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Nikunj

Nikunj Saraf  | Answer  |Ask -

Mutual Funds Expert - Answered on Oct 10, 2022

Nikunj Saraf has more than five years of experience in financial markets and offers advice about mutual funds. He is vice president at Choice Wealth, a financial institution that offers broking, insurance, loans and government advisory services. Saraf, who is a member of the Institute Of Chartered Accountants of India, has a strong base in financial markets and wealth management.... more
swami Question by swami on Oct 10, 2022Hindi
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My age is 27 and i am planning for my retirement so i am investing 20K every month in sip and will step up 10% every year .

I am expecting 15% return on my investments. I started investing in MF from march 2022 and I have also investing 10K in EPF and 1.5 L in LIC.

I have added all my mutual funds below , please reveiw and share ur opinion. If it’s over diversified suggest me which fund i need to remove from my portfolio.

Small cap funds – 4( 6500 )

1. Axis Small Cap Fund Direct Growth-2000

2. Kotak Small Cap Fund - Direct Plan - Growth (Erstwhile Kotak Mid-Cap) -1500

3. NIPPON INDIA SMALL CAP FUND - DIRECT -1500

4.Quant Small Cap Fund - Direct Plan Growth -1500

Mid cap Funds – 4 (4500)

1. PGIM India Midcap Opportunities Fund - Direct Plan – Growth- 1000

2. Quant Mid Cap Fund – Growth -1500

3. Invesco India Midcap Fund - Direct Plan Growth -1000

4. Axis Mid Cap Fund - Direct Growth -1000

Blue chip & Growth -2 (2500)

1. Mirae Asset Emerging Bluechip Fund - Direct Plan-1500

2. Axis Growth Opportunities Fund Direct Growth -1000

Sectorial Diversification -6 (4500)

1. ICICI Prudential Technology Fund - Direct Plan – Growth - 1000

2. ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund Direct Plan Growth -500

3. ICICI Prudential Banking and Financial Services Fund - Direct Plan – Growth -500

4. Mirae Asset Great Consumer Fund - Direct Plan -1500

5. Quant infrastructure fund - 1000

US market (2500)

  1. 1.    Navi US Total Stock Market Fund of Fund Direct Plan Growth – 2500

Ans: Hello swami. The detailed overview of your MF portfolio indicates over-diversification with 20k SIP. Hence, I would suggest reconsidering, pruning, and reshuffling your portfolio. 

As part of the portfolio reshuffle, make sure to have AMC diversification as well.

Limit yourself to 1-2 schemes in each category.

I can see several schemes in different categories for each AMC. I recommend reconsidering the scheme for Navi US scheme to better scheme in same category.

