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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Dec 07, 2022

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Gopalakrishna Question by Gopalakrishna on Dec 07, 2022Hindi
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I am 41 year old working in the software industry. I have no liabilities and I started investing in MFs for the last 4 years. I have a corpus of 10 lakh till now. My current portfolio is:

ICICI PRUDENTIAL EQUITY AND DEBT FUND - GROWTH: 10,000.00

HDFC BALANCE ADVANTAGE FUND - REGULAR PLAN - GROWTH: 10,000.00

ICICI PRUDENTIAL BLUECHIP FUND - GROWTH: 10,000.00

SBI LARGE AND MIDCAP FUND REGULAR GROWTH: 10,000.00

Canara Robeco Flexicap Fund Regular GROWTH: 10,000.00

Mirae Asset Emerging Bluechip Fund - Regular Plan GROWTH Option: 2,500.00

AXIS MIDCAP FUND - GROWTH: 2,000.00

Mirae Asset Large Cap Fund GROWTH Plan: 2,000.00

I also contribute 29,000 per month towards EPF and 17,000 per month towards NPS.

My Question is, are the above funds fine? How much corpus will I create in 15 years?

Ans: Funds are good, with monthly investment of 56500, the corpus that can created in 15 years is 3.1 cr

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  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

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Sir, my age is 34. Presently drawing salary of 90k p/m. Having MF of 22k p/m (Quant Small Cap 5k; Nippon Small Cap 5k, Aditya Birla Front Line Equity Fund 2k, Kotak Flexi Cap 3k, Axis Growth Opportunities Fund 5k & Quant Insfrastructure Fund 2k). As I want to continue the same atleast for coming 15 years, how much amount I need to invest on MF to build a corpus of 3 crores & also suggest me is there any fund which need to add or switch from my existing portfolio? Present obligation is 8k pm.
Ans: Thank you for sharing your financial details and goals. It's great to see your commitment to building a substantial corpus through disciplined mutual fund investments. Let's analyze your current portfolio and create a strategy to achieve your goal of Rs. 3 crores in 15 years.

Current Financial Overview
You are 34 years old, drawing a salary of Rs. 90,000 per month. Your monthly investments in mutual funds are Rs. 22,000 with the following allocation:

Quant Small Cap Fund: Rs. 5,000
Nippon Small Cap Fund: Rs. 5,000
Aditya Birla Front Line Equity Fund: Rs. 2,000
Kotak Flexi Cap Fund: Rs. 3,000
Axis Growth Opportunities Fund: Rs. 5,000
Quant Infrastructure Fund: Rs. 2,000
Your current obligations are Rs. 8,000 per month.

Evaluating Your Portfolio
Your current mutual fund portfolio is diversified across small-cap, large-cap, and sector-specific funds. This diversification is essential for balancing risk and achieving long-term growth. However, we should evaluate each fund's performance and consider adjustments.

Quant Small Cap and Nippon Small Cap Funds
Small-cap funds have high growth potential but come with higher risk. Continue investing but monitor performance regularly.

Aditya Birla Front Line Equity Fund
Large-cap funds provide stability. Consider increasing your allocation to large-cap funds for balanced growth.

Kotak Flexi Cap Fund
Flexi-cap funds offer flexibility to invest across market capitalizations. These funds can adapt to market changes, making them a good choice.

Axis Growth Opportunities Fund
This fund focuses on growth stocks, which can provide significant returns. Keep a close watch on its performance.

Quant Infrastructure Fund
Sector-specific funds can be volatile. Infrastructure funds can perform well during economic growth but consider their cyclical nature.

Suggested Adjustments
To achieve your goal of Rs. 3 crores in 15 years, you may need to increase your monthly investment and optimize your portfolio.

Increase Monthly SIP
Based on typical mutual fund returns, consider increasing your SIP to around Rs. 30,000 - Rs. 35,000 per month. This adjustment can help you reach your target corpus more comfortably.

Review Fund Performance
Regularly review the performance of your funds. Switch funds that consistently underperform and reallocate to better-performing ones.

Add Diversified Equity Funds
Consider adding diversified equity funds to your portfolio. These funds invest across sectors and market capitalizations, providing balanced growth.

