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Should I invest in property or MFs for retirement income at 55?

Moneywize |152 Answers |Ask -Follow

Financial Planner - Answered on Aug 06, 2024

MoneyWize helps you make smart investment choices.... more

Asked by Anonymous - Aug 01, 2024Hindi

Money

I am 48. I have a mutual fund and shares portfolio of around Rs 50 lakh and fixed deposit for around 30 lakh. Moreover my PF is around Rs 28 lakh and NPS is also around 5 lakh. I have two sons. I want to retire by 55. Shall I take a home loan and invest in property to generate rental income? Or, shall I keep investing in MFs to generate funds to the tune of Rs 4 cr by 55. How much will I need to invest to get this corpus by 55?

Ans: Mutual Funds vs. Property: A Retirement Plan

Understanding Your Money Situation

You've built a strong money base with a big mix of mutual funds, shares fixed deposits, PF, and NPS. You want to retire at 55 with Rs 4 crore saved up. This is a big goal, but you can reach it.

Things to Think About:

• Risk Comfort: Can you handle the ups and downs of the stock market? Mutual funds, just like stocks, can go up and down a lot. Property prices also change, but people see them as more steady investments.
• Time Horizon: You don't have much time left until retirement. Mutual funds might give you better returns, but they're riskier. Property could give you a more stable income, but it's harder to sell.
• Management Time: Investing in property takes a lot of work. You need to manage tenants, keep the property in good shape, and follow all the rules. Mutual funds don't need much attention from you.
• Diversification: Both types of investments help spread out your risk. Mixing the two can lower the overall risk in your investment portfolio.

Potential Strategies:

Option 1: Keep Investing in Mutual Funds

• Pros: You could make more money, sell, spread out your investments, and not have to do much work.
• Cons: The market goes up and down a lot, and you need to stick to your investment plan.

To figure out the monthly investment needed to reach Rs 4 crore by 55, you can use online money calculators or talk to a money expert. The amount changes based on how much return you expect.

Option 2: Buy Property to Rent Out

• Pros: Possible rent money, property value going up, tax perks.
• Cons: Big money upfront hard to sell , takes time to manage, and might sit empty sometimes.

Whether this works depends on property costs how much rent you can get, and if you can handle the property.

Option 3: Mix It Up

• Pros: Gets the good stuff from both options.
• Cons: Needs careful planning and looking after.

You could put some of your money into property to earn rent and the rest into mutual funds to grow your wealth.

More Things to Think About:

• Tax Effects: Get to know how taxes work for both property and mutual fund investments.
• Rainy Day Fund: Make sure you have enough money set aside to cover surprise costs.
• Retirement Costs: Figure out how much you'll spend each month when you retire to know how much you need to save.
• Expert Help: Think about talking to a money expert to get advice just for you.

Conclusion:

Mutual funds and property both have good points. The best choice depends on your own situation how much risk you're okay with, and what you want to do with your money. A smart move might be to mix both options.

Keep in mind that this information is just to give you a general idea and doesn't count as financial advice. It's crucial to do your homework or talk to a financial expert before you decide to invest in anything.

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 Kalirajan |6340 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

Asked by Anonymous - Nov 08, 2023Hindi

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Hello Ashish, I am 42 and have MF portfolio of about 20 Lakhs and about 17 Lakhs in NPS Tier 1 and 6 Lakhs of FD. Fixed assets like House are already taken care of. What would be a good corpus to retire at 50 considering living in a Tier 2 city and what amount do I need to invest per month in MFs to achieve this goal.

Ans: To plan for retirement by age 50, start by estimating your post-retirement expenses, factoring in inflation and lifestyle preferences. Aiming for a corpus that can generate enough passive income to cover these expenses is crucial. Since you already have substantial investments, you can use online retirement calculators or consult a Certified Financial Planner to determine the required corpus.

To bridge the gap, calculate the shortfall between your current corpus and the desired retirement corpus. Then, depending on your risk tolerance and investment horizon, allocate a portion of your monthly income towards SIPs in mutual funds targeting higher returns. Regularly review and adjust your investment strategy as needed.

Ramalingam Kalirajan |6340 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 04, 2024

Asked by Anonymous - Jul 03, 2024Hindi

Money

I am 35 years old. My wife is homemaker. Currently receiving salary of 1.75 lakh / month. My monthly expenses are around 40k. I have no any debt and owning a house. I have 24lakh in ppf. Around 10 lakh in equity+mutual fund. NPS 5 lakh and 5 lakh in PF. I am currently investigating 40k / month in MF. And 10k nps and 15k in VPF. I have 5 lakh FD as emergency fund. I have 30 lakh gifted to father where he investmented in Senior Citizen Scheme, it gives 20k / month. I have personal 2cr term insurance and 5 lakh family health insurance. I have some ancestral property which is generating low rental income. It's cost are around 25 lakh and rental / 7k month I want to generate corpus of 7 cr by the age of 45 for retirement purpose. Is it enough? And what should be strategy. Also need an opinion about should I sale that property and invest in high return investment model ?

