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24-year-old confused about SIP investment strategy: Am I on the right track?

Anil

Anil Rego  |377 Answers  |Ask -

Financial Planner - Answered on Jul 31, 2024

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
Asked by Anonymous - Jul 24, 2024Hindi
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Hi, my age is 24 next year will be 25 And I started SIP approx 8k per month it's been 2 months I've started in different funds large, small, flexi but I'm confused that I'm doing it Right or not. I'll increase it 10% or 5% every year. Please guide Thanks in advance ????????????

Ans: Hi,
You should analyse whether 8k per month is a good enough investment per month given your income. Target to invest at-least 25-30% of your monthly income. Since you are young, you can consider Mid & Small-cap funds with a small portion to large-cap funds to generate welath in the long run. You can consider to increase the investment by 10-15% every Year to build upon the Wealth.

Best Regards,
Anil Rego,
Founder & CEO,
Right Horizons
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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I am 40 year old, I have started doing SIP , some are one-time and some are per month SIP, Here is the list:- A---One time SIPs 1.Quant Small Cap Fund Direct Plan- One time invested One lakh and have kept it for 5 years. 2.Nippon India Multi Cap Fund Direct Growth-One time invested One lakh and have kept it for 5 years. 3.ICICI Prudential Small Cap Fund Direct Plan Growth-One time invested One lakh and have kept it for 5 years. 4.Kotak Nifty AAA Bond Jun 2026 HTM Index Fund Direct Growth B--Monthly SIPs 1.HDFC Mutual fund - 10,000 per month 2.Quant Small Cap Fund Direct Plan- 15,000 per month 3.SBI PSU Direct Plan Growth-10,000 per month. My aim is to make 50 Lakhs in 5 Years, am i actually contributing in the right fund or do I need to change, I have taken high risk. Thank you Sunny Sinha
Ans: It's great that you're investing systematically through SIPs to achieve your financial goals. However, it's essential to review your investment strategy periodically to ensure it aligns with your objectives and risk tolerance.

Considering your aim to accumulate 50 lakhs in 5 years and your willingness to take high risk, here are some considerations:

One-time SIPs: Investing in small-cap and multi-cap funds can potentially offer higher returns but also comes with higher volatility. Given your relatively short investment horizon of 5 years, ensure you're comfortable with the risk associated with these funds.
Monthly SIPs: Continuing SIPs in small-cap and PSU funds aligns with your risk appetite. However, it's crucial to monitor the performance of these funds regularly and be prepared for market fluctuations.
Review and Adjust: Periodically review the performance of your funds and assess if they're on track to meet your goal of accumulating 50 lakhs in 5 years. If necessary, consider rebalancing your portfolio or switching to funds with better growth potential and risk-adjusted returns.
Diversification: While high-risk investments have the potential for higher returns, it's essential to diversify your portfolio to mitigate risk. Consider adding funds from different categories such as large-cap or balanced funds to achieve diversification.
Consult a Financial Advisor: Given the complexity of investing and your specific financial goals, consider consulting with a financial advisor who can provide personalized advice tailored to your needs and objectives. They can help you evaluate your investment strategy, identify any gaps or areas for improvement, and make informed decisions to maximize your returns while managing risk.
By staying informed, regularly reviewing your portfolio, and seeking professional guidance when needed, you can increase the likelihood of achieving your financial goals effectively.

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Mutual Funds, Financial Planning Expert - Answered on May 06, 2024

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Sir/Madam, I am 27 years, 6 months ago I started doing sip of 10k total, five mutual funds 2k each, 1. Quant small cap 2. Parag parikh flexi cap 3. Kotak equity opportunities 4. Parag parikh elss tax saver 5. HDFC dividend yield I know I started a bit late, but now I am full stable and disciplined to be consistent and increase the sip amount by time to time. Am I going right, are my chosen funds are good, or I should change, please help and guide, give corrective suggestions
Ans: It's fantastic to see your proactive approach to investing at such a young age. Let's delve into your portfolio and see how you're doing:

• Starting a SIP at 27 is a commendable step towards building wealth for your future. Remember, it's never too late to begin investing, and your consistency will be key to your success.

