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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Apr 07, 2022

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Pranjit Question by Pranjit on Apr 07, 2022Hindi
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Sir I am 45 years old and my wife 35 yrs we both investing in following MF for our child’s education and wealth creation from 03/2018 .Our time horizon is 15 yrs.

1. HDFC EQUITY FUND REGULAR GROWTH Rs 3000/month 

2. AXIS LONG TERM EQUITY FUND DIRECT GROWTH RS 2000/MONTH. 

3. SBI SMALL CAP FUND DIRECT GROWTH RS 2000/MONTH. 

4. SBI TECHNOLOGY FUND DIRECT GROWTH RS 2000/MONTH. 

5. PARAG PARIKH FLEXI CAP FUND DIRECT GROWTH RS 1000/MONTH. 

My wife’s portfolio:

1. MIRAE ASSET EMERGING BLUE CHIP FUND DIRECT GROWTH RS 3000/MONTH 

2. CANARA ROBECCO EMERGING EQUITY FUND Rs 1500/MONTH 

3. CANARA ROBECCO BLUE CHIP FUND DIRECT GROWTH RS 1000/MONTH 

4. MOTILAL OSWAL 35 CAP FUND RS 1500/MONTH. 

5. L &T INDIA VALUE FUND RS 2000/MONTH. 

6. SBI SMALL CAP FUND DIRECT GROWTH RS 2000/MONTH. 

7. QUANT SMALL CAP FUND DIRECT GROWTH RS 2000/MONTH. 

SIR please advice/suggestions regarding above investment required if any modifications? One more thing I want to invest more please suggest me some funds giving return above 20%.

Ans: No changes are required; however, please keep the expectation of returns between 12% and 15%.

Basic thumb rule is risk free returns (10 years govt bond returns) + inflation + equity risk premium.

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  |7720 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

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Hi, I am 36 years old, married & have 1 child (3 year old). Me & wife have combined income from salary of 3.75 lakh post taxes. We are investing in following funds & have investment horizon of more than 15 years. Aditya BSL Pure Value - 2k DSP Value Fund - 4k HDFC Small Cap - 2K Kotak business cycle - 5k Kotak Emerging Equity fund - 2K Motilal Oswal large and Midcap - 10k Bandhan Core Equity - 2k Baroda BNP India Consumption - 3k Franklin India Prima - 4k HDFC Mid Cap Opportunity - 2k HSBC Small Cap - 5k Nippon India Flexi Cap - 7.5 SBI small cap - 4k White Oak capital Large and Mid - 7.5k ICICI prudential India opportunity -10k NPS - 15K Equity Market - 25K SGB - 15K LIC -10K. I'm looking for the same investment till next 15 years. Definitely will increase the MF amount every year. I'm looking for at least 15+ Cr corpus at the age of 55. Please guide me with the existing investment.
Ans: Thank you for providing details about your financial situation and investment goals. It's commendable that you have a long-term investment horizon and are committed to increasing your investment amounts annually. Let's analyze your current portfolio and provide guidance to help you achieve your goal of accumulating a corpus of Rs. 15 crores by the age of 55.

Current Portfolio Analysis
1. Diverse Mutual Fund Investments
You have a well-diversified portfolio across various mutual funds, including large cap, mid cap, small cap, value, and thematic funds. This diversification helps mitigate risk and capture growth across different market segments.

2. Monthly SIP Amount
Your current SIPs in mutual funds amount to Rs. 71,000 per month. This disciplined approach to investing through SIPs ensures regular contributions and benefits from rupee cost averaging.

3. Additional Investments
Besides mutual funds, you also invest in NPS (Rs. 15,000), equity market (Rs. 25,000), Sovereign Gold Bonds (SGB - Rs. 15,000), and LIC (Rs. 10,000). These investments provide further diversification and stability to your portfolio.

Evaluating Your Investment Strategy
1. Investment Horizon
With an investment horizon of over 15 years, you have the advantage of time on your side. Long-term investments in equity mutual funds can help you achieve significant capital appreciation.

2. Portfolio Diversification
Your portfolio includes a mix of large, mid, and small cap funds, as well as value and thematic funds. This diversification is essential to spread risk and capture growth across various sectors and market caps.

3. Regular Increment in SIP Amounts
You plan to increase your SIP amounts every year, which is a wise strategy. This helps in maintaining the purchasing power of your investments and accelerates the growth of your corpus.

Recommendations for Optimization
1. Focus on Quality Funds
While your portfolio is well-diversified, it's essential to focus on quality funds with a consistent track record. Regularly review the performance of your funds and replace underperformers with better alternatives.

2. Reduce Overlapping
Some of your funds may have overlapping investments in similar stocks. Reducing overlapping can enhance the efficiency of your portfolio. For example, having too many small cap funds can lead to redundancy.

3. Maintain Asset Allocation
Regularly rebalance your portfolio to maintain the desired asset allocation. This ensures that your investment strategy remains aligned with your risk tolerance and financial goals.

