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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Dec 07, 2021

Mutual Fund Expert... more
Mithun Question by Mithun on Dec 07, 2021Hindi
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Hi Sir, your expert opinion is needed if the below funds are good to be continued.

I have a monthly SIP in

Company No of units
Axis Midcap 10,000
Quantum Tax Saving 10,000
SBI Small Cap 15,000
Axis Bluechip 20,000
Canara Robeco Equity Hybrid 20,000
Motilal Oswal Nasdaq 100 Fund of Fund 10,000

Ans: Please continue, no need to change.

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  |8334 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 2024

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Sir my age is 32 years, I have started Sip since July 2023 my investment details are below Nippon small cap 2k Quant small cap 1k Tata small cap 1k Sbi small cap 2k ICICI prudential value 2k Quant mid cap 3k Sbi magnam mid cap 2k Sbi contra fund 3k Parag Parikh flexi cap 2k 25 years sip plan with step up, please review my portfolio,
Ans: Your proactive approach to investing in SIPs at a young age is commendable. This sets a strong foundation for long-term wealth creation. Your diversified portfolio reflects a good understanding of market opportunities and risks.

Evaluating Your Current Portfolio
Current Investments:

Your SIPs are spread across small cap, mid cap, and contra funds, with a flexi cap for additional diversification.
Each category serves a distinct purpose in your investment strategy.
Portfolio Composition Analysis
Small Cap Funds:

Growth Potential: Small cap funds offer high growth potential but come with higher risk.
Current Allocation: You have ?6,000 in small cap funds, which is quite aggressive.
Assessment: High risk, high return. Ensure you are comfortable with the volatility.
Mid Cap Funds:

Balanced Growth: Mid cap funds provide a balance between growth and stability.
Current Allocation: ?5,000 in mid cap funds. This is a good strategy to capture growth while managing risk.
Assessment: Moderately risky, suitable for long-term goals.
Value and Contra Funds:

Defensive Strategy: These funds invest in undervalued stocks, aiming for long-term growth.
Current Allocation: ?5,000 combined in value and contra funds.
Assessment: Less risky, suitable for market downturns.
Flexi Cap Funds:

Diversification: Flexi cap funds invest across market capitalizations, providing diversification.
Current Allocation: ?2,000 in flexi cap.
Assessment: Provides a safety net by diversifying across various market segments.
Recommendations for Optimization
Balancing Risk and Growth:

Reallocation Suggestion: Consider reallocating some funds from small cap to more stable options like large cap or balanced funds.
Reason: Reduces overall portfolio risk while still aiming for growth.
Introduction of Large Cap Funds:

Suggestion: Add a large cap fund to your portfolio.
Reason: Large cap funds provide stability and steady returns, balancing the high-risk small and mid cap funds.
Balanced Funds:

Suggestion: Include a balanced or hybrid fund.
Reason: These funds invest in both equity and debt, offering a balanced risk-reward profile.
Portfolio Step-Up Strategy
Regular Increases:

Implementation: Increase your SIP contributions annually as planned.
Reason: Step-up SIPs help in compounding your investments more effectively.
Importance of Professional Guidance
Engage a Certified Financial Planner (CFP):

Benefits: Personalized advice tailored to your financial goals and risk tolerance.
Reason: A CFP can help optimize your portfolio and ensure it aligns with your long-term goals.
Regular Monitoring and Review
Periodic Portfolio Review:

Frequency: Review your investment portfolio at least annually.
Reason: Ensures your investments stay aligned with your goals and market conditions.
Rebalancing:

Action: Rebalance your portfolio if any fund significantly outperforms or underperforms.
Reason: Maintains desired asset allocation and risk level.
Final Thoughts
Your disciplined investment in SIPs across diverse funds is a strong start. For optimal growth and risk management, consider introducing large cap and balanced funds into your portfolio. Regular reviews and professional guidance will keep your investments on track. Your commitment to a 25-year plan with step-ups shows foresight and determination, paving the way for substantial wealth creation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8334 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