Ans: You’re doing well financially, and your goal of accumulating Rs 7 crores by age 45 is both ambitious and commendable. Given your current savings and investments, you’re on the right path. Let's break down a comprehensive strategy to achieve your retirement goal.

Understanding Your Financial Landscape
First, let's appreciate the strong foundation you've built. Here’s a snapshot of your current financial situation:

Monthly Income and Expenses:

Income: Rs 1.75 lakhs per month.
Expenses: Rs 40,000 per month.
Surplus: Rs 1.35 lakhs per month.
Current Investments and Assets:

PPF: Rs 24 lakhs.
Equity and Mutual Funds: Rs 10 lakhs.
NPS: Rs 5 lakhs.
PF: Rs 5 lakhs.
FD (Emergency Fund): Rs 5 lakhs.
Ancestral Property: Rs 25 lakhs, generating Rs 7,000 monthly rental income.
Gifts to Father: Rs 30 lakhs, invested in a Senior Citizen Scheme, yielding Rs 20,000 monthly.
Insurance:

Term Insurance: Rs 2 crores.
Health Insurance: Rs 5 lakhs for family coverage.
Monthly Investments:

Mutual Funds (SIP): Rs 40,000.
NPS: Rs 10,000.
VPF: Rs 15,000.
You’ve done a fantastic job of managing your finances. You have a solid income, controlled expenses, and a diversified investment portfolio. Now, let's explore how to enhance and optimize your strategy to reach the Rs 7 crore target by 45.

Strengthening Your Investment Strategy
Increasing Mutual Fund Investments
Mutual funds are crucial for your wealth-building strategy. Given your goal and the 10-year timeline, let’s focus on how you can leverage mutual funds more effectively.

Equity Mutual Funds:

Equity funds invest in stocks and have the potential for high returns. They are ideal for long-term goals like retirement. Here’s how you can diversify within equity funds:

Large-Cap Funds: Invest in large, established companies. They are relatively stable and less volatile.

Mid-Cap Funds: Invest in medium-sized companies. They offer higher growth potential but come with more risk.

Small-Cap Funds: Invest in smaller companies. They have the highest growth potential but are also the most volatile.

Debt Mutual Funds:

Debt funds are less risky and invest in fixed-income securities like bonds. They provide stable returns and are useful for diversifying your portfolio.

Short-Term Debt Funds: These are less sensitive to interest rate changes and are suitable for conservative investors.

Long-Term Debt Funds: These can provide higher returns but are more sensitive to interest rate changes.

Hybrid Mutual Funds:

Hybrid funds combine equity and debt in one portfolio. They offer a balanced approach and are suitable for moderate risk-takers.

Aggressive Hybrid Funds: Invest more in equity and less in debt, offering higher growth potential with moderate risk.

Conservative Hybrid Funds: Invest more in debt and less in equity, providing stability with moderate growth.

Action Plan:

Increase your monthly SIPs in equity mutual funds. Aim to diversify across large-cap, mid-cap, and small-cap funds.

Consider adding debt funds to your portfolio to balance risk and provide stability.

Review your mutual fund portfolio semi-annually to ensure it aligns with your goals and market conditions.

The Power of Compounding
Compounding allows your investment returns to generate more returns. The longer you stay invested, the more powerful the compounding effect.

For instance, if your mutual fund investments grow at an annual rate of 12%, your Rs 40,000 monthly SIP can grow significantly over the next 10 years. Increasing your SIP amount will further enhance this growth due to the compounding effect.

Regular Portfolio Review and Rebalancing
Monitoring and adjusting your portfolio is crucial. Market conditions change, and so do your financial needs and goals.

Portfolio Review:

Semi-Annual Reviews: Check your investment performance and ensure it aligns with your goals.

Annual Rebalancing: Adjust your asset allocation to maintain your desired risk level. For example, if equity funds outperform and exceed your target allocation, sell some equity and buy more debt or other asset classes.

Market Monitoring: Stay updated on market trends and economic factors that may affect your investments. This helps in making informed decisions.

Action Plan:

Set a schedule for semi-annual portfolio reviews.

Plan for annual rebalancing to maintain your desired asset mix.

Stay informed about market trends and adjust your strategy accordingly.

Maximizing Tax-Advantaged Investments
You’re already investing in tax-saving instruments like PPF and NPS. Let’s explore how to optimize these for maximum benefit.

PPF (Public Provident Fund):

PPF is a safe, tax-free investment. It offers fixed returns and the interest earned is tax-free. Continue maximizing your annual contributions up to the limit of Rs 1.5 lakhs under Section 80C.

NPS (National Pension System):

NPS is an excellent tool for long-term retirement savings. It offers tax deductions under Section 80C and an additional Rs 50,000 under Section 80CCD(1B).

VPF (Voluntary Provident Fund):

VPF is another great option for tax-free returns. Your Rs 15,000 monthly contribution here complements your other retirement savings.

ELSS (Equity Linked Savings Scheme):

Consider adding ELSS funds to your portfolio. They provide tax benefits under Section 80C and have the potential for higher returns due to their equity exposure.

Action Plan:

Maximize contributions to PPF and NPS to take full advantage of tax benefits.

