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Ramalingam

Ramalingam Kalirajan  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 05, 2024

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
Siddappa Question by Siddappa on Sep 08, 2023Hindi
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Sir, my age is 35 years I have started SIP of Rs 2000 each in Quant mid cap fund growth option direct plan Quant small cap fund growth option direct plan Quant tax plan fund growth option direct plan SBI contra fund direct growth I want to remain invested for a period of 10+ years. Please give me your guidence.

Ans: Your investment approach seems focused on mid-cap and small-cap funds, which can offer higher growth potential but come with increased volatility. Here are some suggestions to consider:

Diversification: While mid-cap and small-cap funds can provide growth opportunities, it's essential to diversify your portfolio across different asset classes and fund categories to mitigate risk. Consider adding large-cap or multi-cap funds for stability.

Review and Monitor: Regularly review the performance of your funds and monitor their progress towards your financial goals. If any fund underperforms consistently or doesn't align with your investment strategy, consider replacing it with a better-performing alternative.

Risk Management: Understand the risk associated with mid-cap and small-cap funds and ensure that your overall portfolio risk is balanced according to your risk tolerance and investment horizon.

Long-Term Perspective: Stay committed to your investment plan and maintain a long-term perspective. Over a 10+ year horizon, equity investments have the potential to deliver significant returns, but there may be periods of market volatility that require patience and discipline.

Regular Contributions: Continue with your SIP contributions regularly, and consider increasing your investment amount over time as your income grows or allocate additional funds towards your investment portfolio.

Seek Professional Advice: If you're uncertain about your investment strategy or need personalized guidance, consider consulting with a financial advisor who can provide tailored recommendations based on your financial situation and goals.

By following these principles and staying disciplined in your investment approach, you can work towards building wealth over the long term and achieving your financial objectives.
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  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

Asked by Anonymous - May 10, 2024Hindi
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Hello Sir, I am 37 years old working professional, I am investing rs 16,000.00 in SIP per month, break up is 1. PGIM India Midcap opportunities fund -rs 2500, 2. PGIM India flexi cap fund -rs 2500, 3. ITI Multi cap fund -rs. 2500, 4. Aditya Birla sunlife small cap fund growth -rs 1500, 5. Tata flexi cap fund regular growth -rs 3000, 6. Mahindra Manulife large & Mid cap regular growth - rs. 2500, 7. HDFC Mid cap opportunities fund growth - rs. 1500. This investment I am doing since 5 years. I want to accumulate 1.5 cr in 10 years. Please suggest me what to do? Need your valuable advice.
Ans: Current Investment Assessment
Your disciplined approach towards investing ?16,000 per month in SIPs is commendable. Given your goal to accumulate ?1.5 crore in 10 years, we need to ensure your portfolio is optimized for growth and stability.

Evaluating Your Portfolio
Midcap and Small Cap Funds
You have a significant allocation in midcap and small cap funds. These funds can offer high returns but come with higher volatility. Given the long-term horizon, this allocation can be beneficial, but balancing with other types is crucial.

Flexi Cap and Multi Cap Funds
Flexi cap and multi cap funds provide flexibility by investing across market capitalizations. This diversification helps in managing risks and capturing growth across sectors. Your investment in these funds shows a good strategy for diversification.

Large and Mid Cap Funds
Your allocation in large and mid cap funds adds stability to your portfolio. Large cap funds are less volatile and provide steady returns, while mid cap funds offer growth potential. This balance is essential for achieving your long-term goals.

Recommendations for Portfolio Adjustments
Enhance Diversification
Balanced Allocation: Ensure a balanced allocation across large cap, mid cap, and small cap funds. Overexposure to mid and small cap funds can increase risk.

Sectoral Diversification: Consider funds that diversify across various sectors. This reduces sector-specific risks and enhances portfolio stability.

Focus on Consistent Performers
Actively Managed Funds: Continue with actively managed funds. These funds have the potential to outperform the market through expert management.

Regular Fund Review: Regularly review the performance of your funds. Replace consistently underperforming funds with better-performing ones.

Increase SIP Amount
Annual Increase: Consider increasing your SIP amount annually. This helps in combating inflation and achieving your target corpus faster.

Top-Up SIPs: Use the top-up SIP option if available. This allows you to increase your SIP amount periodically without much hassle.

Tax Efficiency
ELSS Funds: Consider allocating a portion to Equity Linked Savings Scheme (ELSS) funds. They offer tax benefits under Section 80C and can enhance your returns.

Tax Planning: Regularly plan and review your investments for tax efficiency. Tax savings can significantly boost your net returns.

