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Is it wise to continue my 6-year SIP of Rs. 2000 per month?

Ramalingam

Ramalingam Kalirajan  |8221 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 22, 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
Asked by Anonymous - Sep 22, 2024Hindi
Money

I am already invest SIP last 6 years Rs. 2000 per month. Should I continue the policy or close it.

Ans: It’s good that you’ve maintained a Systematic Investment Plan (SIP) for six years. SIPs are a disciplined way to invest regularly without being impacted by market volatility. Your Rs 2000 monthly SIP over this period is a positive step toward building wealth, but let’s carefully evaluate whether continuing or stopping makes sense.

Benefits of Staying Invested
If your SIP is in well-performing funds, continuing can offer significant long-term advantages. Since you are investing for six years already, the compounding effect will start showing better results in the upcoming years.

Here are some reasons to continue:

Rupee Cost Averaging: SIPs ensure that you buy more units when markets are low and fewer units when markets are high. This helps in averaging your costs over time and minimizes the impact of market fluctuations.

Power of Compounding: Staying invested for the long term allows your money to grow exponentially as returns are generated on both your principal and your earlier returns.

Tax Efficiency: If your SIP is in an equity mutual fund, the long-term capital gains tax on profits is lower, and after holding for over one year, you will benefit from tax efficiency.

Long-Term Financial Discipline: Regular investments help build financial discipline, and a six-year SIP shows your commitment to building wealth in a systematic way.

So, if your SIP is aligned with your financial goals, it’s wise to stay invested for a longer period.

Factors to Consider Before Closing the SIP
Before deciding to close your SIP, here are a few factors to review:

Fund Performance: Has your mutual fund consistently underperformed compared to its peers or benchmark? If yes, you may want to switch to a better-performing actively managed fund, but not close the SIP entirely.

Current Financial Situation: Are you in a financial crunch or expecting significant expenses in the near future? If your financial situation has changed, pausing the SIP might be an option.

Market Conditions: If the markets are volatile or bearish, exiting now could lock in losses. SIPs are designed to handle such volatility over time, so exiting due to short-term downturns may not be ideal.

Reviewing these factors will provide you with a clearer direction on whether you should stay invested or pause.

Importance of Reviewing Fund Performance
As a Certified Financial Planner, I recommend that you periodically review the performance of your mutual funds. Here's why:

Consistent Underperformance: If your fund has underperformed its benchmark consistently for over 2 years, it may be time to switch. Moving to an actively managed fund could yield better results in the long run.

Fund Manager Changes: A change in the fund manager or investment strategy can impact the future performance of the fund. Make sure you stay updated on these changes.

Peer Comparison: Compare your mutual fund’s performance with similar funds in the same category. If it lags far behind, explore better-performing funds.

If you find underperformance, don’t immediately close your SIP. Instead, consider switching to a better-performing actively managed mutual fund.

Disadvantages of Index Funds and Direct Funds
You should also avoid switching to index funds or direct mutual fund plans. Here’s why:

Index Funds: While index funds mirror the performance of an index, they don’t beat the market. They merely track it. If the market underperforms, so will the index fund. Moreover, in a volatile market, actively managed funds tend to outperform index funds because professional fund managers make timely decisions based on market conditions.

Direct Funds: These funds lack the expertise and advice provided by a Certified Financial Planner (CFP). Although they might have lower fees, the absence of personalized guidance can lead to poor financial decisions, which can cost more in the long term.

Actively managed mutual funds, overseen by professional fund managers, provide an edge over these options by leveraging expertise to outperform the market.

Diversifying Your SIP Portfolio
If your current SIP is in a single fund or category of funds, it’s essential to diversify for better risk management and returns. Consider the following:

Large-Cap, Mid-Cap, and Small-Cap Funds: Diversifying across market capitalizations helps balance risk. Large-cap funds offer stability, while mid- and small-cap funds provide higher growth potential.

Sectoral or Thematic Funds: While these funds can offer higher returns, they are riskier as they are focused on specific sectors. It’s better to allocate only a small portion of your portfolio here.

Debt Funds: If you are looking for stability, you can allocate a part of your SIP to debt funds. They provide consistent returns, though lower than equity funds.

By diversifying your SIP, you spread your risk while maximizing returns. Ensure the new funds align with your long-term financial goals.

