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Ramalingam

Ramalingam Kalirajan  |7162 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 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 - Jun 17, 2024Hindi
Money

I am 44 years old and is currently investing 6K with step up of 10% in Quant small cap , 10k in SBI long term equity fund, and 10k in parag parikh flexi cap fund. My goal is to have 1 crore within 8 years. Whether I am in right investment track to achieve my goal

Ans: Evaluating Your Current Investment Strategy
Your dedication to investing is admirable, and your goal of accumulating Rs 1 crore in 8 years is achievable with strategic planning. Let's analyze your current investments and see how they align with your objective.

Quant Small Cap Fund
Investing Rs 6,000 monthly in a small cap fund with a 10% annual step-up is a bold and potentially rewarding choice. Small cap funds have high growth potential, albeit with greater volatility. Over the long term, small cap funds can deliver impressive returns, but they require patience and a high risk tolerance.

SBI Long Term Equity Fund
Allocating Rs 10,000 monthly to a long-term equity fund is a wise move, particularly for tax-saving purposes under Section 80C. These funds are generally more stable compared to small cap funds, offering a balanced approach to growth and security. They invest in a diversified portfolio of stocks, which helps in mitigating risk.

Parag Parikh Flexi Cap Fund
The Rs 10,000 monthly investment in a flexi cap fund is another strategic decision. Flexi cap funds provide flexibility to the fund manager to invest across large, mid, and small cap stocks, depending on market conditions. This flexibility can lead to better risk-adjusted returns and a more resilient portfolio.

Calculating the Potential to Reach Rs 1 Crore
To assess whether your current investments will help you reach Rs 1 crore in 8 years, let's consider the average annual returns and the power of compounding.

Expected Returns and Compounding
Equity mutual funds typically offer returns ranging from 12% to 15% annually. With your step-up SIP strategy, where you increase your SIP amount by 10% each year, the compounding effect will be significant. The increased contributions over time, coupled with market growth, will accelerate your corpus accumulation.

Enhancing Your Investment Strategy
The Power of Step-Up SIP
Your strategy to increase the SIP amount by 10% annually is excellent. This incremental increase leverages your growing income and maximizes the benefits of compounding. For instance, if you start with Rs 6,000 and increase it by 10% every year, the final corpus will be significantly larger than a flat SIP.

Regular Portfolio Review
It's crucial to review your portfolio regularly. Market conditions, personal financial goals, and life changes can impact your investment strategy. A Certified Financial Planner (CFP) can provide valuable insights and adjustments to keep your investments on track.

Diversification and Risk Management
Balanced Investment Portfolio
Your investments in small cap, long-term equity, and flexi cap funds are well-diversified. This mix offers a balance between high growth potential and stability. Diversification reduces risk and helps in achieving consistent returns.

Considering Debt Funds
While equity funds are excellent for growth, adding a small portion of debt funds can provide stability. Debt funds offer lower but more stable returns, acting as a cushion during market volatility. This can be particularly useful as you approach your goal, reducing the risk of a significant market downturn affecting your corpus.

Market Cycles and Staying Invested
Understanding Market Volatility
Equity markets are cyclical, with periods of growth and correction. Understanding this helps in setting realistic expectations and avoiding panic during downturns. Staying invested through different market cycles often yields better long-term returns.

Avoiding Market Timing
Trying to time the market can lead to missed opportunities and losses. Consistent investing, regardless of market conditions, is a more effective strategy. Your SIPs automatically buy more units when prices are low, benefiting from rupee cost averaging.

Importance of Early Investment and Incremental Increases
Benefits of Compounding
Starting investments early and increasing contributions incrementally maximizes the benefits of compounding. The longer your money is invested, the more it grows. Your step-up SIP strategy harnesses this power effectively.

Managing Emotions in Investing
Staying Calm During Volatility
Investing involves emotions, especially during market fluctuations. Market downturns can cause anxiety, but a well-defined plan and professional guidance help in staying focused on long-term goals. Avoid making impulsive decisions based on short-term market movements.

Professional Guidance
Relying on your CFP for advice during volatile times can provide an objective perspective and reduce emotional biases. A CFP can help you stay disciplined and make informed decisions aligned with your financial goals.

Financial Tools and Resources
Leveraging Financial Tools
Use financial tools to track and manage your investments. SIP calculators, portfolio trackers, and financial planning software can help stay organized and make informed decisions.

