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Ramalingam Kalirajan |9126 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 14, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by lokesh on Jun 14, 2025

Hi sir my age is 31 and I have sip in nippon small cap 10k quant small cap 5k and hdfc opportunities mid cap fund 5k . I have done sip for one year. I want to invested for 15to 20 years long term. I have invested in direct fund . I am in correct path for long term sir.

Ans: You are 31 years old and have already started SIPs in three equity mutual funds with a total monthly investment of Rs. 20,000. You have a time horizon of 15 to 20 years. This gives you a solid advantage. Let us now evaluate your investment path step by step with a complete 360-degree assessment.

Age and Investment Time Horizon
You are in your early 30s. That is the right stage to invest.

You have a very long investment horizon. That works in your favour.

Investing for 15 to 20 years gives power of compounding.

Longer duration reduces market risk in equity mutual funds.

Wealth creation becomes smoother when time is on your side.

Investment Strategy and SIP Amount
You are investing Rs. 20,000 monthly. That is a good amount.

Consistency is more important than the amount itself.

SIP is a disciplined way of investing. You are on track.

With 15+ years, equity mutual funds are a good fit.

You have shown strong investment behaviour. Keep it up.

Asset Allocation and Fund Types
You have invested in small cap and mid cap funds.

Small caps are volatile but high return over long term.

Mid cap funds balance risk and reward better than small cap.

But too much allocation to small caps increases risk.

You must balance with large cap or flexi cap funds too.

Diversification across market caps improves portfolio stability.

Three funds are enough. Avoid adding too many schemes.

Risk Assessment and Investment Discipline
Small caps carry higher market risk.

Mid caps have moderate risk.

Ensure your risk appetite matches your portfolio mix.

If you panic during market fall, reduce small cap allocation.

Keep SIPs running even during market correction.

SIPs in volatile funds work better during bad market phases.

Direct Funds – Hidden Drawbacks
You mentioned you invest in direct funds.

Direct funds seem low cost, but come with many risks.

You miss personalised review from a qualified CFP.

There is no handholding during market downturns.

Portfolio rebalancing becomes difficult in direct route.

Most investors make emotional mistakes in direct funds.

Regular funds via MFD with CFP bring expert support.

You also get goal tracking and asset rebalancing service.

Cost difference is small, but service difference is big.

Active Funds – Stronger Potential Than Index Funds
You have not invested in index funds. That is good.

Index funds cannot beat the market. They just copy.

They also fall fully during market crash.

Actively managed funds can avoid underperforming stocks.

Skilled fund managers create alpha over long term.

Active funds give you better downside protection.

Small and mid cap funds are only available in active form.

So your fund category is well chosen.

Role of a Certified Financial Planner (CFP)
A CFP gives full financial planning, not just fund selection.

You get help in retirement planning, tax optimisation, and cash flow.

CFPs align funds with your goals and future needs.

They also review funds regularly and guide rebalancing.

They protect you from investing mistakes and panic selling.

With CFP, your investment becomes goal-based and risk-aligned.

Instead of direct funds, use regular funds through CFP for 360-degree support.

Goal Mapping and Long-Term Vision
You must link each SIP to a specific goal.

For example, retirement, child education, or buying a house.

Goal-based planning gives clarity and motivation.

You can increase SIP over time as income grows.

Keep a review system every year to track progress.

Adjust funds or amount when your goals change.

Emergency Fund and Insurance Check
Before investing, emergency fund must be ready.

At least 6 months of expenses in liquid or bank fund.

Medical insurance must be in place for entire family.

Life insurance only if you have dependents.

Avoid investment + insurance products.

If you have ULIPs or endowment, consider exiting and moving to mutual funds.

Keep insurance and investment separate always.

Review and Rebalancing – Key to Long-Term Success
SIP is not set and forget.

Review funds once a year with CFP help.

Rebalance if small caps outperform too much.

Some years mid caps may lag. Stay patient.

Don’t chase past performance. Focus on long-term.

Rebalancing reduces risk and improves return stability.

Track not only returns, but also goal progress.

Portfolio Hygiene and Best Practices
Avoid investing in too many funds. Three to five is enough.

Don’t stop SIPs during market correction.

Increase SIP by 10% every year if possible.

Avoid frequent switching between funds.

Focus more on time in market than timing the market.

Avoid NFOs and thematic funds unless very clear about risk.

Use STP only when shifting large sums from lump sum.

SIP is best suited for salaried and monthly income investors like you.

Taxes and Exit Plan Awareness
Equity mutual funds now have new capital gain rules.

Long term capital gains above Rs. 1.25 lakh taxed at 12.5%.

Short term gains taxed at 20%.

Use long-term strategy to save tax legally.

Don’t redeem funds unless needed.

Withdraw in phases when nearing goals.

Plan systematic withdrawal at retirement.

Retirement Planning Angle
At 31, you have 29 years to retire at 60.

Your SIP will give big wealth with compounding.

Don’t touch long-term funds for short-term needs.

Make a retirement corpus target with help of CFP.

Increase SIP if you get bonus or salary hike.

Retirement SIP should continue even if job changes.

Emotional Strength and Investor Behaviour
Equity investing tests patience and discipline.

Don’t react to market news or media noise.

Volatility is normal in small and mid cap funds.

Be mentally prepared for 30-40% fall at times.

Stay focused on long-term goal, not short-term returns.

Discipline beats intelligence in long-term investing.

Final Insights
You are doing well with SIP and long-term approach.

Your fund categories match growth objective.

But fund allocation is slightly aggressive. Add some balance.

Shift from direct to regular fund through CFP.

Direct funds lack review and protection from panic mistakes.

Build a portfolio with large, mid and small caps together.

Ensure emergency fund and insurance are in place.

Keep track of your goals and stay consistent.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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.