• Your choice of mutual funds reflects a diversified approach, covering different sectors and market capitalizations. This is a smart strategy as it spreads your risk across various segments of the market.

• Investing in small-cap, flexi-cap, equity opportunities, ELSS tax saver, and dividend yield funds provides you with exposure to different investment styles and strategies. However, it's essential to review these funds periodically to ensure they continue to align with your financial goals.

• Consider assessing the performance of each fund against its benchmark and peers to gauge whether they are meeting your expectations. Look for consistency in returns and fund management expertise.

• As you progress in your investment journey and your financial situation evolves, you may consider increasing your SIP amount gradually. This will accelerate the growth of your portfolio over time.

• Additionally, stay updated with market trends and changes in economic conditions to make informed decisions about your investments. Keeping yourself informed will help you navigate any market volatility effectively.

• If you're unsure about whether your chosen funds are the right fit for you, don't hesitate to seek advice from a Certified Financial Planner. They can provide personalized recommendations based on your financial goals, risk tolerance, and investment horizon.

In conclusion, you're off to a great start with your SIP investments. Stay disciplined, continue to educate yourself about investing, and periodically review your portfolio to ensure it remains aligned with your objectives. With patience and perseverance, you're on track to build a strong financial foundation for the future. Keep up the excellent work!

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I am investing in parag parikh flexi , quant small cap, kotak multi asset fof, nippon small cap and icici all seasons bond fund and i am 25 started my sip when i was 23 and i have accumulated 3.4 lakhs am i am doing the right way
Ans: Starting your SIP journey at 23 is a smart decision. It gives you a long horizon to ride through market cycles. This helps in compounding your investments over time.

You’ve accumulated Rs 3.4 lakhs already, which shows discipline in your savings. It’s great to see your commitment. Let’s take a closer look at your chosen funds and their suitability based on your goals.

?

Diversified Fund Selection: Evaluating the Mix
You’ve chosen funds across different categories. Each fund has a specific role in your portfolio. But there are things to consider for long-term efficiency.

Let’s evaluate the categories and assess the advantages and disadvantages.

?

Flexi Cap Funds: Parag Parikh Flexi Cap
Flexi Cap funds give flexibility to the fund manager. They can invest across large, mid, and small caps. This approach allows better returns during market ups and downs.

The fund you’ve chosen is well-known. However, the performance relies heavily on the manager’s strategy. This means your success depends on how the fund manager shifts between caps.

For a 25-year-old like you, it’s a good choice. But remember, you need to keep an eye on its performance.

?

Small Cap Funds: Quant Small Cap & Nippon Small Cap
Small-cap funds come with high growth potential. But they also carry more risk. They are suitable for young investors like you. But make sure you can tolerate volatility.

Both Quant and Nippon Small Cap funds can generate strong returns over time. However, market downturns may significantly affect them. Holding too many small caps may also increase risk. Consider reducing exposure to small caps to balance your portfolio.

For stability, try not to have more than 20-30% in small caps.

?

Multi Asset Funds: Kotak Multi Asset Fund of Funds
Multi-asset funds spread your investment across different asset classes like equity, debt, and gold. These funds reduce risk by diversifying your portfolio. However, being an FoF (Fund of Funds), the expense ratio may be higher.

Although it adds a layer of safety, multi-asset funds may limit your growth potential. For someone with a long investment horizon like you, direct equity funds may yield better results. If you prefer stability, it’s a reasonable choice.

But, focus more on equity-heavy funds at this stage.

?

Debt Funds: ICICI All Seasons Bond Fund
Debt funds, like ICICI All Seasons Bond Fund, are meant for conservative investors. They offer stable returns but less growth compared to equity.

