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Ramalingam Kalirajan  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 27, 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
Arun Question by Arun on Dec 30, 2023Hindi
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Arun Prasad v k, hi sir, I am 46 yrs wish to retire by 55. Presently I have 25 lacs in fixed deposit, 15 lacs in post office savings , house rent8k, monthly 25k as salary. Besides, this I have 30k as monthly expenses... I have no idea / knowledge about mutual fund and I want to invest regularly for more 10 years...systematically and at the time of 55 I want to get best amount as pension amount..without loosing investment amount to beat the inflation. Kindly suggest me good mutual fund and tell me how to invest directly..without agent.. 2. My fixed deposit going to mature this month for Rs.11 lacs. Kindly suggest ,is it advisable to invest as lumpsum Or in what way to invest.

Ans: t's commendable that you're planning for your retirement and seeking to explore mutual fund investments to achieve your financial goals. Here's a tailored approach to help you get started:

Selecting Mutual Funds: Since you're aiming for long-term wealth accumulation with the goal of generating a pension-like income at the age of 55, consider investing in a mix of equity and debt mutual funds to balance growth potential with capital preservation. Look for funds with a track record of consistent performance, experienced fund managers, and low expense ratios. You may consider diversified equity funds, balanced funds, and debt funds based on your risk tolerance and investment horizon.
Investing Directly?
investing directly in mutual funds without professional guidance can pose certain risks. Here are some perils to consider:

Lack of Expertise: Direct investing requires a deep understanding of the mutual fund landscape, market dynamics, and investment strategies. Without proper knowledge, you may struggle to select the right funds and construct a well-balanced portfolio.
Risk of Mistakes: DIY investing increases the risk of making costly mistakes such as selecting unsuitable funds, mistiming the market, or misinterpreting fund performance data. These mistakes can hinder your investment returns and jeopardize your retirement goals.
Limited Access to Research: Individual investors may have limited access to research tools, market insights, and expert analysis compared to financial professionals. This can make it challenging to make informed investment decisions and navigate complex financial markets effectively.
Lack of Personalized Advice: Investing directly means missing out on personalized financial advice tailored to your unique needs, goals, and risk tolerance. A Certified Financial Planner or Mutual Fund Distributor (MFD) can provide valuable guidance and help you build a customized investment plan aligned with your objectives.
Considering these challenges, I would recommend considering regular mutual funds through an MFD. An MFD can offer personalized advice, recommend suitable mutual funds based on your financial goals and risk profile, and provide ongoing support to help you navigate the investment landscape effectively.
Lumpsum Investment: Regarding your maturing fixed deposit of 11 lakhs, consider your risk tolerance and investment goals before deciding how to deploy this amount. Since you have a relatively short time horizon until retirement, you may consider investing a portion of the amount in debt funds for stability and liquidity, while allocating the remainder to equity funds for potential growth over the long term. Alternatively, you can stagger your investments over time through systematic transfer plans (STP) to mitigate timing risk.
Regular Monitoring: Once you've invested in mutual funds, monitor your investments regularly and review your portfolio periodically to ensure alignment with your financial goals and risk profile. Consider rebalancing your portfolio if needed based on changes in market conditions or your financial situation.
By following these steps and staying disciplined with your investment approach, you can work towards building a robust investment portfolio to support your retirement goals while safeguarding your investment against inflation.

By working with an MFD, you can access professional expertise, receive personalized recommendations, and benefit from ongoing guidance to make informed investment decisions and achieve your retirement goals more effectively.

If you have any further questions or need assistance, feel free to reach out to a Certified Financial Planner or Mutual Fund Distributor for personalized advice and support.
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  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 12, 2024

Asked by Anonymous - Jul 01, 2024Hindi
Money
I am 50year old .i am doctor by profession.My wife is also doctor and govt.employee.our mo thly income is 4lakh.i have invested in real estate,ulip and guaranteed plans.Now i invested in mutual funds for last 3-4 month in motilal oswal mid cap,nippon large cap,quant small cap,quant infrastructure direct fund ,Sbi contra fund and tata small cap.I can invest 1 lakh per month and even more.PLease guide me in my portfolio and other investment to create fund for retirement of 3-4 lakh per month
Ans: At 50 years old, with a stable income of Rs. 4 lakhs per month, you are in a strong financial position. Both you and your wife being doctors and having government jobs provide a solid financial foundation. You aim to build a retirement corpus that provides Rs. 3-4 lakhs per month. This goal is realistic but requires careful planning and adjustments to your current investment strategy.