Investment Strategy for Rs. 3 Crore Corpus
Monthly SIP Calculation
To build a corpus of Rs. 3 crores in 15 years, assume an average annual return of 12%. Based on this, you need to invest approximately Rs. 30,000 - Rs. 35,000 per month.

Systematic Increase in SIPs
Consider gradually increasing your SIP amount as your income grows. This strategy leverages the power of compounding and boosts your corpus.

Balanced Portfolio
Maintain a balanced portfolio with a mix of small-cap, large-cap, flexi-cap, and diversified equity funds. This balance mitigates risk and enhances returns.

Importance of Regular Monitoring
Annual Portfolio Review
Conduct an annual review of your portfolio. Assess fund performance, market conditions, and your financial goals. Make adjustments as needed.

Rebalance Your Portfolio
Rebalancing ensures your portfolio remains aligned with your risk tolerance and financial objectives. It involves realigning asset allocation to maintain the desired risk level.

Professional Guidance
Certified Financial Planner
Consult a Certified Financial Planner (CFP) to tailor your investment strategy. A CFP can provide personalized advice, helping you optimize your investments and achieve your financial goals.

Conclusion
You are on the right track with your current investments. By increasing your SIP amount and optimizing your portfolio, you can achieve your goal of Rs. 3 crores in 15 years. Regular monitoring and professional guidance will further enhance your financial security. Stay disciplined and focused on your long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Milind

Milind Vadjikar  |702 Answers  |Ask -

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

Ramalingam

Ramalingam Kalirajan  |7159 Answers  |Ask -

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

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I am 49 years old and doing MF since 2009 staring with small amount 2000/- pm. Last year i shuffle the portfolio last year. I have following investment in mutual fund 1. parag parik Flexi cap fund - reg gr 5000/- 2. Canara robeco bluechief equity fund gr 5000/- 3. Invesco india infra structure fund 5000/- 4. Quant small cap fund 5000/- I want to create corpus of 2 cr in next 10 years Currently my portfolio value is around 31 L.
Ans: At 49 years of age, you have a solid plan for the next 10 years, aiming to accumulate Rs 2 crores. While this is achievable, let's assess your current investments and how we can optimize them to help you reach your target with a well-balanced and structured approach.

Current Assessment of Your Portfolio
Parag Parikh Flexi Cap Fund: A Flexi Cap fund offers flexibility to invest across market caps. This provides diversification but may be subject to market fluctuations. While it has potential for long-term growth, it may not always outperform focused funds.

Canara Robeco Bluechip Equity Fund: Bluechip funds generally invest in large, established companies. These are relatively safer but may not give extraordinary returns compared to mid or small-cap funds.

Invesco India Infrastructure Fund: Infrastructure sector funds can have high growth potential. However, they are cyclical and may face volatility, especially during economic downturns.

Quant Small Cap Fund: Small-cap funds come with higher risk but can deliver significant returns. They are suitable if you have a high-risk appetite, but they require monitoring for volatility.

With a current portfolio value of Rs 31 lakhs, achieving Rs 2 crore in 10 years will require a balanced approach, with a mix of growth-oriented and stable investments.

Analytical Approach
Growth Potential of Your Current Funds
Your current funds cover a range of categories: Flexi Cap, Bluechip, Infrastructure, and Small Cap. While they provide diversification, there are certain risks, especially in sectoral and small-cap investments. Here's an analysis:

Flexi Cap Funds: These funds allow fund managers to shift between large, mid, and small-cap stocks depending on market conditions. This flexibility can enhance returns but may also expose you to greater risks if the market turns volatile. Consider whether you want to retain this flexibility or prefer a more focused investment approach.

Bluechip Funds: These large-cap investments offer stability. Since you have a long-term horizon, Bluechip funds can be a cornerstone of your portfolio, providing steady growth with lower risk. However, they may not deliver returns as high as mid or small-cap funds over the same period.

Sector-Specific Funds: Your investment in infrastructure is cyclical and dependent on the economy and government policies. While it can generate high returns during periods of infrastructure growth, it is more volatile compared to diversified funds.

Small Cap Funds: These funds have higher potential returns but also higher risks. They can be a good choice if you are prepared for short-term volatility.