Continue with your VPF contributions to enhance your retirement corpus.

Explore investing in ELSS for additional tax-saving and growth opportunities.

Evaluating the Role of NPS
Your Rs 5 lakh in NPS and Rs 10,000 monthly contributions are strategic for long-term growth. NPS combines equity and debt, making it suitable for retirement planning.

Advantages of NPS:

Tax Benefits: Contributions are deductible under Section 80C and Section 80CCD(1B).

Low-Cost: NPS has lower management fees compared to other retirement funds.

Market-Linked Growth: Investments can grow significantly with market performance.

NPS Allocation:

Equity: Can provide high returns over the long term. NPS allows up to 75% allocation in equity.

Corporate Bonds: Offer moderate returns with lower risk.

Government Bonds: Provide stability and safety.

Action Plan:

Consider increasing your monthly NPS contributions for additional tax benefits and growth.

Review and adjust your NPS asset allocation to balance growth and risk.

Maintaining a Solid Emergency Fund
Your Rs 5 lakh emergency fund in FD is well-placed. It provides liquidity and safety for unforeseen expenses. Let’s ensure it remains sufficient and accessible.

Emergency Fund Guidelines:

Size: Should cover at least 6 to 12 months of living expenses. Given your monthly expenses of Rs 40,000, a Rs 5 lakh fund is adequate.

Accessibility: Keep it in liquid or easily accessible investments, such as a high-interest savings account or liquid mutual funds.

Action Plan:

Periodically review your emergency fund to ensure it meets your needs.

Consider increasing it if your expenses rise or you face significant financial obligations.

Assessing the Ancestral Property
Your ancestral property is valued at Rs 25 lakhs and generates Rs 7,000 monthly rental income. Let’s evaluate whether to keep or sell this asset.

Rental Yield Analysis:

The rental yield is currently 3.36% annually (Rs 7,000 x 12 months = Rs 84,000 per year). This is relatively low compared to other potential investments.

Real estate often involves maintenance costs and can be illiquid, making it less flexible.

Selling the Property:

Selling could free up Rs 25 lakhs for higher-return investments like mutual funds. This could significantly boost your wealth-building efforts.

Consider the tax implications and costs associated with selling property.

Action Plan:

Evaluate the pros and cons of retaining versus selling the property.

If selling, plan to reinvest the proceeds in growth-oriented assets.

Insurance and Health Coverage
Your Rs 2 crore term insurance provides substantial financial protection for your family. Ensure that the coverage remains adequate as your financial needs evolve.

Health Insurance:

Your Rs 5 lakh family health insurance is crucial. Regularly review the coverage to ensure it meets your healthcare needs.

Consider adding a top-up plan if you anticipate higher medical expenses.

Action Plan:

Review your term insurance periodically to ensure it covers your financial liabilities and family’s needs.

Assess your health insurance coverage and add top-up plans if necessary.

Boosting Retirement Savings
To reach your Rs 7 crore goal by 45, a combination of higher savings and smart investments is key. Let’s explore strategies to enhance your retirement savings.

Increasing SIPs:

Consider increasing your monthly SIPs in mutual funds. Given your Rs 1.35 lakh monthly surplus, redirecting more towards SIPs can accelerate your savings growth.
Exploring Higher-Yield Investments:

Focus on equity mutual funds and other growth-oriented investments to leverage market potential and compounding.
Action Plan:

Gradually increase your SIP contributions in alignment with your income and financial goals.

Continuously seek higher-yielding investments that align with your risk tolerance and time horizon.

The Benefits of Actively Managed Funds
Actively managed mutual funds have the potential to outperform the market, especially during volatile conditions. They involve professional management and strategic investment decisions.

Disadvantages of Index Funds:

Lack of Flexibility: Index funds passively track the market and cannot adapt to changing conditions.

Potential for Lower Returns: During bear markets, index funds may suffer as they mirror overall market performance.

Advantages of Actively Managed Funds:

Professional Management: Fund managers actively select securities to outperform the market.

Strategic Allocation: They can adjust asset allocation based on market conditions and opportunities.

Action Plan:

Continue focusing on actively managed mutual funds for potential higher returns.

Avoid relying solely on index funds, especially given your ambitious Rs 7 crore goal.

Avoiding Direct Funds
Direct mutual funds have lower expense ratios but require individual management and decision-making. Investing through a Certified Financial Planner (CFP) offers professional guidance and aligns better with your financial goals.

Disadvantages of Direct Funds:

Self-Management: Requires time and expertise to manage investments effectively.

Risk of Poor Decisions: Without professional advice, you might make suboptimal investment choices.

Advantages of Regular Funds with CFP:

Professional Guidance: A CFP provides expert advice and helps align investments with your goals.

Comprehensive Planning: CFPs offer holistic financial planning, including risk management and tax strategies.

Action Plan:

Continue investing in regular funds with the guidance of a CFP.

Avoid direct funds to benefit from professional management and strategic planning.

Exploring Fixed Deposits and Bonds
Fixed deposits (FDs) and bonds can play a complementary role in your investment portfolio. They offer safety and stability, which are essential for balancing riskier investments like equity funds.

