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46-Year-Old Seeks Portfolio Advice for 7-Year Goal

Ramalingam Kalirajan |7966 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Feb 14, 2025

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

Question by Saravanan on Feb 13, 2025Hindi

I am 46 years old, moderate risk taker and new to mutual funds. Below is the portfolio for 7 year goal. Kindly review my portfolio and advise. Nippon India Index Nifty 50 growth direct plan (25%) - Rs.6974 Kotak Nifty Next 50 Index Growth Direct Plan (15%) - 4184 Parag Parikh Flexi cap Fund direct growth (20%) - 5579 HDFC Balanced Advantage Fund - Direct Plan (20%) - 5579 Mirae asset aggressive hybrid fund - direct plan (20%) - 5579 Note: I have replaced pure debt funds due to higher tax implications with BAF and Aggressive hybrid fund.

Ans: You have allocated funds across different categories.

Your focus is on equity and hybrid funds.

You have avoided pure debt funds for tax efficiency.

Your goal is for seven years, which is a medium-term horizon.

Concerns with Index Funds
Index funds follow the market, but they lack active management.

They cannot outperform during market corrections.

Actively managed funds can generate better returns.

They offer better stock selection and risk management.

Index funds may not provide downside protection.

Concerns with Direct Plans
Direct plans do not offer advisor support.

You need to track and rebalance yourself.

Market conditions change, requiring timely portfolio adjustments.

Investing through an MFD with CFP helps with strategy.

Expert guidance ensures risk is managed well.

Portfolio Allocation Analysis
Index funds make up 40% of your portfolio.

Flexi-cap fund brings diversification and active management.

Hybrid funds balance risk with equity and debt mix.

Balanced Advantage Fund adjusts asset allocation dynamically.

Aggressive Hybrid Fund has a mix of equity and debt.

Potential Issues with Your Portfolio
High exposure to index funds may limit returns.

No pure debt component increases market risk.

Hybrid funds offer stability, but allocation needs review.

Active funds can provide better long-term returns.

A mix of equity, hybrid, and debt ensures better risk control.

Suggested Portfolio Adjustments
Reduce index fund exposure and increase active equity funds.

Ensure diversification across large, mid, and small-cap stocks.

Keep hybrid funds, but review their performance regularly.

A small portion in pure debt can provide stability.

Tax-efficient withdrawals should be planned carefully.

Tax Implications on Your Investments
Long-term capital gains over Rs 1.25 lakh are taxed at 12.5%.

Short-term capital gains are taxed at 20%.

Hybrid fund taxation depends on equity allocation.

Proper tax planning can reduce your tax burden.

A systematic withdrawal plan (SWP) can help manage taxes.

Final Insights
Your asset allocation needs better balance.

Active funds can offer better risk-adjusted returns.

Hybrid funds help, but pure debt adds more stability.

Reviewing funds regularly ensures your goal is met.

A certified financial planner can help optimize your portfolio.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

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