SIP Calculators
Estimating future returns and planning contributions effectively using SIP calculators helps set realistic goals and track progress. This can provide a clear picture of your investment journey and the adjustments needed to reach your target.

Adapting to Life Changes
Life Events and Financial Goals
Life events like marriage, childbirth, or career changes can impact your financial goals and capacities. Adapt your investment strategy accordingly. Reevaluate your goals periodically to ensure they align with your evolving needs.

Adjusting Contributions
Increase contributions during income growth phases and reduce them if expenses rise temporarily. This flexibility helps in maintaining a balanced approach to savings and expenditures.

Tax Benefits and Efficient Planning
Utilizing Tax Benefits
Tax planning is essential to maximize your net returns. Utilize tax-saving instruments effectively, such as long-term equity funds for Section 80C deductions. Proper tax planning enhances your overall returns by reducing the tax burden.

Long-Term Capital Gains (LTCG)
Equity investments held for over a year qualify for LTCG, which are taxed favorably compared to short-term gains. Planning your investments to optimize tax benefits can enhance your net returns.

Insurance and Risk Management
Adequate Insurance Coverage
Ensure sufficient life and health insurance coverage. This protects your family from unforeseen events and secures your financial plans. Term insurance is cost-effective and provides substantial coverage.

Separating Insurance and Investment
If you hold LIC, ULIPs, or investment-cum-insurance policies, consider surrendering them. These often provide suboptimal returns due to high charges and mixing insurance with investment. Reinvesting the proceeds into mutual funds can optimize growth.

Regular Portfolio Review
Annual Reviews
Conduct detailed reviews annually. Assess performance, rebalance asset allocation, and make necessary changes. This ensures your investments align with your goals.

Rebalancing
Rebalance your portfolio periodically to maintain the desired risk-return profile. This involves selling overperforming assets and buying underperforming ones to ensure optimal allocation.

Understanding Financial Market Dynamics
Long-Term Growth
Historically, equity markets have provided superior returns over the long term. Understanding market dynamics, economic indicators, and global trends helps set realistic expectations and stay committed to your investment plan.

Diversification Across Sectors
Investing in different sectors such as technology, healthcare, and finance reduces sector-specific risks. A diversified portfolio across various sectors enhances stability and growth potential.

Setting Realistic Financial Goals
Assessing Financial Milestones
Setting realistic financial milestones helps track progress and stay motivated. Break down your Rs 1 crore goal into smaller, achievable targets. This makes the journey manageable and provides a clear roadmap.

Periodic Goal Evaluation
Evaluate your financial goals periodically. Adjust them based on changes in income, expenses, and market conditions. Regular evaluation ensures your goals remain relevant and attainable.

Professional Financial Planning
Benefits of a CFP
A Certified Financial Planner (CFP) provides expert advice tailored to your financial goals. They offer insights into market trends, tax planning, and portfolio management, ensuring optimal growth and risk management.

Personalized Financial Strategies
A CFP develops personalized financial strategies based on your risk tolerance, financial goals, and market conditions. Their expertise helps in making informed decisions and achieving financial milestones.

Final Insights
Achieving Rs 1 crore in 8 years is ambitious but feasible with a strategic approach. Your current investments in small cap, long-term equity, and flexi cap funds form a solid foundation. Increasing your SIP contributions, leveraging actively managed funds, and conducting regular portfolio reviews will optimize growth. Diversifying further with debt funds, understanding market cycles, and managing emotions during volatility are essential. Adapting to life changes, efficient tax planning, and adequate insurance coverage ensure comprehensive financial security. With discipline, patience, and professional guidance, you can reach your Rs 1 crore goal and secure a prosperous future.

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  |7162 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

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I have 2.75 lacs in Growth and Income, The Naked Trader, Dividend Kings Smallcases each and SIP of 20k in each of them. And 45k invested in hdfc defence, axis elss, zerodha largemid, quant multi, invesco india small, icici nifty midcap, Mutual funds and sip of 5k in each of them. I am 38 years old and investing one lakh every month. My current expenses perm month are 50k. My goal is to have 4 crores by next 12 years. Is it going in good direction?
Ans: Your proactive approach to wealth-building at 38 years old, coupled with your disciplined investment regimen, sets a promising foundation for achieving your financial goals. Let's evaluate your current investment portfolio and progress towards your target of accumulating 4 crores in the next 12 years.

