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Vivek

Vivek Lala  |301 Answers  |Ask -

Tax, MF Expert - Answered on Aug 19, 2023

Vivek Lala has been working as a tax planner since 2018. His expertise lies in making personalised tax budgets and tax forecasts for individuals. As a tax advisor, he takes pride in simplifying tax complications for his clients using simple, easy-to-understand language.
Lala cleared his chartered accountancy exam in 2018 and completed his articleship with Chaturvedi and Shah. ... more
Asked by Anonymous - Jul 27, 2023Hindi
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I am 61 years old, I want to invest Rs. 40000 per month for next atleast 10 years. Which Fund I should invest so as to get between 10% to 15% returns?. Thank you.

Ans: Hello, since your time horizon is more than 7 years, you can split the 40K between 4 categories of funds i.e small cap, mid cap, multi cap and consumption fund with 10K sip for each of the funds.
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  |7101 Answers  |Ask -

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

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PLS SUGGEST WHICH M.FUND SHOULD I INVEST FOR TEN YEARS FOR 5000RS MONTHLY
Ans: Strategic Mutual Fund Selection for Long-Term Wealth Creation

Investing in mutual funds is a prudent strategy for long-term wealth accumulation, especially when considering a ten-year horizon. Let's delve deeper into the process of selecting suitable mutual funds for this purpose.

Understanding Investment Objectives

Before diving into fund selection, it's crucial to understand your investment objectives. As a Certified Financial Planner, I appreciate your goal of securing your financial future over the next decade. By considering factors like risk tolerance, time horizon, and financial goals, we can craft a tailored investment strategy to meet your needs.

Selecting Mutual Funds: Actively Managed Funds for Long-Term Growth

Active management offers the potential to outperform the market over the long term through skilled fund management and strategic decision-making. When choosing mutual funds for a ten-year investment horizon, consider the following:

Equity-Oriented Active Funds: Actively managed equity funds have the flexibility to capitalize on market opportunities and navigate market downturns effectively. Look for funds managed by experienced fund managers with a proven track record of delivering consistent returns.

Regular Funds via MFDs: Investing through a Certified Financial Planner (CFP) who is also a Mutual Fund Distributor (MFD) offers personalized guidance and tailored investment solutions. MFDs can help you select suitable funds based on your risk profile, investment goals, and financial circumstances. They provide ongoing support, monitoring, and portfolio rebalancing, ensuring your investments remain aligned with your objectives.

Diversification and Asset Allocation: Opt for actively managed funds that offer broad diversification across different sectors, market capitalizations, and investment styles. This diversification helps spread risk and enhances the potential for long-term wealth creation. Your CFP-MFD can assist in designing a well-balanced portfolio with an appropriate asset allocation strategy to suit your risk tolerance and investment horizon.

Mitigating Risks

While equity investments offer the potential for high returns, they also come with inherent risks. Here's how you can mitigate these risks:

Diversification: Your CFP-MFD can help you construct a diversified portfolio comprising multiple actively managed funds. Diversification across asset classes, sectors, and geographical regions helps mitigate concentration risk and provides a buffer against market volatility.

Regular Monitoring and Review: Your CFP-MFD will monitor your portfolio regularly, keeping you informed about its performance and market developments. Periodic reviews enable timely adjustments to your investment strategy, ensuring it remains aligned with your long-term financial goals.

Conclusion

In conclusion, investing in actively managed mutual funds through a CFP-MFD offers a personalized approach to wealth creation and financial planning. By selecting quality funds, maintaining a diversified portfolio, and receiving ongoing guidance from your CFP-MFD, you can navigate market uncertainties and work towards achieving your long-term financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

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

Asked by Anonymous - Mar 03, 2024Hindi
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I am 53 year. I want to invest Rs 10,000 every month. What is the best option to invest so that after 4/5 years I get good return
Ans: Maximizing Returns with Monthly Investments
Investing regularly is a prudent financial decision, and I commend your commitment to building wealth even at 53. Let's explore the best options for investing ?10,000 every month to achieve good returns within a 4-5 year timeframe.

Understanding Investment Objectives
Short-Term Horizon: With a 4-5 year investment horizon, it's essential to prioritize investments with moderate risk and potential for decent returns.

