you approach your retirement age, gradually transfer funds from equity to debt through STPs. This will help reduce risk as you near your goal.

Stable Returns in Later Years: STPs allow you to lock in gains from equity investments and shift to safer debt funds as you approach your retirement.

Regularly Review and Adjust
Annual Review: Conduct an annual review of your portfolio to ensure it’s on track. Adjust your investment strategy based on market conditions and your changing risk appetite.

Consult a Certified Financial Planner: Regular consultations with a CFP can provide professional guidance and help in optimizing your investment strategy.

Emergency Fund and Insurance
Maintain an Emergency Fund: Ensure you have at least 6-12 months’ worth of expenses in a liquid fund. This will protect your investments from being liquidated in case of unforeseen expenses.

Adequate Insurance: Ensure you have adequate life and health insurance coverage to protect your family and your assets. This will safeguard your retirement corpus from unexpected medical or life events.

Final Insights
Achieving Rs. 8 crores by the age of 55 is ambitious but attainable with disciplined saving and investing. Focus on increasing your equity exposure while maintaining a safety net through EPF, PPF, and emergency funds. Regularly review and rebalance your portfolio to stay aligned with your goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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My daughter scored 96.6 in MHT CET in which colleges she can get for Computer Science in Mumbai. Also we are trying to apply through EWS
Ans: With a 96.6 percentile in MHT CET and EWS category, your daughter stands a strong chance for Computer Science (CSE) or related branches in several reputable Mumbai colleges. VESIT Mumbai’s 2022 cutoff for CSE was 96.6 percentile for open seats, and recent years show similar or slightly higher cutoffs; with EWS reservation, her chances improve, especially in later rounds. Vidyalankar Institute of Technology (VIT) Mumbai had a CSE EWS cutoff of 94.84 in 2024, while Information Technology closed at 92.99–92.81, making both attainable. Shah & Anchor Kutchhi Engineering College, SIES Graduate School of Technology, and Fr. Conceicao Rodrigues College of Engineering (Bandra) also have CSE/IT cutoffs between 94–97 percentile for EWS and open categories. Other strong options include Bharati Vidyapeeth College of Engineering (Navi Mumbai), Don Bosco Institute of Technology, and Atharva College of Engineering, all with CSE/IT cutoffs in the 94–97 range for EWS. SPIT Mumbai, DJ Sanghvi, and Thadomal Shahani are more competitive, typically closing above 98–99 percentile for CSE, so they are unlikely at your score.

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My daughter got 94.9 percentile in MHT-CET. We are in OBC category. What college she will get.
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The recommendation is to prioritize DY Patil College of Engineering Pune, AISSMS College of Engineering Pune, PCCOE Pune, and MIT World Peace University Pune for CSE/IT, and include AI/Data Science as alternatives, ensuring a strong academic and placement environment at her percentile and category. All the BEST for the Admission & a Prosperous Future!

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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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