Long-Term Goal Strategy
Accumulating ?1.5 Crore
Targeted Growth Rate: Aim for an annual growth rate of 12-15%. This is achievable with a well-diversified equity-focused portfolio.

Regular Monitoring: Regularly monitor your portfolio to ensure it stays on track towards your goal. Adjust allocations based on performance and market conditions.

Risk Management
Portfolio Rebalancing: Periodically rebalance your portfolio to maintain the desired asset allocation. This helps in managing risk and optimizing returns.

Emergency Fund: Maintain a separate emergency fund. This ensures you do not need to dip into your investments during financial emergencies.

Retirement Planning
Long-Term Equity Investments: Continue focusing on long-term equity investments. Equities tend to outperform other asset classes over long periods.

Diversified Portfolio: Ensure your portfolio is diversified across various equity funds. This reduces risk and improves the potential for consistent returns.

Conclusion
Your current investment strategy is on the right track, and with a few adjustments, you can enhance your portfolio's performance. By maintaining a balanced and diversified portfolio, regularly increasing your SIP amount, and focusing on tax efficiency, you are well-positioned to achieve your goal of accumulating ?1.5 crore in 10 years.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 14, 2024

Asked by Anonymous - Jul 14, 2024Hindi
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I am 37 years old and a govt servant.i just recently started sip in four funds 1.Mirae asset large and midcap fund direct growth. _1k 2.quant large and mid cap fund direct growth_1k 3.kotak equity opportunities fund direct growth_1k 4.icici prudential retirement fund pure equity plan direct growth -5k Is it good for a term like 10 years?and if i want to invest 5k more then where should i invest for a term of 15 to 20 years.please advice .thank you
Ans: As a government servant at 37, planning for the future is crucial. Starting SIPs in mutual funds is a wise step, but evaluating and refining your strategy can optimize your returns. This analysis will guide you through your current investments and suggest additional avenues for a long-term horizon.

Current SIP Analysis

You've begun SIPs in four mutual funds with a 10-year perspective:

Mirae Asset Large and Midcap Fund
Quant Large and Midcap Fund
Kotak Equity Opportunities Fund
ICICI Prudential Retirement Fund Pure Equity Plan
Your current allocation in these funds is commendable. Let's evaluate the benefits and potential improvements.

1. Mirae Asset Large and Midcap Fund

This fund invests in both large and midcap stocks. It offers growth potential from midcaps and stability from large caps. This balanced approach can yield good returns over the long term.

2. Quant Large and Midcap Fund

Similar to the Mirae Asset Fund, this fund also diversifies between large and midcap stocks. Diversification is a key strategy to mitigate risk while aiming for growth.

3. Kotak Equity Opportunities Fund

This fund focuses on equity opportunities across market caps. It's known for good management and consistent performance. It adds diversity to your portfolio.

4. ICICI Prudential Retirement Fund Pure Equity Plan

This fund is designed for long-term goals like retirement. It invests primarily in equities, which can offer higher returns over an extended period.

Your portfolio currently has a good mix of large-cap stability and mid-cap growth potential. However, since you're considering a long-term investment horizon of 15-20 years, let's explore where you can invest an additional Rs 5,000 per month.

Evaluating Direct Funds vs Regular Funds

You've invested in direct plans, which typically have lower expense ratios. However, regular funds through a Certified Financial Planner (CFP) have their advantages. A CFP provides personalized advice, timely reviews, and adjustments to your portfolio. These services can potentially enhance your investment performance, justifying the slightly higher expense ratios.

Long-term Investment Strategy

For a long-term investment horizon of 15-20 years, consider the following factors:

Diversification: Spread investments across different asset classes and sectors.
Risk Tolerance: Understand your risk appetite and invest accordingly.
Consistent Review: Regularly review and adjust your portfolio based on market conditions and personal goals.
Recommended Investment Avenues

To invest an additional Rs 5,000 per month, here are some funds and strategies to consider:

1. Flexi Cap Funds

Flexi cap funds invest in stocks across market capitalizations. They offer flexibility to shift investments between large, mid, and small caps based on market conditions. This dynamic allocation can capture opportunities across the spectrum and provide robust returns over the long term.

2. Mid Cap Funds

Mid cap funds focus on medium-sized companies with high growth potential. These companies often grow faster than large caps and can offer higher returns. However, they come with higher risk, suitable for a long-term horizon.

3. Sectoral or Thematic Funds

These funds invest in specific sectors like technology, healthcare, or financial services. Investing in a growing sector can yield substantial returns. However, they are riskier and require careful selection and timing. For example, the healthcare sector in India is poised for significant growth due to increasing health awareness and spending.