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 09, 2024

Asked by Anonymous - Apr 21, 2024Hindi
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Hi Experts, I am 40 years old. I am investing in mutual fund SIPs. My portfolio has following funds each 1000Rs SIP monthly. 1) Quant Infrastructure 2) Quant Mid cap 3) Quant Small cap 4) Quant Active 5) Quant Flexi cap 6) ICICI Pru Infrastructure 7) ICICI Pru Bluechip 8) ICICI Pru Bharat 22 FOF 9) Nippon India Large cap 10) Nippon India Growth 11) Nippon Small cap 12) Nippon India Multi cap 13) Nippon Power & Infra 14) Aditya Birla Sun Life PSU 15) SBI PSU 16) Invesco PSU 17) JM Large cap 18) JM Value fund 19) JM Flexi cap 20) Tata Small cap 21) HDFC Mid cap opportunities 22) Mahindra Manulife Mid cap 23) Mahindra Manulife Multi cap 24) Motilal Oswal Mid cap. Am I good to continue on these funds? Do I need to add/remove any funds for a good portfolio. Please provide your thoughts.
Ans: It's commendable that you're investing in mutual funds through SIPs to build wealth for your future. However, your portfolio seems overly concentrated with a large number of funds, which may not necessarily translate into better returns. Let's review your portfolio and suggest any necessary adjustments for better diversification and performance:
Assessing Your Portfolio:
1. Quant Funds: These funds focus on quantitative strategies, which can be riskier and more volatile. Consider whether the strategy aligns with your risk tolerance and investment objectives.
2. ICICI Pru and Nippon India Funds: These are reputable fund houses offering a range of funds across different market segments. Review the performance and risk profile of each fund to ensure they meet your expectations.
3. PSU Funds: Investing in sector-specific funds like PSU funds increases concentration risk. While these funds may offer potential upside, they are susceptible to sector-specific risks.
4. Mid Cap and Small Cap Funds: These funds have the potential for high growth but come with increased volatility. Ensure they align with your risk tolerance and investment horizon.
Portfolio Optimization:
1. Consolidation: Consider consolidating your portfolio by reducing the number of funds. Focus on high-quality funds with strong track records and consistent performance.
2. Diversification: Aim for a well-diversified portfolio across different asset classes, market caps, and sectors to spread risk and optimize returns.
3. Exit Strategy: Evaluate the underperforming funds and consider exiting those that consistently lag behind their benchmarks or peers. Redirect the proceeds to more promising opportunities.
4. Professional Advice: Consult with a Certified Financial Planner to review your portfolio comprehensively and tailor it to your financial goals, risk tolerance, and investment horizon.
Conclusion:
While your current portfolio includes several funds, it may benefit from streamlining and optimizing for better performance and risk management. By focusing on quality over quantity and maintaining a diversified approach, you can enhance the potential for long-term wealth creation.
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 18, 2024

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Hi Experts, I am 40 years old. I am investing in mutual fund SIPs. My portfolio has following funds each 1000Rs SIP monthly. 1) Quant Infrastructure 2) Quant Mid cap 3) Quant Small cap 4) Quant Active 5) Quant Flexi cap 6) ICICI Pru Infrastructure 7) ICICI Pru Bluechip 8) ICICI Pru Bharat 22 FOF 9) Nippon India Large cap 10) Nippon India Growth 11) Nippon Small cap 12) Nippon India Multi cap 13) Nippon Power & Infra 14) Aditya Birla Sun Life PSU 15) SBI PSU 16) Invesco PSU 17) JM Large cap 18) JM Value fund 19) JM Flexi cap 20) Tata Small cap 21) HDFC Mid cap opportunities 22) Mahindra Manulife Mid cap 23) Mahindra Manulife Multi cap 24) Motilal Oswal Mid cap Am I good to continue on these funds? Do I need to add/remove any funds for a good portfolio. Please provide your thoughts.
Ans: Mutual Fund Portfolio Analysis and Recommendation

Comprehensive Portfolio Evaluation

Your diversified mutual fund SIP portfolio reflects a proactive approach towards wealth accumulation and investment diversification. Let's assess each fund's performance and suitability to optimize your investment strategy.

Assessing Current Portfolio Allocation

Your portfolio consists of a wide range of funds spanning various market segments, including infrastructure, mid-cap, small-cap, large-cap, and flexi-cap funds. This diversification aims to capture growth opportunities across different sectors and market capitalizations.

Benefits of Actively Managed Funds over Index Funds

Actively managed funds offer the potential for higher returns and outperformance compared to index funds. Fund managers leverage their expertise to select promising stocks and navigate market fluctuations effectively, enhancing portfolio returns over the long term.

Disadvantages of Index Funds

Index funds, while low-cost and passively managed, may not always deliver superior returns compared to actively managed funds. They are subject to market volatility and offer limited scope for outperformance, especially during market rallies and downturns.

Identifying Overlapping Investments

Review your portfolio for any overlapping investments across funds managed by the same asset management company or with similar investment objectives. Consolidating overlapping funds can streamline your portfolio and reduce redundancy.

Optimizing Portfolio Allocation

Consider rebalancing your portfolio to ensure optimal allocation across different market segments. Focus on funds with strong fundamentals, consistent performance, and alignment with your risk tolerance and investment goals.