Goal Clarity: Define your specific financial goals and the purpose of the invested funds to align investment strategies accordingly.

Risk Appetite: Assess your risk tolerance to determine the appropriate mix of investment options for your portfolio.

Evaluating Investment Options
Considering your investment horizon and return expectations, explore the following options:

Equity Mutual Funds: Offer the potential for higher returns but come with higher volatility. Suitable for investors with a longer investment horizon and higher risk tolerance.

Debt Mutual Funds: Provide stability and steady returns with lower risk compared to equity funds. Ideal for investors seeking capital preservation and income generation.

Balanced Funds: Combine equity and debt components to provide a balanced approach to risk and return. Suitable for investors seeking moderate growth with reduced volatility.

Benefits of Actively Managed Funds
Active management offers several advantages for investors with a short-to-medium-term investment horizon:

Potential for Outperformance: Skilled fund managers actively manage the portfolio, aiming to generate alpha and outperform the market.

Risk Management: Experienced fund managers employ risk management techniques to mitigate downside risk and preserve capital, crucial for investors with a shorter investment horizon.

Flexibility: Active management allows for tactical allocation adjustments based on market conditions and economic outlook, optimizing returns.

Disadvantages of Index Funds
Index funds may not be suitable for investors seeking good returns within a 4-5 year timeframe due to the following reasons:

Market Tracking: Index funds passively track a specific index, limiting the potential for alpha generation and outperformance compared to actively managed funds.

Lack of Flexibility: Investors in index funds cannot benefit from active management strategies such as sector rotation or stock selection, which are crucial for optimizing returns in volatile markets.

Market Volatility: During periods of market volatility, index funds may experience higher drawdowns compared to actively managed funds, posing a risk to capital preservation.

Conclusion
Considering your investment horizon of 4-5 years, a balanced approach with a mix of equity and debt mutual funds may be suitable to achieve good returns while managing risk. By investing systematically and regularly reviewing your portfolio, you can work towards achieving your financial goals effectively.

Remember to consult with a Certified Financial Planner to tailor an investment strategy that aligns with your specific needs and objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 03, 2024

Asked by Anonymous - Sep 03, 2024Hindi
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I am 59 yrs old, want to invest Rs 10 lakhs in mutual funds.Pls suggest me the specific funds where I can invest to have a regular monthly income of around 25k.l also had an initial investment of around 15 lakhs in Mutual funds.
Ans: At age 59, your goal is to invest Rs. 10 lakhs in mutual funds to generate a regular monthly income of Rs. 25,000. You also have an existing investment of Rs. 15 lakhs in mutual funds. The challenge is to create a strategy that balances income generation with capital preservation.


Recommending specific mutual fund schemes in an online forum is not advisable for several reasons:

Individual Needs Vary: Every investor has unique financial goals, risk tolerance, and time horizons. A scheme suitable for one person might not be appropriate for another. Providing a specific recommendation without understanding your complete financial situation can lead to unsuitable investment choices.

Dynamic Market Conditions: The performance of mutual funds can vary based on market conditions. What might be a top-performing scheme today might not perform as well in the future. Recommending specific schemes online doesn't consider future market changes.

Need for Personalised Advice: A Certified Financial Planner (CFP) can provide advice tailored to your situation. They will consider your existing investments, income needs, and risk tolerance before suggesting specific funds. This personalized approach is more effective than generic online advice.

Importance of Income-Generating Funds
For your objective, investing in mutual funds that focus on generating regular income is crucial. These funds usually distribute dividends or allow you to set up a Systematic Withdrawal Plan (SWP) to meet your income needs.

Why Actively Managed Funds Are Better
Investing in actively managed funds through a CFP is generally preferable over index funds or direct funds. Here’s why:

Outperformance Potential: Actively managed funds aim to outperform their benchmarks. Experienced fund managers make strategic decisions based on market conditions, which can lead to better returns.

Regular Monitoring: A CFP will regularly monitor your portfolio, ensuring it remains aligned with your financial goals. They can make adjustments based on your evolving needs or market changes.