4. International Funds

Investing in international funds provides exposure to global markets. This diversification can reduce risk associated with the Indian market. It also allows you to capitalize on the growth of developed economies and emerging markets. For instance, a fund investing in US technology stocks can offer high growth potential.

5. Balanced or Hybrid Funds

Balanced funds invest in both equity and debt instruments. They provide growth potential with equity and stability with debt. This mix can be suitable for moderate risk tolerance and long-term investment. These funds can provide a cushion during market volatility, ensuring smoother returns.

6. Multi-Asset Funds

Multi-asset funds diversify across various asset classes, including equity, debt, and gold. This diversification reduces risk and can provide steady returns. Investing in multiple assets helps in balancing the portfolio against market fluctuations.

The Benefits of Actively Managed Funds

While index funds passively track market indices, actively managed funds have fund managers making strategic decisions. Actively managed funds aim to outperform the market, providing higher returns. They adjust portfolios based on market trends, economic conditions, and company performance. This active management justifies the slightly higher expense ratios, as it can potentially lead to better returns than passive funds.

Implementing the Strategy

Based on the analysis, here's a suggested allocation for your additional Rs 5,000 investment:

Flexi Cap Fund: Rs 1,500
Mid Cap Fund: Rs 1,000
Sectoral/Thematic Fund: Rs 1,000
International Fund: Rs 1,000
Multi-Asset Fund: Rs 500
This allocation provides a balanced mix of growth potential and risk mitigation.

Regular Review and Adjustment

Investing is not a one-time activity. Regularly review your portfolio to ensure it aligns with your goals. A Certified Financial Planner can assist in this process, providing insights and adjustments based on market trends and your evolving financial situation.

Final Insights

Investing for the long term requires a strategic approach. Your current SIPs are a good start, and with the additional Rs 5,000 investment, you can further strengthen your portfolio. Diversification across different asset classes and sectors is key to maximizing returns and minimizing risk.

Consider the benefits of regular funds through a Certified Financial Planner. While they have higher expense ratios, the personalized advice and active management can enhance your investment performance.

Focus on a balanced mix of flexi cap, mid cap, sectoral/thematic, international, and multi-asset funds. This diversified approach can capture growth opportunities across markets and sectors, ensuring a robust and resilient portfolio.

Regularly review your investments, adjust based on performance and market conditions, and stay committed to your long-term goals. With careful planning and strategic investments, you can build a substantial corpus for your future needs.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Nitin

Nitin Narkhede  |56 Answers  |Ask -

MF, PF Expert - Answered on Jan 21, 2025

Asked by Anonymous - Dec 01, 2024Hindi
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We two brothers have inherited a property on 200 sq yard by registered will of our father in 2020. The property was purchased by our father in 1970 and redeveloped in 1990 into three story building. Ground floor is with my brother and first floor. Third floor without roof rights was sold by our father at the time of redevelopment . Me and my brother have terrace rights as per registered will of our father ( each has 50% roof/ terrace rights). My brother is US citizen and want to sell his share for four crores. The expected rental income from the ground floor will be Rupees 60 thousand per month. The circle rate of the property is Rupees 7 lakh per yard. My interest in the ground floor of the property is mainly to live peacefully without any interference by unknown new buyer. I am 65 and my question is from financial point should I purchase from my brother by paying Rs. 4 crore or keep the amount in bank as fixed deposit/ RBI bonds at around 8 percent per year. Second question is if he sell it to other buyer how he will sell terrace as the terrace is undivided and we both have inherited it by registered will. Thirdly there are many builders who want to redevelop the property into four floor with basement and stilt parking. What will be the right option . I have only son .
Ans: Dear Friend,
If you’re considering whether to purchase your brother’s share of the inherited property for ?4 crore, weigh peace of mind against financial returns. Buying his share gives you full control, eliminates potential disputes with a third-party buyer, and ensures no interference in your peaceful living. However, the rental yield of ?60,000/month (~1.8% annual return) is significantly lower than the ~8% return you could get by investing ?4 crore in fixed deposits or bonds, which would generate ~?2.67 lakh/month.

Regarding the terrace, your brother cannot sell his 50% share independently since it is undivided and jointly inherited. Any sale requires your consent, limiting his ability to transfer full terrace rights to a new buyer.

Redevelopment of the property is an excellent option, offering increased value and rental income. Builders are likely to provide additional floors or cash components in exchange for development rights, enhancing long-term financial benefits and ensuring modern amenities.