Asked by Anonymous - Apr 29, 2024Hindi
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Sir, I have been doing SIP under following MF's : Axis Flexi Cap Fund - Regular Plan 5,000.00 Bandhan Core Equity Fund - Regular Plan - Growth 3,000.00 DSP Mid Cap Fund - Regular Plan 2,500.00 HSBC Value Fund - Regular Plan 2,500.00 ICICI Prudential Value Discovery Fund 2,500.00 Kotak Flexi Cap Fund - Regular Plan 2,000.00 Quant Active Fund 5,000.00 SBI Flexi Cap Fund - Regular Plan 2,500.00 SBI Small Cap Fund - Regular Plan 10,000.00 UTI Flexi Cap Fund - Regular Plan 5,000.00 HDFC Mid-Cap Opportunities Fund - Regular Plan 3,000.00 Aditya Birla Sun Life Flexi Cap Fund - Regular Plan - Growth 5,000.00 HDFC Focused 30 Fund - Regular Plan 2,000.00 Also i have lump-sum investment in following MF schemes - HDFC Top 100 RP (G) 51,998.45 HDFC Gold RP (G) 1,43,997.00 ICICI Prudential Multi-Asset Fund 3,79,511.11 ICICI Prudential US Bluechip Equity Fund - Regular 99,800.95 Kotak Flexi Cap Fund - Regular Plan 1,14,995.00 In addition to above, i am investing regularly in PPF & have an Share portfolio of about Rs. 6 Lacs & few Life Insurance policies (LIC). I am in need of about Rs. 25 Lacs. Kindly advise which funds to exit and if any other rebalancing of MF is required. Thanks
Ans: You've built a diverse portfolio with a mix of systematic investment plans (SIPs), lump-sum investments, and other financial instruments, showcasing your commitment to long-term wealth creation. Let's review your current holdings and make strategic adjustments to align with your financial goals:
1. SIP Review:
• Evaluate the performance and suitability of each SIP based on your investment objectives and risk tolerance.
• Consider consolidating or exiting SIPs with underperforming funds or overlapping strategies to streamline your portfolio.
2. Lump-Sum Investments:
• Assess the performance and outlook of your lump-sum investments to ensure they complement your overall investment strategy.
• Consider rebalancing or exiting investments that no longer align with your investment goals or risk profile.
3. Portfolio Rebalancing:
• Rebalance your portfolio to maintain an optimal asset allocation and manage risk effectively.
• Consider reallocating funds from underperforming or overweight sectors/funds to sectors/funds with better growth potential.
4. Exit Strategy:
• Identify funds or investments that are not performing as expected or do not align with your investment strategy.
• Develop an exit strategy to liquidate such investments gradually while minimizing any potential impact on your overall portfolio returns.
5. Alternative Investments:
• Explore alternative investment options such as debt instruments, real estate investment trusts (REITs), or international funds to diversify your portfolio further.
• Consider adding exposure to sectors or asset classes that offer growth potential while mitigating downside risks.
6. Risk Management:
• Review your risk management strategy to ensure adequate protection against market volatility and unforeseen events.
• Consider enhancing your insurance coverage, particularly health and life insurance, to safeguard your financial well-being and protect your loved ones.
7. Financial Planning:
• Continuously monitor your financial plan and make necessary adjustments based on changes in your life circumstances, financial goals, and market conditions.
• Consult with a Certified Financial Planner (CFP) to receive personalized advice and guidance tailored to your specific financial situation and objectives.
Remember, investing is a dynamic process, and periodic review and adjustment are essential to stay on track towards achieving your financial goals. By taking a proactive approach and making informed decisions, you can optimize your investment portfolio and work towards building long-term wealth and financial security.

..Read more

Ramalingam

Ramalingam Kalirajan  |8334 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 2024

Asked by Anonymous - May 02, 2024Hindi
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Dear sir, I have following sip Hdfc defence 5000 Hdfc multicap 10000 Hdfc small cap 10000nippon small cap 15000 Sbi large and mid cap 5000 Hdfc balanced advantage fund lump sum 25000 Hdfc focused 30 fund lump sum 25000 Hdfc manufacturing fund lump sum 50000 Sbi conta fund lumpsum 1200000 Sbi psu fund lump sum 500000 Sbi energy opportunity fund lump sum 200000 Please advice
Ans: It's clear you've taken a proactive approach to investing, and you've built a diverse portfolio across various mutual funds. Let's assess your current holdings and provide some guidance.

Your SIPs in HDFC Defence, HDFC Multicap, HDFC Small Cap, Nippon Small Cap, and SBI Large and Mid Cap demonstrate a blend of large, mid, and small-cap exposure, which is commendable for diversification.

However, having multiple funds within the same fund house, such as HDFC, may lead to overlapping holdings and concentration risk. Consider diversifying across different fund houses to spread risk more effectively.

Your lump sum investments in HDFC Balanced Advantage, HDFC Focused 30, HDFC Manufacturing, SBI Contra, SBI PSU, and SBI Energy Opportunity Funds provide additional diversification across different investment themes and strategies.

While lump sum investments can be beneficial, especially during market downturns, it's essential to review your investment rationale for each fund and ensure they align with your long-term financial goals and risk tolerance.

Given the size of your lump sum investments, consider consulting with a Certified Financial Planner to assess if your portfolio is appropriately diversified and if any adjustments are needed to optimize returns while managing risk.

Additionally, periodically review your portfolio's performance and make necessary adjustments to stay aligned with your financial objectives and market conditions.

In conclusion, while your current investments showcase a diverse portfolio, consider diversifying across fund houses and regularly reviewing your holdings to ensure they remain aligned with your long-term financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8334 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2025

Asked by Anonymous - May 12, 2025
Money
I am 38 years old and self-employed, earning an average of 1.8 to 2 lakhs per month. I have a home loan of 44 lakhs (EMI is 46,000, tenure 15 years). There is no other liabilities. My investments include 11 lakhs in mutual funds, 3 lakhs in fixed deposits, and 1.5 lakh in gold. Should I focus on prepaying the home loan given my irregular income, or keep my investments intact and continue with EMIs?
Ans: You are doing quite well, especially with your investments and controlled liabilities. Your financial discipline is truly appreciable.

