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Dev Ashish  |48 Answers  |Ask -

MF Expert, Financial Planner - Answered on Aug 24, 2023

Dev Ashish is a fee-only SEBI-registered investment advisor with over 15 years of active experience in the stock market. In 2011, he founded StableInvestor, a platform for personal finance and financial planning.
He provides professional fee-only investment advisory services to small and high networth individuals in order to help them achieve their financial goals.
Ashish's views are regularly published in national business publications. He has an MBA degree from NMIMS, Mumbai and also holds an engineering degree.... more
Mohan Question by Mohan on Aug 22, 2023Hindi

Best mutual fund to invest for new investor am aggressive investor

Ans: If you plan to invest in equity funds), you need to have a time horizon of at least 5+ years if not more. If this is applicable in your case, then you can consider investing in any good largecap index fund, or flexicap fund or if you don't want to invest fully in equities, then can consider Aggressive Hybrid Funds (which have 60-70% in equities).

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.
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 Kalirajan  |5260 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 10, 2024

Asked by Anonymous - Dec 24, 2023Hindi
How to compare and evaluate the appropriate mutual funds for an moderately aggressive investor want to be investing for 5 years from now.
Ans: When evaluating mutual funds for a moderately aggressive investor with a 5-year investment horizon, consider the following factors:

Investment Objective: Look for funds aligned with your risk appetite and investment goals. For a moderately aggressive investor, consider a mix of equity and balanced funds.

Performance: Analyze the historical performance of the funds over various timeframes. Look for consistent returns compared to their benchmark and peers.

Risk Metrics: Assess the volatility and downside risk of the funds using metrics like standard deviation and Sharpe ratio. Ensure the risk level matches your risk tolerance.

Fund Manager Expertise: Research the track record and experience of the fund manager. A skilled and experienced manager can navigate market cycles effectively.

Expense Ratio: Consider the expense ratio as lower fees can enhance your returns over the long term.

Portfolio Composition: Evaluate the fund's portfolio holdings, sector allocation, and diversification strategy. Ensure the fund's holdings align with your investment objectives and risk profile.

Fund Size and Liquidity: Opt for funds with adequate assets under management (AUM) and liquidity to handle redemptions efficiently.

Past Performance vs. Benchmark: Compare the fund's performance with its benchmark index to assess its ability to generate alpha.

Independent Ratings: Consider ratings from reputable agencies or financial advisors to gain insights into a fund's quality and performance consistency.

Qualitative Factors: Consider qualitative aspects like the fund house's reputation, investment philosophy, and transparency.

By considering these factors comprehensively, you can identify mutual funds that are suitable for your moderately aggressive investment strategy over a 5-year horizon. Additionally, regularly review your investments to ensure they remain aligned with your financial goals and risk tolerance.

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Ramalingam Kalirajan  |5260 Answers  |Ask -

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

Asked by Anonymous - Jun 20, 2024Hindi
Advice for mutual fund /please suggest
Ans: Mutual funds are investment vehicles that pool money from various investors to purchase securities like stocks, bonds, and other assets. This pooling provides investors with diversification and professional management, making mutual funds a popular investment choice.

Benefits of Investing in Mutual Funds
Mutual funds invest in a wide range of securities, spreading out risk. This diversification helps protect your investment from the poor performance of a single security.

Professional Management
Mutual funds are managed by professional fund managers who have the expertise to make informed investment decisions. They monitor market trends and adjust the fund’s portfolio to achieve its objectives.

Mutual funds offer high liquidity. You can buy and sell mutual fund units on any business day. This ease of access to your money is a significant advantage.

You don’t need a large amount of money to start investing in mutual funds. You can start with as little as Rs 500, making it accessible to all.

Mutual funds offer a range of schemes to suit different investment goals, risk appetites, and time horizons. Whether you want to save for retirement, your child’s education, or a holiday, there’s a mutual fund for you.

Types of Mutual Funds
Equity Funds
Equity funds invest primarily in stocks. They offer the potential for high returns but come with higher risk. They are suitable for investors with a long-term horizon and a higher risk tolerance.

Debt Funds
Debt funds invest in fixed-income securities like bonds and government securities. They are less volatile than equity funds and are suitable for conservative investors looking for stable returns.

Balanced or Hybrid Funds
Balanced or hybrid funds invest in both equities and debt. They offer a balanced risk-reward ratio and are suitable for investors looking for a mix of growth and stability.

Systematic Investment Plan (SIP)
SIPs allow you to invest a fixed amount regularly in a mutual fund. This disciplined approach helps in averaging the purchase cost and building a substantial corpus over time.