If your priorities are peace of mind and control over the property, purchase your brother’s share. Otherwise, invest in safer financial instruments and consider redevelopment to maximise the property’s potential. Consult a lawyer and financial advisor to ensure the best decision. Your Financial adviser can deeply evaluate all your assets and liabilities and provide a solution which will give you more leverage.
Regards, Nitin Narkhede -Founder Prosperity Lifestyle Hub,
Free webinar https://bit.ly/PLH-Webinar

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Nitin

Nitin Narkhede  |56 Answers  |Ask -

MF, PF Expert - Answered on Jan 21, 2025

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Myself and my sister as joint owner of a property enteredvinto joint development agreementvwith a builder for construction of 8 flats in 4800 sq. Ft land. 2400 sq. Ft was retained for us with 4 flats constructed by builder to be given free of cost and 2400 sq. Ft UDS sold to builder thro PGPA for him to sell 4 flats. After selling 3 flats with 1800 sq. ft UDS by builder, we cancelled GPA and registered with SRO for retaing 600 Sq. ft UDS for our use with the consent agreeing to pay compensation for this cancel of GPA. Now I want clarification as to the ownership of the above said cancelled UDS of 600 Sq. ft as Joint owner or myself as per Joint developement agreement with a rider that myself will take possessionof 600 UDS by cancelling GPA later with builder and paying compensation st the mutually ahreed price. Builder says that myself is the owner for the cancelled 600 Sq. ft retained. I want to know whether I hv to register settlement deed for partingvwith 600 Sq. ft UDS by my sister or the statement of builder as myself will be the owner for 600 UDS regisyeted by cancelling GPA signed by the builder and both of us. Pl. Clarify.
Ans: Dear G,
The ownership of the 600 sq. ft. UDS (Undivided Share of Land) depends on the terms of the Joint Development Agreement (JDA) and the GPA cancellation deed. As per the JDA, the builder agreed to transfer the 600 sq. ft. UDS to you after GPA cancellation in return for compensation. If the GPA cancellation deed and subsequent agreements clearly state that this UDS belongs solely to you and these are registered with the Sub-Registrar’s Office (SRO), you are the legal owner. However, if your sister’s name still appears as a co-owner in the original title deed, you will need her to execute a **Settlement Deed** or **Gift Deed** in your favor, which must be registered to confirm your sole ownership and avoid disputes. The builder’s statement that you are the owner is valid only if it aligns with the registered documents. To confirm ownership, verify the SRO records to ensure the transfer has been legally recorded. If any gaps exist, consult a property lawyer to review the JDA, GPA cancellation deed, and builder’s agreement to ensure proper registration of ownership and resolve any ambiguity. This will safeguard your rights and provide clarity regarding the 600 sq. ft. UDS.
Regards, Nitin Narkhede -Founder Prosperity Lifestyle Hub,
Free webinar https://bit.ly/PLH-Webinar

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Nitin

Nitin Narkhede  |56 Answers  |Ask -

MF, PF Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 14, 2025Hindi
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Hi sir/mam, I'm 32 years old working in a private firm as Manager. I own 9 lacs in FDs, accumulated 17 lacs in Mutual funds through SIP of around 23k pm (currently XIRR at 15-16% in with 75% in equity). I also have 2.5 lacs in PPF and 1.2 lacs in NPS. For tax savings I do yearly investments in PPF and NPS of about 1 lacs and rest I cover with ELSS (part of my SIPs). I want to retire at the age of 50, my current salary is 1.2 lac per month in hand, and receive few incentives of 1.5 lac a yr. I live in Mumbai with my wife and plan to buy a house of 60 lacs (out of which 20 L I'm borrowing from family, and rest of it will be loan with about 35k EMI). I also have a flat in NCR worth 80 L (purchased at 35 lacs), for which I have an EMI of 11k per month which is covered by rent I receive from there. I don't have kids yet, but I plan to have two of them. What should be my plan of investing that I can retire by max between 50 and 55 yrs of age with an upper middle class lifestyle in either Mumbai or NCR. How much should my corpus be? My current expenses are around 60k including rent in Mumbai, and my parents are independent. I have both health and life insurance of 1 cr+ cover.
Ans: Dear Friend,
To retire comfortably at 50-55 with an upper-middle-class lifestyle, you’ll need a retirement corpus of ?5 crore. Currently, your mutual funds, PPF, and NPS are projected to grow to ~?1.82 crore by 50. To bridge the gap of ?2.18 crore, increase your SIPs by ?30,000/month in equity funds, which can grow to ~?2.25 crore at 12% CAGR in 18 years. Prioritize repaying the ?20 lakh family loan after buying the Mumbai house, ensuring the ?35,000 EMI doesn’t hinder your additional investments. Post-retirement, rely on rental income from your NCR property and a 4% systematic withdrawal strategy from your corpus to cover inflation-adjusted expenses. Maintain ?5-6 lakhs in an emergency fund and continue tax-saving investments like ELSS, PPF, and NPS. Regularly review and rebalance your portfolio to stay aligned with your goals. With disciplined savings and investments, you’re on track for a secure retirement.
Regards, Nitin Narkhede
-Founder Prosperity Lifestyle Hub,
Free webinar https://bit.ly/PLH-Webinar