Assessing Your Investment Portfolio:
Before assessing the direction of your financial journey, let's review your investment portfolio to understand its composition and alignment with your goals.

Equity Investments: Your diversified portfolio comprising Growth and Income, The Naked Trader, and Dividend Kings Smallcases reflects a strategic focus on equity investments, offering growth potential and income generation.

Mutual Funds: Investments in HDFC Defence, Axis ELSS, Zerodha Largemid, Quant Multi, Invesco India Small, and ICICI Nifty Midcap Mutual Funds exhibit a well-rounded approach, leveraging both active and passive strategies to capitalize on market opportunities.

Evaluating Progress Towards Goals:
Your goal of accumulating 4 crores in the next 12 years is ambitious yet achievable with consistent savings and prudent investment decisions. Let's assess your current trajectory:

Monthly Savings: Investing one lakh every month, coupled with disciplined savings habits, positions you well to meet your long-term wealth accumulation target.

Expense Management: With current monthly expenses of 50k, you demonstrate a balanced approach to managing your finances, ensuring a healthy surplus for investment and wealth creation.

Strategies for Enhancing Growth:
While your current investment approach is commendable, there are strategies you can implement to further enhance growth and accelerate progress towards your financial goals:

Regular Review: Periodic review of your investment portfolio ensures alignment with your evolving goals and market dynamics, enabling timely adjustments as needed.

Asset Allocation: Reassess your asset allocation strategy to optimize risk-adjusted returns, considering factors such as age, risk tolerance, and investment horizon.

Goal-based Investing: Adopt a goal-based investment approach, allocating resources strategically towards specific objectives like retirement, education, and wealth accumulation.

Commitment to Continuous Improvement:
As we navigate your financial journey together, rest assured that I'm committed to providing ongoing guidance and support. Your proactive approach and commitment to financial growth serve as a beacon of inspiration for achieving long-term prosperity.

Conclusion: Cultivating Financial Abundance with Purpose
In conclusion, your journey towards accumulating 4 crores in the next 12 years is well underway, propelled by disciplined savings and diversified investments. By embracing continuous improvement and strategic wealth-building strategies, you're poised to realize your financial aspirations with confidence.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |7162 Answers  |Ask -

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

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Hello Sir, pinaki here I have invested in SIP 5000 each of 20k..and 6 lakh lumsum in SBI flexi cap fund.....HDFC mid cap opportunity 5k, kotak flexi cap 5k, parag parikh flexi cap 5k, ABSL flexi cap 5k from last 1 year and having a goal to reach 1 cr in next 10 yrs .. am I in the right path to achieve my goal?
Ans: Pinaki,

I hope you are doing well. It’s great to see that you have taken steps towards building your financial future. Investing through SIPs and lump sum amounts shows your commitment to disciplined investing. Let’s delve deeper into your investments and evaluate your path towards achieving your goal of Rs 1 crore in the next 10 years.

Understanding Your Current Investments
You have diversified your investments across various mutual funds. Here’s a summary of your current SIPs and lump sum investment:

SIP Investments: Rs 5,000 each in four funds, totaling Rs 20,000 per month.
Lump Sum Investment: Rs 6 lakh in SBI Flexi Cap Fund.
The funds you have chosen are a mix of flexi cap and mid cap funds, which is a good start.

SIPs: A Steady Approach
Systematic Investment Plans (SIPs) are an excellent way to invest regularly. They help in averaging out the cost of investments and mitigate market volatility.

Evaluating Flexi Cap Funds
Flexi cap funds provide flexibility in investing across large, mid, and small-cap stocks. They offer a balance between risk and return. Your allocation in flexi cap funds shows a balanced approach.

Mid Cap Fund Investment
HDFC Mid Cap Opportunities Fund adds a bit more risk but also the potential for higher returns. Mid cap funds can outperform in a growing market but can also be volatile.

Goals and Expectations
Your goal is to accumulate Rs 1 crore in 10 years. To assess if you are on the right path, let's consider a few factors:

Expected Returns
Historically, equity mutual funds in India have delivered returns between 12-15% per annum. However, past performance is not indicative of future results. It's important to have realistic return expectations.

