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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Jan 09, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Abhishek Question by Abhishek on Jan 09, 2023Hindi
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Best sip fir long term investment

Ans: Please pick up a good diversified flexi cap or large cap fund as per your risk taking ability. You may look up the performance of funds on valuresearchonline, etmoney, moneycontrol etc.Alternately, you may just do a SIP in an Index fund or ETF for a long period of time to get market returns.
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  |5173 Answers  |Ask -

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

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I am willing to invest INR 12500 in SIP for next 10 to 15 years. Kindly advise for best SIP for good return.
Ans: investing in SIPs (Systematic Investment Plans) is a smart way to build wealth over the long term. With a time horizon of 10 to 15 years, you have the opportunity to benefit from the power of compounding and potentially higher returns from equity investments. Here's a suggestion for a diversified SIP portfolio:

Large Cap Fund: Allocate a significant portion of your SIP amount to a large-cap fund. These funds invest in established companies with a proven track record and offer stability to your portfolio.
Flexi Cap Fund: Opt for a flexi-cap fund that provides the flexibility to invest across companies of various market capitalizations based on market conditions. This offers exposure to both large, mid, and small-cap segments, enhancing diversification.
Mid Cap Fund: Allocate a portion of your SIP to a mid-cap fund, focusing on companies with medium market capitalization. Mid-cap companies have the potential for significant growth, providing an opportunity for higher returns over the long term.
Small Cap Fund (Optional): Depending on your risk appetite, you may consider including a small-cap fund in your portfolio. These funds invest in smaller companies with the potential for rapid growth, albeit with higher volatility.
By focusing on large-cap, flexi-cap, and mid-cap funds, you create a well-diversified SIP portfolio that balances stability with growth potential. Before finalizing your investment decisions, assess your risk tolerance and consult with a Certified Financial Planner to ensure your portfolio aligns with your long-term financial goals. Remember to stay disciplined and review your portfolio periodically to make any necessary adjustments.

..Read more

Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 23, 2024

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Sir which SIP will be best for investment?
Ans: Choosing the best SIP (Systematic Investment Plan) involves evaluating several factors to ensure it aligns with your financial goals and risk tolerance.

Understanding SIP
SIP is a method of investing a fixed amount regularly in mutual funds. It offers the benefit of disciplined investing and rupee cost averaging.

Assessing Your Investment Goals
Before selecting an SIP, it's essential to define your investment goals.

Are you saving for retirement, a child's education, or buying a house?

Evaluating Risk Tolerance
Your risk tolerance determines the type of funds you should invest in.

Are you comfortable with high risk for potentially high returns, or do you prefer stability?

Time Horizon
Your investment horizon influences the type of mutual funds you should choose.

A longer time horizon allows for more aggressive investments.

Benefits of Actively Managed Funds
Actively managed funds are managed by professional fund managers who aim to outperform the market.

Advantages Over Index Funds
Higher Returns: Actively managed funds aim to beat the market index, potentially offering higher returns.

Flexibility: Fund managers can adjust the portfolio based on market conditions.

Diversification: These funds often have a diversified portfolio to mitigate risk.

Disadvantages of Index Funds
Limited Flexibility: Index funds strictly track an index, limiting flexibility.

No Outperformance: They aim to match, not outperform, the index.

Market Cap Bias: These funds are heavily weighted towards large-cap stocks, which might not always offer the best returns.

Types of Funds for SIP
Equity Funds
Equity funds invest primarily in stocks. They offer high growth potential and are suitable for long-term investments.

Large Cap Funds
These funds invest in large, well-established companies. They offer stability and moderate growth.

Mid Cap Funds
These funds invest in mid-sized companies. They have higher growth potential but come with increased risk.

Small Cap Funds
These funds focus on smaller companies. They can offer substantial returns but with higher volatility.

Debt Funds
Debt funds invest in fixed-income securities like bonds. They offer stability and regular income.

Short-Term Debt Funds
Suitable for conservative investors seeking stable returns in the short term.

Long-Term Debt Funds
Offer higher returns but with increased interest rate risk.

Hybrid Funds
Hybrid funds combine equity and debt investments. They offer a balanced approach, providing both growth potential and stability.

Balanced Advantage Funds
These funds dynamically manage the allocation between equity and debt based on market conditions.

Choosing the Right SIP
Factors to Consider
Fund Performance: Look at the fund's historical performance and compare it with benchmarks.

Expense Ratio: Lower expense ratios can improve net returns.

Fund Manager’s Track Record: A skilled and experienced fund manager can significantly impact the fund's performance.

Risk-Return Profile: Ensure the fund’s risk profile matches your risk tolerance.

Suggested Categories for SIP
Large Cap Equity Funds: For stability and moderate returns.

Mid Cap Equity Funds: For higher growth potential with moderate risk.

Small Cap Equity Funds: For aggressive growth with higher risk.

