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Ramalingam Kalirajan |2636 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 08, 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

Question by Rohan on May 04, 2024Hindi

Sir need your expert advice on my following SIPs 1. MA nifty smallcap 250 momentum quality 100 ETF - 10000 2. MOMOMENTUM ETF - 10000 3. MO Large and midcap - 10000 4. Edelweiss nifty midcap 150 momentum 50 - 10000 5. ITBEES - 10000 I am more aligned towards passive investment and will continue to do around 10 yrs with annual step up 10%. After that I will stop investing and have plan to take home loan of 1.2 to 1.5 cr to buy dream home and let my invested amount compound for further next 10 years.

Ans: It's great that you're investing through SIPs and planning for your future financial goals. However, it's essential to review your portfolio periodically to ensure it aligns with your objectives and risk tolerance. Here are some points to consider:

Diversification: Your portfolio seems heavily focused on ETFs tracking momentum-based strategies. While momentum investing can yield high returns, it's important to diversify across different asset classes and investment styles to reduce risk. Consider adding exposure to other sectors or asset classes like debt or international equities for better diversification.
Risk Management: Momentum strategies can be volatile and may underperform during market downturns. Ensure you're comfortable with the level of risk associated with your investments, especially considering your long-term investment horizon. Regularly monitor the performance of your investments and be prepared to rebalance if needed.
Passive vs. Active Management: While passive investing offers cost-effective exposure to broad market indices, consider the merits of active management, especially in volatile markets or specialized sectors. Actively managed funds may provide opportunities for alpha generation through skilled fund management.
Annual Step-Up: Your strategy of increasing SIP amounts annually is commendable as it helps boost savings over time and counteracts the impact of inflation. Continue to review your investment goals and adjust your SIP amounts as needed to stay on track with your financial objectives.
Long-Term Planning: Your plan to let your investments compound for 10 years after stopping SIPs and using the proceeds for a home loan is sound. Ensure you have a clear understanding of your housing finance needs, including EMI affordability, interest rates, and loan tenure, to make an informed decision.
Professional Advice: Consider consulting with a certified financial planner to review your portfolio holistically, taking into account your risk profile, financial goals, and time horizon. They can provide personalized recommendations and help optimize your investment strategy for long-term success.
Overall, while passive investing through ETFs can be an efficient way to gain market exposure, it's important to maintain a balanced approach and periodically review your portfolio to ensure it remains aligned with your evolving financial goals and risk tolerance.

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