Guidance on Complex Decisions: With actively managed funds, you receive ongoing guidance. Your CFP can help you navigate market volatility, tax implications, and income strategies, which is crucial as you approach retirement.

Suitable Mutual Fund Categories for Regular Income
Hybrid Funds: These funds invest in a mix of equity and debt. The equity portion offers growth potential, while the debt portion provides stability. Hybrid funds are ideal for generating regular income with moderate risk.

Monthly Income Plans (MIPs): MIPs focus on providing regular income through a combination of fixed income and equity investments. They aim for stable returns with lower risk exposure compared to pure equity funds.

Debt Funds with Systematic Withdrawal Plans (SWPs): Debt funds invest in fixed-income securities, offering lower risk and stable returns. An SWP allows you to withdraw a fixed amount regularly, turning your investment into a source of income. This is often more tax-efficient than traditional fixed deposits.

Considerations for Your Investment Strategy
Review Your Existing Portfolio: Assess your current Rs. 15 lakh mutual fund investment. Ensure it aligns with your income goals. If necessary, consider reallocating to more income-focused funds.

Systematic Withdrawal Plan (SWP): An SWP can be set up to withdraw Rs. 25,000 per month, providing a steady income while allowing the remaining investment to grow.

Risk Management: As you approach retirement, protecting your capital is essential. Focus on funds that offer stability and moderate growth rather than high-risk options like small-cap or sectoral funds.

Tax Efficiency: Income generated from mutual funds, especially through SWP, can be tax-efficient. Long-term capital gains from equity-oriented funds and interest from debt funds are generally taxed at lower rates.

Final Insights
Investing Rs. 10 lakhs to generate a regular monthly income of Rs. 25,000 requires careful planning. While recommending specific mutual fund schemes is not suitable in an online forum, focusing on the right categories—such as hybrid funds, MIPs, and debt funds with SWP—can help achieve your goals. Reviewing your existing Rs. 15 lakh investment and possibly reallocating to more income-focused funds is also crucial.

Consulting with a Certified Financial Planner (CFP) will ensure that your investment strategy is tailored to your specific needs, taking into account your risk tolerance, income requirements, and market conditions.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Ravi

Ravi Mittal  |431 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 22, 2024Hindi
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A bit long story I'm 21 student preparing for medical competative entrance exam for past 3 years (21-24).2 year ago this phase I was in a long distance relationship for 4 months with a girl I met in my class .But it didn't last long due to the problems created due to distance as she couldn't understand myself and I couldn't understand herself.so there was a misunderstanding and I couldn't hold on as I was in heavy pressure by exams and financial problems.so I couldn't handle and I felt like too early and broke up with her by losing my mind.she was completely disappointed as I didn't speak to her for more than an year due to one more year preparation.i missed her very much but I didnt tell her.I missed govt seat in border mark and the same year she got into a relationship with another guy in her class.i don't blame her. But I feel like my entire life is shattered and I couldn't move on from that girl till now.I couldn't concentrate on my career too.im kind of person who is always confident in all aspects but I have totally lost my mind .I can see that in an danger situation as age is running and family pressure, everyone of my classmates are far ahead of me I couldn't withstand this situation and couldn't make proper decision in any aspect. Mam please help me out.
Ans: Dear Anonymous,
I understand your concerns. The first step is to focus on moving on; she has, and you should too. Prioritize your career, your family, and your future. Next, what has happened to your career progress has already happened. It's unfortunate, but there's no way to change that. But give yourself a second chance; work harder and achieve greater things than you even imagined before. Trust me, you are not the only person who is standing in a situation like this. Many have, and many more will. But the ones who have passed this time will give you the same advice that I did.

Best Wishes.