SIP Growth Projection
If you continue investing Rs 20,000 per month in SIPs, here’s how it might grow over 10 years, assuming an average annual return of 12%:

Total SIP Investment: Rs 24 lakhs.
Estimated Future Value of SIPs: Around Rs 47.5 lakhs.
Lump Sum Investment Growth
Your Rs 6 lakh lump sum investment in the SBI Flexi Cap Fund, assuming an average annual return of 12%, could grow to approximately Rs 18.6 lakhs in 10 years.

Total Future Value
Combining your SIPs and lump sum investments, the total estimated future value might be around Rs 66.1 lakhs. This is a substantial amount, but it falls short of your Rs 1 crore goal.

Adjusting Strategy for Goal Achievement
To bridge this gap, consider the following adjustments:

Increase SIP Contributions
One straightforward way to reach your goal is to increase your monthly SIP contributions. If you increase your SIPs from Rs 20,000 to around Rs 30,000 per month, the future value could be closer to Rs 71 lakhs from SIPs alone. Combined with your lump sum, you would be nearer to your Rs 1 crore goal.

Annual Increase in SIP
Consider an annual step-up in your SIP contributions. For example, increasing your SIP by 10% every year can significantly enhance your corpus over time.

Reinvest Dividends
Ensure that you have chosen the growth option for your mutual funds. Reinvesting dividends can help in compounding your returns over time.

Regular Review and Rebalancing
Periodically review your portfolio. Market conditions and fund performances can change. Rebalancing your portfolio ensures it stays aligned with your goals.

Actively Managed Funds: A Potential Edge
You mentioned having invested in several flexi cap and mid cap funds. Actively managed funds can potentially offer better returns than index funds. Experienced fund managers can make tactical decisions to navigate market conditions. This flexibility might provide an edge in achieving higher returns.

Benefits of Actively Managed Funds
Actively managed funds have the potential to outperform benchmarks, especially in volatile markets. Fund managers actively pick stocks based on research and market conditions, which might provide better returns.

Regular Funds Over Direct Funds
While direct funds have lower expense ratios, investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential can offer valuable benefits. They provide professional advice, portfolio reviews, and help in rebalancing investments as needed.

Disadvantages of Direct Funds
Direct funds require more active management by the investor. Without professional guidance, one might miss critical market signals or fail to rebalance the portfolio appropriately. This can potentially impact the overall returns.

Value of Professional Guidance
A Certified Financial Planner can help you navigate complex market conditions. They can provide tailored advice, ensure your investments align with your goals, and offer periodic reviews to keep your portfolio on track.

Investment Monitoring and Adjustments
Regular Portfolio Reviews
Review your portfolio at least once a year. This helps in assessing fund performance and making necessary adjustments. Underperforming funds can be switched for better-performing ones.

Rebalancing Strategy
Rebalancing involves adjusting your portfolio to maintain your desired asset allocation. It helps in managing risk and optimizing returns. This is crucial in volatile markets.

Emergency Fund and Insurance
Ensure you have an adequate emergency fund and sufficient insurance coverage. This protects your investments from being disrupted in case of unforeseen events.

Tax Efficiency
Tax Implications on Investments
Understand the tax implications of your investments. Long-term capital gains tax (LTCG) on equity funds is applicable beyond Rs 1 lakh of gains. Plan your investments to be tax-efficient.

Utilize Tax-saving Opportunities
Investing in tax-saving instruments like ELSS (Equity Linked Savings Scheme) can provide tax benefits under Section 80C. This not only helps in saving tax but also in growing your wealth.

Financial Discipline
Stick to Your Investment Plan
Stay disciplined and avoid making impulsive decisions based on short-term market fluctuations. Stick to your investment plan and review it periodically.

Avoid Frequent Fund Switching
Frequent switching of funds can incur exit loads and impact returns. Stick to your chosen funds unless there's a strong reason to change.

Long-term Perspective
Focus on Long-term Goals
Investing is a long-term journey. Focus on your long-term goals and avoid getting swayed by short-term market volatility. Patience and discipline are key to successful investing.

Diversification
Ensure your portfolio is well-diversified across different asset classes. This reduces risk and enhances the potential for returns.