Fixed Deposits (FDs):

Safety: FDs provide capital protection and guaranteed returns.

Liquidity: They can be easily liquidated in times of need.

Bonds:

Fixed Income: Bonds offer regular interest payments, adding a stable income stream.

Lower Risk: They are less volatile compared to equities.

Action Plan:

Maintain a portion of your portfolio in FDs and bonds for stability and diversification.

Ensure that these investments align with your overall risk tolerance and financial goals.

Final Insights
Your goal of accumulating Rs 7 crores by 45 is challenging but achievable. Your current financial status is strong, and with strategic enhancements, you can reach this milestone.

Key Takeaways:

Increase mutual fund SIPs, focusing on equity funds for higher growth.

Leverage tax-advantaged investments like PPF and NPS for maximum benefits.

Consider selling the ancestral property and reinvesting in growth-oriented assets.

Regularly review and rebalance your portfolio to maintain alignment with your goals.

Embrace the power of compounding and stay disciplined in your investment approach.

Stay committed to your plan, monitor your progress, and adjust your strategy as needed. Your financial discipline and strategic planning will guide you to your retirement goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ramalingam Kalirajan |6340 Answers |Ask -Follow

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

Question by M - Jul 19, 2024Hindi

Money

Sir I am 48 years old and would like to retire by 55 years. I am investing Rs 70 K per month in MF through SIP for the last 7 years & have a corpus of close to Rs 1.3 CR. Shres separe portfolio and invested Rs 25 Lakhs & value today Rs 45 Lakhs. I have 2 shops & getting monthly rent of Rs 15 K & one independent house & flat 3 bHk in Bhopal so getting another 15 K rent. The property value all put together will be 2.5 CR & a loan of 20 lakh housing for my current appartment where I am staying. Therefore I need atleast 1.20 Lakhs as retirement corpus at the age of 55. Please advice

Ans: You aim to retire by 55 years. You currently invest Rs 70,000 per month in mutual funds through SIPs and have accumulated a corpus of Rs 1.3 crore over the last 7 years. Your goal is to secure Rs 1.20 lakhs per month as a retirement corpus. Let's evaluate your current investments and how to achieve this goal.

Evaluating Current Investments

Mutual Funds: Rs 1.3 crore corpus from 7 years of Rs 70,000 monthly SIPs.

Stocks: Invested Rs 25 lakhs, now valued at Rs 45 lakhs.

Rental Income: Rs 15,000 monthly from two shops and Rs 15,000 monthly from residential properties.

Property Value: Total property value of Rs 2.5 crore, with a Rs 20 lakh housing loan.

Steps to Achieve Your Retirement Goal

Continue SIP Investments: Maintain or increase your SIP investments to grow your corpus.

Diversify Portfolio: Balance your portfolio with equity, debt, and balanced funds for stability and growth.

Review Stock Portfolio: Ensure your stock portfolio is diversified to minimize risk and maximize returns.

Utilize Rental Income: Use rental income to supplement monthly expenses and potentially reinvest a portion.

Analyzing the Adequacy of SIP Amount

Future Value Projection: Calculate the potential growth of your current SIPs and corpus to estimate future value.

Inflation Adjustment: Consider the impact of inflation on your retirement corpus needs.

Evaluating Real Estate Holdings

Rental Income: Continue leveraging rental income for additional cash flow.

Property Value: Assess the potential appreciation of your properties over time.

Addressing Housing Loan

Repayment Plan: Develop a strategy to repay the Rs 20 lakh housing loan before retirement.
Alternative Investment Strategies

Actively Managed Funds: Consider the benefits of actively managed funds over index funds for potentially higher returns.

Regular Funds via CFP: Highlight the advantages of regular funds and professional guidance from a CFP over direct funds.

Final Insights

Diversification: A diversified investment portfolio balances risk and reward.

Regular Review: Periodically review your investment strategy to ensure alignment with retirement goals.

Professional Guidance: Seek advice from a Certified Financial Planner for personalized financial planning.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Latest Questions

Milind Vadjikar |161 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Sep 19, 2024

Asked by Anonymous - Sep 18, 2024Hindi

Money

One of my close relatives has sold his agricultural land for Rs 80 lacs. He wants to keep aside Rs 25 lacs for his daughter marriage. Remaining amount he wants to invest in such a way that he gets around 50000 per month income for his expenses besides maintaining liquidity as well. Pl suggest.

Ans: He may do a lumpsum/staggered investment into equity savings fund(moderately high risk)(For eg Mirae Asset Equity Savings fund-Growth, best 5 yr return in its category) for 8 years. Assuming a conservative return of 11% his corpus would grow to 1.27 Cr after 8 years. Then he can initiate an SWP at the rate of 5% which will yield a monthly payout of around 53 K.

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

Happy Investing!!