SIP Continuation and Goal Alignment
You should also reassess whether your SIP aligns with your financial goals. At 45, you may be approaching certain life milestones, such as retirement planning, children’s education, or creating an emergency corpus. Here’s how to align your SIP:

Retirement Corpus: If you’re aiming to build a retirement corpus, staying invested for 10-15 years is a good strategy. Equity mutual funds are known to outperform other asset classes over the long term, helping you achieve this goal.

Children’s Education: If you are saving for children’s education, your SIP should be allocated toward a balanced or equity-oriented fund that provides moderate to high returns in 5-10 years.

Emergency Fund: SIPs are not the best option for emergency funds. Instead, liquid mutual funds or fixed deposits are better suited for immediate liquidity needs.

Ensure your SIP is serving your financial objectives effectively.

Balancing SIP and Lumpsum Investments
Since you’re already investing through SIP, you might also want to explore balancing it with a lumpsum investment. SIPs are beneficial for regular investments, but a lumpsum investment at the right time can accelerate wealth creation. For example:

Market Timing: Investing a lumpsum during a market correction can help you buy more units at a lower cost, boosting returns when the market recovers.

Goal-Based Lumpsum Investment: If you have a specific financial goal, such as buying a house or funding your children’s education, you can invest a lumpsum in a suitable fund that matches the timeframe of your goal.

However, avoid relying entirely on lumpsum investments, as SIPs provide the advantage of disciplined investing over time.

Building a Comprehensive Investment Strategy
Instead of merely continuing or closing your SIP, consider creating a more comprehensive investment strategy. Here are some steps to follow:

Review Current Investments: Examine all your existing investments, including your SIP, savings, and other assets. Ensure they are well-diversified and aligned with your financial goals.

Risk Profile Assessment: Assess your risk tolerance based on your age, income, and responsibilities. If you have a high risk tolerance, equity funds can dominate your portfolio. If you are risk-averse, include more debt funds or hybrid funds.

Set Clear Financial Goals: Define short-, medium-, and long-term financial goals. These could include retirement, children’s education, or buying property. Each goal should have a corresponding investment strategy.

Regular Review and Rebalancing: Continuously review your portfolio’s performance and rebalance it every year. Ensure it remains in line with your risk profile and financial goals.

Finally
Continuing your SIP depends on how it aligns with your long-term goals and the fund’s performance. Staying invested for 10-15 years can unlock the full potential of compounding. However, ensure you periodically review the fund and consider diversifying into other categories if necessary. Avoid index funds or direct mutual fund plans, as actively managed funds offer better growth potential over time.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
Instagram: https://www.instagram.com/holistic_investment_planners/
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  |8221 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

Asked by Anonymous - Jul 05, 2023Hindi
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Money
Sir, with my existing SIP I have corpus of Rs. 20.50 lakh, but as on since 3 month my SIP is stopped due to irregular monthly income. What I should do with my SIP whether I resume my SIP anyhow (Rs.13000 monthly) , is this the right time as the market is on all time high. My age is 43. please suggest.
Ans: Is Resuming Your SIP Amid Market Highs the Right Move?

As a Certified Financial Planner, I understand the importance of making informed decisions about your investments, especially when facing uncertainties like irregular income and market highs. Let's delve into your situation to find the best course of action.

Assessing Your Current Financial Standing

Firstly, congratulations on building a corpus of Rs. 20.50 lakh through your SIP. This demonstrates your commitment to long-term financial planning and investment discipline, which are crucial for achieving your goals.

However, it's understandable that you've had to pause your SIP due to irregular income. Financial stability is paramount, and it's prudent to prioritize meeting your immediate financial needs before resuming investments.

Understanding Market Dynamics

You rightly point out that the market is currently at an all-time high. This presents both opportunities and risks for investors. While high market levels may tempt some to hold off on investing, it's essential to remember that timing the market is notoriously difficult.

Market timing relies on predicting short-term fluctuations, which is often a futile exercise. Instead, a disciplined approach of regular investing, such as through SIPs, can help mitigate the impact of market volatility over the long term.