Evaluating Portfolio Balance and Risk
Your portfolio appears to lean toward higher-risk investments, especially with exposure to small-cap and sectoral funds. While this strategy can lead to higher returns, it may expose you to considerable volatility. Given your age and the importance of preserving capital closer to retirement, you may want to rebalance your portfolio to include more stable investments.

We recommend the following adjustments:

Steps for Portfolio Optimization
Diversification to Manage Risk
Increase Large Cap Exposure: Large-cap funds are more stable and can provide consistent returns over time. Since you have a Bluechip fund, consider increasing your allocation to large-cap investments, which may help balance out the volatility from your small-cap and sectoral funds.

Limit Sectoral Exposure: While the infrastructure sector has growth potential, it's also vulnerable to cyclical downturns. Consider reducing your exposure to sector-specific funds to avoid the risk of underperformance during economic downturns.

Balanced or Hybrid Funds: Hybrid funds, which invest in both equity and debt, can offer a mix of growth and stability. Adding a balanced fund to your portfolio may help reduce volatility while still allowing you to benefit from equity growth.

Reevaluate Small Cap Allocation
Small-cap funds can offer high returns but are also highly volatile. At 49, your risk tolerance may need to shift slightly toward more stable investments. You may want to limit your exposure to small-cap funds to 15-20% of your total portfolio. You could consider moving part of your small-cap allocation into mid-cap or multi-cap funds for a more balanced risk-return profile.

Consistent SIPs and Top-Ups
You are currently investing Rs 20,000 per month through SIPs. This is a good strategy to average out market volatility and stay disciplined with your investments.

Consider Increasing Your SIP Amount: If possible, increase your SIPs gradually every year. Even a small annual increase in your investment can significantly enhance your corpus over the next 10 years.

Top-Up SIPs During Market Corrections: Take advantage of market downturns by making lump sum investments or increasing your SIP during these times. This will allow you to buy more units at lower prices, boosting your overall returns.

Long-Term Focus and Active Monitoring
Given that you are 10 years away from your goal, it's important to maintain a long-term focus while regularly reviewing your portfolio:

Review Performance Annually: Keep track of how your funds are performing. If any of your funds consistently underperform their benchmark or peers, consider switching to better-performing funds after consulting a Certified Financial Planner.

Avoid Frequent Portfolio Changes: While it's essential to monitor performance, avoid the temptation to make frequent changes based on short-term market movements. Stick to your plan unless there is a fundamental reason to alter your investments.

Importance of Actively Managed Funds
You have been investing through a regular plan, which is good as it allows you access to the expertise of a Mutual Fund Distributor (MFD) with Certified Financial Planner (CFP) credentials. Let's understand the benefits of regular funds over direct funds:

Expert Advice: Regular funds give you access to professional advice. Your Certified Financial Planner can help you make informed decisions, especially when market conditions change or when your goals evolve.

Active Management: Actively managed funds tend to outperform passive investments, such as index funds, in volatile markets. Your planner will ensure your portfolio is in line with your risk tolerance and long-term goals.

Avoid Direct Funds
While direct funds may seem attractive due to lower expenses, they lack professional guidance. Managing a portfolio on your own requires significant time and knowledge. Given your 10-year goal, regular funds with the support of a planner are a more efficient way to optimize returns and manage risks.

Disadvantages of Index Funds
Index funds might not suit your goal of accumulating Rs 2 crore in 10 years. They mirror the market and lack the ability to outperform. Actively managed funds, on the other hand, aim to outperform the market. You are already investing in actively managed funds, which have the potential for better returns, especially in a growing economy like India.

Creating an Emergency Fund
Before making any changes to your portfolio, ensure you have a solid emergency fund. This should be 6-12 months of your monthly expenses. It will act as a financial cushion in case of unexpected events, allowing you to stay on course with your investments without liquidating them prematurely.

Estate Planning and Insurance Review
At 49, it's also essential to consider estate planning. Ensure that you have nominated beneficiaries for your investments and that your will is updated.

Additionally, review your insurance coverage:

Health Insurance: Make sure you have adequate health coverage for yourself and your dependents. Medical expenses can erode your savings, especially as you get older.

Life Insurance: Ensure you have sufficient life insurance coverage to protect your family’s financial future. Term insurance is the most cost-effective option for providing a large cover.