Projected Growth and Corpus Calculation
1. Expected Returns
Assuming an average annual return of 12% from your equity mutual funds, you can project the growth of your investments over the next 15 years. Historical data suggests that well-diversified equity portfolios can achieve such returns over the long term.

2. Increasing SIP Contributions
Increasing your SIP contributions by 10% annually can significantly boost your corpus. This strategy takes advantage of compounding and helps in accumulating a larger corpus.

3. Additional Contributions
Your investments in NPS, equity market, SGB, and LIC also contribute to your overall corpus. Ensure these investments are aligned with your risk tolerance and financial goals.

Example Calculation
Let's consider a simplified example to project your corpus:

Initial Monthly SIP: Rs. 71,000
Annual Increase in SIP: 10%
Annual Return on Mutual Funds: 12%
Over 15 years, this strategy can help you accumulate a significant corpus. Please note that actual returns can vary, and it's essential to review and adjust your strategy regularly.

Importance of Consulting a Certified Financial Planner
1. Personalized Advice
A Certified Financial Planner (CFP) provides personalized advice based on your financial situation, goals, and risk tolerance. They help you make informed decisions tailored to your needs.

2. Expert Management
A CFP continuously monitors your investments and market conditions. They make necessary adjustments to your portfolio, ensuring it remains on track to achieve your financial objectives.

3. Risk Management
A CFP employs strategies to manage risk and optimize returns. Their expertise helps in navigating market volatility and safeguarding your investments.

Conclusion
Your disciplined investment approach, diversified portfolio, and long-term horizon put you on a strong path toward achieving your goal of accumulating Rs. 15 crores. By focusing on quality funds, reducing overlap, and maintaining a balanced asset allocation, you can optimize your investment strategy.

Regularly consulting with a Certified Financial Planner (CFP) will provide you with personalized advice and expert management to keep your investments on track. Your commitment to increasing your SIP contributions annually further enhances your potential to achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7720 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 02, 2024

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Hi Sir, I am currently working in PSB in the Middle management group and investing in different investment options to achieve the goal of financial freedom. I have one 6 years old daughter and want to accumulate a fund of 2.5 Cr for her education and marriage also. I am investing the monthly amount in below mentioned categories: A) Traditional: 1) Sukanya Sammaridhi account: 2K 2) PPF: 1K B) Market Linked: 1) DSP Small cap fund: 3K 2) SBI magnum Mid Cap Fund: 2 K 3) HDFC Mid Cap opportunities Fund: 3 K 4) Aditya Birla SL Pure value fund Reg (G): 1K 5) Mirae Asset Large & Midcap Fund Reg (G): 2 K 6) Canara Robeco Emerging Equities Reg (G): 3K 7) 3-4 K in share purchase for long term investment. I want to keep investing in MFs for the next 25 years with an annual increment in monthly investment figures as per the capability. Kindly advise me about these funds and share your suggestions to achieve my dream. Awaiting your reply. Regards, Bhuvneshwar.
Ans: Bhuvneshwar, your commitment to securing your daughter's future is commendable, and your diversified investment strategy reflects your dedication to achieving your financial goals. Let's break down your approach:

Traditional Investments: Sukanya Samriddhi and PPF provide a solid foundation with tax benefits and guaranteed returns. These avenues ensure stability and security for your daughter's future needs.
Market-Linked Investments: By investing in a mix of small, mid, and large-cap funds, you're tapping into the potential growth of the market. Your selection shows a balanced approach, spreading risk across different segments of the market.
Direct Stock Investments: Your involvement in direct stock purchases demonstrates your confidence in specific companies for long-term growth. However, ensure thorough research and prudent decision-making to mitigate risks associated with individual stocks.
To further enhance your strategy:

Regular Review and Rebalancing: Periodically assess the performance of your investments and rebalance if needed to maintain your desired asset allocation.
Risk Management: While market-linked investments offer growth potential, they also carry inherent risks. Ensure you're comfortable with the level of risk in your portfolio and adjust your investments accordingly.
Gradual Increase in Investments: Your plan to incrementally increase your monthly investments aligns with the principle of gradual improvement over time. Consistency and discipline in this approach will help you reach your target efficiently.
Remember, Bhuvneshwar, achieving financial freedom for your daughter's education and marriage requires patience, discipline, and a long-term perspective. Stay focused on your goals, continuously educate yourself, and adapt your strategy as needed along the journey. With dedication and strategic planning, you're well on your way to realizing your dreams for your daughter's future.

