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Ajit

Ajit Mishra  | Answer  |Ask -

Answered on Aug 01, 2020

Amrit Question by Amrit on Aug 01, 2020Hindi
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Need advice on following with a three year horizon.

Ans:

1. Indian Bank 1500 @65 – Exit

2. PNB 6000 @60- Exit

3 Ashok Leyand 2000@50- Hold

4. SBI(one month 100 share SIP) 350 at present @185 – Hold for long term

5. Tata motors (Rs 10,000 each SIP) 1200 @avg 150- Switch to Maruti

6. Yes Bank 2000 Locked at 47, Recently went for IPO of 1000 shares at Rs 13, awaiting allocation. - Hold

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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Asked by Anonymous - Oct 15, 2024Hindi
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hello, please advise on plan of action age: 40 Corpus: 3cr ICICI aggressive hybrid fund - 93L Hdfc flexi cap fund - 93L Cash in 7% interest savings account - 14L Ncd's - 100L (monthly interest income 80k / maturity dec '25) Monthly expenses: around 1.5L (including health insurance premium) Current plan: 80k income from ncd's plus 70k withdrawal from savings account Please advise a plan post NCD maturity - shall this 1cr go into 40L savings account for 2+ years expenses and balance divided into the 2 mutual funds mentioned above - and 2 years post start a swp? Thank you!
Ans: Hello;

I would recommend you to move your current MF holdings into equity savings type mutual funds (low to moderate risk) for eg. ICICI Pru and Kotak equity savings funds.

Buy an immediate annuity for the 1 Cr received after NCD maturity. At 6% annuity rate you may expect a monthly payout of 50 K.

Top up the fund corpus, if required, so that it stays above 1 Cr in both funds at the start of swp.

Do a 3.5% SWP from both funds to get a monthly income of 30 K + 30 K= 60 K

Total monthly income will be 60+50= 110 K

Please find some resource to generate additional 40 K monthly income, in a relatively less risky manner, as desired.

I do not recommend SWP beyond 3% because with higher SWP rate you may eat into your corpus during market drawdowns.(3.5% in your case suggested as an exception).

NCDs are risky hence they are able to offer higher returns but we have seen what happened in DHFL crisis so avoid it at all costs, in future.

I could have recommended to do an immediate annuity for entire corpus of ~ 3 Cr and take 1.5 L annuity income(pre-tax) but time in retirement will be high(current age 40)and corpus in annuity will not have much scope for inflation hedging.

Wish I could offer you a better plan to meet your monthly income goal with current resources.

Best wishes;

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Ramalingam

Ramalingam Kalirajan  |7831 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 01, 2024

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please provide your view on Groww Nifty EV & New Age Automotive ETF FoF Direct Growth. can i start and wait for some more day or months. There is no average annual returns provided by this fund since its inception. It started from 14 Aug 2024. please advise how much money we can start with. lumpsum or monthly basis.
Ans: The Groww Nifty EV & New Age Automotive ETF FoF aims to mirror the performance of the electric vehicle (EV) and automotive innovation sector. Since this is a recently launched fund (14th August 2024), historical returns aren’t available. However, the fund’s theme is closely tied to emerging trends in EVs and new-age mobility. This sector has growth potential but is also highly susceptible to market volatility, regulatory changes, and technological advancements.

Assessing Risks Associated with Sector-Specific ETFs
Sector-focused ETFs, like EV & New Age Automotive, carry inherent risks. These funds concentrate investments in a particular industry, leading to greater sensitivity to sector performance. As a result, they are more volatile than diversified equity funds or actively managed funds. In times of sector underperformance, such funds may experience sharp downturns, affecting the stability of your investment portfolio.

Disadvantages of Investing in Index-based ETFs Over Actively Managed Funds
Index-based ETFs, which passively replicate an index, don’t allow fund managers to capitalize on market inefficiencies. Here, the fund mirrors the index's performance without scope for outperforming the benchmark. Active management, on the other hand, enables fund managers to make tactical decisions, thereby offering potential for higher returns. Actively managed funds can provide added flexibility to manage sector-specific risks, which is limited in a passive strategy.

