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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Apr 25, 2022

Mutual Fund Expert... more
Ganesh Question by Ganesh on Apr 25, 2022Hindi
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I am 42 year old working in a private company. I am having home loans with Rs.8244 emi, spouse is not working and I am earning Rs.42,000 monthly. 

I have following investments in mutual funds since last one year. I want to save for child education and retirement, please suggest suitable mutual fund schemes.

Axis blue chip Rs.1000 sip - total investment Rs.50,000

Axis growth opportunities Rs.2000 sip- total investment Rs.20,000

Hdfc children's gift fund (investment from 2015) Rs.1000 sip - investment Rs.70,000

Kotak balanced advantage fund - lump sum Rs.30,000

Ans: These are good funds and suitable for you.

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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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Jun 08, 2021

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Sir, recently I have started to invest in Mutual funds. Below funds i have invested please suggest are those are right selection. If not, please suggest which fund I will invest in for the next 13 yrs. For Retirement - next 13 yrs i will invest 1 Axis Bluechip fund direct plan - growth 1000/- 2 SBI Magnum Medium Duration fund direct -growth -3000/- 3 ICICI asset allocator fund FOF direct - growth - 7000/- 4 ICICI Prudential Saving fund direct plan - growth - 3000/- 5 Tata Retirement saving fund progressive P D- growth - 1000/- 6 L&T Midcap fund direct - growth - 1000/- 7 canara Robeco Emerging equities fund direct - growth - 1000/- For Child Education (next 12 yrs) 1 canara robeco Aggressive hybrid fund - 3000 /- 2 Axis midcap fund - 3000/-  3 Nippon india Multi cap fund - 2000/- Also need to start two more SIPs about 3500 and 2500 for 14yrs and 17 yrs target for kids’ marriage. Please suggest a fund for marriage goals.  Also need to invest a lump sum of 750,000/- for child education for which fund I will select, the duration minimum should be 7yrs or max 10 yrs for investment? Please suggest above funds are the right section or not? If not please suggest which fund I will refer to for retirement and Child education.
Ans:

For Retirement: Need to do investments in Equity Oriented funds so that a decent corpus can be created.

You may continue with 1, 3 and 7 and for rest below can be considered

a)   UTI Flexi Cap – Growth

b)  Parag Parikh Flexi- Cap Growth

c)   Axis ESG Equity Fund – Growth

d)  DSP Mid Cap Fund – Growth

For Child’s Education:  You may continue with 1 and 2 and consider adding Motilal Oswal Focused- 25 Fund – Growth

..Read more

Ramalingam

Ramalingam Kalirajan  |6292 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

Asked by Anonymous - Aug 09, 2024Hindi
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I need advice on which mutual funds to invest? Currently saving around 10k in PPF, UTI MNC FundDirect Growth 5k , Tata Equity PE Fund Direct Growth5K and Axis ESG Integration Strategy Direct Growth 5K. I can invest 15K more each month. Please suggest good fund for retirement and child education.
Ans: Assessing Your Current Investment Portfolio
You have done an excellent job of diversifying your portfolio. Your current investments in PPF, UTI MNC Fund, Tata Equity PE Fund, and Axis ESG Integration Strategy Fund demonstrate a solid understanding of the importance of balancing risk and reward. The fact that you are saving Rs. 10,000 monthly in PPF also indicates that you are focused on building a secure, long-term savings foundation with guaranteed returns, which is essential for retirement planning.

Diversified Equity Funds
Your investment in the UTI MNC Fund is a strategic choice for long-term growth. This type of fund invests in multinational companies, which often have strong financials and global business models. These companies tend to have consistent revenue streams and are less affected by domestic economic conditions. However, it's important to note that these funds can be volatile in the short term, so they should be considered as part of your long-term strategy.

