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Ramalingam

Ramalingam Kalirajan  |6999 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 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
rahul Question by rahul on Apr 21, 2024Hindi
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i am 37 years old.i want to have retirement corpus of 10 crore & retire when i am 55 years old. i am currently doing the following SIP.axis small cap fund 6500, Nippon small cap fund 6500, Mahindra manulife small cap fund 6500, icici prudential nifty midcap 150 index fund 11000, navi nifty next 50 index fund 12000, parag parikh flexicap fund 13000, bandhan nifty 50 index fund 12000, hdfc dividend yield fund 4000, bandhan sterling value fund 4000. Please analyse by Sip investments & whether its sufficient enough ro reach my target of 10 crore corpus.i can take high risk and high return

Ans: Your Retirement Goal
You aim to build a ?10 crore retirement corpus by age 55, starting at age 37. This is a great goal, and you have 18 years to achieve it.

Current SIP Investments
You are currently investing ?68,500 per month across various mutual funds. Here’s a breakdown of your investments:

Axis Small Cap Fund: ?6,500 monthly
Nippon Small Cap Fund: ?6,500 monthly
Mahindra Manulife Small Cap Fund: ?6,500 monthly
ICICI Prudential Nifty Midcap 150 Index Fund: ?11,000 monthly
Navi Nifty Next 50 Index Fund: ?12,000 monthly
Parag Parikh Flexicap Fund: ?13,000 monthly
Bandhan Nifty 50 Index Fund: ?12,000 monthly
HDFC Dividend Yield Fund: ?4,000 monthly
Bandhan Sterling Value Fund: ?4,000 monthly
Analysis of Current Investments
1. High Exposure to Small Cap and Mid Cap Funds
Your investments have a significant allocation to small cap and mid cap funds. These funds offer high returns but come with high volatility. Given your risk tolerance, this is suitable for long-term growth.

2. Index Funds
You have invested in several index funds. While they offer low expense ratios, they lack the flexibility to outperform the market in volatile conditions. Actively managed funds could provide better returns with professional management.

3. Flexicap Fund
The Parag Parikh Flexicap Fund provides diversified exposure across market caps. This is good for balancing risk and return.

4. Dividend Yield Fund
HDFC Dividend Yield Fund focuses on stocks with high dividend yields. This is more suited for regular income rather than aggressive growth.

5. Value Fund
Bandhan Sterling Value Fund aims to invest in undervalued stocks. This can be beneficial but requires patience as value stocks may take time to perform.

Recommendations for Improvement
1. Reduce Index Fund Exposure
Index funds provide market returns but lack the potential for higher growth. Consider reducing exposure to these funds.

2. Increase Allocation to Actively Managed Funds
Actively managed funds can outperform the market with expert management. Allocate more to well-performing actively managed funds for higher growth potential.

3. Diversify Across Market Caps
While your small cap exposure is good for high returns, balancing with more large cap and flexicap funds can reduce volatility.

4. Consider Equity and Debt Mix
For long-term stability, a small portion in debt funds can provide a safety net. Consider allocating 10-20% of your portfolio to debt funds.

Suggested New Allocation
Actively Managed Large Cap Fund: ?10,000 monthly
Actively Managed Mid Cap Fund: ?10,000 monthly
Actively Managed Small Cap Fund: ?10,000 monthly
Flexicap Fund: ?13,000 monthly
Actively Managed Debt Fund: ?5,000 monthly
Remaining in Current Funds: Distribute the rest evenly across your high performing small cap and flexicap funds.
Conclusion
Your current SIPs reflect a strong commitment to building a substantial retirement corpus. By reallocating some of your investments to actively managed funds and diversifying across market caps, you can enhance your portfolio's growth potential. Regular monitoring and adjustments will ensure you stay on track to meet your goal of ?10 crore by age 55.

Regular Monitoring and Review
Annual Review: Assess the performance of your funds annually. Make adjustments based on market conditions and financial goals.
Rebalancing: Ensure your portfolio remains aligned with your risk tolerance and investment objectives through periodic rebalancing.
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  |6999 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