At your age, having too much in debt can hold back your growth. It’s wise to include some debt for safety. But limit it to 10-15% of your portfolio. Given your time frame, equity-oriented funds would work better for wealth creation.

You can keep this fund but ensure your overall exposure to debt doesn’t exceed 15%.

?

Analyzing Portfolio Allocation: Equity vs Debt Balance
Your current portfolio leans more toward equity, which is perfect for your age. Equity funds tend to perform better in the long term. The small-cap funds add aggressive growth potential. However, they also increase risk.

Since you are 25, it’s the best time to take some risk. But, too much exposure to small caps may lead to higher volatility. Ideally, consider adding large and mid-cap funds to maintain a balance between growth and safety.

Remember, having a mix of large caps, mid-caps, and small caps will ensure you capture growth while protecting your portfolio from wild swings.

?

Actively Managed Funds vs Index Funds
It’s good that you haven’t invested in index funds. Index funds follow the market, which may not provide high returns in volatile conditions. They don’t give you the benefit of active fund management.

Active funds, like the ones you’ve chosen, allow fund managers to take advantage of market opportunities. This makes them a better choice for long-term investors like you. You can expect better risk-adjusted returns through active management.

?

Why Regular Funds Are Better Than Direct Funds
It’s worth considering if you’ve chosen regular funds or direct funds. Direct funds may seem to offer lower expenses. But they often miss the expert guidance you get from a Certified Financial Planner (CFP).

When investing through a CFP, you get ongoing support, portfolio monitoring, and rebalancing. These services help in aligning your investments with your financial goals. With regular funds, you can make the most of professional advice to maximize your returns.

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Taxation Rules for Mutual Funds
Being aware of mutual fund taxation is essential to avoid surprises later. For equity mutual funds, the Long-Term Capital Gains (LTCG) tax is 12.5% for gains above Rs 1.25 lakh. Short-Term Capital Gains (STCG) are taxed at 20%.

For debt funds, both LTCG and STCG are taxed as per your income tax slab. This could affect your returns, especially if your income tax slab is high. This is why it’s crucial to balance your equity-debt allocation based on your tax situation.

You are still young, so equity-focused investments should dominate your portfolio.

?

SIP: A Powerful Tool for Long-Term Wealth Creation
You’ve adopted the Systematic Investment Plan (SIP) strategy, which is great. SIP allows you to invest small amounts regularly and benefit from market fluctuations. It also reduces the risk of timing the market.

For a long-term goal of 20-25 years, SIPs will help you accumulate wealth slowly and steadily. The key is to continue investing consistently and avoid stopping during market downturns. This ensures you benefit from rupee cost averaging.

Keep increasing your SIP amounts as your income grows. This will boost your wealth-building process.

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Should You Open a Demat Account in Your Daughter's Name?
Opening a demat account in your daughter’s name seems like a good idea. But there are some points to consider.

She’s currently 7 years old. You’ll be managing the account on her behalf. The gains will be clubbed with your income and taxed accordingly.

Managing multiple accounts can become complicated. Instead, you can continue investing in your name. Later, you can pass it on to her when she turns 18.

Keep the investment focused on long-term goals like her education or marriage. You can maintain the funds in your name for now. You can also create a trust fund in the future if needed.

?

Final Insights: Aligning with Your Goals
Overall, you are on the right path. You’ve made some solid investment choices at an early age. But here are some points to enhance your strategy:

Consider reducing your exposure to small-cap funds. Add more mid-cap or large-cap funds for stability.

Limit debt fund allocation to 10-15% of your portfolio. Focus more on equity for long-term growth.

Stay invested in actively managed funds for better returns. Avoid index funds due to their passive nature.

Ensure you invest through a Certified Financial Planner to get the best advice. Regular funds offer more value with professional support.

Continue your SIPs, increase your amounts, and stay disciplined. This will help you achieve your financial goals smoothly.