Balanced Advantage Funds: For a balanced approach between equity and debt.

Short-Term Debt Funds: For conservative investors seeking stable returns.

Consulting a Certified Financial Planner
Personalized Advice: A CFP provides tailored investment strategies based on your goals and risk profile.

Holistic Planning: They consider your entire financial situation and future needs.

Expert Guidance: Benefit from their market knowledge and experience in managing investments.

Conclusion
Choosing the best SIP depends on your financial goals, risk tolerance, and investment horizon. Consider a mix of large, mid, and small-cap funds, along with hybrid funds, for a balanced and diversified portfolio.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 23, 2024

Asked by Anonymous - May 16, 2024Hindi
Money
Hi I am 44 year old & want to invest in SIP @ amount Rs.5000/- per month for 15 yrs. Please suggest some SIP which is good for long term return.
Ans: Investing in a Systematic Investment Plan (SIP) is a wise decision for securing your financial future. At 44 years old, you have a 15-year horizon for your SIP investment of Rs. 5000 per month. This long-term approach can yield significant returns due to the power of compounding. Let's explore how you can optimize your SIP investment strategy.

Genuine Compliments and Understanding
Your decision to invest regularly and plan for the long-term is commendable. It's never too late to start, and your foresight will benefit you greatly in the years to come.

Understanding SIPs and Their Benefits
What is a SIP?
A SIP allows you to invest a fixed amount regularly in a mutual fund scheme. This methodical investment helps in building wealth over time without the stress of market volatility.

Benefits of SIPs
Rupee Cost Averaging: SIPs reduce the risk of market volatility by averaging the cost of your investments over time.
Power of Compounding: Regular investments grow exponentially due to compounding, especially over a long period.
Financial Discipline: SIPs inculcate a habit of regular saving and investing.
Evaluating Your Financial Goals
Long-Term Goals
Your primary goal is to achieve a substantial corpus after 15 years. This corpus can serve various purposes such as retirement, children's education, or other financial aspirations.

Selecting the Right Mutual Funds for SIP
Equity Mutual Funds
Equity mutual funds are suitable for long-term investments due to their potential for higher returns. These funds invest in stocks of companies, aiming for capital appreciation.

Types of Equity Funds
Large-Cap Funds: Invest in large, established companies with a stable performance history.
Mid-Cap Funds: Invest in medium-sized companies with high growth potential but slightly higher risk.
Small-Cap Funds: Invest in smaller companies that can offer high returns but come with higher risk.
Multi-Cap Funds: Invest in companies of all sizes, providing a balanced approach to risk and return.
Actively Managed Funds vs. Index Funds
Disadvantages of Index Funds
Index funds track a specific index and offer average returns matching the index performance. They lack the flexibility to adapt to market changes.

Advantages of Actively Managed Funds
Actively managed funds, guided by professional fund managers, aim to outperform the market. Fund managers make strategic decisions based on market analysis, potentially offering higher returns.

Importance of Professional Guidance
Consulting a Certified Financial Planner
A Certified Financial Planner (CFP) can provide personalized advice tailored to your financial goals and risk tolerance. They help in selecting the right mix of funds to optimize your investment portfolio.

Diversification for Risk Management
Diversified Portfolio
Diversifying your investments across various types of equity funds mitigates risk. A well-diversified portfolio balances potential high returns with the stability of safer investments.

Systematic Withdrawal Plan (SWP) for Future Stability
As you approach your financial goals, consider a Systematic Withdrawal Plan (SWP) to withdraw your investments in a structured manner. This ensures a steady income stream without depleting your corpus rapidly.

Monitoring and Adjusting Your Investment
Regular Review
Periodically review your investment portfolio to ensure it aligns with your goals. Market conditions and personal financial situations change, and your investment strategy should adapt accordingly.

Rebalancing
Rebalance your portfolio if certain funds significantly outperform or underperform. This maintains the desired asset allocation and risk level.

Tax Efficiency
Tax Planning
Effective tax planning enhances your returns. Equity mutual funds held for more than a year qualify for long-term capital gains tax, which is lower than short-term gains tax.

Emergency Fund and Insurance
Maintaining an Emergency Fund
Ensure you have an emergency fund equivalent to 6-12 months of expenses. This safeguards against unforeseen financial needs without disturbing your investments.

Adequate Insurance Coverage
Having adequate health and life insurance protects your financial plan. Insurance coverage ensures that unexpected medical expenses or unfortunate events do not derail your financial goals.

Conclusion
Your decision to invest Rs. 5000 per month in SIPs for 15 years is a strategic move towards financial security. By selecting the right equity mutual funds and diversifying your portfolio, you can achieve substantial returns. Regular monitoring, tax planning, and professional guidance will further enhance your investment strategy.