Milind Vadjikar |161 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Sep 19, 2024

Asked by Anonymous - Sep 17, 2024Hindi

Money

Dear Sir, I have another question: I have been investing in the Bajaj Allianz Life Goal Assurance Plan for the past five years, which is a combination of insurance and investment. The total premium payment duration is 10 years, with a SIP of ?10,000 per month, followed by a lock-in period of an additional 5 years So far, my monthly contributions of ?10,000 have grown to ?9.40 lakhs, with an approximate CAGR of 16%, although the insurance coverage remains at ?12 lakhs. Initially, I did not have much knowledge but continued investing due to the plan’s market-linked structure. For the first five years, my funds were allocated to Pure Stock II and Equity Growth funds basically large-cap. Recently, mid-cap and small-cap index funds were also added to their portfolio. Now that I’ve completed 5 years of investing in large-cap components, I am considering allocating the remaining 5 years to mid-cap and small-cap funds, without increasing the SIP. This would be done through a fund switch from large-cap to mid-cap and small-cap or by dividing the allocation equally—25% each across pure-stock, equity growth, mid-cap, and small-cap funds. Would you recommend this strategy while allowing the large-cap corpurs from the first 5 years to grow at their own pace and remaining 5 years switched into mid-cap/small-cap. Since the policy will mature in 2034, this gives me ample time for the investment to grow, allowing the corpus to build significantly over the remaining years

Ans: Since you are looking for 10 year time horizon, I recommend you divide the allocation equally(25%) across pure stock, equity growth, midcap index and small cap quality index funds.

Happy Investing!!

Milind Vadjikar |161 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Sep 19, 2024

Question by Meenakshi - Sep 18, 2024Hindi

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Best 5 mutual funds

Ans: Hello; It would be appropriate if you kindly share your financial goal for which you are trying to identify best mutual funds. Also information about your age, risk appetite, time horizon for investment, any loan liability etc will help us to guide you better.

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Milind Vadjikar |161 Answers |Ask -Follow

Insurance, Stocks, MF, PF Expert - Answered on Sep 19, 2024

Question by Sapna - Sep 18, 2024Hindi

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I am 42 yrs old...I want to invest now so tat after 10 yrs my daughter nd my son ; both get monthly 20,000 in their account ... Please suggest me such investment plans

Ans: You may consider doing a SIP of 33 K into Mirae Asset Large & Midcap Fund (Best 10 yr return in its category) for 10 years.

This may yield you a corpus of 81.40 L after 10 years assuming modest return of 13%.

You may buy immediate annuities in the name of your daughter and son for 40 L each from insurance companies. Assuming 6% rate it will yield them a monthly payout of 20K.

*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!!

Radheshyam Zanwar |892 Answers |Ask -Follow

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Sep 19, 2024

Question by aprk - Sep 18, 2024

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I am bsc cbz(chemistry botany zoology) 2nd semester student in bikaner rajasthan and my age is 22 and general category and want to pursue research msc than phd but confused about the scope in india in research field i am from middle class family . I dont want to become a school/ coaching teacher but can look for assistant professor and i am not interested in doing msc in chemistry or physics want to do in biotechnology microbiology etc. please help me ????????

Ans: Hello APRK.
You can pursue an M.Sc. and aim to go for P.Hd. There is a lot of scope for research field in India. To become an assistant professor, you must have a minimum qualification of M.Sc. If you are not interested in M.Sc. Chemistry / Physics, then you can go with Biotechnology Microbiology. This is also a good option for you.
In my opinion, there is no point in diversifying yourself without any reason. The correct path is B.Sc. then M.Sc. and then P.Hd. Join as an assistant professor in any college and even though you don't want to join any school/college, you can join any big coaching center or start your coaching. Without any confusion at this stage, just focus on your B.Sc. and try to excel In it with a high %tile for a better future in PG and P.Hd. While pursuing a B.Sc., if possible join some computer courses related to AI, Website development, Mastering Excel, Business Automation, etc. to have an added advantage from a job placement point of view.

If you are dissatisfied with the reply, please ask again without hesitation.
If satisfied, please like and follow me.
Thanks.

Radheshyam

Radheshyam Zanwar |892 Answers |Ask -Follow

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Sep 19, 2024

Asked by Anonymous - Sep 19, 2024Hindi

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Namaste ji Maine+2art English ke sath Kiya or pcb nios se ki Kya mai neet ka exam de sakta hu

Ans: Hello.
As you have done PCB with NIOS, you are eligible to appear for the NEET examination.

If you are dissatisfied with the reply, please ask again without hesitation.
If satisfied, please like and follow me.
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Ramalingam Kalirajan |6340 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 19, 2024

Asked by Anonymous - Sep 18, 2024Hindi

Money

Sir, How to find out where the Indian govt plans to invest in? Previously the planning commission published 5-year plans. Since the 5-year plans are no more, where to look for to understand govt’s investment strategy? Thanks.