The Tata Equity PE Fund is another well-considered choice, focusing on companies with strong fundamentals but trading at lower valuations. This approach, known as value investing, can be rewarding, especially during periods of market correction or downturn. It helps in accumulating quality stocks at lower prices, potentially leading to higher returns when the market rebounds.

ESG Funds
Your investment in the Axis ESG Integration Strategy Fund aligns with a growing trend toward responsible investing. ESG (Environmental, Social, and Governance) funds not only aim for financial returns but also consider the impact of their investments on society and the environment. These funds can be a good fit for investors looking to contribute positively to global challenges while growing their wealth. However, it's essential to be aware that ESG funds might sometimes underperform compared to other equity funds, especially in sectors that are not ESG-compliant but might offer higher returns.

Allocating for Retirement
Retirement planning requires a careful balance of growth and safety. Given your current investments and the additional Rs. 15,000 you can allocate monthly, here's a strategy to enhance your retirement corpus.

Balanced Advantage Funds
Balanced Advantage Funds are an excellent option for those nearing retirement. These funds dynamically adjust the asset allocation between equity and debt based on market conditions. This means that during market highs, they reduce equity exposure to safeguard returns, and during lows, they increase equity exposure to take advantage of lower prices. This approach ensures that your investment is protected against market volatility while still participating in equity market gains.

Investing in a Balanced Advantage Fund can provide you with a steady growth of capital, coupled with a degree of safety. Over the next 10-15 years, these funds can play a crucial role in building a sizable retirement corpus without exposing you to undue risk.

Equity-Oriented Hybrid Funds
Another option for retirement planning is Equity-Oriented Hybrid Funds. These funds invest a significant portion of their portfolio in equities while maintaining a substantial debt component. The equity portion offers growth potential, while the debt portion adds stability and reduces overall portfolio volatility.

Equity-Oriented Hybrid Funds are particularly suitable for those who prefer a moderate risk level and are looking for a balanced approach to wealth creation. These funds are designed to weather market fluctuations better than pure equity funds, making them ideal for retirement planning, where preserving capital is as important as growing it.

Diversified Equity Funds
To further bolster your retirement savings, you might consider increasing your SIP in diversified equity funds. These funds invest across various sectors and market capitalizations, providing exposure to a wide range of industries and companies. The broad exposure reduces the risk associated with investing in a single sector or market segment, thus offering a more stable return over the long term.

Diversified equity funds have the potential to deliver higher returns, especially over an extended investment horizon. This makes them an attractive option for retirement planning, where the focus is on maximizing returns while managing risk.

Planning for Child Education
Planning for your children's education is another critical financial goal. Education costs, especially for higher education, are on the rise, and it's essential to start early and invest wisely to ensure you can meet these expenses without financial strain.

Equity Mutual Funds
Given that your children are still in school, you have time on your side. Equity mutual funds are an excellent option for long-term goals like education. These funds have the potential to deliver high returns over the long term, helping you build a substantial corpus to cover education costs.

Equity funds can be volatile in the short term, but over a period of 10-15 years, they tend to outperform other asset classes. By investing in these funds, you can take advantage of the power of compounding, where the returns on your investments generate further returns, leading to exponential growth over time.

Child-Specific Mutual Funds
You may also consider investing in child-specific mutual fund plans. These plans are designed to meet the specific financial needs of education by focusing on both growth and safety. They typically invest in a mix of equity and debt, ensuring a balanced approach to wealth creation.

Child-specific plans often come with a lock-in period, which aligns with the investment horizon needed for education planning. The lock-in period ensures that you stay invested for the long term, helping you avoid the temptation to withdraw funds early, which could compromise your child's education fund.

These funds also offer features like an automatic portfolio rebalancing, where the fund manager shifts the investment from equity to debt as the child approaches college age. This reduces the risk of market volatility affecting the corpus needed for education expenses.