Disadvantages of Direct Funds

Direct funds require investors to conduct their own research and make investment decisions independently. However, investing through a Certified Financial Planner (CFP) provides access to professional guidance and comprehensive financial planning services, enhancing portfolio management.

Highlighting Benefits of Regular Funds Investing through MFD with CFP Credential

Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential offers personalized guidance and disciplined investing. An MFD can help optimize your investment strategy, monitor portfolio performance, and ensure alignment with your financial goals.

Conclusion

While your current mutual fund SIP portfolio demonstrates a diversified approach, consider reviewing and potentially consolidating funds to optimize returns and reduce complexity. Seek guidance from a Certified Financial Planner (CFP) to reassess your investment strategy, align it with your financial goals, and navigate market uncertainties effectively.

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 Jun 08, 2024

Money
Hi Sir, I've been investing in mutual funds since completion of my M. Tech in 2016. I've redeemed many funds due to bad performance. But now I've realigned my portfolio. My previous investment funds include Canara Robeco Tax saver, SBI focused equity, Axis Small cap and PGIM India Midcap. Total is around 9.72 lakhs. I've not redeemed these funds. And stopped investing in them. My current investment funds through SIP include Quant Small cap, Quant mid cap, Quant tax saver, Quant flexi cap, ICICI Pru blue-chip, Axis Gold FOF, Kotak Debt Hybrid, SBI energy Opportunities and ABSL Liquid fund. My question is should I continue investing in these funds or take exit from some of them. Is my portfolio well diversified?
Ans: It's great to see your commitment to investing and your proactive approach to managing your portfolio. Since completing your M. Tech in 2016, you've navigated the complex world of mutual funds, which is commendable. It's normal to encounter some challenges along the way, such as poor performance of certain funds. Realigning your portfolio shows a thoughtful and strategic mindset. Let's take a comprehensive look at your current investments and evaluate their alignment with your financial goals.

Portfolio Analysis
Previous Investments
Your previous investments include Canara Robeco Tax Saver, SBI Focused Equity, Axis Small Cap, and PGIM India Midcap, totaling around Rs 9.72 lakhs. These funds are still part of your portfolio, although you have ceased further investments in them. Let's evaluate their current role in your portfolio.

Canara Robeco Tax Saver

This fund primarily offers tax benefits under Section 80C of the Income Tax Act. If you don't need additional tax-saving investments, continuing to hold may be redundant. Consider your tax-saving requirements and whether this fund's performance aligns with your expectations.

SBI Focused Equity

A focused fund typically invests in a limited number of stocks. This can be beneficial in a bullish market but can also carry higher risk. Evaluate if this concentrated approach fits with your risk tolerance and overall strategy.

Axis Small Cap

Small-cap funds can offer high returns but come with increased volatility and risk. Assess your risk tolerance to determine if this aligns with your goals. Small-cap funds can be part of a growth-oriented portfolio, but they require patience and a long-term horizon.

PGIM India Midcap

Midcap funds balance growth potential and risk. They can be a solid choice for long-term growth but should be evaluated for performance consistency. Midcaps often represent companies in the growth phase, which can lead to significant capital appreciation over time.

Current Investments Through SIP
Your current investments through SIPs include Quant Small Cap, Quant Mid Cap, Quant Tax Saver, Quant Flexi Cap, ICICI Pru Blue-chip, Axis Gold FOF, Kotak Debt Hybrid, SBI Energy Opportunities, and ABSL Liquid Fund. Let's analyze these in detail.

Quant Small Cap, Mid Cap, and Tax Saver

Investing in multiple funds from the same fund house can be risky due to fund house-specific risks. However, Quant is known for its research-driven approach. Ensure these funds are not overly correlated. Diversifying across fund houses can mitigate risk.