Keep reviewing your portfolio every year. Adjust your allocation based on your evolving goals and risk appetite.

?

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

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Dr Nagarajan Jsk

Dr Nagarajan Jsk   |183 Answers  |Ask -

NEET, Medical, Pharmacy Careers - Answered on Dec 21, 2024

Asked by Anonymous - Nov 19, 2024Hindi
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Hello sir I am mbbs graduated from russia in 2020,n passed with my fmge exam in india in 2021, I want to ask if i want to practice medicine or work as doctor in uk ? Is it necessary for me to pass plab exam exam? Or if i get sponsorship from any uk i will be able to work there and simultaneously i will give plab exam?? Please guide me i m so confused?
Ans: Hi, I understand that you pursued a medicine course in Russia (a non-European country) and, since you are from India, you have completed the FMGE. Now you want to practice or work in the UK as a doctor?

Based on your question, you are eligible to practice in India after completing your internship (which you haven't mentioned, but I assume you have completed it). The FMGE is essentially a licensure exam for Indian students who have completed their medical studies abroad, so you are eligible to practice in India only.

If you want to practice medicine in the UK, you need to complete the PLAB test, as you are from outside the UK/Switzerland/European countries (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland).

You also inquired about sponsorship. Here is the information related to sponsorship for practicing medicine in the UK.
(Extracted from general medical council, uk org. )Applying for registration using sponsorship
If you apply through sponsorship, you will have to satisfy the sponsor that you possess the knowledge, skills and experience required for practising as a fully registered medical practitioner in the UK. Each sponsor has their own scheme which we have pre-approved. If you can satisfy the requirements of their scheme, they will issue you with a Sponsorship Registration Certificate (SRC) which you will need for your application with us. Please ensure this is a Sponsorship Registration Certificate for GMC registration, as we can’t accept UK visa sponsorship certificates for your application for registration.
Please note that a core part of all sponsors' criteria is that a doctor applying for an offer of sponsorship must have been engaged in medical practice for three out of the last five years including the most recent 12 months. If you cannot meet these minimum criteria, it is unlikely that you'll be able to supply sufficient evidence to support your application for sponsorship.
Doctors applying through sponsorship are required to demonstrate their English language skills by achieving our current minimum scores in the academic version of the IELTS test or the OET (medicine version).
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If you have any further questions, please visit the GMC website for more information.

WISH YOU ALL THE VERY BEST.

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Hi Sir, I follow your articles regularly and your detailed assessment is really awesome.I am 47yrs Male with wife, 20&18 years kids, elder one is in B.Tech and younger one is 12th. My wife is a home maker. Coming to financials. I have 4 houses including the one residing worth 10cr(total) and getting rental income of 70k per month, invested in stocks and MFs worth 60L, have foreign stocks of worth 1.7cr, accumulated pf around 1.3cr. I have farm lands worth 5cr. Have 1.2cr loan and salary of ~4L (net). current sips in equity 70k/month, have 5Cr term plan, health insurance for family 50L. How do I plan my retirement at 52-53years assuming 80 years life expectancy. Don't want to depend on kids and need regular income ~3-4L per month.
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Real Estate:
You own four houses worth Rs 10 crore, generating Rs 70,000 monthly rental income. This is a solid base for passive income. However, real estate can have fluctuating maintenance costs, tenant issues, and varying rental yields over time.

Stocks and Mutual Funds:
Your Rs 60 lakh investment in stocks and mutual funds is a commendable step. Active mutual funds offer professional fund management and can outperform index funds over time.

Foreign Stocks:
Your Rs 1.7 crore portfolio in foreign stocks adds geographical diversification. Monitor currency exchange fluctuations and global market trends.

Provident Fund (PF):
With Rs 1.3 crore in PF, this is a reliable retirement corpus. The fund provides fixed returns and tax benefits, adding stability.