Your commitment to investing for the long-term is commendable. With careful planning and disciplined execution, you can achieve your financial aspirations and secure a stable future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 23, 2024

Asked by Anonymous - Jul 18, 2024Hindi
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HI, I am 41 years old and want to start a SIP to give a return of 20 lakh in next 15 yrs for children education. which fund I should choose?
Ans: Goal Assessment

You aim to accumulate Rs. 20 lakh over the next 15 years for your children's education.

Starting a SIP is a smart way to achieve this goal.

Let's explore the best approach to meet your objective.

Investment Horizon and Risk Appetite

You have a long-term horizon of 15 years.

This allows you to take on more risk for potentially higher returns.

Equity mutual funds are suitable for long-term goals.

Types of Equity Mutual Funds

Large-Cap Funds: Invest in big, stable companies. Less risky but moderate returns.

Mid-Cap Funds: Invest in medium-sized companies. Moderate risk and returns.

Small-Cap Funds: Invest in smaller companies. High risk but high returns.

Flexi-Cap Funds: Invest across various company sizes. Balanced risk and returns.

Why Not Index Funds?

Index funds follow the market. They lack active management.

Actively managed funds aim to beat the market.

This offers potentially higher returns.

For your goal, actively managed funds are better.

Benefits of Regular Funds

Professional Management: Managed by experts.

Personal Guidance: Certified Financial Planner can guide you.

Better Performance: Regular monitoring and adjustments.

Choosing the Right Funds

Diversify across different types of funds.

This balances risk and reward.

A mix of large-cap, mid-cap, and small-cap funds is ideal.

Example Allocation Strategy

Large-Cap Fund: 40% for stability and steady growth.

Mid-Cap Fund: 30% for moderate growth.

Small-Cap Fund: 20% for high growth potential.

Flexi-Cap Fund: 10% for balanced growth.

Regular Monitoring and Review

Review your investments annually.

Adjust based on performance and changing market conditions.

Seek advice from a Certified Financial Planner regularly.

Benefits of SIP

Discipline: Ensures regular investment.

Rupee Cost Averaging: Buys more units when prices are low.

Compounding: Helps in wealth creation over time.

Why Avoid Direct Funds?

Direct funds lack personal guidance.

You miss out on expert advice.

Certified Financial Planners provide valuable insights.

Final Insights

Starting a SIP for your child's education is a wise decision.

Choose a mix of large-cap, mid-cap, small-cap, and flexi-cap funds.

Regularly review and adjust your portfolio.

Seek professional guidance to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 23, 2024

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I am a PSU employee. Now started getting EPFO pension after the age of 58 years. Where shall I show this amount received in ITR? In Salary Section or Income from other sources? If it is to be shown in the salary section, is the employer is the same as that of my current employee? Presently my age is 59 years and still working in the same PSU.
Ans: Receiving your EPFO pension after the age of 58 is a significant milestone. Given your current age of 59 and your ongoing employment with the same PSU, it's crucial to understand how to report this pension income correctly in your Income Tax Return (ITR).

Where to Report EPFO Pension in ITR
Salary Section vs. Income from Other Sources:
Income from Other Sources: EPFO pension is considered as "Income from Other Sources". This means it should be reported under this section in your ITR.
Reporting Details
Employer Details:
When reporting EPFO pension under "Income from Other Sources", you do not need to list your current employer as the source. The pension is disbursed by the Employees' Provident Fund Organization (EPFO), which acts as the payer.
Continued Employment
Working Beyond 58 Years:
Since you are still working in the same PSU, your current salary will continue to be reported under the "Salary" section of your ITR.
There is no overlap or confusion between the two sources of income.
Tax Implications
Taxable Income:
The EPFO pension is fully taxable as per your applicable tax slab.
Make sure to include the entire amount received in the relevant section to avoid any discrepancies.
Benefits of Correct Reporting
Compliance:
Correctly reporting your pension income ensures compliance with tax regulations.
This helps in avoiding any potential scrutiny or penalties from tax authorities.
Ensuring Accuracy
Double-check Figures:
Verify the pension amount received with the statements provided by EPFO.
Cross-check with your bank statements to ensure accuracy.
Professional Advice
Certified Financial Planner (CFP):
Consulting a Certified Financial Planner can provide additional insights into managing your retirement income effectively.
They can help you optimize your tax liabilities and ensure you are maximizing your financial benefits.
Insight into Pension and Salary Reporting
Separate Sources:
Keep your salary income and pension income distinctly separate in your financial records.
This clarity helps in maintaining accurate and transparent financial management.
Final Insights
Clear Distinctions:

Understand the distinction between salary income and pension income.
Report EPFO pension under "Income from Other Sources".
Professional Guidance:

Utilize the expertise of a Certified Financial Planner for comprehensive financial planning.
Ensure compliance with tax regulations to avoid any future issues.
Summary
Report EPFO pension under "Income from Other Sources".
Do not list current employer details for the pension.
Pension income is fully taxable.
Consult a Certified Financial Planner for optimal financial management.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...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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