Analyzing the Pros and Cons of Resuming Your SIP

Resuming your SIP of Rs. 13,000 per month requires careful consideration. Here's an evaluation of the pros and cons:

Pros:

Dollar-cost averaging: By investing a fixed amount at regular intervals, you purchase more units when prices are low and fewer units when prices are high. This strategy can help smooth out market volatility over time.
Discipline: SIPs instill discipline by automating your investments, regardless of market conditions or fluctuations in income.
Long-term focus: At 43, you have several years until retirement. Continuing your SIP aligns with your long-term financial goals, allowing your investments to potentially grow over time.
Cons:

Market highs: Investing at market peaks may lead to short-term fluctuations in the value of your investments. However, focusing on long-term goals can help mitigate this risk.
Irregular income: If your income remains unpredictable, committing to a fixed SIP amount may strain your finances during lean months.
Considering Alternatives

If the irregularity of your income persists, you may explore alternatives to traditional SIPs. For instance, you could opt for flexible SIPs that allow you to vary your investment amount based on your monthly income.

Additionally, you might consider building an emergency fund to cover expenses during periods of irregular income. This fund can provide a financial buffer, reducing the need to dip into your investments during challenging times.

Seeking Professional Advice

As a Certified Financial Planner, I'm here to provide personalized guidance tailored to your unique circumstances. I can help you reassess your financial goals, evaluate investment options, and devise a strategy that aligns with your current financial situation and long-term objectives.

Ultimately, the decision to resume your SIP depends on various factors, including your income stability, risk tolerance, and investment horizon. By weighing the pros and cons carefully and seeking professional advice, you can make informed choices that contribute to your financial well-being.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8221 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 30, 2024

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I am investing monthly Sip for horizon 15-20yrs should I continue. Mirae asset tax saver fund parag parikh flex cap fund motilal oswal midcap fund Nippon india small cap fund quant small cap fund monthly10k in each shouid continue ? Can I add Sbi contra fund to my portfolio
Ans: Evaluation of Existing SIP Portfolio and Potential Addition

Current Portfolio Review:

Your current SIP investments in Mirae Asset Tax Saver Fund, Parag Parikh Flexi Cap Fund, Motilal Oswal Midcap Fund, Nippon India Small Cap Fund, and Quant Small Cap Fund reflect a well-diversified approach across different market segments. These funds cater to varying risk appetites and have the potential for long-term wealth creation.

Assessment of Continuing SIPs:

Mirae Asset Tax Saver Fund:

This ELSS fund offers tax benefits under Section 80C of the Income Tax Act and has a track record of delivering consistent returns.
Given your investment horizon of 15-20 years, continuing SIPs in this fund can be beneficial for wealth accumulation while availing tax benefits.
Parag Parikh Flexi Cap Fund:

Known for its global diversification strategy and focus on quality stocks, this fund is suitable for long-term wealth creation.
The fund's flexible allocation across market caps provides stability and growth potential, making it suitable for your investment horizon.
Motilal Oswal Midcap Fund:

Midcap funds tend to be more volatile but offer higher growth potential over the long term.
Considering your extended investment horizon, continuing SIPs in this fund can help capture the growth opportunities presented by mid-cap stocks.
Nippon India Small Cap Fund and Quant Small Cap Fund:

Small-cap funds have the potential for significant growth over the long term but come with higher volatility.
Since you have a long investment horizon, maintaining SIPs in these funds can capitalize on the growth potential of small-cap stocks.
Potential Addition:

Considering adding SBI Contra Fund to your portfolio merits evaluation. Here's why:

Contrarian Approach: SBI Contra Fund follows a contrarian investment strategy, investing in stocks that are undervalued or out of favor.
Diversification: Adding this fund can further diversify your portfolio, as it focuses on stocks across market caps and sectors.
Potential Upside: The fund's contrarian approach can lead to outperformance during market cycles, complementing the growth-oriented nature of your existing SIPs.
Conclusion:

Continuing SIPs in your current portfolio funds align well with your long-term investment horizon of 15-20 years. Additionally, considering the potential benefits of SBI Contra Fund and its diversification advantages, adding it to your portfolio can enhance diversification and potentially boost returns over the long term.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Vivek

Vivek Shah  |60 Answers  |Ask -

Financial Planner - Answered on Apr 19, 2024

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Hello sir, I have started SIP in motilal oswal Nasdaq 100 of 100 fund since last 6 months. Should I continue with this?
Ans: Hello Vaibhav,

Firstly, it's essential to assess your investment goals, risk tolerance, and the suitability of the investment in your portfolio. The Motilal Oswal Nasdaq 100 Fund offers exposure to some of the largest and most innovative companies listed on the Nasdaq Stock Market, providing an opportunity for diversification and potential growth.