Quant Flexi Cap

Flexi Cap funds offer flexibility to invest across market capitalizations. This can provide a balanced approach to risk and reward. Flexi Cap funds can dynamically adjust their allocations, which can be beneficial in varying market conditions.

ICICI Pru Blue-chip

Blue-chip funds invest in large, established companies. They are typically less volatile and offer steady growth, making them a safe core holding. These funds are suitable for conservative investors seeking stable returns.

Axis Gold FOF

Gold funds can hedge against inflation and market volatility. However, they should not constitute a large portion of your portfolio due to limited long-term growth potential. Gold is a safe haven asset but doesn't generate regular income.

Kotak Debt Hybrid

Debt hybrid funds provide stability by combining equity and debt. They can be a good choice for moderate risk tolerance. These funds aim to balance risk and return, making them suitable for conservative investors.

SBI Energy Opportunities

Sector funds, like this one focusing on energy, carry higher risk due to industry-specific factors. Ensure you are comfortable with the associated volatility. Sector funds can offer high returns but require careful monitoring.

ABSL Liquid Fund

Liquid funds are ideal for emergency funds and short-term goals due to their high liquidity and low risk. They are suitable for parking surplus funds that might be needed quickly without exposing them to market risks.

Diversification Assessment
Diversification is crucial to managing risk. Your portfolio spans various asset classes and sectors, which is positive. However, let's scrutinize the balance:

Equity Exposure
Your equity investments are spread across large-cap, mid-cap, small-cap, and sector-specific funds. This is a good mix, but consider if the sector-specific and small-cap funds align with your risk appetite and goals.

Debt Exposure
Kotak Debt Hybrid and ABSL Liquid Fund provide necessary debt exposure. Ensure this aligns with your risk tolerance and time horizon. Debt investments add stability and reduce overall portfolio volatility.

Gold Exposure
Axis Gold FOF adds a layer of diversification. However, keep its allocation limited due to gold's lower long-term growth. Gold can be a hedge but shouldn't dominate your portfolio.

Sector Exposure
SBI Energy Opportunities fund introduces sector-specific risk. Ensure it doesn't overly concentrate your portfolio. Sector funds should be carefully weighed to avoid overexposure to one industry.

Recommendations
Consolidate Overlapping Funds
Holding multiple funds from the same fund house (e.g., multiple Quant funds) may not offer significant diversification benefits. Evaluate their individual performances and consider consolidating to reduce complexity. Streamlining your portfolio can make management easier.

Review Sector Funds
Sector funds can offer high returns but come with increased risk. Assess your comfort with the volatility and potential downturns in the energy sector before continuing with the SBI Energy Opportunities fund. Consider the cyclical nature of sector performance.

Balance Risk and Stability
Ensure a balanced mix of high-growth potential funds (small-cap, mid-cap) and stable, less volatile funds (blue-chip, debt hybrid). This balance can provide growth while mitigating risk. Diversification across market capitalizations can smoothen returns.

Regularly Monitor Performance
Keep an eye on the performance of your funds relative to their benchmarks. Underperforming funds should be reviewed periodically. If consistently underperforming, consider exiting and reallocating to better-performing options. Regular reviews ensure alignment with goals.

Align with Financial Goals
Revisit your financial goals and risk tolerance. Ensure your portfolio composition aligns with your objectives, whether they are wealth accumulation, retirement planning, or other specific goals. Goals dictate the investment strategy and asset allocation.

Actively Managed vs. Index Funds
You mentioned avoiding index funds. Index funds often come with lower fees but may not outperform the market. Actively managed funds can offer potential for higher returns through expert fund management. The fund manager's expertise can navigate market complexities, although this comes with higher fees.

Disadvantages of Index Funds:

Limited Flexibility
Index funds must stick to the index composition, lacking flexibility to capitalize on market opportunities. This rigid structure can limit potential gains.

Market Risk
They mirror the index performance, providing no cushion during downturns. Index funds fall when the market falls.

Potential Underperformance
In volatile markets, actively managed funds might outperform due to strategic adjustments. Active managers can exploit market inefficiencies.