Ans: To understand the Indian government's current investment strategy:

NITI Aayog Reports: Provides long-term policy directions.
Union Budget: Key sectors and fund allocations.
Economic Survey: Insights into upcoming policies.
National Infrastructure Pipeline (NIP): Focus on infrastructure investments.
Ministry Websites: Sector-specific strategies and schemes.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ramalingam Kalirajan |6340 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 19, 2024

Asked by Anonymous - Sep 19, 2024Hindi

Money

Hello sir. I am 46 looking for advice . I want to increase my 50 L to 1 crore mf portfolio in next one year and my end goal is to achieve 5 to 7 crore by 10 years . I will invest Sip 12 lakh per year for next 5 years . I am getting 32 lakhs cash in next 6 to 9 manths. I am thinking to invest 8 laksh every quarter additional lumpsum by distributing to different mf. I have mf portfolio as large cap 3 including 1 index fund 23% . Midcap 3 23% and small cap 3 23% and flexicap 2 8% and sectorial 2 10% hybrid 2 13%. Based on overlapping fund I see large cap as potential to balance as it's 54% overlapping stocks ,other funds are 0verlapping is 8 to 14%. For each areas . I would like to know is my strategy right to distributing lumpsum quarterly wise right ? . I will be mostly distributing same % ? . Please let me know any other method to achieve the goal. Also all mfs iam keeping are 5 or 4 rated funds with consistent return of 15 to 20% with alpha more than 1 . I am reducing investment on 3 rated funds below alpha 1 funds. Please confirm the approach and Your guidance will be really appreciated

Ans: At 46, you are in a strong financial position with Rs. 50 lakh in mutual funds. Your goal is to grow this to Rs. 1 crore within a year and Rs. 5 to 7 crore in the next 10 years. You plan to invest Rs. 12 lakh per year through SIPs for the next five years, and you will also receive Rs. 32 lakh in cash in the next 6 to 9 months, which you plan to invest in a staggered manner. Your current mutual fund portfolio includes a mix of large-cap, mid-cap, small-cap, flexi-cap, sectoral, and hybrid funds.

Now, let's evaluate and assess your strategy from all angles to ensure it is aligned with your financial goals.

Evaluating Your Portfolio Composition
Current Allocation: Your portfolio includes a diverse range of mutual funds. You have 23% in large-cap, mid-cap, and small-cap funds, 8% in flexi-cap, 10% in sectoral, and 13% in hybrid funds.

Large-Cap Overlap: You mentioned that 54% of your large-cap funds overlap, which indicates some redundancy. Reducing overlap will streamline your portfolio and improve diversification.

Mid-Cap and Small-Cap Allocation: With 23% allocated to mid-cap and small-cap funds, you are well-positioned to benefit from higher growth potential. However, this also comes with higher volatility, which we will discuss in a later section.

Sectoral Funds: Sectoral funds make up 10% of your portfolio. These funds can be risky as they are dependent on the performance of specific sectors. Limiting exposure here is wise.

Hybrid Funds: Hybrid funds, at 13%, provide a mix of equity and debt, which adds a layer of stability. This is a balanced approach and complements your aggressive equity investments.

Lumpsum Strategy: Quarterly Distribution
Your Plan: You plan to distribute Rs. 8 lakh every quarter from your Rs. 32 lakh cash inflow, over the next year. Distributing lumpsum investments quarterly is a prudent way to mitigate market timing risks.

Staggered Approach: By staggering your lumpsum investment, you can take advantage of rupee cost averaging. This reduces the impact of market volatility, which is particularly important given the uncertain nature of markets.

Potential Risks: One concern with lump sum investments is the temptation to invest during market highs. Timing the market is difficult, and a disciplined staggered approach, as you’ve chosen, helps mitigate this risk.

SIPs for Consistent Growth
Annual SIP Commitment: You are investing Rs. 12 lakh annually in SIPs over the next five years. This is an excellent strategy, as SIPs benefit from market volatility. You are disciplined, which is crucial for long-term growth.

Rebalancing Strategy: You are reviewing funds based on their ratings and alpha. Reducing investments in 3-rated funds with lower alpha and focusing on 4- and 5-rated funds is smart. It is essential to continuously monitor fund performance, but avoid making impulsive changes based on short-term fluctuations.

Overlap in Large-Cap Funds
Issue of Overlap: You observed a 54% overlap in your large-cap funds, which is quite high. This can limit your exposure to new opportunities and reduce diversification. It is worth considering consolidation of your large-cap holdings to reduce this overlap.

Action Plan: You can replace some of the overlapping large-cap funds with high-quality actively managed funds. Actively managed funds can provide better opportunities for returns compared to index funds, as fund managers can take advantage of market inefficiencies.

Avoid Index Funds: While index funds can provide low-cost exposure, they often mirror market indices and cannot outperform them. Since you are aiming for a higher growth rate, actively managed funds are likely to be more beneficial. Index funds also lack flexibility in adjusting to changing market conditions, which is essential for achieving higher returns.

Flexi-Cap Funds: Adaptive and Flexible
Flexi-Cap Allocation: Your allocation of 8% to flexi-cap funds is solid. Flexi-cap funds offer the advantage of flexibility in investing across large-cap, mid-cap, and small-cap segments based on market opportunities.

Balancing Act: These funds can adapt to market conditions, providing a more balanced risk-return profile. Increasing your allocation to flexi-cap funds could further enhance the flexibility of your portfolio. These funds can help reduce the impact of volatility while still capitalizing on growth opportunities.

