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Will my SIP portfolio of Rs. 3000/month be right for my 5-year goal?

Ramalingam

Ramalingam Kalirajan  |9255 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 09, 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
Siddharth Question by Siddharth on Oct 09, 2024Hindi
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Sir, based on your suggestions and after a thorough research, i m heading for below SIP for a period of 5 years large cap 1. ICICI Prudential Blue Chip- 500/- per month 2. Nippon India large cap- 500/-per month Total: 1000/- per month Flexi- cap 1. JM Flexi cap- 500/- per month 2. HDFC Flexi cap- 500/- per month Total: 1000/- per month Multiple Asset 1. ICICI Prudential Multi Asset- 500/- per month 2. UTI Multi Asset Allocation Fund- 500/- per month Total: 1000/- per month Overall: 3000/- per month your final observations for above? may i invest accordingly as described above?

Ans: Your planned SIP portfolio looks diversified across large-cap, flexi-cap, and multi-asset categories, which is a thoughtful approach. However, it's crucial to review your choices periodically and ensure they align with your risk profile, time horizon, and long-term goals. While these funds seem balanced, factors like fund manager changes, market conditions, and personal financial situations can shift over time. I strongly recommend consulting a Certified Financial Planner (CFP) or a trusted Mutual Fund Distributor (MFD) to customize this plan further and ensure it suits your unique needs before making any final investment decisions.

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.
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Sir, Based on your suggestions I have decided to start SIP in the below MFs: Large Cap 1. ICICI Prudential Bluechip Fund- 500 Rs. per month 2. SBI Bluechip Fund- 500 Rs. per month 3. Nippon India Large Cap Fund- 500 Rs. per month 4. HDFC Top 100 Fund- 500 Rs. per month Total Amount : 2000 Rs. per month Balanced Fund 1. ICICI Prudential Equity & Debt Fund- 500 Rs. per month 2. UTI Aggressive Hybrid Fund- 500 Rs. per month Total Amount: 1000 Rs. per month Multi Cap 1. Nippon India Multi Cap- 500 Rs. per month 2. Quant Active Fund- 500 Rs. per month Total Amount- 1000 Rs. per month Your observations on the above please? Should I start my SIP with the above proposed portfolio??
Ans: Your proposed portfolio covers large-cap, balanced, and multi-cap categories, which is a good starting point for diversification. However, each mutual fund category and fund selection needs to align with your long-term goals, risk tolerance, and the current financial landscape.

Before proceeding with this portfolio, consider these key points:

Fund Overlap: Investing in multiple large-cap funds could result in overlapping of the same stocks, as large-cap funds generally invest in similar companies. This could limit diversification.

Balanced Funds: Your balanced funds, which mix equity and debt, are suitable for some stability. However, it’s essential to check if they match your risk-return profile and goals for stability versus growth.

Multi-Cap: Multi-cap funds offer diversified exposure across market caps, which is good for long-term growth. However, ensure that you are comfortable with the inherent volatility they can bring.

To ensure the best fit for your goals and preferences, it's advisable to consult with a Certified Financial Planner (CFP) or a Mutual Fund Distributor (MFD). They can provide a tailored and comprehensive plan, considering factors like:

Your overall financial goals.
Investment horizon.
Risk appetite.
Fund performance consistency.
This personalized advice can help you structure a portfolio that balances growth and safety effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

..Read more

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Asked by Anonymous - Nov 18, 2024Hindi
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Please suggest if following investment are good as SIP started last year sep 2023 HDFC Flexi cap 5000, Parag Parikh 5000,SBI L & Mid cap 2500/-, Axis Blue chip fund 2500, AXis Mid cap fund 2500/- HDFC mid-cap opportunities fund 5000, Kotal emerging fund 2500/- Nippon India smal cap fund 5000/- HDFC Pharma & healthcare fund 4000/- Nippon India multicap fund 2500/- HSBC value fund 3000/- Investment are on monthly basis. Pease advise
Ans: Your portfolio demonstrates a proactive approach to wealth building. It includes diverse mutual funds across categories. Monthly SIPs indicate your long-term financial discipline. This is commendable. However, let’s evaluate its alignment with your financial goals.

Below are detailed insights for your portfolio assessment:

Strengths of Your Portfolio
Diversification

You’ve invested in funds from multiple categories. This includes large-cap, mid-cap, small-cap, flexi-cap, and sectoral funds.
A diversified portfolio reduces overall risk. It balances growth potential across market segments.
Consistency

Monthly SIPs ensure disciplined investments. This helps capture market volatility effectively.
Long-term SIPs can create substantial wealth through compounding.
Exposure to Growth Opportunities

Investments in mid-cap and small-cap funds offer higher growth potential. These funds are suitable for long-term wealth creation.
Sectoral funds provide concentrated exposure to booming sectors like healthcare.
Inclusion of Value and Multicap Funds

Value funds identify undervalued stocks. This can deliver long-term growth.
Multicap funds offer flexibility to invest across market capitalizations.
Areas for Improvement
Overlapping Fund Categories

Having multiple funds in the same category might lead to redundancy. For example, multiple mid-cap and flexi-cap funds.
Similar funds can increase portfolio overlap. This reduces the benefit of diversification.
Sectoral Fund Allocation

Sectoral funds like healthcare have high risk. These funds depend on sector-specific performance.
Such funds should have limited allocation in a balanced portfolio.
Number of Funds

A portfolio with too many funds can be hard to track. It dilutes returns without adding significant diversification.
Fewer funds with distinct strategies are easier to manage and monitor.
Portfolio Insights
Risk Assessment

Your portfolio leans towards high-risk categories like mid-cap and small-cap.
Consider balancing it with funds having stable growth, such as large-cap or flexi-cap.
Goal-Based Allocation

Align investments with specific financial goals. For example, retirement, child’s education, or buying a house.
Define timelines for each goal. Adjust fund categories based on risk tolerance and time horizon.
Taxation Awareness

Equity fund gains above Rs 1.25 lakh are taxed at 12.5%. Short-term gains attract 20% tax.
Ensure to account for these taxes in your investment strategy.
Regular Fund Investment Benefits

Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) offers advantages.

They provide expert insights, fund tracking, and timely rebalancing.

Direct fund investments might lack professional guidance. This could lead to suboptimal decision-making during market volatility.

Suggested Course of Action
Streamline the Portfolio

Reduce the number of overlapping funds. Keep one or two funds per category.
Focus on high-quality funds with a proven track record.
Adjust Sectoral Fund Exposure

Limit sectoral fund exposure to a small percentage of your total investment.
Use these funds only for specific, high-risk goals.
Rebalance Annually

Review your portfolio at least once a year. Rebalance it to maintain desired asset allocation.
Shift funds if they no longer align with your goals or risk tolerance.
Emergency Fund Allocation

Maintain a liquid fund or emergency fund equivalent to 6-12 months of expenses.
This avoids withdrawing SIPs during unexpected financial needs.
Monitor Fund Performance

Regularly review the performance of each fund against its benchmark.
Replace consistently underperforming funds with better alternatives.
Long-Term Discipline

Stick to your SIPs, especially during market downturns. This helps average out costs.
Avoid making decisions based on short-term market fluctuations.
Final Insights
Your portfolio reflects a strong commitment to financial growth. However, streamlining your investments can enhance efficiency and returns. Focusing on goal-based allocation ensures better alignment with your financial objectives.

Consider professional guidance to refine your portfolio and stay on track. This ensures your investments work harder for your future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

..Read more

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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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