...Read more

Milind

Milind Vadjikar  |682 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 13, 2024Hindi
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Sir, I am 40yrs old. Having monthly takehome salary of 1.1 lakh and rental income of 36000. My investment are 2 flats worth of 1cr. 4 plots in Bhubaneswar worth of 2crs. EPF balance 50 lakh, LIC policies worth of 16 lakhs, NPS worth of 10 lakhs. My monthly saving commitments are - EPF (employee+employer) 28000 NPS 15000 MF 7500 Gold scheme 5000 Financial burden - HL emi of 24000 Monthly expanses 50000 I would like to retire at 50. Please advise for retirement plan with life expectancy of 80yrs.
Ans: Hello;

The value of your investments after 10 years;

A. EPF Corpus+Contribution: 1.6 Cr
B. NPS Corpus+Contribution: 53 L
C. MF(sip) + Gold(sip): 25 L
D. Real estate (land): 3.26 Cr

So sum of A, C & D gives us a corpus of 5.11 Cr

Since you will withdraw NPS before 60 age 80% of corpus will go into annuity while 20% will be available to you.

So you may expect monthly income of around 21 K from annuity(42.4 L).

Balance 10.6 L get added to 5.11L taking your total corpus to ~ 5.2 Cr.

If you invest 5 Cr in a conservative hybrid debt fund and do a SWP at the rate of 3%, you may expect a monthly income of around 1.1 L(post-tax).

Add your monthly rental income of 36 K(No growth factored) and annuity income of 21 K to this and you have total monthly income of 1.67 L after 10 years.

Your current monthly expenses of 50 K after 10 years would be around 90 K and 1.6 L after 20 years.

Considering return of around 7-7.5% from the conservative hybrid debt fund you will still generate inflation adjusted return at 3% SWP after 80 years of age.

Assumptions:
Inflation rate-6%
Return from EPF-8%
Return from NPS-9%
Return from MF-10%
Return from gold-7%
Return from Land-5%
Annuity rate-6%

The spare flat is not considered in this because it will continue to yield you rental income in retirement.

Since real estate(land) returns may fluctuate over 10 years suggest to increase MF sip(6X) as a back-up, also in this case you may decide to retain & invest in NPS upto 60 age.

Of course MF returns are also not assured but you are improving the odds by backing two appreciable assets(RE & equity) over long-term.

Happy Investing;
X: @mars_invest

...Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 22, 2024

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My age 62, male, getting rental income Rs. 90k nett. Already subscribing 12.5k in PPF for the past 2 1/2 years. No other investments. My target is 5 crores in 10 years. I already have Mediclaim Rs.50 lakhs for me & wife . Please advice me what to do.
Ans: Your current financial foundation is strong and shows promise:

A rental income of Rs. 90,000 per month provides consistent and predictable cash flow. This stability can serve as the backbone for your investment strategy.

PPF contributions of Rs. 12,500 per month for 2.5 years reflect disciplined saving. However, its returns may be insufficient to achieve a high-growth target like Rs. 5 crores in 10 years.

A robust Mediclaim policy of Rs. 50 lakhs for you and your wife ensures adequate health coverage. This safeguard allows you to focus on wealth-building without worrying about medical emergencies.

Despite these positive factors, achieving Rs. 5 crores in 10 years requires a carefully crafted and growth-oriented strategy.

Defining and Prioritising Your Financial Goals
Achieving Rs. 5 crores is ambitious yet achievable with a focused approach:

Define this target as your primary financial goal over the next decade.

Break it into manageable milestones: for example, Rs. 50 lakhs every 1-2 years in cumulative investments and growth.

Prioritise high-return investments that align with your risk tolerance and financial capacity.

Optimising Existing PPF Contributions
While PPF is a secure investment, its growth potential is limited:

Returns: PPF currently offers an interest rate of approximately 7-7.5%, which barely outpaces inflation.

Contribution Review: Consider capping your PPF contributions at Rs. 1.5 lakh annually (to utilise the Section 80C benefit). This ensures that excess funds are redirected to higher-return investments.

PPF can serve as a low-risk component of your portfolio but should not dominate your investment strategy.

Building a Diversified Investment Portfolio
A diversified portfolio will provide a balance of risk and reward. Include the following components:

1. Equity Mutual Funds for Growth
Equity mutual funds are essential for achieving high returns over the long term:

Large-Cap Funds: These invest in established companies and offer stability with moderate growth. They are ideal for a portion of your portfolio to reduce risk.

Multi-Cap or Flexi-Cap Funds: These provide exposure to companies of all sizes, offering growth and diversification.

Sectoral and Thematic Funds: Avoid these unless you have a high risk tolerance and understand market dynamics.