Mid-Cap and Small-Cap Funds: Growth with Volatility
Growth Potential: Mid-cap and small-cap funds provide significant growth potential. However, they are also more volatile compared to large-cap funds.

Current Allocation: Your allocation of 23% each to mid-cap and small-cap funds indicates a high-risk appetite. While these funds can deliver high returns, they can also experience sharp declines in the short term.

Risk Management: Since you are aiming for long-term growth, holding these funds makes sense. However, it’s essential to ensure that your portfolio is not overly concentrated in these high-risk categories. You may want to consider reducing your exposure slightly to mitigate risk, particularly as you approach retirement.

Sectoral Funds: Strategic but Risky
Sectoral Allocation: Sectoral funds can deliver outsized returns, but they are also highly risky as they depend on the performance of specific sectors.

Limiting Exposure: Keeping sectoral funds at 10% of your portfolio is reasonable. However, be cautious about increasing this allocation further, as these funds are more vulnerable to sector-specific downturns.

Hybrid Funds: Stability and Safety
Hybrid Allocation: Your 13% allocation to hybrid funds is a good way to balance your portfolio. Hybrid funds combine equity and debt, providing a safety net during market downturns.

Importance of Stability: These funds offer lower returns compared to pure equity funds, but they also provide stability, especially during market corrections. It’s a good idea to retain this allocation to hybrid funds as part of your overall strategy.

Monitoring Fund Ratings and Alpha
Fund Selection: You are making fund selections based on ratings and alpha. This approach is effective as it helps filter out underperforming funds.

Consistent Review: Continuously monitoring the performance of your funds is crucial. However, avoid making frequent changes based on short-term performance. Focus on long-term consistency and the overall trajectory of the funds.

Reducing 3-Rated Funds: You are reducing your investment in 3-rated funds with an alpha below 1. This is a sound decision as these funds are underperforming. Focus on high-quality funds that have consistently delivered strong returns.

Achieving Your 5 to 7 Crore Goal
Targeting 5 to 7 Crore: Your target of achieving Rs. 5 to 7 crore in 10 years is ambitious but achievable. With disciplined SIPs, a staggered lumpsum approach, and strategic fund selection, you are well on track.

Strategic Rebalancing: It’s important to regularly rebalance your portfolio to ensure it remains aligned with your goals. Focus on actively managed funds, reduce overlap, and avoid index funds to maximize your growth potential.

Consistency: The key to achieving your goal will be consistency. Stick to your SIP schedule, invest your lumpsum funds wisely, and avoid chasing short-term gains.

Final Insights
Your Strategy Is Strong: Overall, your strategy is solid. You have diversified your portfolio across different types of funds, and your disciplined approach to SIPs and lumpsum investments is commendable.

Focus on Large-Cap Overlap: Reducing the overlap in your large-cap funds will improve diversification and provide new growth opportunities.

Continue Monitoring Performance: Keep reviewing your fund performance, but avoid making hasty changes based on short-term trends. Focus on long-term growth.

Stay Disciplined: The key to success is discipline. Stick to your investment plan, and you will be well on your way to achieving your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ramalingam Kalirajan |6340 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 19, 2024

Question by KRISHNA - Sep 10, 2024Hindi

Money

Mr Vivek Lala, Good Morning. Can you please tell me , 1) where all the places we can invest in SWPs. 2) Is there any age limit for SWP. 3) Is there SWP facility in NPS also?.4) Any upper ceiling limit to invest in SWP?. Thank you.

Ans: A Systematic Withdrawal Plan (SWP) is a facility offered by many mutual funds. It allows investors to withdraw a fixed sum from their investments at regular intervals. Let’s dive into each part of your query to provide detailed insights.

1. Investment Options for SWPs

SWPs are primarily associated with mutual funds. Here are the various options where you can invest through SWPs:

Debt Mutual Funds: These are one of the most popular options for SWPs. They provide stability, with low-risk returns.

Equity Mutual Funds: SWPs can also be done in equity mutual funds. This option is riskier, but it can offer better returns in the long term.

Hybrid Mutual Funds: These funds combine equity and debt, offering balanced risk and returns. SWPs in hybrid funds can help diversify risk.

Balanced Advantage Funds: These are dynamic funds that shift between equity and debt based on market conditions. SWPs in these funds could provide more stability.

Notably, SWPs are not available in direct equity, bonds, or other such traditional investments. They are mainly associated with mutual funds. It’s a simple and flexible option for generating regular income.

2. Age Limit for SWPs

There is no age limit for investing in an SWP. Whether you are young and looking to generate additional income, or you are in retirement, anyone can opt for SWPs. You can start an SWP at any stage in your life, as long as you have a mutual fund investment.

For young investors, it can be used to fund specific needs like education, travel, or other personal expenses. For retirees, it acts as a regular source of income to meet living expenses.

3. SWP in National Pension System (NPS)

Unfortunately, there is no SWP facility available in the NPS. The NPS is structured differently from mutual funds. It is a pension scheme meant for long-term retirement savings. The withdrawals from NPS are governed by specific rules, and it doesn’t offer the flexibility that SWPs do.