Making the Most of Your Additional Investment Capacity
You have an additional Rs. 15,000 per month to invest, and this can be allocated wisely towards both your retirement and child’s education goals. Here's how you can distribute this amount:

Rs. 7,500 towards retirement funds: Invest in a diversified equity fund or a balanced advantage fund. This ensures growth with a degree of safety, crucial for retirement planning.

Rs. 7,500 towards child education funds: Allocate this towards an equity fund or a child-specific plan that offers a mix of growth and stability.

This split ensures that both your retirement and your child’s education goals are being addressed simultaneously. By maintaining a disciplined investment approach and regularly reviewing your portfolio, you can achieve these goals without compromising on your current lifestyle.

Avoiding Common Pitfalls
When planning your investments, it's essential to be aware of the potential pitfalls that could derail your financial goals. Here are some common issues to avoid:

Disadvantages of Index Funds
Index funds are passive funds that aim to replicate the performance of a specific market index. While they have lower expense ratios compared to actively managed funds, they also come with certain limitations. Index funds are designed to match the market's performance, which means they do not have the potential to outperform the market. This can be a significant drawback in a bullish market, where actively managed funds may generate higher returns by selecting outperforming stocks.

Moreover, index funds are fully invested at all times, regardless of market conditions. During market downturns, this lack of flexibility can lead to significant losses, as the fund cannot shift to safer assets like cash or bonds.

In contrast, actively managed funds, managed by experienced fund managers, can adapt to changing market conditions by adjusting the portfolio composition. This flexibility allows them to potentially outperform the market and protect your investments during volatile periods.

Disadvantages of Direct Funds
Direct funds have lower expense ratios compared to regular funds because they are purchased directly from the fund house without involving a distributor or advisor. However, the lower cost comes with the responsibility of managing the investments yourself.

Investing in direct funds requires a good understanding of market dynamics, fund performance, and portfolio management. Without the guidance of a Certified Financial Planner, you may miss out on crucial market opportunities or fail to rebalance your portfolio when needed.

Regular funds, on the other hand, involve a distributor or advisor who provides professional advice and regular portfolio reviews. The slightly higher expense ratio is often justified by the expert guidance and peace of mind you receive. By investing through a Certified Financial Planner, you can ensure that your portfolio is aligned with your financial goals and risk tolerance.

Final Insights
Your current portfolio is well-structured and diversified, but there is always room for optimization. By reallocating your additional savings wisely, you can strengthen both your retirement and child’s education corpus. Regular reviews and adjustments to your investment strategy will ensure that you remain on track to meet your financial goals without compromising your current lifestyle.

Your proactive approach to saving and investing is commendable, and with careful planning, you can secure a comfortable retirement and provide for your children's education without financial stress.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Dr Karthiyayini

Dr Karthiyayini Mahadevan  |1065 Answers  |Ask -

General Physician - Answered on Sep 14, 2024

Asked by Anonymous - Sep 13, 2024Hindi
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I am 75 + ....Around two months back I was diagnosed as dengue positive with platelet count at 75,000. with proper medication, platelet counts were increased to 2,05,000 and fever was subsided.However swellings on both arms and legs persisted.. Off late on my both solders i am suffering severe pain and enable to make any movement, i feel like inner vain of my both hands are getting stretched/pulled (right from my solder to the finger tips and swelling on both hands and legs are still there. My doctor says that it may continue for another two three months and proscribed me only pain killer tablets.Doctor says that there is no specific medicine for Dengue. I got thorough blood and urine test along with other test like scanning, x-ray etc. All the test reports are normal except slightly blood sugar (PP) on higher side and enlargement of prostate gland (which is there since last 10 years and i am on regular medicine (silodosin 8-mg, one tab a day) Kindly advise me with your good suggestions that what could be the cause of this problem and which expert doctor I should consult since it is very difficult situation for carrying out my routine activities and also I can't sleep properly due to severe pain. Thank you
Ans: Post viral illness can trigger different chain of immune reactions
They are mostly self limiting if your lifestyle is well disciplined.
Here are the points towards a healthy lifestyle
1.Early dinner by 6 pm and avoid animal protein and fat at dinner meal
2.Sleeping time to be regulated. Fix a specific time around 9/9.30 pm and unwind from the world particularly off media from 7 pm
3.Regular brisk walking 30 mts a day five days a week
4.Balanaced nutrition and avoid highly refined carbohydrates

