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Ulhas

Ulhas Joshi  |277 Answers  |Ask -

Mutual Fund Expert - Answered on May 18, 2023

With over 16 years of experience in the mutual fund industry, Ulhas Joshi has helped numerous clients choose the right funds and create wealth.
Prior to joining RankMF as CEO, he was vice president (sales) at IDBI Asset Management Ltd.
Joshi holds an MBA in marketing from Barkatullah University, Bhopal.... more
Nandakumar Question by Nandakumar on Mar 28, 2023Hindi
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I am 45 Years old, Please suggest how to make 4 Crores within next 10 Years with an monthly investment of Rs.50000. my current investment is in real estate , ,gold, NPS and Some FD

Ans: Hello Nandakumar, thank you for writing to me. To create a corpus of Rs.4 Crore, you will need to invest Rs.1.8 Lakh every month.

If you wish to invest only thru Mutual Funds, then you can consider starting monthly SIP's in:

1-Edelweiss NIFTY 100 Quality 30 Index Fund-Rs.60 thousand.
2-Axis ESG Fund-Rs.60 thousand.
3-UTI MNC Fund-Rs.60 thousand.
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  |6292 Answers  |Ask -

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

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Hi I'm 28 years old. My monthly intake is 30k and have 2 mutual funds with 2000rs SIP each. And have around 4 lakh bank savings. How can I make 4-5 crore in next 10 years please suggest.
Ans: Let's start by understanding where you are right now. You earn Rs 30,000 a month and have Rs 4 lakh in savings. You also invest Rs 4,000 monthly in mutual funds through SIPs. These are good steps, but we need to evaluate and enhance your strategy to reach your goal of Rs 4-5 crore in 10 years.

Setting Realistic Expectations
Given your current income and savings, aiming for Rs 4-5 crore in 10 years is quite ambitious. It requires a clear plan and disciplined execution. We must be realistic, considering the investment risks and returns involved. This goal may need a very high rate of return or significantly increased savings, which might not be practical or safe.

Enhancing Savings and Investments
To increase your chances of achieving your goal, you need to maximize your savings and investments. Here’s how:

Increase Savings Rate: Try to save and invest more from your monthly income. Aim for at least 20-30% of your income.

Review and Adjust Expenses: Evaluate your monthly expenses. Cut down on unnecessary expenditures to increase your savings.

Emergency Fund: Ensure that your Rs 4 lakh in bank savings acts as an emergency fund. This should cover at least 6 months of expenses.

Smart Investment Choices
Your current mutual fund investments are a good start. Let's explore how you can optimize them.

Diversify Investments: Don't put all your money in one type of investment. Diversify across different mutual funds, including equity and debt funds.

Actively Managed Funds: Actively managed funds often outperform index funds, especially in volatile markets. Professional fund managers can make strategic decisions to maximize returns.

Regular Fund Investments: Investing through a Certified Financial Planner (CFP) can provide you with professional advice and better fund choices. Regular funds may have higher costs, but the expertise and potential returns can justify these expenses.

Regular Monitoring and Adjustments
Periodic Review: Regularly review your portfolio with your CFP. Adjust your investments based on market conditions and your financial goals.

Risk Management: Balance high-risk investments with safer ones. Diversification can help manage risk while aiming for higher returns.

Increasing Income Streams
Skill Enhancement: Consider enhancing your skills or gaining additional qualifications to boost your earning potential.

Side Hustles: Explore part-time work or freelance opportunities to increase your income.

Understanding Investment Risks
Market Volatility: All investments carry risks. Understand that high returns come with high risks. Market fluctuations can affect your investment value.

Long-Term Perspective: Investing is a long-term game. Don't panic with short-term market changes. Stay focused on your long-term goals.

Tax Planning
Tax-Saving Investments: Invest in tax-saving instruments under Section 80C to reduce your taxable income. This can increase your investable surplus.

Capital Gains Management: Understand the tax implications on capital gains from your investments. Long-term capital gains are taxed differently than short-term ones.

Benefits of Regular Investments Through a CFP
Expert Guidance: A CFP can help you make informed decisions based on your financial goals and risk appetite.

Strategic Planning: Regular investments through a CFP offer strategic planning, taking into account market trends and economic conditions.

Rebalancing Portfolio: A CFP can assist in rebalancing your portfolio periodically to maintain the desired risk-reward ratio.

Disadvantages of Direct Funds
Lack of Professional Guidance: Direct funds require you to make all investment decisions, which might not be ideal without professional expertise.

Time-Consuming: Managing direct funds can be time-consuming and requires constant monitoring.

Benefits of Mutual Funds Through CFP
Holistic Planning: CFPs offer holistic financial planning, considering all aspects of your financial life.

Tailored Advice: Investment advice tailored to your specific goals and financial situation.

Convenience: Less hassle and more peace of mind as the CFP manages your investments.

Final Insights
Reaching Rs 4-5 crore in 10 years is challenging but not impossible with a disciplined and strategic approach. Increase your savings rate, diversify investments, seek professional guidance, and continuously monitor and adjust your portfolio. Stay focused on your long-term goals and maintain a balanced approach to risk and returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6292 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 23, 2024

Asked by Anonymous - Jul 10, 2024Hindi
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I have 1 crore cash .... How can I make 5 crore in next 10 years
Ans: You want to grow Rs. 1 crore into Rs. 5 crores in 10 years. This is a very ambitious goal and requires a strategic approach. Achieving this will require disciplined investments and careful planning.