Farm Lands:
Farm lands worth Rs 5 crore are an illiquid but valuable asset. They might not generate consistent income unless leased or developed.

Loans:
A loan liability of Rs 1.2 crore needs prioritised repayment. Focus on loans with higher interest rates first.

Insurance Coverage:
A Rs 5 crore term plan is robust. Your Rs 50 lakh health insurance is sufficient for unexpected medical emergencies.

Retirement Goals
You need Rs 3–4 lakh monthly for 27–28 years post-retirement.
The portfolio must generate steady, inflation-adjusted returns.
Action Plan for Retirement
Debt Management
Prepay High-Interest Loans:
Use a portion of your surplus income to prepay loans. This reduces interest outflow and increases your cash flow.

Avoid New Loans:
Focus on reducing existing liabilities instead of taking on new ones.

Portfolio Restructuring
Real Estate:
Retain essential properties. Sell underperforming or non-essential properties to reduce concentration in real estate. Invest proceeds in mutual funds or debt instruments for diversification.

Mutual Funds (MFs):
Increase SIPs in actively managed funds. They outperform direct funds due to guidance from Certified Financial Planners and MFDs. Regular funds offer better tracking and professional assistance.

Stocks:
Monitor direct equity investments closely. Consider reallocating underperforming stocks to mutual funds for better management.

Debt Instruments:
Invest in high-quality debt funds or fixed-income securities for stability. These instruments balance equity volatility and ensure steady returns.

SIP Strategy
Increase SIPs from Rs 70,000 to Rs 1 lakh/month.
Allocate 70% to equity funds for long-term growth.
Invest 30% in debt funds for stability and liquidity.
Emergency Fund
Maintain a 12-month expense reserve in liquid funds or fixed deposits.
This covers unexpected expenses without disturbing investments.
Income During Retirement
Systematic Withdrawal Plan (SWP)
Use SWPs in mutual funds to generate regular income.
Withdraw 6–8% annually from your mutual fund portfolio for a steady income stream.
Rental Income Optimisation
Review property rents regularly.
Invest part of rental income in equity or debt mutual funds for compounding.
Dividend Stocks
Retain high-dividend-yield stocks for regular income.
Reinvest surplus dividends for long-term growth.
Tax Efficiency
Equity Funds Taxation:
Long-term gains above Rs 1.25 lakh are taxed at 12.5%. Short-term gains are taxed at 20%.

Debt Funds Taxation:
Both short- and long-term gains are taxed per your income slab.

Real Estate Capital Gains:
Use exemptions under Sections 54 or 54F to save tax on property sales.

Inflation Protection
Allocate 60–70% of your portfolio to equity investments.

Equity provides inflation-adjusted returns over time.

Debt funds and fixed instruments safeguard against equity market volatility.

Estate Planning
Draft a will to allocate assets transparently among family members.
Use nomination and joint ownership to avoid legal complications.
Consider a family trust for farm lands to avoid disputes.
Periodic Review
Review your financial plan every six months.
Adjust investments based on market conditions, goals, and needs.
Consult a Certified Financial Planner regularly for updates.
Finally
A well-diversified portfolio ensures financial independence post-retirement. Focus on debt repayment, portfolio balance, and tax-efficient withdrawals. Your assets can comfortably generate Rs 3–4 lakh monthly income, adjusted for inflation.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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I am the eldest sibling in our families and aged 51. Normally, whenever anyone in the family has a problem - financial, mental, psychological, issue with people or anything else, they come up to discuss with me and share. Well, many would say I am lucky as people look up to me when they are in any kind of a problem. But that is not the case. Sadly no one is around with whom I can discuss or even think to share my issues, my problems. I do not have any friends. Sadly, yes, that is a fact and at my age, I dont expect that here we have a culture where we can get to making friends, at least the kind of friends with whom you can confide, share your feelings, problems. I tried and failed. Maybe because I am introvert or maybe I am too cautious. To make it more complicated, I dont work in the regular kind of job. I am a lone person who works as a freelance from home. This limits my outreach when it comes to interacting with real people. I have clients, business contacts, but I cannot get personal with them. It will never be a good choice. My wife is busy with her job + we do not have any relation beyond the daily matters related to household and it has been more than 10 years now that we live this way. Tried to sort out things with her but she just does not have time and interest (after all who wants to add on to tensions, stress). My daughter is after all my daughter - I cannot share these with her, and definitely at 10 she is too young to be one to discuss such stuff. I am not sure how far this issue can be fixed but I am hopeful to find some path here.
Ans: Dear Kevin,
Starting small can be helpful. Consider connecting with people through shared interests or hobbies, either online or in person, where the pressure to immediately open up is minimal. Online communities, local meetups, or volunteer activities can create low-stakes opportunities to connect with like-minded individuals. The goal isn’t to instantly find someone to confide in but to slowly build a sense of belonging and companionship.