...Read more

Milind

Milind Vadjikar  |132 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 14, 2024

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I am going to turn 34 years old this year. Me and my wife earn 3.7 Lakh Per Month In Hand (Post all deductions: Tax, EPF), above included salary and rental. 3 Lakh per month i can invest. How do you suggest i should invest for achieving my goals. In my family i have my Wife, Son 4 YO and my parents. Live with my parents in my own house so i do not plan to buy house. My wife and my own current savings: - 80 lakhs in Equity (PMS and Mutual Funds). - 45 Lakh in Crypto Currency (Invested 5 lakh very early and i want to stay invested). - Commercial Real Estate Office Worth 1 Cr. yielding rental of 47 thousand per month. - 15 Lakh Provident Fund - 20 Lakh Bank FD & Arbitrage Fund (Emergency Fund) - 5 Lakh Savings Account (Day today expenses) Expenses: - 70k per Month including everything (Daily expense, Vacation, mobile etc). - Our monthly expense is low as my father is also working and many other expenses (around 50k) are taken care by him only. I have health insurance cover from my company of 6.5 lakh. Personal medical insurance of 10 lakh. Term insurance from my company of around 1.7 crore. Personal Term Insurance of 4 crore. Zero loans. Goals: - 1.5 crore in today's terms 10-12 years later to reconstruct the house. - 40 lakh, 6 years later for new car. - 3-4 crore at age of around 55 (For my personal goal). - 2 crore for my son higher education. - 30 crore for my retirement.
Ans: Thanks for candidly sharing your goals, current income and savings/investments.

You have adequate term life cover but recommend to cover family and parents with healthcare cover of 50 L as a minimum considering increasing cost of medical treatments and rise in illnesses with age.

Your existing investments are considered as 95 L (Ignoring Emergency fund and saving account balance)

Crypto holdings are considered 0 since they are highly volatile, unregulated and not backed by any tangible asset.

1.5 Cr house reconstruction expenses 12 years hence translates into around 3 Cr considering 6% inflation.

So start a SIP of 90K for 12 years into Nippon India Multicap Fund & HDFC top 100 Fund(50:50)which may yield a corpus of 3.12 Cr(Considering modest return of 13%)

Next goal is car purchase after 6 years so initiate a SIP of 40K in HDFC balanced advantage fund which will yield a corpus of 40L considering modest return of 10.5%

Next goal is a corpus of 3-5 Cr when you will be 55 so you can do a SIP of 50K in PPFAS flexicap fund which will yield a corpus of 5.73 Cr assuming conservative return of 13%

Further important goal is corpus for child education so considering timeframe of 14 years recommend to do a SIP of 50K in HDFC Children's Gift Fund which will yield a corpus of 2Cr+ assuming modest return of 12%

Finally retirement goal of 30Cr assumed to be 25 years from now so you may start a SIP of 70K in ICICI Pru Retirement Fund Pure Equity Plan which yield you a corpus of 15.9 Cr considering modest growth of 13%.
Plus your corpus of 95 L at a modest return of 9.5% will yield a value of 9.18Cr after 25 years
So your total retirement corpus is now 15.9+9.18=25.08 Cr
Further the amount getting released after achievement of all other goals apart from retirement can be redeployed in a value based BAF(HDFC; 10% return) for residual span towards retirement goal.
i.e. 90K for 13 years --2.89 Cr
40K for 19 years--2.73 Cr
50K for 5 years----0.39 Cr
50K for 11 years---1.2 Cr
Total_-----------------------7.21 Cr

Adding this to our earlier calculated retirement corpus gives us comprehensive retirement corpus of 7.21+25.08= 32.21 Cr

Anything you get from Crypto is bonus!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing

You may follow us on X at @mars_invest for updates

Happy Investing!!