Evaluating Your Existing Investments
You have diversified your investments across real estate, ULIPs, guaranteed plans, and mutual funds. However, it’s important to assess how well these align with your retirement goals.

Real Estate Investments
Real estate can be a good long-term investment. However, it often lacks liquidity. In the context of retirement planning, liquidity is crucial. If you need funds quickly, selling real estate might not be easy. Also, the returns from real estate can be inconsistent. While it has growth potential, the market is also subject to downturns.

ULIPs and Guaranteed Plans
ULIPs and guaranteed plans often come with high fees and lower returns. The insurance component in these plans usually dilutes the investment returns. For someone aiming to build a retirement corpus, these might not be the most efficient options. It might be wise to consider surrendering these policies and reinvesting in more growth-oriented instruments like mutual funds.

Current Mutual Fund Investments
You have started investing in mutual funds, which is a positive step. Your portfolio includes mid-cap, large-cap, small-cap, infrastructure, and contra funds. While diversification is good, it’s important to ensure that each investment aligns with your long-term goals.

Assessment of Your Mutual Fund Portfolio
Let’s take a closer look at your current mutual fund investments and evaluate their suitability for your retirement goal.

Mid-Cap Funds
Mid-cap funds have the potential for high growth. They invest in medium-sized companies that are likely to grow over time. However, they also come with higher risk compared to large-cap funds. While it’s good to have mid-cap exposure, it’s important to balance it with more stable investments.

Large-Cap Funds
Large-cap funds invest in well-established companies. These companies have a track record of stability and growth. Large-cap funds are less volatile than mid or small-cap funds. They provide steady returns and are essential in a retirement portfolio.

Small-Cap Funds
Small-cap funds can deliver high returns, but they are also highly volatile. Investing in small-cap funds is risky, especially as you approach retirement. While they can be part of your portfolio, the allocation should be limited.

Infrastructure and Contra Funds
Infrastructure funds invest in companies involved in infrastructure development. They can provide good returns, but they are also subject to sector-specific risks. Contra funds, on the other hand, invest in underperforming sectors with the hope of a turnaround. These funds can be rewarding but require a long-term horizon and carry higher risk.

Direct Funds
Direct funds have lower expense ratios but require active management. If you are not monitoring your investments closely, direct funds might not be ideal. Investing through a Certified Financial Planner (CFP) can help manage this, as they provide professional advice and regular reviews.

Recommendations for Portfolio Adjustment
To create a robust retirement fund, it’s crucial to refine your portfolio. Here’s how you can do that:

Rebalance Your Mutual Fund Portfolio
Increase Allocation to Large-Cap Funds: Large-cap funds provide stability and should form the core of your portfolio. Consider increasing your allocation to these funds for steady growth.

Reduce Exposure to Small-Cap Funds: While small-cap funds offer high growth potential, they also carry high risk. Given your retirement goal, it’s advisable to reduce exposure to small-cap funds and reallocate to more stable options.

Consider Balanced or Hybrid Funds: These funds invest in both equity and debt instruments. They provide a balanced risk-reward ratio and are suitable for investors nearing retirement. They offer stability while still providing growth opportunities.

Limit Sector-Specific Funds: Infrastructure and contra funds are subject to sector-specific risks. It might be wise to limit your exposure to these funds and focus on more diversified funds that spread risk across sectors.

Reevaluate Real Estate and ULIPs
Surrender ULIPs and Guaranteed Plans: ULIPs and guaranteed plans might not provide the returns needed for your retirement goals. Consider surrendering these policies and reinvesting the proceeds in mutual funds. This move can potentially offer better returns and align with your retirement plan.

Consider Selling Real Estate: If your real estate investments are not generating the expected returns or if they are illiquid, you might consider selling some properties. The proceeds can be reinvested in more liquid and growth-oriented instruments like mutual funds.

Increase Monthly Investment
Allocate Rs. 1 Lakh or More Monthly: With a monthly income of Rs. 4 lakhs, you can afford to invest more. Allocating Rs. 1 lakh or more per month towards your retirement fund can significantly enhance your corpus over time. Focus on large-cap and balanced funds for these investments.

Set Up a Systematic Investment Plan (SIP): A SIP allows you to invest regularly in mutual funds. This approach not only helps in averaging out the cost but also instills discipline in investing.