Your relationship with your wife appears to be another significant source of emotional distance. While her lack of interest in deep conversations may seem like a barrier, it’s worth exploring other ways to reconnect—perhaps by spending time together in shared activities or revisiting moments that once brought you closer. Sometimes, relationships stuck in routines benefit from new experiences or even professional counseling to navigate the underlying dynamics.

Regarding your daughter, while it’s clear she cannot shoulder your emotional burdens, she can still be a source of joy and connection. Investing time in activities with her can provide a sense of fulfillment and grounding that counters loneliness.

Above all, remember that reaching out for professional support, such as therapy, is not a sign of weakness but an act of self-care. A therapist can provide a safe space to express your feelings and help you develop strategies to foster deeper connections and manage emotional isolation.

You deserve to feel supported and connected, and even if the journey to finding that seems long, every step you take toward opening up or seeking out others is a move toward a more fulfilling and less lonely existence.

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Top4 sips with 15k amount suggest me
Ans: Here’s an updated strategy for your Rs. 15,000 SIP allocation, replacing the sectoral/thematic fund with a small-cap fund for better long-term growth potential.

Suggested SIP Allocation (Rs. 15,000)
Large-Cap Fund

Allocation: Rs. 4,000/month
Objective: Stability and steady growth by investing in India’s top 100 companies.
Why Choose: Provides consistent returns and low volatility in your portfolio.
Flexi-Cap Fund

Allocation: Rs. 4,000/month
Objective: Diversified exposure across large, mid, and small-cap stocks.
Why Choose: Offers balanced risk and returns with flexibility during market cycles.
Mid-Cap Fund

Allocation: Rs. 3,500/month
Objective: Tap into the growth potential of medium-sized companies.
Why Choose: Higher returns with manageable risk compared to small caps.
Small-Cap Fund

Allocation: Rs. 3,500/month
Objective: Focus on fast-growing small-cap companies.
Why Choose: High-growth potential over the long term, though with higher volatility.
Why Include Small-Cap Funds?
Long-Term Growth: Small-cap companies have immense potential to grow significantly over time.
Diversification: Adds exposure to an underrepresented segment, complementing large and mid-caps.
High Returns: Potential for higher returns compared to other categories, albeit with higher risk.
Key Considerations
Investment Horizon: Stay invested for at least 7-10 years to mitigate short-term volatility.
Active Fund Management: Avoid direct or index funds to leverage professional expertise.
Regular Monitoring: Review fund performance periodically with a Certified Financial Planner.
Tax Implications
Equity Funds:
LTCG above Rs. 1.25 lakh/year taxed at 12.5%.
STCG (held less than 1 year) taxed at 20%.
Final Insights
This updated allocation ensures a mix of stability, moderate risk, and high growth. With consistent SIPs and periodic reviews, you can achieve robust wealth creation over the long term. A Certified Financial Planner can assist in optimising your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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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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