...Read more

Ramalingam

Ramalingam Kalirajan  |6292 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 14, 2024

Asked by Anonymous - Sep 14, 2024Hindi
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I am 27 years old studying 3rd year MD, have the following monthly SIPs. 1.PPF 12500 2. PLI 5300 3. Jeevan Umang 5400 4. RD 4500 5. ICICI equity and debt fund 5000 6. ICICI india oppertunity fund 2000 7. Kotak multi cap fund 2000 8. Sundaram service fund 2000 9. Nippon small cap fund 2000 10. HDFC multi cap fund 2000 11. Canara robaco blue chip equity fund 2000 12. Motilal Oswal large and mid cap 5000 Please evaluate my portfolio and advice Do I need to cancel any of the above Or should I go for alternatives than above mentioned Kindly suggest
Ans: At the age of 27, with a long-term investment horizon, you have built a diverse portfolio. However, a review of your portfolio is necessary to ensure optimal returns and financial security. Let’s assess each of your existing investments while providing insights on potential improvements.

1. PPF (Public Provident Fund)

The PPF is a solid choice for risk-free, tax-efficient, long-term savings.

It offers guaranteed returns and tax benefits under Section 80C.
It should be continued as part of your debt allocation.
However, you may want to limit over-reliance on low-return instruments like PPF, as it has a lock-in period of 15 years and a lower growth potential compared to equities.
2. Postal Life Insurance (PLI)

PLI is one of the oldest and most reliable life insurance products in India.

It offers low premiums with high returns.
However, if you are purely looking for life cover, term insurance may offer a higher sum assured at a lower cost.
For wealth accumulation, this may not be the most optimal choice due to its moderate returns. It is advisable to review whether you need both PLI and Jeevan Umang (discussed below).
3. Jeevan Umang

Jeevan Umang is a combination of life insurance and investment, providing regular payouts.

Such investment-cum-insurance plans generally offer lower returns compared to mutual funds.
You might want to re-evaluate keeping this plan since standalone life insurance (term insurance) combined with mutual fund investments may provide better growth and flexibility.
Cancelling or surrendering this policy should be considered after evaluating its surrender value and whether it's feasible based on your financial goals.
4. Recurring Deposit (RD)

RDs are low-risk instruments but have relatively lower returns.

While RDs ensure capital safety, they might not be ideal for wealth creation, especially for long-term goals.
Since you're still young with a long investment horizon, it might be better to channel more funds into equities for higher growth potential.
Consider reducing or stopping this RD and redirecting the funds into equity-based investments.
5. ICICI Equity and Debt Fund

This hybrid fund is a balanced option offering exposure to both equity and debt.

It provides the potential for growth through equities while managing volatility with debt.
As you are young and have a long-term horizon, a higher allocation towards pure equity funds might yield better long-term results.
Evaluate whether you need a hybrid fund in your portfolio, as your other debt investments (PPF, RD) already provide stability.
6. ICICI India Opportunity Fund

This is a thematic fund, focused on certain sectors or market opportunities.

Thematic funds can be more volatile and risky compared to diversified equity funds.
Consider whether you need exposure to such a niche strategy. These funds can work well in a bull market but may not be ideal for consistent long-term growth.
It might be wiser to replace this fund with a more diversified equity mutual fund for better stability.
7. Kotak Multi Cap Fund

Multi-cap funds invest across large-cap, mid-cap, and small-cap stocks.

Multi-cap funds are suitable for long-term growth as they provide diversification across different market capitalisations.
This is a good choice to hold as it balances risk and returns by spreading investments across different categories.
No change is required here.
8. Sundaram Service Fund

Thematic funds like this one tend to focus on specific industries or sectors.