Conclusion
Pinaki, your current investment strategy shows a commendable commitment to achieving your financial goals. You have diversified across different funds and invested regularly. However, to reach your goal of Rs 1 crore in 10 years, you might need to make some adjustments.

Consider increasing your SIP contributions, adopting an annual step-up strategy, and ensuring you have the growth option for your mutual funds. Regular portfolio reviews and rebalancing are crucial to staying on track.

Investing through actively managed funds with professional guidance can provide an edge in achieving higher returns. Stay disciplined, focus on your long-term goals, and avoid making impulsive decisions based on market fluctuations.

Remember, investing is a journey, and with the right strategy and discipline, you can achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |7162 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 12, 2024

Asked by Anonymous - Jul 15, 2024Hindi
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Hi Guys, I am 30 yrs old (Single) salaried employee earning 8LPA. I have recently started SIP in mutual funds investing 5K each in Quant Small Cap, Midcap, Flexi cap, ELSS & Nippon India small cap fund which in total becomes 25K. How many years it will take to become 1 Crore and any other suggestions towards my investment. And Occasionally I do buy some IPO's.
Ans: You are on a strong financial path by investing Rs. 25,000 per month through SIPs across various mutual funds. This shows dedication to building wealth. At 30 years old, your early start will provide a good runway for growth.

Assessing Your Goal
Target Corpus: Rs. 1 Crore

Accumulating Rs. 1 crore is a significant goal. With disciplined investing, it’s achievable.

The time to reach Rs. 1 crore depends on the average annual return of your investments. Typically, equity mutual funds can offer 12-15% returns over the long term.

Investment Horizon

If your SIPs average a return of 12% annually, it would take about 15 years to reach Rs. 1 crore.

With a higher return of 15%, you could achieve this in approximately 13 years.

These are estimates, as actual returns can vary based on market conditions and fund performance.

Evaluating Your Current Portfolio
Fund Selection

Your portfolio is diversified across small-cap, mid-cap, flexi-cap, and ELSS funds. This diversification reduces risk and increases potential returns.

However, investing in two small-cap funds (Quant Small Cap and Nippon India Small Cap) increases exposure to high-risk assets. Small-cap funds can be volatile and may not always deliver consistent returns.

Balancing Risk

Consider balancing your portfolio by reducing exposure to small-cap funds. Reallocate some investments into large-cap or hybrid funds for stability.

Flexi-cap funds offer flexibility by investing across large, mid, and small-cap stocks. This is good for balancing growth and risk.

ELSS funds not only provide tax benefits but also serve as equity investments. They are a smart choice for long-term goals.

Suggested Adjustments
Review Small-Cap Allocation

Small-cap funds offer high growth potential but with high risk. Limit your exposure to small-cap funds to around 20-25% of your total investment.

Consider reallocating a portion from small-cap funds to large-cap or hybrid funds. This will help in stabilizing your portfolio while still offering growth.

Diversify with Large-Cap or Hybrid Funds

Large-cap funds invest in well-established companies. They offer steady returns with lower risk compared to small-cap and mid-cap funds.

Hybrid funds, which invest in both equity and debt, provide a balance between risk and return. They can act as a buffer during market downturns.

Review Your Portfolio Annually

It’s important to review your portfolio annually. Make adjustments based on market performance and changes in your financial goals.

Rebalancing your portfolio ensures that it remains aligned with your risk tolerance and investment horizon.

IPO Investments
Occasional IPO Investments

IPOs can offer good returns, but they come with risks. Not all IPOs perform well post-listing, and some can be volatile.

Invest in IPOs only if you have a good understanding of the company and its growth potential.

Ensure that your IPO investments do not exceed 5-10% of your total portfolio. This limits risk while allowing you to participate in new opportunities.

Long-Term Planning
Staying the Course

Consistency is key. Continue your SIPs regularly, regardless of market conditions. This will help in rupee cost averaging and accumulating wealth over time.

Avoid the temptation to time the market or stop your SIPs during market downturns. The market will have ups and downs, but staying invested is crucial for long-term growth.

Increase SIPs Gradually

As your income grows, consider increasing your SIPs. Even a small increase in your monthly investment can significantly reduce the time needed to reach your Rs. 1 crore goal.

A 5-10% annual increase in your SIPs can help in reaching your target faster without putting too much strain on your finances.