Money
i am 37 years old.i want to have retirement corpus of 10 crore & retire when i am 55 years old. i am currently doing the following SIP.axis small cap fund 6500, Nippon small cap fund 6500, Mahindra manulife small cap fund 6500, icici prudential nifty midcap 150 index fund 11000, navi nifty next 50 index fund 12000, parag parikh flexicap fund 13000, bandhan nifty 50 index fund 12000, hdfc dividend yield fund 4000, bandhan sterling value fund 4000
Ans: It's commendable that you have a clear retirement goal and are taking proactive steps to achieve it through SIP investments. Here's some guidance to help you reach your target retirement corpus of 10 crores by the age of 55:
1. Evaluate Your Investment Portfolio: Review your existing SIP investments to ensure they are aligned with your long-term retirement goal. Assess the performance of each fund and make adjustments if necessary to optimize returns.
2. Diversification: While your current portfolio consists of a mix of small cap, mid cap, flexi cap, dividend yield, and index funds, consider diversifying further across asset classes such as equity, debt, and hybrid funds. This diversification can help mitigate risk and enhance returns over time.
3. Risk Management: As you approach retirement, gradually shift your investment focus towards more conservative options to safeguard your accumulated wealth. Balance the growth potential of equity funds with the stability of debt and hybrid funds to manage risk effectively.
4. Regular Monitoring and Rebalancing: Stay vigilant and monitor the performance of your SIPs regularly. Periodically rebalance your portfolio to maintain the desired asset allocation and adapt to changing market conditions.
5. Consult with a Certified Financial Planner (CFP): Seek professional guidance from a Certified Financial Planner who can assess your financial situation, analyze your investment portfolio, and recommend personalized strategies to achieve your retirement goals. A CFP can offer valuable insights and help you navigate complex financial decisions effectively.
6. Stay Disciplined and Patient: Building a substantial retirement corpus requires discipline, patience, and a long-term investment horizon. Stay focused on your goal, avoid impulsive decisions, and continue contributing diligently towards your SIPs to accumulate wealth systematically over time.
7. Given your retirement aspirations, it's crucial to tailor your investment strategy to maximize returns and mitigate risks. While index funds offer certain advantages, such as low fees and broad market exposure, they also come with drawbacks that may not align with your long-term financial goals:
Disadvantages of Index Funds:
a. Limited Scope for Outperformance: Index funds aim to replicate the performance of a specific market index, which means they can't outperform the market. If you seek above-average returns, actively managed funds may offer more potential for outperformance through skilled fund management and stock selection.
b. Lack of Flexibility: Index funds adhere strictly to the composition of their underlying index, limiting the fund manager's ability to capitalize on emerging opportunities or adjust the portfolio in response to changing market conditions. Actively managed funds have the flexibility to adapt their investment strategies dynamically, potentially enhancing returns and managing risk more effectively.
c. Inability to Mitigate Risk: Index funds are passively managed and hold all the stocks within the index, including those with high levels of risk or poor fundamentals. In contrast, actively managed funds can employ risk management techniques, such as sector rotation or stock selection, to mitigate downside risk and preserve capital during market downturns.
Benefits of Actively Managed Funds:
i. Potential for Alpha Generation: Actively managed funds are run by professional fund managers who aim to generate alpha, or returns that exceed the benchmark index. Through in-depth research, market analysis, and active decision-making, fund managers seek to identify undervalued securities and capitalize on market inefficiencies to enhance returns.
ii. Dynamic Portfolio Management: Actively managed funds have the flexibility to deviate from the benchmark index and capitalize on investment opportunities across different market conditions. Fund managers can adjust the portfolio allocation, sector exposure, and stock selection based on their market outlook and investment objectives, potentially optimizing returns and managing risk more effectively.
iii. Tailored Investment Approach: Actively managed funds offer a personalized investment approach tailored to specific investment objectives, risk tolerance, and time horizon. Fund managers can incorporate qualitative factors, fundamental analysis, and macroeconomic trends into their investment decisions, providing investors with a diversified and actively managed portfolio designed to achieve their financial goals.
Remember, achieving financial independence in retirement is a journey that requires careful planning, commitment, and perseverance. By following a well-thought-out investment strategy and seeking expert advice when needed, you can pave the way for a secure and comfortable retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Certified Financial Planner
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6999 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Apr 24, 2024Hindi
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Hi Sir, I am 36 years old current salary 1.4 L monthly and want to have a retirement corpus of 5 Cr at the age of 45. I am investing in below sips ICICI prudential value discovery growth-5k since 2016 Pgim India flexi cap 5k since 2020 Pgim midcap 5k since 2020 Nippon India small cap growth 8k since 2024.please let me know if my investments are okay and do I need to diversify
Ans: You've already taken a commendable step by starting your investments, and aiming for a significant retirement corpus is a great goal. Let's evaluate your current investments and suggest some adjustments.

Diversification:
While you have diversified across different categories like flexi-cap, mid-cap, and small-cap, you might want to consider adding a large-cap or a balanced fund to bring stability to your portfolio.
Diversification across different market caps and sectors can help in reducing the overall risk.
Consistency:
It's good to see that you've been investing consistently, which is the key to long-term wealth creation.
Review the performance of your funds annually to ensure they are aligning with your financial goals.
Risk Assessment:
Mid-cap and small-cap funds tend to be riskier but offer higher growth potential. Ensure you are comfortable with the associated volatility and risk.
As you approach closer to your retirement age, you might want to gradually shift towards more conservative investment options to safeguard your corpus.
Goal Planning:
To achieve a retirement corpus of 5 Cr by the age of 45, you need to ensure your investments are aligned with this goal.
Consider increasing your SIP amounts periodically or adding lump-sum amounts whenever possible to accelerate your wealth accumulation.
Professional Advice:
Consulting a Certified Financial Planner can provide personalized advice tailored to your financial situation and goals.
They can help in optimizing your portfolio, ensuring you are on track to achieve your retirement goal, and making necessary adjustments based on changing market conditions and your financial situation.
In conclusion, while your current investments are a good start, diversifying further and ensuring alignment with your retirement goal will be beneficial. Regularly reviewing and adjusting your portfolio as needed can help you stay on track. Remember, investing is a marathon, not a sprint, and staying disciplined and patient will be key to achieving your financial goals.

..Read more

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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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