Regular Funds Through a Certified Financial Planner vs. Direct Funds
Direct fund investments are often promoted for cost savings due to lower expense ratios. However, regular funds through a Certified Financial Planner (CFP) offer strategic benefits that go beyond cost. A CFP assesses your entire financial picture, aligns investments with your goals, and monitors fund performance. These insights are especially valuable for complex or niche sectors like EVs. A CFP ensures regular fund selection that fits your portfolio, making the fee worthwhile for the tailored financial guidance.

Lump Sum vs. Systematic Investment Plan (SIP) Mode
When investing in sector-specific funds, systematic investments (SIP) can be beneficial. SIPs distribute your investment over time, mitigating risks tied to market timing. Lump sum investments in volatile sectors could lead to greater losses if market conditions are unfavorable at the time of entry. A SIP also provides you with the opportunity to average costs in case of sector underperformance.

Capital Gains Taxation on Mutual Funds
Equity mutual funds have revised capital gains tax rates:

Long-Term Capital Gains (LTCG): Above Rs 1.25 lakh, taxed at 12.5%.

Short-Term Capital Gains (STCG): Taxed at 20%.

For equity-oriented funds like this ETF FoF, it’s essential to monitor your holding period to optimize tax impact. In contrast, debt mutual funds are taxed based on your income tax slab, adding flexibility depending on your investment goals.

Recommended Investment Approach
For investors new to this niche, starting with a SIP can be a cautious yet strategic approach. You may consider allocating a minor portion of your overall equity investments into this fund, with the rest in diversified or actively managed equity funds. Limiting initial exposure is wise until the fund has a track record to evaluate performance reliability.

Monitoring Performance Over Time
As this ETF lacks historical performance, periodic assessment of both sector trends and the fund’s growth is crucial. Observe how regulatory changes, EV adoption rates, and advancements in battery technology impact this sector. This evaluation can offer insights into when you might increase your investment in this sector if favorable trends emerge.

Finally
The Groww Nifty EV & New Age Automotive ETF FoF Direct Growth is promising for investors with high risk tolerance, especially those interested in the EV and automotive sectors. Its niche focus offers potential returns but with elevated risks due to the limited scope and recent launch. For most investors, starting small with a SIP is a balanced way to participate in this sector without high exposure risk.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

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NEET, Medical, Pharmacy Careers - Answered on Feb 05, 2025

Asked by Anonymous - Jan 31, 2025Hindi
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My child will be appearing for NEET UG 2025 for the fourth time. Each time his performance has been abysmal, which, I know, is going to be repeated this year too. We have already asked him to move ahead but he is adamant on appearing in NEET which is beyond his calibre. He doesn't have any idea what to do next, has never thought of a Plan B,C or D. Kindly guide as to how plan a career ahead for him. Is there any sort of psychoanalysis to know what is the right study option for him and where to get it done. I can't afford crores of rupees in pvt. medical colleges/abroad .I can take professional assisstance . Kindly give me contact number/ email ID. Thanks.
Ans: Hi Sir,

Don't worry. First, it's important to counsel him.

The health sector is a promising field, which is why I believe your son is so determined to appear for the NEET exam, even though this will be his fourth attempt. It’s natural for him to feel a bit worried. I think he needs to reflect on why he hasn't been able to succeed so far. It's crucial for him to analyze where the problems lie. For example, if he's struggling with chemistry, he should focus more on that subject, as well as the others he finds challenging.

He has a lot of homework to do, including taking mock tests and learning effective strategies rather than just simple ideas.

I have one question: Has he enrolled in any study or coaching center for NEET preparation? If so, it would be beneficial to discuss ways to improve his performance.
If he has prepared himself, kindly approach the best coaching center near your area. For more information about us, you can contact the admin.

Poocho. Life Change Karo!

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