Tax Planning and Retirement
Investing in mutual funds is tax-efficient, but it’s essential to plan for the tax implications. Equity mutual funds are subject to long-term capital gains tax (LTCG). Proper tax planning can help in maximizing your retirement corpus.

Consider Tax-Saving Funds: Investing in tax-saving mutual funds can help reduce your taxable income while growing your retirement corpus.

Plan for Post-Retirement Income: Once you retire, the withdrawal strategy will be crucial. Systematic Withdrawal Plans (SWP) from mutual funds can provide regular income while minimizing tax liabilities.

Final Insights
Building a retirement corpus of Rs. 3-4 lakhs per month is achievable with the right strategy. Your current portfolio is diverse, but it needs adjustments to align with your retirement goals. Focus on increasing your allocation to large-cap and balanced funds, reducing exposure to high-risk small-cap and sector-specific funds, and considering the liquidity and return potential of your real estate and ULIP investments.

By investing Rs. 1 lakh or more per month, regularly reviewing your portfolio, and working with a Certified Financial Planner (CFP), you can create a solid retirement fund that meets your needs. This disciplined approach will ensure that your investments grow steadily, providing the desired retirement income.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 2024

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Hi sir, My age is 50 . I have around 35 lacs in Mutual funds and in stocks approx at 50:50 ratio . My stocks are not appreciating well as compared to mutual funds . As I am not able to keep myself updated in stocks as having my busy schedule from 9:00am to 8:00pm. Besides this I have a saving of 30 lacs in PF and PPF . Besides this I had some savings in postal fixed deposit which is going to be matured in next 4 months and the matured amount is around 60 lacs . I wanted to invest this amount in some mutual funds or with some savings instrument having an appreciation of approx 13-15 % .Pls guide me how should I invest this fund ? If you suggest for mutual fund , then pls suggest the fund types , and should I invest in lumpsum or SIP. If I am going for SIP. , then in how many months or weeks should I invest this total fD matured amount ? I am at present working in a private company with a monthly in-hand salary of 1.5 lacs .and I have no liability for next 8-9 years .
Ans: Current Financial Situation
At age 50, you have Rs. 35 lakhs in mutual funds and stocks, split evenly. Your stocks are not performing well. Your busy schedule from 9:00 am to 8:00 pm makes it hard to manage your stocks.

You also have Rs. 30 lakhs in PF and PPF, and Rs. 60 lakhs in a postal fixed deposit maturing in four months.

Your monthly in-hand salary is Rs. 1.5 lakhs, and you have no liabilities for the next 8-9 years.

Investment Goals
You aim to invest the Rs. 60 lakhs maturing from the fixed deposit. You seek an appreciation of 13-15% per annum.

Assessment of Current Strategy
Mutual Funds vs. Stocks
Your mutual funds are performing better than your stocks. Mutual funds are managed by professionals, offering better returns for those with limited time.

Existing Investments
Your PF and PPF provide stability and tax benefits. These are good for long-term security but offer lower returns compared to equity investments.

Recommendations for Improvement
Increase Mutual Fund Investments
Given your busy schedule, mutual funds are a better option than direct stocks. They are professionally managed and require less personal attention.

Types of Mutual Funds
Equity Mutual Funds: These funds have the potential for higher returns, aligning with your goal of 13-15% appreciation.
Actively Managed Funds: These funds can outperform index funds due to active management by professionals.
Investment Strategy
SIP vs. Lumpsum: Investing in mutual funds via SIPs helps mitigate market volatility. It averages the purchase cost over time.
Investment Period: Consider spreading the Rs. 60 lakhs investment over 12-18 months through SIPs. This approach reduces the risk of market timing.
Diversify Your Portfolio
Diversification: Invest in different types of equity mutual funds. This includes large-cap, mid-cap, and small-cap funds. Diversification reduces risk and can provide better returns.
Review and Adjust Regularly
Portfolio Review: Regularly review your investments. Adjust your portfolio based on performance and changes in your financial goals.
Consult a CFP: A Certified Financial Planner can help tailor your investment strategy to meet your specific goals and risk tolerance.
Final Insights
Your current investment strategy is good but can be improved. Shift your focus from direct stocks to mutual funds for better management and returns.

Invest the Rs. 60 lakhs from the maturing fixed deposit in equity mutual funds through SIPs over 12-18 months. This approach will help you achieve your target returns while reducing risk.