...Read more

Ramalingam

Ramalingam Kalirajan  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 20, 2025Hindi
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Hello sir, I am 35yo with 2 (4yo, 1yo) children. Can I retire now, with following corpus: mutual fund and stocks : 3.5 crore, lands: 50 lakh, PF&PPF: 80 lakh, FD: 25 lakh, SGB &Gold:50 lakh. Currently doesn't own any house. Monthly expense is around 1 lakh.
Ans: Your corpus and monthly expenses show a solid foundation. Retirement at 35, however, requires careful assessment. Let’s analyse your situation step by step.

Current Financial Assets and Allocations

Mutual Funds and Stocks: Rs 3.5 crore

This is a significant part of your corpus. Equity investments offer high growth potential.

Lands: Rs 50 lakh

Real estate investments are illiquid. Consider them only for long-term growth or inheritance.

PF and PPF: Rs 80 lakh

These provide stability and assured returns. These are good for meeting long-term goals.

Fixed Deposit: Rs 25 lakh

FDs are low-risk and ensure liquidity. This is beneficial for emergencies.

SGB and Gold: Rs 50 lakh

Gold is a strong hedge against inflation. It also offers diversification.

Monthly Expense Analysis

Your monthly expense of Rs 1 lakh equates to Rs 12 lakh annually.

Accounting for inflation, this expense will grow over time. Planning for this is crucial.

Core Observations

Your total corpus is Rs 5.55 crore. This is substantial for your age.

Inflation and rising expenses over time will impact your corpus.

Without a house, rent becomes a recurring expense. Factor this into your calculations.

You have no guaranteed income sources post-retirement.

Key Areas of Improvement

Housing

Consider buying a house if feasible. Owning a house ensures stability and reduces rent.

Do not invest excessively in real estate as it is illiquid.

Corpus Utilisation

Avoid over-reliance on equity investments for withdrawals. Equity is volatile in the short term.

Use a mix of debt and equity for regular withdrawals.

Children’s Education and Marriage

Both are major financial goals. Plan dedicated investments for these.

Use long-term instruments for education and marriage funds.

Emergency Fund

Maintain an emergency fund of at least 12 months of expenses.

Keep it in liquid funds or high-yield savings accounts.

Recommended Financial Strategies

Asset Allocation

Diversify your portfolio across equity, debt, and gold.

Maintain 60% equity, 30% debt, and 10% gold as a starting point. Adjust as needed.

Mutual Fund Investments

Continue with actively managed funds. These can outperform index funds in emerging markets like India.

Avoid direct funds if you lack time or expertise. Regular funds offer advisor support and insights.

Debt Investments

Increase debt allocation for stability. Consider high-quality debt mutual funds.

Ensure these align with your withdrawal needs.

Tax Planning

Monitor tax implications of mutual fund withdrawals.

LTCG from equity funds above Rs 1.25 lakh is taxed at 12.5%.

Plan withdrawals to minimise tax liabilities.

Insurance Needs

Ensure adequate health insurance for your family. Cover at least Rs 25 lakh for each member.

Check if you have term insurance. Secure Rs 2-3 crore coverage for your family’s financial safety.

Inflation and Lifestyle Adjustments

Inflation can erode your purchasing power. Plan investments to counter inflation.

Avoid lifestyle inflation. Stick to essential expenses wherever possible.

Income Generation Options

Systematic Withdrawal Plans (SWP)

Use SWP from mutual funds for regular income.

Choose hybrid funds for better stability and returns.

Rental Income

Invest part of your corpus in commercial properties.

Ensure this aligns with your liquidity needs and risk profile.

Freelance or Part-Time Work

Consider light work for additional income. It can extend your corpus.

Use your skills to generate flexible income streams.

Monitoring and Review

Review your portfolio annually. Adjust allocations as goals evolve.

Work with a Certified Financial Planner for periodic checks.

Final Insights

Retirement at 35 is ambitious but achievable with meticulous planning. Your current corpus is strong, but consider the following:

Plan for inflation, children’s needs, and healthcare costs.

Diversify investments and secure guaranteed income sources.

Avoid premature decisions. Evaluate thoroughly before retiring.

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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