Final Insights
Reaching Rs. 1 crore through disciplined SIPs is achievable with a diversified portfolio. Review your portfolio regularly and consider rebalancing to reduce high-risk exposure. Consistent investing, along with occasional prudent IPO investments, will help you achieve your financial goals. Stay patient and committed to your investment plan, and you will see your wealth grow over time.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Pushpa R  |33 Answers  |Ask -

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Asked by Anonymous - Nov 22, 2024Hindi
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Hi Pushpa, I start my day with morning meditation which brings calm and peace to my mind. But after first instance that angers me, the calm from the morning is lost and the mood for the entire day is disturbed. Although I don't express the anger outside in words or action, but the mind is definitely angered. What can I do so that words or actions don't anger me ? And if they do, how can I bring myself back to my calm state quickly ?
Ans: To remain calm even when faced with anger, it's essential to train the mind regularly, not just in the mornings. Here’s a simple way to handle it:

Mindful Breathing: When you feel anger rising, pause and take deep breaths. Slowly inhale for 4 counts, hold for 4, and exhale for 6 counts. This simple practice can calm your mind in moments.

Witness Your Anger: Instead of reacting, observe the anger. Tell yourself, "This is just a passing emotion. I don't need to hold on to it."

Practice Gratitude: Shift your focus to something positive—like a good moment from your day. Gratitude quickly softens anger.

Carry Peace Throughout the Day: After morning meditation, visualize yourself remaining calm no matter what happens. This mental preparation helps when challenges arise.

Remember, meditation and mindfulness need consistent guidance to become effective. A yoga or meditation coach can teach you techniques tailored to your personality and lifestyle. Self-practice is good, but expert guidance ensures you build resilience faster and avoid frustration.

When anger disrupts your peace, see it as a signal to return to your breath and inner calm—each time, you grow stronger.

R. Pushpa, M.Sc (Yoga)
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Nayagam P P  |3930 Answers  |Ask -

Career Counsellor - Answered on Nov 27, 2024

Asked by Anonymous - Jun 09, 2024Hindi
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Milind Vadjikar  |707 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 27, 2024

Asked by Anonymous - Nov 27, 2024Hindi
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Hi Milind, Hope you are doing well. I am an NRI. I am 42-year-old. I am a Software engineer. My son is 11-year-old. Please share your guidance for better investment in MF or Stocks which has better returns with less risk. The plan is for my son’s education for his degree. Please find my plan. 1. I can spend 20K per month towards SIP. 2. Plan is for 8 years investment. 3. In next 8 years, my target is to make 40 to 50 lakhs Please provide your inputs to my following queries 1. Which mutual funds can help to achieve my above goal? 2. Is it better to invest in 2 to 3 mutual funds ? 3. How much I need to SIP to achieve my above goals? 4. How can I apply investments in the mutual fund from United Kingdom? 5. Do I need open DMAT account ? If so, please guide how can I do this from UK? 6. Do I need to do KYC? If so, please guide how can I do this from UK? Appreciate you if you guide me Thank you
Ans: Hello;

To generate a corpus of around 50 L in 8 years you have two options:

1. Start with 20 K monthly SIP and step it up each year by 15% upto 8 years.

2. Start with a monthly sip of 31 K which may yield you a corpus of around 50 L after 8 years.

A modest 12% return from equity mutual funds is considered.

Mutual funds will be certainly better then direct stocks from a risk perspective.

You may invest in a flexicap type mutual fund and a large and midcap type mutual fund in the proportion of 50:50 for your investment.

You may select any fund from the top quartile in these categories.

You don't need a demat account.

You will need to do KYC before investing, some investment apps/AMCs offer it to be done online even for NRIs.

Happy Investing;

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Anu

Anu Krishna  |1330 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Nov 27, 2024

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I am a Single mother (divorcee) of 4year old kid. I was separated when the kid was around a year old, because of his habits and abusive nature. I didn't want my to go through the same The father or his family never asked to see the kid. Now my kid asks questions "where is my dad", "everyone has father, where is mine". It breaks my heart and i am not sure how to handle it. How can I tell my kid that the father doesn't want to be involved in a polite way so that it doesn't break my kid.
Ans: Dear Sushma,
I am sure this is really tough for you.
What I can suggest is actually reading out books to him that explain separation/divorce through stories. This will enable him to understand that there are families and not all families are the same. But do ensure that you give him a good image about his father. Bitterness as a seed can grow and that is not healthy for a child at all. As the story progresses, you may want to insert the truth that in some families, the father/mother are not involved and choose to be away. This maybe difficult for him to fathom right now but slowly comparing his life with his friends, he will have more questions as he grows up. Take it one day at a time...break the truth gently and very age appropriately and right now, stories seem to be the better way.