Direct Funds vs. Regular Funds
Direct funds can save on distribution costs, offering lower expense ratios. However, investing through a certified financial planner can provide valuable insights, strategic planning, and comprehensive financial advice, which is beneficial for long-term success.

Disadvantages of Direct Funds:

Limited Guidance
Direct funds do not offer advisory support, which can be crucial for making informed decisions. Professional advice ensures a tailored investment approach.

Complex Management
Managing a portfolio without professional advice can be challenging, especially in volatile markets. Market dynamics require informed decisions.

Lack of Strategy
Professional planners can provide tailored strategies, optimizing your portfolio based on your financial goals. Strategic planning is key to achieving objectives.

Additional Considerations
Risk Tolerance and Time Horizon
Your risk tolerance and investment time horizon are critical factors in portfolio construction. High-risk, high-reward funds like small-cap and sector funds should align with a long-term horizon and higher risk tolerance. Conversely, conservative funds like blue-chip and debt hybrid are better suited for those with a lower risk tolerance or nearing financial goals.

Regular Reviews and Rebalancing
Regularly review and rebalance your portfolio to maintain alignment with your financial goals. Market conditions and life changes can impact your investment strategy. Rebalancing ensures your portfolio stays on track and mitigates risk.

Emergency Fund Allocation
Ensure you have an adequate emergency fund allocation in highly liquid investments like liquid funds. This provides financial security in unforeseen circumstances and prevents the need to liquidate long-term investments prematurely.

Final Insights
Your dedication to managing your investments is admirable. Realigning your portfolio is a positive step. Ensure your investments are well-diversified, aligned with your financial goals, and reflective of your risk tolerance. Regular monitoring and strategic adjustments are key to achieving long-term success. With careful planning and periodic reviews, your portfolio can be well-positioned to meet your 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 Nov 14, 2024

Asked by Anonymous - Nov 13, 2024Hindi
Money
Hi sir Kindly review my portfolio.. Investing below amount in SIP 1)Large cap - Axis 4500 Nippon 4500 2) Flexi cap - Parag parikh - 3000 Icici - 2500 3) Mid cap - Motilal - 2500 Aditya birla - 500 Kotak - 500 4) Small cap Tata - 1500 My goal for investing is my child education, child marriage and Retirement funds I planning to invest for next 15 years Kindly suggest which and all mutual fund I have to continue and remove for better returns.. Thank you
Ans: It’s great to see that you’re committed to securing funds for your child’s education, marriage, and retirement. These are critical milestones, and with the right approach, your investments can help you achieve them effectively.

Investment Goals and Approach

You have clear long-term objectives, which is ideal. Planning with specific goals like education, marriage, and retirement brings purpose to your investment journey. Given the 15-year investment horizon, you can take advantage of compounding benefits, especially with equity mutual funds. However, let’s ensure your portfolio is optimized for growth, risk, and tax efficiency.

Evaluating Your Mutual Fund Choices

Let’s look at your current investments across various categories:

1. Large Cap Funds
Large-cap funds provide stability, as they invest in established companies with relatively lower volatility. However, there can be limited scope for very high growth in large caps compared to mid or small caps.

You’re invested in two large-cap funds. It’s often advisable to focus on one high-performing large-cap fund to avoid overlap and unnecessary diversification.

Consider retaining a large-cap fund that has a consistent track record, active fund management, and strong research backing.

2. Flexi Cap Funds
Flexi-cap funds offer flexibility by investing across market caps. This allows the fund manager to capture growth opportunities in any segment of the market.

Holding two flexi-cap funds is fine, as it balances large and mid-cap stocks, offering both stability and growth. However, evaluate each fund’s performance and select one if you feel any duplication in returns.

3. Mid Cap Funds
Mid-cap funds offer growth potential but come with higher risk. Given your long-term horizon, they can be beneficial.