..Read more

Ramalingam

Ramalingam Kalirajan  |7720 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Money
Hi, I am 36 years old, married & have 1 child (3 years old). My & wife and I have combined income from a salary of 4 lakh post taxes. We are investing in the following funds & have an investment horizon of more than 15 years. Wife Aditya BSL Pure Value - 2k DSP Value Fund - 4k HDFC Small Cap - 2K JM Financial Mid Cap - 10K Kotak business cycle - 5k Kotak Emerging Equity fund - 2K Motilal Oswal large and Midcap - 10k Motila Oswal Business Cycle Fund - 10k My Self Bandhan Core Equity - 2k Baroda BNP India Consumption - 3k Franklin India Prima - 4k HDFC Mid Cap Opportunity - 2k HSBC Small Cap - 5k Kotak Special Opportunity Fund - 10K Nippon India Flexi Cap - 7.5 SBI small cap - 4k White Oak capital Large and Mid - 7.5k ICICI prudential India opportunity -10k Equity Market - 25K SGB - 10K LIC - 5.2K. I'm looking for the same investment till next 15 years. Definitely will increase the MF amount every year. I'm looking for at least 15+ Cr corpus at the age of 55. Please guide me with the existing investment
Ans: Your portfolio demonstrates impressive discipline and diversification. Your strategy aligns well with your long-term goals. Let’s evaluate your investments from different perspectives to enhance your financial journey.

Income and Savings Allocation
You and your spouse have a combined post-tax income of Rs 4 lakh monthly. This indicates a healthy cash flow for both expenses and investments.

You are currently investing a significant portion of your income. It’s commendable and reflects your commitment to wealth creation.

Ensure you have adequate emergency funds in place. Ideally, maintain 6–12 months of household expenses in liquid assets like bank deposits or liquid funds.

Regularly increase your investments in line with your income growth. This will help mitigate inflation and maintain financial discipline.

Portfolio Diversification
Your portfolio includes large-cap, mid-cap, small-cap, and thematic funds. Let’s analyse its structure:

Equity Funds: Your portfolio has a good mix of large-cap, mid-cap, and small-cap funds. However, there may be an overlap in holdings due to multiple funds in similar categories.

Thematic and Sectoral Funds: These add potential for higher returns but come with higher risk. Maintain their allocation within 10–15% of your portfolio.

Direct Stocks (Equity Market): A Rs 25K monthly allocation here adds direct exposure. This is suitable if you have expertise and time to track individual stocks.

Debt and Gold: Investments in Sovereign Gold Bonds (SGBs) and LIC provide stability. However, LIC policies may have lower returns compared to other instruments.

Steps to Optimise Your Portfolio
1. Reduce Fund Overlap
Multiple funds in similar categories can lead to duplication. Consolidate funds with similar investment styles.

For example, instead of holding several mid-cap funds, select one or two strong performers.

2. Evaluate LIC Policy
LIC is a low-return investment compared to equity funds. If you hold traditional LIC policies, consider surrendering them after a cost-benefit analysis.

Reinvest proceeds into mutual funds for better compounding over 15+ years.

3. Balance Asset Allocation
Equity investments dominate your portfolio, which is suitable for your time horizon.

Continue allocating 10–15% to debt and gold for stability. Use a debt mutual fund for better tax efficiency than LIC policies.

Keep reviewing asset allocation annually based on life events or market conditions.

4. Increase Systematic Investment Plan (SIP) Amount
Increase SIPs by at least 10–15% annually to match income growth.

This disciplined approach ensures consistent wealth accumulation.

5. Review Fund Performance Regularly
Monitor fund performance every 6–12 months. Exit funds underperforming their category for over two years.

Choose funds managed by experienced fund managers with a proven track record.

6. Tax Efficiency
LTCG above Rs 1.25 lakh is taxed at 12.5%. Keep this in mind while redeeming equity funds.

Use the tax-harvesting strategy by redeeming gains below Rs 1.25 lakh annually to minimise tax liability.

Insurance Coverage
Ensure you and your spouse have adequate term insurance covering at least 10–15 times your annual income.

A health insurance policy for the family is crucial. Consider a super top-up policy for additional coverage.

Avoid investment-linked insurance products. Term insurance is cost-effective, and mutual funds provide better returns.

Child’s Future Planning
Start a dedicated SIP for your child’s education and marriage. Allocate funds in diversified equity schemes.

Goal-based investing helps in disciplined savings and keeps you on track.

Retirement Planning
Your target corpus of Rs 15+ crore by age 55 is realistic.

Focus on equity for growth. Add balanced funds or flexi-cap funds for moderate risk-adjusted returns.

Avoid early withdrawals to benefit from compounding over 15+ years.

Thematic Investments
Funds like business cycle or thematic funds are high-risk. Keep allocation limited to avoid concentration risks.

Evaluate the suitability of these funds every three years.

Risk Management
Your equity allocation indicates a high-risk appetite. Reassess your risk profile every 3–5 years.

Avoid emotional decisions during market volatility. Stay focused on long-term goals.

Final Insights
Your financial discipline and long-term approach are excellent. Optimising your portfolio with fewer funds and higher SIP amounts will improve efficiency. Regular reviews and a clear focus on goals will ensure success.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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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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