Later in life as he grows even older, he can choose to seek and understand the truth in his own way. It may seem like a big contrast then but he will know that you had in his childhood come from a space of concern for his emotional growth.

You may also check in with other single mothers and they will surely have some things to share on it...at the end of the day, do what you think is right as a mother for your child.

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

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Ramalingam

Ramalingam Kalirajan  |7162 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 27, 2024

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Dear Sir, I am 38 years old and I want to invest 60 lakh in mutual fund as lumpsum or STP over one year. I am planning to break it to 4 parts of 15 lakh each and invest in Nifty 50, Nifty midcap 150, one multi cap and one flexi cap. I have an invest horizon of 20 years. I have invested in real estate so I have already diversified myself so want to stick to mutual funds for 60 lakhs. Please advise if this is wise or am I being dumb?
Ans: Your financial planning shows a clear and thoughtful approach. Allocating Rs 60 lakh with a 20-year horizon is wise. However, let’s evaluate your strategy to ensure optimal diversification, risk management, and returns.

Diversification Achieved:
Your existing real estate investments ensure risk is spread across asset classes.

Long-Term Horizon Advantage:
A 20-year horizon allows you to absorb market volatility and maximise compounding benefits.

Focus on Mutual Funds:
Sticking to mutual funds for this corpus is logical and efficient.

Reassessing Your Allocation Plan
Lumpsum vs Systematic Transfer Plan (STP):
Lumpsum investment can expose you to market timing risks. Use STP over 12–18 months to reduce volatility.

Equity Fund Categories Selection:
Your idea of investing in large-cap, mid-cap, multi-cap, and flexi-cap funds is balanced.

Issues with Index Fund Allocation
Concerns with Nifty 50 and Nifty Midcap 150:
Index funds lack active management, leading to missed opportunities during market fluctuations.

Benefits of Actively Managed Funds:
Active funds aim for better returns through expert fund manager insights and stock selection.

Advantages of Multi-Cap and Flexi-Cap Funds
Multi-Cap Funds:
These funds provide exposure across large-cap, mid-cap, and small-cap segments, ensuring balanced growth.

Flexi-Cap Funds:
Fund managers can freely allocate investments to market segments based on opportunities.

Complementary Approach:
Combining these funds with active large- and mid-cap funds ensures robust diversification.

Strategic Recommendations
Adopt a Blend of Active Funds:
Replace index funds with actively managed large- and mid-cap funds.

Focus on Quality Fund Selection:
Choose funds with consistent long-term performance and experienced fund managers.

Allocate Based on Risk Appetite:
Consider 60–70% allocation to equity funds for growth and 30–40% to hybrid or debt funds for stability.

Start STP Immediately:
Park your lumpsum in liquid funds and systematically transfer to equity funds monthly.

Taxation Awareness
Equity Mutual Funds Tax Rules:

LTCG above Rs 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
Debt Funds Taxation:
LTCG and STCG are taxed as per your income slab.

Plan Exit Strategy:
Use SWP (Systematic Withdrawal Plan) after 20 years to optimise tax benefits.

Risks and Monitoring
Mitigate Market Risks:
Diversified fund selection and STP lower volatility risks.

Review Regularly:
Monitor your portfolio yearly and rebalance if needed.

Avoid Over-Concentration:
Ensure no single fund category dominates your portfolio.

Additional Suggestions
Emergency Fund:
Ensure an emergency fund of at least 6–12 months' expenses.

Insurance Coverage:
If not already covered, secure adequate health and term insurance.

Avoid Unnecessary Additions:
Stick to mutual funds without over-diversifying into unrelated assets.

Final Insights
Your planned allocation reflects thoughtful diversification and long-term focus. Replacing index funds with actively managed funds can enhance returns. Using an STP will balance market volatility effectively. With consistent monitoring and expert fund selection, your Rs 60 lakh investment can achieve your 20-year goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...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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