Considering you've been investing in the fund for the past six months, it's a good start to evaluate its performance against your expectations and the broader market trends. While short-term fluctuations are common in the stock market, analyzing the fund's performance relative to its benchmark index and peers can offer valuable insights.

Additionally, review the fund's investment strategy, portfolio composition, and expense ratio to ensure they align with your investment objectives and risk profile. Regular monitoring of your investments is crucial to adapt to changing market conditions and make necessary adjustments to your portfolio.

Ultimately, the decision to continue with your SIP in the Motilal Oswal Nasdaq 100 Fund should be based on your long-term financial goals, investment horizon, and comfort level with market volatility. If the fund continues to meet your expectations and remains in line with your investment strategy, it may be prudent to stay invested.

However, if you have concerns about the fund's performance, changes in your financial situation, or shifts in your investment objectives, it's advisable to reassess your investment strategy and consult with a qualified financial advisor to explore alternative options.

Remember, investing is a journey that requires careful planning, patience, and periodic review. I encourage you to stay informed, stay focused on your goals, and make decisions that align with your financial aspirations.

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8221 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 12, 2025

Asked by Anonymous - Apr 12, 2025Hindi
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I am 38 year old in IT, draws a little over 3L per month, married and 3 kids. First one in 5th standard, second in UKG and third is in play school. Wife working in IT as well drawing 2L per month. We have Two houses - one individual house estimated value (1.5 CR) with 18L loan pending paid by me (26.5k per month EMI) and other apartment nearing completion estimated value (1CR) with 50L loan pending paid by my wife (47k per month EMI). As far as other savings are concerned I have around 50L in MFs and my wife has 20L. I have 5L in stocks, 5L in FDs and 5L in other markets. My PF value is around 25L. My wife PF and Gratuity together around 20L. We have Vehicles estimated to give 10L. Currently living in a metro city for our work with expenses upto 2L per month including loans, kids education, rent etc Please tell us what more needed for us to retire and move to less expensive tier 2 place where living expenses can be between 50k - 1l name month.
Ans: Current Financial Overview
Age: 38 years

Monthly Income: Rs. 5 lakh (combined)

Monthly Expenses: Rs. 2 lakh (including EMIs)

Assets:

Mutual Funds: Rs. 70 lakh

Stocks: Rs. 5 lakh

Fixed Deposits: Rs. 5 lakh

Other Investments: Rs. 5 lakh

Provident Fund: Rs. 45 lakh (combined)

Vehicles: Rs. 10 lakh

Liabilities:

Home Loan 1: Rs. 18 lakh (EMI: Rs. 26,500)

Home Loan 2: Rs. 50 lakh (EMI: Rs. 47,000)

Retirement Corpus Estimation
Target Monthly Expenses Post-Retirement: Rs. 1 lakh

Expected Retirement Age: 50 years

Life Expectancy: 85 years

Inflation Rate: 6%

Expected Return on Investments Post-Retirement: 8%

Based on these assumptions, you would require a retirement corpus of approximately Rs. 6 crore to maintain your desired lifestyle in a tier-2 city.

Children's Education Planning
Child 1: Currently in 5th standard

Child 2: Currently in UKG

Child 3: Currently in play school

Assuming higher education costs of Rs. 25 lakh per child in today's terms and considering an education inflation rate of 10%, the future cost for each child could be significantly higher. Therefore, it's essential to start dedicated investments for each child's education.

Action Plan
Increase Savings: Aim to save at least 40% of your combined monthly income.

Debt Reduction: Prioritize paying off high-interest debts to reduce financial burden.

Investment Strategy:

Continue investing in mutual funds with a focus on long-term growth.

Diversify your portfolio to include a mix of equity and debt instruments.

Emergency Fund: Maintain an emergency fund equivalent to 6 months of expenses.

Insurance:

Ensure adequate life insurance coverage for both you and your wife.

Obtain comprehensive health insurance for the entire family.

Final Insights
You're on a solid financial path with a strong income and investment base.

Focus on increasing your savings rate and reducing liabilities.