You currently have three mid-cap funds. It might be better to consolidate into one or two top-performing funds in this category to reduce excessive overlap and diversify across sectors rather than just fund names.

4. Small Cap Fund
Small-cap funds are suitable for aggressive growth but can be highly volatile. It’s wise to limit exposure to small caps, as they tend to fluctuate significantly, especially over shorter timeframes.

Given your portfolio composition, your allocation to small caps is moderate, which seems appropriate. However, ensure you are comfortable with the high-risk nature of small caps, especially if the market faces downturns.

Analysis of Direct vs. Regular Funds

Opting for direct funds might appear attractive due to lower expense ratios, but it’s crucial to weigh the potential downsides:

Lack of Guidance: Direct funds lack the guidance a Certified Financial Planner (CFP) can offer. Expert support ensures your portfolio is regularly rebalanced and aligned with market changes, personal goals, and tax updates.

Regular Tracking: With a CFP’s help, your investments are reviewed frequently, making timely adjustments in case of underperformance. This hands-on approach is particularly helpful in achieving your long-term goals.

Tax Considerations: Regular funds through a CFP can help you optimize tax efficiency by offering proactive advice on capital gains, loss harvesting, and adjusting investments according to the new capital gains tax rules.

Importance of Actively Managed Funds

While index funds may seem attractive for their lower costs, actively managed funds bring added advantages, especially for long-term investors like you:

Potential for Higher Returns: Skilled fund managers actively seek growth opportunities that can outperform benchmarks over time. This could be a significant advantage given your long-term goals.

Flexibility in Market Movements: Active funds allow managers to make informed changes, adapting to market conditions and potentially protecting your investments during volatile phases.

Diverse Exposure: With active management, your funds are better diversified across sectors and stocks, reducing concentration risk and enhancing the potential for stable returns.

Investment Strategy Recommendations

Considering your goals and time horizon, here’s a comprehensive approach to optimize your portfolio:

Consolidate Fund Choices: Consider reducing similar funds within each category. This will provide clarity and focus, making it easier to track progress and reduce management complexity.

Review and Rebalance: Regularly review your portfolio performance, preferably with a CFP, to ensure each fund aligns with your risk tolerance and goals. Aim for annual rebalancing to stay on track.

Allocate Based on Goals: Assign specific funds for each goal. For example:

Child’s Education and Marriage: Given the moderate-to-high timeframe, allocate funds with a mix of stability (large-cap and flexi-cap funds) and growth (mid-cap).
Retirement: Invest in a diversified mix of flexi-cap and large-cap funds, along with a smaller allocation to mid-caps, as retirement is a long-term goal with a potentially higher investment horizon.
Avoid Overlapping: Limit overlap between funds by choosing those with unique holdings or management strategies. Too many funds can dilute returns, especially if they invest in similar stocks.

Tax Considerations

With recent changes in capital gains tax rules, be mindful of the following when planning exits or rebalancing:

Equity Mutual Funds: Long-term capital gains (LTCG) above Rs 1.25 lakh are now taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.

Debt Funds: LTCG and STCG for debt funds are taxed according to your income tax slab.

Tax Efficiency: To minimize tax outgo, hold investments for the long term and consult a CFP for tax-optimized rebalancing.

Investment Horizon: Sticking to your 15-year investment plan can help mitigate tax impacts and optimize returns.

Insurance Evaluation

If you hold any LIC, ULIP, or investment-linked insurance policies, review their performance and fees. These products often come with high costs, which can limit returns. Consider surrendering such policies if they don’t align with your goals and reinvest in well-performing mutual funds instead.

Finally

Your commitment to a 15-year SIP plan shows your dedication to securing your family’s future. A structured, diversified approach with periodic reviews can enhance your portfolio’s performance, aligning it with your goals of education, marriage, and retirement.

A Certified Financial Planner can be a valuable partner in this journey, providing expert advice to help you make the most of your investments and adjust them as needed.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

..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.

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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

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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

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

Money
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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