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Ramalingam Kalirajan |7365 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 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

Question by Santosujit on Oct 31, 2023Hindi

Hi I am 41 year Old. I have all total 10 lakh in savings in EPF+NPS. I have my own home. I will retire by 60 in next 19 years. I can invest 40K per month. Pls suggest some MFs.

Ans: Given your age, retirement horizon, and investment capacity, you have a good opportunity to build a substantial corpus for your retirement. Here's a general approach to selecting mutual funds for your SIP:

Diversified Equity Funds: These funds invest across various sectors and market capitalizations, providing you with diversification and growth potential. Given your 19-year horizon, you can consider allocating a significant portion of your investment to diversified equity funds.
Mid-cap and Small-cap Funds: These funds have the potential to offer higher returns over the long term, but they also come with higher volatility. As you have a long investment horizon, you can consider allocating a smaller portion of your portfolio to mid-cap and small-cap funds to boost returns.
Large-cap Funds: These funds invest in large, well-established companies that are typically more stable but offer moderate returns. They can be a core part of your portfolio to provide stability.
Balanced Advantage Funds: These funds dynamically manage equity and debt allocation based on market valuations. They can be suitable for investors who want to participate in equity markets but with lower volatility.
Index Funds or ETFs: If you want to track the market, you can consider investing in index funds or ETFs that mimic the performance of a specific index. They generally have lower expense ratios and can be a cost-effective way to invest.
When selecting specific mutual funds:

Performance: Check the historical performance of the fund compared to its benchmark and peers.
Fund Manager: An experienced and skilled fund manager can make a difference. Look for consistency in performance under the current fund manager.
Expense Ratio: Lower expense ratios can significantly impact your returns over the long term.
Asset Under Management (AUM): A reasonably sized AUM indicates the trust of investors in the fund. However, extremely large funds might find it challenging to generate high returns.
Remember to review and rebalance your portfolio periodically, ideally at least once a year, to ensure it aligns with your financial goals and risk tolerance. Given the importance of this decision, it might also be beneficial to consult with a financial advisor who can provide personalized advice based on your specific situation and goals.

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