Selecting the Right Mutual Fund
Assess Your Risk Tolerance
Understanding your risk tolerance is crucial. It helps you choose a fund that matches your comfort level with market fluctuations.

Define Your Investment Goals
Clearly define your investment goals. Are you saving for retirement, a child's education, or a new home? Different goals may require different types of mutual funds.

Evaluate Fund Performance
Look at the historical performance of the fund. While past performance is not a guarantee of future results, it gives an idea of how the fund has managed various market conditions.

Check Expense Ratios
The expense ratio is the annual fee that mutual funds charge their shareholders. Lower expense ratios can mean higher returns for investors.

Consider the Fund Manager’s Experience
The experience and track record of the fund manager are critical. A seasoned fund manager can navigate market ups and downs effectively.

Disadvantages of Index Funds
Index funds aim to replicate the performance of a market index. While they offer low expense ratios, they lack the potential for outperformance that actively managed funds offer.

Limited Flexibility
Index funds are rigid as they strictly follow the index composition. Active funds can adapt to changing market conditions.

Average Returns
Index funds aim to match the market, so their returns are average. Actively managed funds have the potential to outperform the market.

Lack of Professional Management
Index funds do not benefit from the expertise of fund managers, which can be a disadvantage in volatile markets.

Benefits of Actively Managed Funds
Potential for Higher Returns
Active fund managers use their expertise to select high-performing securities, aiming to outperform the market.

Adaptive Strategy
Active funds can adjust their strategy based on market conditions, potentially avoiding downturns and capitalizing on opportunities.

Expertise of Fund Managers
Investors benefit from the knowledge and experience of professional fund managers, who actively monitor and adjust the fund's portfolio.

Disadvantages of Direct Funds
Direct funds are mutual funds purchased directly from the fund house, bypassing intermediaries. While they have lower expense ratios, they may not always be the best choice.

Lack of Professional Advice
Without a Certified Financial Planner (CFP), you might miss out on valuable advice and insights that can enhance your investment strategy.

Complex Decision-Making
Choosing the right funds and managing your portfolio can be complex and time-consuming without professional guidance.

Potential for Lower Returns
Without expert advice, you might not optimize your investments, leading to lower returns compared to investments made through a CFP.

Benefits of Regular Funds via CFP
Expert Guidance
Investing through a CFP provides you with expert advice tailored to your financial goals and risk tolerance.

Simplified Process
A CFP can simplify the investment process, helping you choose the right funds and manage your portfolio effectively.

Better Portfolio Management
With a CFP, your portfolio is regularly reviewed and adjusted to align with your changing financial goals and market conditions.

Common Mistakes to Avoid
Chasing Past Performance
Investors often make the mistake of investing in funds that have performed well in the past, without considering current market conditions and future potential.

Ignoring Expense Ratios
High expense ratios can significantly impact your returns over time. Always consider the cost of investing.

Lack of Diversification
Investing too much in one type of asset can be risky. Diversify your investments to spread risk.

Not Reviewing Your Portfolio
Regularly review your portfolio to ensure it aligns with your goals and market conditions. Adjust as necessary.

The Importance of a Long-Term Perspective
Compounding Benefits
Investing for the long term allows your investments to benefit from compounding, where your returns generate additional returns.

Weathering Market Volatility
Long-term investing helps you ride out market volatility and take advantage of market recoveries.

Achieving Financial Goals
A long-term perspective aligns with most financial goals, such as retirement or funding a child’s education, which require substantial amounts of money.

Empathy and Understanding Your Needs
Personalized Approach
A CFP takes a personalized approach, understanding your unique financial situation and goals to provide tailored advice.

Building Trust
Building a relationship with a CFP ensures you have a trusted advisor to guide you through your investment journey.

Emotional Support
Investing can be stressful. A CFP provides emotional support, helping you stay calm during market fluctuations and stick to your investment plan.

Choosing to invest in mutual funds is a smart decision. It shows you are proactive about securing your financial future. Your decision to seek professional advice reflects a commitment to making informed and strategic investment choices.

Final Insights
Investing in mutual funds offers numerous benefits, including diversification, professional management, and flexibility. By understanding your risk tolerance, defining your investment goals, and selecting the right funds, you can build a robust investment portfolio. Avoid common mistakes, and consider the advantages of actively managed and regular funds over index and direct funds. With a Certified Financial Planner by your side, you can navigate the complexities of investing and work towards achieving your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner


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Nayagam P P  |2453 Answers  |Ask -

Career Counsellor - Answered on Jul 25, 2024

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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