Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 07, 2025

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 - Aug 07, 2025Hindi

Confused on where to invest. Hi Gurus, I'm 22 male with 60K a month income, trying to invest 40K a month on MF and stocks. (Avoiding FDs for now) Aiming for FIRE at around 45. Surely 20K won't be my expenses, expecting to grow in the future at about atleast 40K a month within a year. For now doing random one time investment in MFs about 50% in Motial Mid Cap and Parag parikh flexi cap. 15% in HDFC small cap, 10 % in HDFC flexicap. and the rest in Nipon large cap, Nippon multicap. I do random amounts but focus on Mid and flexi caps. In stocks, i stay around nifty and midcap which don't seem to be performing too well since the returns are lower than FD rates (investing for aorund 2 years. I want guidance on how to navigate low returns and rebalance to go for higher returns on long term. I dont care if the returns are short term or long term as long as I'm financially safe al the time and achieve FIRE at 45. Assume 45K a month in expenses growing at 15% each year with income growing at 15 % each year too. Im clueless on how to navigate these complexities and what to make of this.

Ans: It’s great that you are starting early at 22. That gives you a big edge. You are saving a good chunk of your income, and that’s very positive. Your FIRE goal at 45 is bold but very possible with discipline.

You’ve taken a strong initiative. Let’s bring structure to your effort and clear your confusion.

» Stay Focused on Goals, Not Market Mood

– FIRE at 45 is your main goal. Keep that as your focus.

– Don’t worry about 2-year returns. Equity works in long-term only.

– Ignore comparisons with FD rates. You are investing for freedom, not short-term safety.

– Daily or monthly returns don’t show the full picture.

– Wealth grows slowly and silently at first, then it multiplies.

– Patience is your strongest asset at this stage.

» Avoid Random Investments and Bring Structure

– Random investing creates chaos and confusion.

– Mixing multiple funds without a plan reduces impact.

– Without structure, there is overlap, dilution, and risk imbalance.

– Every rupee should have a clear purpose and role.

– Decide first how much is for FIRE, and how much for other needs.

– Link investments to timelines – 5, 10, 20 years.

– Random investing won’t take you to FIRE.

» Create a Monthly SIP Plan with Defined Roles

– You are already investing Rs 40,000. That’s excellent.

– Convert this into 5–7 structured SIPs.

– Use core and satellite approach.

– Core funds for stability and compounding.

– Satellite funds for aggression and growth.

– Don’t just focus on mid and flexi cap.

– Use large cap and multi cap for foundation.

– Use small cap and contra for high returns.

– Allocate with purpose, not preference.

» Suggested Allocation Structure (Indicative)

– Core portfolio: 60% (Rs 24,000/month)

One flexi cap fund

One large and mid cap fund

One multi cap fund

One large cap fund

– Satellite portfolio: 40% (Rs 16,000/month)

One small cap fund

One contra or value fund

One mid cap fund

– This structure creates balance, flexibility, and growth.

– Avoid sector or theme-based funds for now.

– These are risky for SIP and long-term FIRE goals.

» Say No to Index Funds

– You mentioned staying near Nifty and midcap stocks.

– That’s similar to index-style investing.

– Index funds lack flexibility.

– They can’t avoid overvalued or poor stocks.

– Index funds fall when market falls. No protection.

– Active funds are managed better.

– Fund managers adjust holdings during market changes.

– Actively managed funds deliver more value for long-term SIPs.

– FIRE needs consistent performance, not just low cost.

» Remove Overlap in Fund Selection

– You mentioned too many funds from the same category.

– Multiple flexi cap or small cap funds create duplication.

– Choose only one best fund per category.

– Focus on fund quality, not quantity.

– Review overlap using fund holdings and sector exposure.

– Overlap reduces diversification and increases risk.

– Less is more when each fund has a clear job.

» Avoid Direct Plans – Choose Regular with CFP Support

– Direct plans don’t give guidance or monitoring.

– You are doing random one-time investments. That’s risky in direct route.