ELSS Funds: These not only provide tax savings under Section 80C but also deliver market-linked returns.

Why Avoid Index Funds?

Index funds may offer simplicity and lower expense ratios, but they lack flexibility. They cannot adapt to market conditions or capitalise on outperforming sectors. Actively managed funds, on the other hand, have the potential to outperform the market, especially in a developing economy like India.

Start with a Systematic Investment Plan (SIP) in selected funds to build wealth steadily.

2. Debt Mutual Funds for Stability
Debt funds add stability to your portfolio and reduce overall risk:

Choose funds with low credit risk and moderate duration to ensure safety and predictable returns.

Debt funds are suitable for short- to medium-term goals or as a fallback during market corrections.

Taxation Note: Both LTCG and STCG on debt funds are taxed as per your income tax slab. This should be factored into your planning.

3. Balanced Advantage Funds
Balanced advantage funds (BAFs) dynamically allocate assets between equity and debt. They:

Provide exposure to equity while minimising downside risk.

Offer a suitable option for someone nearing retirement but seeking growth.

4. Gold Investments for Diversification
Allocate a small portion (5-10%) of your portfolio to gold:

Gold serves as a hedge against inflation and currency depreciation.

Choose gold ETFs or sovereign gold bonds for ease of liquidity and better returns.

Emergency Fund Creation
Having an emergency fund is non-negotiable:

Maintain at least 6-12 months of expenses in liquid investments like liquid mutual funds or high-interest savings accounts.

This ensures liquidity for unforeseen events without disturbing your long-term investments.

Focus on Retirement Planning
At 62, balancing growth and safety becomes critical:

Estimate your monthly retirement expenses, considering inflation over the next 10-15 years.

Your target of Rs. 5 crores should primarily serve as your retirement corpus.

Allocate assets thoughtfully:

60-70% in equity funds for growth.
30-40% in debt funds for stability.
Periodically rebalance your portfolio to maintain this allocation.

Strategic Tax Planning
Tax efficiency can significantly impact your returns:

Continue using Section 80C to its full potential, including ELSS funds and PPF.

Consider the National Pension System (NPS) for an additional Rs. 50,000 deduction under Section 80CCD(1B).

Be mindful of the new taxation rules for mutual funds:

Equity Mutual Funds: LTCG above Rs. 1.25 lakh is taxed at 12.5%; STCG at 20%.
Debt Funds: LTCG and STCG are taxed as per your income slab.
Consult a Certified Financial Planner to optimise your tax strategy.

Regular Portfolio Monitoring and Rebalancing
Investing is not a one-time activity:

Review your portfolio every six months or annually to track performance.

Rebalance your asset allocation periodically to align with your financial goals and risk appetite.

Stay committed to SIPs even during market downturns, as this ensures cost-averaging.

Additional Suggestions
Avoid Over-Reliance on PPF
While PPF is safe, it is not sufficient for wealth creation. Shift excess contributions to equity-based investments for better returns.

Avoid Direct Stocks
Direct equity investing requires time, expertise, and constant monitoring. It carries higher risk and may lead to losses without proper research. Instead, rely on equity mutual funds managed by professionals.

Avoid Mixing Insurance and Investments
Do not invest in ULIPs or endowment plans, as they offer suboptimal returns. Stick to pure insurance products for protection and mutual funds for growth.

The Role of a Certified Financial Planner
To achieve Rs. 5 crores, a well-crafted financial plan is essential. A Certified Financial Planner (CFP) can:

Analyse your current investments and recommend improvements.

Design a customised strategy tailored to your income, expenses, and goals.

Provide periodic reviews to ensure you stay on track.

Finally
Achieving Rs. 5 crores in 10 years is a realistic goal if you adopt a disciplined and diversified approach.

Optimise your PPF contributions and channel excess funds into higher-growth investments.

Build a diversified portfolio with equity and debt mutual funds.

Include a small allocation to gold and maintain an emergency fund.

Stay consistent with your SIPs and review your investments regularly.

Work with a Certified Financial Planner to create a personalised roadmap.

By following these steps, you can secure your financial future and meet your 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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