Power of Compounding
Compounding is your strongest ally in achieving such growth. The longer your money stays invested, the more it can grow. The key is to choose investment avenues that offer both growth potential and compounding benefits.

Choosing the Right Investment Mix
To achieve your goal, you need a balanced investment portfolio. This means spreading your investments across various types of mutual funds. Consider a mix of equity funds, which offer high growth potential, and balanced funds, which offer stability.

Equity Mutual Funds: Equity funds should form the core of your investment. They have the potential to generate higher returns over the long term. Choose funds managed by experienced fund managers.

Balanced or Hybrid Funds: These funds invest in both equity and debt instruments. They offer moderate growth with lower risk. This helps in cushioning your portfolio against market volatility.

Avoid Index Funds: Index funds only track the market. They don't try to outperform it. Actively managed funds aim to deliver better returns than the index. With an ambitious target, actively managed funds could serve you better.

Importance of Regular Investment
Investing your Rs. 1 crore in one go can be risky. Instead, consider a Systematic Investment Plan (SIP). This spreads your investment over time and reduces the impact of market volatility.

Systematic Investment Plan (SIP): Start a SIP in your chosen mutual funds. This approach will help you average out the purchase cost and manage risks better.

Top-Up Your SIP: Consider increasing your SIP amount every year by 10-20%. This strategy will accelerate your corpus growth.

Role of Diversification
Don’t put all your money in one type of investment. Diversifying your portfolio will spread the risk and increase the chances of achieving your goal.

Diversify Across Sectors: Invest in mutual funds that focus on different sectors. This way, if one sector underperforms, others can balance it out.

Diversify Across Market Capitalisation: Include funds that invest in large-cap, mid-cap, and small-cap stocks. Large-caps offer stability, while mid and small-caps offer higher growth potential.

Avoiding High-Risk Investments
While it may be tempting to go for high-risk investments like direct stocks or sector-specific funds, they can be volatile. Your focus should be on consistent growth rather than chasing quick returns.

Avoid Direct Stock Investments: Stocks can be unpredictable. For your goal, mutual funds are a safer and more reliable option.

Avoid Real Estate and Annuities: Real estate is not liquid, and annuities offer lower returns. Stick to mutual funds for better growth potential.

Regular Review and Rebalancing
Your investment strategy needs regular monitoring. As market conditions change, your portfolio may need adjustments.

Review Quarterly: Check your portfolio’s performance every quarter. This will help you stay on track to meet your financial goals.

Rebalance Annually: Rebalancing ensures your portfolio stays aligned with your risk tolerance and goals. Shift funds from one category to another based on performance and future outlook.

The Role of a Certified Financial Planner
Having a Certified Financial Planner (CFP) by your side can be beneficial. They can guide you in selecting the right mutual funds, adjusting your strategy, and keeping you focused on your goals.

Expert Guidance: A CFP will help you navigate market uncertainties and keep your investments aligned with your financial plan.

Tax Efficiency: A CFP can also help you plan tax-efficient withdrawals and investments, ensuring you keep more of your returns.

Final Insights
Your goal of turning Rs. 1 crore into Rs. 5 crores in 10 years is achievable with the right strategy. Focus on a diversified mutual fund portfolio, regular SIPs, and annual reviews to keep your investments on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Asked by Anonymous - Sep 15, 2024Hindi
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I am having a home loan of 12 lac for 20 years @8.7p.a. roi. I am about to have estimated 4500 Surplus every month out of which I will invest rs 1200 in sip with 1% step up every year and rest in principal. My query is 1-Please suggest the fund names for excellent growth to recover all the interest and principal(if possible). 2- Bank has committed to review and revise roi every year based on my cibil. I want to get this statement verified from the expert 3-My Cibil score is 790 at present. I am a regular user of credit card, pay dues timely, my average monthly bill is 2000/- only. and as told above I am going to have a home loan. I want my cibil score 825. How much time will it take to increase my cibil by 35 points.
Ans: Hello;

Your home loan of 12 L with 8.7%(considered fixed for calculation sake)and 20 year tenure is expected to have an interest outgo of 13.36 L

If you start a SIP of 1200 with 1% top-up each year then it will yield you a corpus of 14.55 L, after 20 years,thereby covering your interest outgo

If you want principal also to be covered for recovery through your investment then you must make a SIP of 2100 with 1% top-up each year which will yield you a corpus of around 25.56 L, after 20 years, thus exceeding your entire loan outgo(principal+ interest) of 25.36 L.

Here I have considered moderate return of 13% and recommend you to invest in PPFAS flexicap fund.

CIBIL score of above 750 is considered excellent and bank should offer you best possible ROI. Do check with other banks for best offer.

CIBIL Score calculation depends on:
Repayment history(35%)
Credit Utilisation (30%)
Credit history(15%)
Credit Mix(10%)
New Credit(10%)

My opinion is you are already in the excellent cibil rating category and should get best ROI from the bank.

CIBIL score increase happens over a period of time based on positive development on aforementioned criteria.

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

Happy Investing!!

...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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