– In market falls, you may react emotionally.

– Direct plan investors often miss rebalancing and tax planning.

– Regular plans through CFP bring full support.

– Your portfolio stays aligned with FIRE even during market cycles.

– Slightly higher cost in regular plan gives safety, clarity, and better decisions.

– You’ll need this expert help as your income and goals grow.

» Rebalance Once a Year

– Right now, you have no rebalancing system.

– Rebalancing avoids concentration in one segment.

– Review your portfolio once in 12 months.

– Exit underperformers. Add to winners.

– Rebalance between large, mid, and small based on goal timeline.

– Don’t keep chasing best performing fund.

– Stick to quality with consistency.

– Rebalancing also improves tax efficiency.

» Keep Equity for Long Term Only

– You said returns are less than FD. But that’s temporary.

– Equity gives high returns only after 5+ years.

– Don’t judge funds based on 1 or 2-year return.

– FIRE needs equity for long duration.

– The first few years will look slow.

– Later, compounding becomes powerful.

– Avoid panic-selling. Let SIPs run.

» Link Every Investment to a Goal

– FIRE is the big goal, but there will be small ones too.

– For example: travel, emergency fund, gadgets, wedding, skill courses.

– Make separate buckets for short, medium, and long term.

– Short-term needs should not go into equity.

– Use liquid or ultra-short funds for those.

– Don’t disturb FIRE investments for short goals.

» Plan Tax Smartly

– As per new rule: equity LTCG above Rs 1.25 lakh taxed at 12.5%.

– STCG taxed at 20%.

– Plan redemptions carefully with support from your CFP.

– Avoid frequent switches to reduce tax.

– Don’t exit good funds just to book gains.

– SIPs help average cost and reduce tax impact over time.

» Emergency Fund is a Must

– FIRE doesn’t mean ignoring safety.

– Keep 3–6 months of expenses aside.

– Use a low-risk liquid fund, not equity.

– This helps avoid panic when income stops.

– Emergency fund protects your FIRE journey.

» Increase SIPs as Income Grows

– Your income will grow. Increase SIPs too.

– Try to raise SIPs by 10–15% every year.

– This keeps pace with inflation and growing goals.

– FIRE needs bigger corpus as time passes.

– Don’t let expenses grow faster than savings.

» Don’t Mix Stocks and Mutual Funds Without Strategy

– If you pick stocks randomly, you increase risk.

– Stock picking needs deep research and patience.

– If you stay focused on mutual funds, that’s safer.

– You can always add stocks later with experience.

– For FIRE, stability matters more than thrill.

» Stick to Discipline, Not Market Noise

– Avoid reacting to news or market movements.

– Don’t check NAVs daily.

– SIPs work only if you stay consistent.

– Don't stop SIPs during crash. That’s when returns grow later.

– SIP is your best friend for FIRE. Let it work silently.

» Keep FIRE Realistic and Flexible

– Your expense goal is Rs 45,000/month, rising at 15% yearly.

– That’s ambitious but possible if you save consistently.

– Review FIRE number once a year.

– Adjust based on inflation, lifestyle, family, and life changes.

– Have backup plans. Don’t burn all bridges for FIRE.

– Flexibility keeps financial stress low.

» Use a Certified Financial Planner for Full Strategy

– FIRE is a long journey. You will need guidance.

– A CFP helps in building full roadmap.

– They review your funds, rebalance, track goals, and keep you on course.

– Don’t do it all alone. DIY mistakes can delay FIRE.

– Start with structured SIPs and grow with a plan.

» Finally

– You’ve made a smart early start. That’s your biggest advantage.

– FIRE at 45 is possible with discipline and clarity.

– Avoid random investments and index funds.

– Build structured SIP portfolio with core and satellite mix.

– Remove overlaps and stay away from direct plans.

– Use expert help for full tracking and corrections.

– Keep emotions away. Let SIPs work for long term.

– Increase savings as income grows. Review yearly.

– FIRE is a journey of patience. And you’re already ahead.

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.