Ensure regular reviews and adjustments to your portfolio. Diversify your investments to manage risk effectively.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 21, 2024

Asked by Anonymous - Oct 21, 2024Hindi
Money
Dear Mr. Ramalingam, Good Morning, I am 66 years old and have Rs.20 L of my retirement funds. Advice me on investing in some good mutual Funds, I can wait upto 5 years to withdraw the amount please
Ans: You’ve accumulated Rs 20 lakhs for your retirement, and you’re willing to invest it with a five-year horizon. This time frame, though relatively short, can still allow for reasonable growth if invested wisely. At the age of 66, balancing growth and safety is key.

Understanding Your Risk Tolerance
Moderate Risk Approach: At your age, it’s prudent to avoid high-risk investments. However, moderate risk exposure is necessary to generate inflation-beating returns.

Capital Preservation with Growth: You want to grow your funds but also ensure the preservation of your capital. The goal should be to strike the right balance between safety and returns.

Diversified Portfolio for Stability
Combination of Equity and Debt: A good strategy would be a 50-60% allocation to debt and the rest in equity. Debt mutual funds provide stability, while equity funds offer potential growth.

Avoid Full Equity Exposure: Considering your age and time horizon, avoiding complete exposure to equity is important. While equity can generate high returns, it can also be volatile, which may not align with your objective.

Choosing Debt Mutual Funds
Low to Moderate Risk Debt Funds: You should consider investing in low to moderate risk debt mutual funds. These funds offer stability and reasonable returns over a five-year period, helping protect your capital from market volatility.

Taxation Advantage: Debt mutual funds are taxed as per your income tax slab, and long-term gains can be more tax-efficient if held for over three years. This provides a dual benefit of stable returns and tax savings.

Adding Some Equity for Growth
Actively Managed Equity Funds: To outpace inflation and achieve decent returns over five years, you can invest a small portion in actively managed equity funds. These funds allow flexibility and the potential for higher growth than traditional options.

Avoid Index Funds: While index funds have lower costs, they simply mirror the market’s performance. For a time horizon like five years, actively managed funds are better suited as they can adapt to market conditions and aim to outperform.

Opt for Regular Plans Over Direct Funds
Benefits of Regular Funds: Although direct funds have lower expense ratios, they lack the personalized advice you get from investing through a Mutual Fund Distributor with a Certified Financial Planner. Their expertise can make a difference in the performance and structure of your portfolio.

Professional Guidance: The cost difference between direct and regular plans is minimal when compared to the benefits of professional advice, including regular reviews, rebalancing, and timely switches to better-performing funds.

Focus on Liquidity and Flexibility
Short-Term Liquidity: Though your investment horizon is five years, it’s wise to ensure some liquidity for unforeseen expenses. Consider keeping a portion of your funds in a liquid mutual fund or short-term debt fund, which can be accessed easily in case of an emergency.

Flexibility of Mutual Funds: One of the advantages of mutual funds is the ease with which you can withdraw or switch funds based on your financial situation. This flexibility is crucial as you may need to adjust your investments over the five years.

Systematic Withdrawal Plan (SWP)
Plan for Withdrawals: As you approach the end of your investment horizon, consider setting up a Systematic Withdrawal Plan (SWP). This allows you to withdraw a fixed amount monthly while your corpus continues to generate returns.

Minimise Tax Impact: An SWP is a tax-efficient way of withdrawing funds. Since only the gains are taxed, the tax burden is lighter compared to lump-sum withdrawals.

Wealth Protection Through Insurance
Ensure Adequate Health Insurance: At 66, having comprehensive health insurance is vital. It helps protect your investments from being depleted by medical expenses. Ensure that your health insurance coverage is sufficient, and review it regularly to keep pace with medical inflation.

Life Insurance is Not a Priority: Since your primary goal is capital preservation and growth, life insurance isn’t a focus at this stage. Instead, ensure that your existing policies (if any) are aligned with your current needs.

Review and Rebalance Annually
Monitor Portfolio Performance: It’s important to review your portfolio every year. If any of your funds underperform or market conditions change, a Certified Financial Planner can guide you to rebalance and realign your investments.

Avoid Timing the Market: Stick to your strategy without attempting to time the market. Frequent buying and selling can lead to unnecessary taxes and missed growth opportunities.