Final Insights
Achieving a corpus of Rs 2 crore in 10 years is possible with a well-thought-out strategy. Your current portfolio is diversified, but it leans toward higher-risk investments. By rebalancing your portfolio to include more stable large-cap and hybrid funds, increasing your SIP contributions, and staying focused on long-term growth, you can optimize your chances of meeting your goal.

Regular monitoring and guidance from your Certified Financial Planner will ensure that your portfolio stays aligned with your risk tolerance and financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Instagram: https://www.instagram.com/holistic_investment_planners/

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Milind

Milind Vadjikar  |702 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 26, 2024

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Hi Experts, I seek your guidance on my mutual fund portfolio. Below are the details: Total Portfolio Details: - Total Invested Amount: ?15,76,159 - Current Value: ?19,35,234 - Total Returns: ?3,59,075 (+22.78%) - XIRR: 20.75% Monthly SIP Contribution: ?1,18,000 Breakdown of monthly SIP contributions across funds: 1. Parag Parikh Flexi Cap Fund Direct Growth – ?30,000 2. SBI Large & Midcap Fund Direct Plan Growth – ?15,000 3. SBI Magnum Mid Cap Fund Direct Plan Growth – ?20,000 4. Nippon India Large Cap Fund Direct Growth – ?30,000 5. Nippon India Small Cap Fund Direct Growth – ?7,500 6. ICICI Prudential Technology Direct Plan Growth – ?10,000 7. Quant Small Cap Fund Direct Plan Growth – ?7,500 8. HSBC Small Cap Fund Direct Growth – ?5,000 9. Edelweiss US Technology Equity Fund of Funds Direct Growth – ?5,000 Can you suggest if I am on track to create 5 CR corpus in 10 years I have ?25 lakh invested in a Fixed Deposit (FD) in my mother’s account, earning an interest rate of 7.75%, to generate tax-free returns. Additionally, I’m planning to purchase a plot worth ?30–50 lakh in the next 1–2 years. Is it a good idea to keep the money in FD for now, or are there better short-term investment options I should consider to maximize returns while keeping the funds accessible for my future purchase? Looking forward to your suggestions! Thank you!
Ans: Hello;

Your monthly sip value adds upto 1.3 L however you have claimed it to be 1.18 L. (Maybe a typo).

Existing corpus(19.35 L) and monthly sip (1.3 L) won't reach 5 Cr in 10 years.

You have two options to make it happen:

1. Increase monthly sip amount to 1.9 L.

2. Top-up current monthly SIP of 1.3 L by minimum 10% each year for 10 years.

Both ways will lead you to a corpus of 5 Cr over 10 years.

You may consider money market mutual funds for parking your funds for a 1 year horizon. Returns may be comparable to FD returns but with flexibility to withdraw anytime. They typically have low to moderate risk.

Happy Investing;
X: @mars_invest

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Nayagam P

Nayagam P P  |3928 Answers  |Ask -

Career Counsellor - Answered on Nov 26, 2024

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Career
Is doing BBA + Law (Honors) from BITS Law is worth
Ans: Anju, prior to addressing the question, I would like to draw your attention to a recent article in 'The Times of India' which indicates that a majority of law graduates tend to favor employment in corporate settings over practicing in courts. Now, coming to your question, please note, BITS Law School's BBA + LLB (Hons) program is a 5-year program that combines business administration with legal studies. The program focuses on areas such as corporate law, intellectual property, business laws, and dispute resolution. The program offers a strong multidisciplinary approach, preparing students for careers in corporate law, legal consultancy, and management. Its strengths include a business + legal acumen curriculum, industry-driven curriculum, and a reputation for excellence in education and placement opportunities. However, it lacks the legacy and alumni network of top-tier law schools and can be expensive. Career opportunities include corporate and business law, management roles, consulting, entrepreneurship, academia/research, international arbitration, cyber and technology law, corporate governance, and intellectual property rights. The program is worth considering if you aim for a corporate or business law career, are comfortable with the cost and value of the BITS brand, and have excellent industry connections and internships. Build your profile well by the time you complete your BBA+LLB & improve your all other skills required. All the BEST for Your Prosperous Future.

To know more on ‘ Careers | Education | Jobs’, ask / follow Us here in RediffGURUS.

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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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