NPS provides partial withdrawal options, but these are limited. Upon maturity, you can withdraw 60% of your corpus, but the remaining 40% must be used to purchase an annuity. So, NPS does not have the same withdrawal flexibility as SWPs in mutual funds.

4. Upper Ceiling Limit for SWPs

There is no upper ceiling limit for investing in SWPs. You can invest as much as you want in mutual funds and set up an SWP accordingly. Your SWP amount depends on the size of your corpus and the returns it generates.

However, it’s crucial to be cautious. Withdrawing more than the returns can eat into your capital. Therefore, it is advisable to carefully calculate how much you wish to withdraw through SWP to ensure that your capital lasts for the desired period.

Advantages of SWPs

Here are the key advantages of opting for SWPs:

Regular Income: SWPs provide a steady and regular stream of income.

Tax Efficiency: SWPs in equity and hybrid funds are more tax-efficient compared to traditional income sources like Fixed Deposits.

Customisation: SWPs allow you to customize the withdrawal amount and frequency.

Flexibility: You can start or stop an SWP anytime. You can also increase or decrease the amount as needed.

Capital Protection: SWPs allow you to withdraw just the returns, protecting your capital.

Disadvantages of SWPs

Despite the advantages, there are a few downsides to SWPs:

Capital Erosion: If your withdrawals exceed the returns, your capital could reduce over time.

Market Risks: In equity-based SWPs, market fluctuations can impact returns, especially if you’re withdrawing regularly.

Lower Returns in Debt Funds: Debt funds provide stability but generally have lower returns compared to equity funds.

Comparison: SWPs vs Direct Investments

Some investors prefer direct mutual fund investments. However, direct plans, while having lower expense ratios, lack professional advice. Certified Financial Planners (CFPs) have extensive market experience and can tailor investments according to your goals and risk appetite.

Direct funds are usually opted by those who understand markets well. However, many investors lose potential returns by making emotional or uninformed decisions. That’s where regular funds managed by an MFD with CFP credentials can provide significant benefits. The guidance of a professional can ensure that your investments stay aligned with your goals and market conditions.

Why Actively Managed Funds are Better than Index Funds

If you’re considering mutual funds for SWPs, actively managed funds are a better option compared to index funds. Here’s why:

Market-Beating Potential: Actively managed funds have the potential to outperform the market, while index funds can only mirror the market returns.

Professional Management: Actively managed funds are run by experienced fund managers who actively adjust portfolios to seize opportunities and mitigate risks.

Customisation and Flexibility: Active funds allow fund managers to customize portfolios according to changing market conditions, unlike index funds which are rigid.

While index funds offer low-cost investments, they don’t offer the flexibility and potential growth that actively managed funds do.

No Ceiling on SWP Investments

As mentioned earlier, there is no ceiling on the amount you can invest in SWPs. However, you must consider how much you are withdrawing monthly. Over-withdrawing can erode your capital.

A Certified Financial Planner can help you plan an optimal withdrawal amount. They will ensure that your corpus is not depleted quickly while generating consistent returns.

Final Insights

SWPs are an excellent way to generate regular income, especially for retirees or those looking for a steady cash flow. The flexibility and tax benefits make it an attractive option for many investors.

You should remember, though, that SWPs in equity funds carry market risks, while debt funds offer stability with lower returns. A balance between the two, or opting for hybrid funds, may offer a safer bet for long-term withdrawal plans.

Lastly, avoid direct and index funds if you prefer peace of mind and professional management. By investing through a Certified Financial Planner, you can make sure your investments are aligned with your long-term financial goals, especially if you are considering SWPs.

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

Dr Dipankar Dutta |612 Answers |Ask -Follow

Tech Careers and Skill Development Expert - Answered on Sep 19, 2024

Asked by Anonymous - Sep 18, 2024Hindi

Career

I joined MSRIT ( cse cyber ) this year , i got 96 percentile in mains , but rank was round 60k (open) , I was having option in BMSCE cse core but I dropped it as the seat intake in cse core itself went from 300 to 1200 , Here at Msrit few told me I should have taken civil , mech , metallurgy at nits or life sci at NIT rourkela, I love to learn coding now , but could u tell me did I have taken a right decision , I was thinking too one time about that nit tag but as from this year onwards branch change provision in may nits has been stopped so I took msrit! I am big depressed did I choose right decsion or not , plz elaborate sir/mam

Ans: MSRIT is a well-established institution with a strong reputation for engineering, particularly in computer science and related branches.
The CSE Cyber specialization is one of the most in-demand fields, especially with the growth in data security, ethical hacking, cybersecurity, and AI.
The NIT tag is definitely prestigious, but keep in mind that it’s important to choose a field that aligns with your passion. While civil, mechanical, or metallurgy at an NIT would give you the NIT brand, these fields may not provide the same level of growth and opportunities (at least in the short term) as CSE Cyber.
Upskill yourself in coding, algorithms, data structures, cybersecurity, and other relevant fields.
Participate in hackathons, coding competitions, and internships.
Do relevant online courses from NPTEL etc, to gather skills.

See more questions »

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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