Stay Disciplined and Focus on Your Goal
Discipline is Key: The most important factor in any investment strategy is discipline. Stay committed to your investment plan for the full five-year period to allow your money to grow optimally.

Avoid Panic During Market Fluctuations: Markets can be volatile, especially when you have an equity component in your portfolio. Avoid making hasty decisions based on short-term market movements.

Final Insights
To achieve a balanced and growth-oriented portfolio with your Rs 20 lakhs, opt for a mix of equity and debt mutual funds. Prioritise stability while allowing for some growth with a small equity exposure. Regularly review your investments, stay disciplined, and ensure adequate insurance coverage to protect your wealth and financial security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

..Read more

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Milind

Milind Vadjikar  |702 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 26, 2024

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Hi Experts, I seek your guidance on my mutual fund portfolio. Below are the details: Total Portfolio Details: - Total Invested Amount: ?15,76,159 - Current Value: ?19,35,234 - Total Returns: ?3,59,075 (+22.78%) - XIRR: 20.75% Monthly SIP Contribution: ?1,18,000 Breakdown of monthly SIP contributions across funds: 1. Parag Parikh Flexi Cap Fund Direct Growth – ?30,000 2. SBI Large & Midcap Fund Direct Plan Growth – ?15,000 3. SBI Magnum Mid Cap Fund Direct Plan Growth – ?20,000 4. Nippon India Large Cap Fund Direct Growth – ?30,000 5. Nippon India Small Cap Fund Direct Growth – ?7,500 6. ICICI Prudential Technology Direct Plan Growth – ?10,000 7. Quant Small Cap Fund Direct Plan Growth – ?7,500 8. HSBC Small Cap Fund Direct Growth – ?5,000 9. Edelweiss US Technology Equity Fund of Funds Direct Growth – ?5,000 Can you suggest if I am on track to create 5 CR corpus in 10 years I have ?25 lakh invested in a Fixed Deposit (FD) in my mother’s account, earning an interest rate of 7.75%, to generate tax-free returns. Additionally, I’m planning to purchase a plot worth ?30–50 lakh in the next 1–2 years. Is it a good idea to keep the money in FD for now, or are there better short-term investment options I should consider to maximize returns while keeping the funds accessible for my future purchase? Looking forward to your suggestions! Thank you!
Ans: Hello;

Your monthly sip value adds upto 1.3 L however you have claimed it to be 1.18 L. (Maybe a typo).

Existing corpus(19.35 L) and monthly sip (1.3 L) won't reach 5 Cr in 10 years.

You have two options to make it happen:

1. Increase monthly sip amount to 1.9 L.

2. Top-up current monthly SIP of 1.3 L by minimum 10% each year for 10 years.

Both ways will lead you to a corpus of 5 Cr over 10 years.

You may consider money market mutual funds for parking your funds for a 1 year horizon. Returns may be comparable to FD returns but with flexibility to withdraw anytime. They typically have low to moderate risk.

Happy Investing;
X: @mars_invest

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Nayagam P

Nayagam P P  |3928 Answers  |Ask -

Career Counsellor - Answered on Nov 26, 2024

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Is doing BBA + Law (Honors) from BITS Law is worth
Ans: Anju, prior to addressing the question, I would like to draw your attention to a recent article in 'The Times of India' which indicates that a majority of law graduates tend to favor employment in corporate settings over practicing in courts. Now, coming to your question, please note, BITS Law School's BBA + LLB (Hons) program is a 5-year program that combines business administration with legal studies. The program focuses on areas such as corporate law, intellectual property, business laws, and dispute resolution. The program offers a strong multidisciplinary approach, preparing students for careers in corporate law, legal consultancy, and management. Its strengths include a business + legal acumen curriculum, industry-driven curriculum, and a reputation for excellence in education and placement opportunities. However, it lacks the legacy and alumni network of top-tier law schools and can be expensive. Career opportunities include corporate and business law, management roles, consulting, entrepreneurship, academia/research, international arbitration, cyber and technology law, corporate governance, and intellectual property rights. The program is worth considering if you aim for a corporate or business law career, are comfortable with the cost and value of the BITS brand, and have excellent industry connections and internships. Build your profile well by the time you complete your BBA+LLB & improve your all other skills required. All the BEST for Your Prosperous Future.

To know more on ‘ Careers | Education | Jobs’, ask / follow Us here in RediffGURUS.

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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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