Plan systematically for your children's education expenses.

Regularly review and adjust your investment portfolio to align with your retirement goals.

Consider consulting a Certified Financial Planner to tailor a comprehensive financial plan for your family's needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

Nayagam P

Nayagam P P  |4417 Answers  |Ask -

Career Counsellor - Answered on Apr 12, 2025

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Hii sir muje aaose puchhna hai mere bete ne ssc kiboard ki exam fi hai aage ki padhai k bare me thoda confuse hai hambe dmit bhi karvaya ...to dmit k councelar ne hame science stram lene se mana kar diya hai aur engineering me bhi dalne se mana kiya hame use cse diploma me karvana chahte the lekin councelar ne commers aur arts me jane ki salah di hai dmit test par kitna trust karna chahiye kya kare
Ans: Uday Sir, thank you for reaching RediffGURU. Your concern is completely valid — and many parents face the same confusion after 10th, especially after taking a DMIT test. Let me explain everything in a clear and practical way: DMIT (Dermatoglyphics Multiple Intelligence Test) is based on fingerprint patterns and claims to assess a child’s inborn talents, personality, and learning style. While it can give some general insights, it is not scientifically proven and should not be the sole basis for career decisions. However, to some extent, Psychometric Test will be more helpful, compared to DMIT, providing some suitable career options for your son. So, use DMIT as a guidance tool, not as the final decision-maker. What Should You Focus on Instead? His Interest + Aptitude + Effort — These matter more than any test. Look at your son's performance in Maths, Science, English, etc. during SSC. Has he shown any interest in: Coding or Computers? Business or Finance? Design or Creativity? Communication or Language? Based on this, you/he can help select the right stream (Engineering | Medical | Commerce | Arts-Humanities) or he prefers Diploma (like CSE Diploma after 10th) if he's not confident about handling 11th-12th Science, then a diploma in Computer Engineering (CSE) is a good alternative. After 3 years of diploma, he can join 2nd year of Engineering (B.E/B.Tech) through lateral entry. But again, it should be based on his interest in technology or computers — not pressure.

Talk to your son — ask what he enjoys or dreams about. Use DMIT + school marks + family guidance together to decide. Don’t choose a stream only because “DMIT said so” or “log kya kahenge.” All the best for your Son's Bright Future!

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Nayagam P P  |4417 Answers  |Ask -

Career Counsellor - Answered on Apr 12, 2025

Asked by Anonymous - Apr 09, 2025Hindi
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sir mene 2022-2023 baords diya tha pass nhi hua 2023-2024 diya hn pass hoga but percentage km aye then 2024-2025 krliya hn 90 percent aaye hn isme mene as a regular students karya hn naaki ki improvemnt likha nhi aayega school balo ne confirm kiyaa hn kya ab jee de skta mains and adv 2026 mein iwant to scoore good in adv sir 2026 with good rank
Ans: Your Academic History Recap: 2022-2023: Gave boards – Did not pass.2023-2024: Gave boards again – Passed, but low percentage. 2024-2025: Appeared as a regular student, scored 90%, and the school confirmed it won’t show as improvement. Are You Eligible for JEE Main & Advanced 2026? Yes, you are eligible for both JEE Main and Advanced 2026, because only your latest qualified attempt is considered, which is 2025. You passed 12th in 2025, so your first JEE Advanced attempt will be in 2025, and second in 2026 (which is what you’re planning). Make sure your 2025 mark sheet shows you as a regular pass and not an "improvement candidate. In JEE Advanced, eligibility criteria say: "A candidate should have appeared for the Class 12 (or equivalent) examination for the first time in either the previous year or the current year." You are within this rule because 2025 is your first full qualified passing year. Plan to Score High in JEE Advanced 2026. Since you have a full year to prepare, here’s a strategy: Focus on Concepts: Use NCERT, HC Verma, Irodov, Cengage, or MS Chauhan as per subjects. Join any reliable online Test Series. Solve PYQs (Last 20 years): For both Mains and Advanced. Revise Smartly: Make short notes, formula sheets, and track your weak areas. Stay Consistent: Use Pomodoro technique, meditation/yoga to stay sharp. If time permits, watch EduJob360 YouTube Videos on Engineering Entrance Exams, Preparation Strategies, Counselling & More. All the best for your preparation & admissions!

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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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