Sector-focused funds are prone to higher volatility due to limited diversification.
While such funds can provide high returns in specific cycles, they may not be ideal for consistent long-term growth.
You could consider switching to a diversified equity fund to reduce concentration risk.
9. Nippon Small Cap Fund

Small-cap funds have high growth potential but are also volatile.

Given your long-term horizon, small-cap funds can offer excellent growth opportunities.
However, small-cap funds should be a part of your portfolio, but with a smaller allocation due to higher risks.
Keep an eye on the fund’s performance and market conditions but maintain some exposure to small caps for aggressive growth.
10. HDFC Multi Cap Fund

Similar to the Kotak Multi Cap Fund, this fund offers broad exposure across different types of companies.

Multi-cap funds are an important component of a well-diversified portfolio.
Holding multiple multi-cap funds may lead to overlapping stock investments, so it may be beneficial to consolidate into one multi-cap fund for simplicity and efficiency.
No immediate need for cancellation, but consider streamlining your investments.
11. Canara Robeco Blue Chip Equity Fund

Blue chip equity funds invest in well-established companies with strong track records.

Blue chip funds are a stable option for long-term wealth creation with moderate risk.
These funds tend to perform well in the long term, providing stable growth.
Continue investing in blue-chip equity for consistent, lower-risk returns.
12. Motilal Oswal Large and Mid Cap Fund

This fund invests in a mix of large and mid-cap companies.

Large and mid-cap funds offer a balance of stability from large caps and growth potential from mid caps.
It’s a good choice to keep, given your long-term investment horizon.
Continue your SIP in this fund as it provides a diversified exposure to both stable and high-growth companies.
Portfolio Insights

Your portfolio is a mix of both equity and debt instruments. There are areas where you could improve efficiency and focus more on growth. Since you are young, your portfolio should focus more on equity investments rather than debt or conservative instruments.

Here are some points for improvement:

Consider reducing or stopping PLI, Jeevan Umang, and RD. They offer lower returns and are not ideal for wealth accumulation.
Consolidate your multi-cap funds to avoid redundancy and improve efficiency.
Consider moving away from thematic funds (ICICI India Opportunity, Sundaram Service) and replace them with more diversified options for better risk management.
Maintain small exposure to small-cap funds but don’t over-allocate due to volatility.
Large-cap and blue-chip funds should continue, as they provide stability to your portfolio.
Investment Strategy Moving Forward

Since you are currently pursuing your MD, you might want to focus on building a strong long-term growth portfolio. The following strategy could help you optimise your investments:

Increase Equity Exposure: Given your young age and long-term goals, you could increase your equity exposure to maximise returns. Equity mutual funds have historically outperformed other asset classes over long periods.

Reduce Debt Instruments: PPF is a good debt instrument, but the RD and life insurance policies may not be ideal for wealth creation. Consider directing those funds into more growth-oriented investments.

Review Insurance Needs: If your current life insurance policies are not providing adequate coverage, switch to a term plan that offers high coverage at a lower premium. This will allow you to free up more funds for investment purposes.

Consolidate and Simplify: You have multiple schemes in similar categories, which might lead to unnecessary overlap. Streamlining your portfolio by focusing on a few high-quality funds can make it easier to track performance.

Continue SIPs: SIPs are a great way to invest systematically. Increase your SIPs in funds with strong performance records and reduce exposure to underperforming or high-risk funds.

Monitor Portfolio Regularly: Keep track of your fund performance, rebalance annually, and make adjustments as needed to align with your goals.

Final Insights

Your portfolio is already in a good shape for someone at the start of their professional career. However, there are some areas where you could optimise for better returns. By focusing more on equity and less on conservative products like life insurance and RDs, you can enhance your wealth creation potential.

This shift in strategy will allow you to focus on long-term growth, ensuring a solid financial foundation for the future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...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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