You are 38, self-employed, with Rs.1.8 to 2 lakhs monthly income.
Your current home loan is Rs.44 lakhs with EMI of Rs.46,000 for 15 years.
You have Rs.11 lakhs in mutual funds, Rs.3 lakhs in FDs, and Rs.1.5 lakhs in gold.
Your income is irregular, but you have no other liabilities.

Let us now do a 360-degree evaluation of whether to prepay the loan or stay invested.

 

Step-by-Step Financial Assessment
1. Evaluate the Stability of Your Income First
You earn between Rs.1.8 to Rs.2 lakhs per month.

 

But income is irregular. That needs caution.

 

Loan EMI is Rs.46,000 — about 25% of your average income.

 

If income drops in any month, EMI pressure will increase.

 

So we must first ensure EMI is always affordable, without stress.

 

Hence, liquidity is more important for you right now than aggressive loan prepayment.

 

2. Evaluate Your Emergency Reserve
You have Rs.3 lakhs in FD and Rs.1.5 lakhs in gold.

 

That makes it Rs.4.5 lakhs total liquid safety.

 

Your EMI is Rs.46,000, and personal expenses will also be there.

 

Ideal emergency fund for you = 6 to 9 months of expenses + EMI.

 

That is around Rs.6 to Rs.8 lakhs minimum.

 

So current emergency fund is slightly lower than ideal.

 

Please don’t use this for loan prepayment now.

 

3. Assess the Role of Mutual Funds
You have Rs.11 lakhs in mutual funds. That’s a solid step.

Now let’s assess whether to redeem this and prepay loan.

 

Should You Redeem Mutual Funds to Prepay?
Mutual funds, over long term, give better post-tax return than loan savings.

 

Loan interest is 8% to 9%, whereas mutual funds can give 11–13% in long term.

 

Especially if funds are equity-oriented and held for 5+ years.

 

You will also get capital gains tax exemption on Rs.1.25 lakhs LTCG annually.

 

If you redeem funds, you lose growth potential and compounding.

 

That hurts long-term wealth building.

 

So, do not redeem the entire Rs.11 lakhs in mutual funds.

 

4. Disadvantage of Early Loan Prepayment in Your Case
Prepaying early will reduce interest over time, yes.

 

But you may run into cash flow stress in slow months.

 

Once money is used to prepay, it cannot be taken back easily.

 

Liquidity once lost = flexibility lost.

 

Also, income tax benefit under Section 24(b) gets reduced if loan balance drops.

 

So it’s better to maintain balance between repayment and investment.

 

5. Best Strategy for You – A Balanced Approach
Let’s now craft the best plan for you.

 

Maintain Strong Liquidity First
Keep FD and gold untouched.

 

Increase emergency fund to at least Rs.6–Rs.7 lakhs.

 

For that, set aside extra Rs.2.5–Rs.3 lakhs from savings over time.

 

This makes your EMI safe even in low-income months.

 

Continue Your Mutual Fund SIPs Without Stopping
SIPs give long-term growth and beat loan interest in most cases.

 

Don’t stop mutual fund investments to prepay loan.

 

Stay invested. Let wealth compound.

 

Start Small and Periodic Prepayments
Don’t do bulk prepayment now. Do systematic small prepayments.

 

For example, Rs.25,000 to Rs.50,000 extra every 3–4 months.

 

When income is higher, use that surplus to prepay in parts.

 

Target 1–2 bulk part-payments per year.

 

This reduces tenure and interest slowly, without affecting liquidity.

 

Track Your Loan Amortisation Every 6 Months
Use netbanking or get a fresh loan statement every 6 months.

 

Check how each prepayment is reducing principal.

 

Adjust your strategy accordingly.

 

Avoid One-Time Full Prepayment
That would kill your long-term investment compounding.

 

Also removes your income tax benefit under Section 24(b).

 

Stay flexible. You are self-employed.

 

You need cash buffers more than salaried people.

 

Final Insights
Do not do bulk home loan prepayment from mutual funds now.

 

Keep SIPs going and maintain your compounding.

 

Grow your emergency fund to Rs.6–7 lakhs minimum.

 

Use surplus months to make small part-payments towards home loan.

 

This protects your peace and builds wealth at the same time.

 

Reassess in 2–3 years. You may be able to prepay more later.

 

You are already in a good financial position. Your thoughtful approach is praiseworthy.

 

Best Regards,
 
K. Ramalingam, MBA, CFP,
 
Chief Financial Planner,
 
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8334 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2025

Money
i wish to purchase new car i10, should i purchase the same through own money or should i take a vehicle loan from bank and the money own by my to be kept as FDR or liquid mutual fund
Ans: It’s a good sign that you’re thinking before buying a car. You’re not rushing into it. That shows maturity and smart thinking.

We will now evaluate own money vs vehicle loan — from every angle.

 

Understanding the Nature of a Car Purchase
A car is not an investment.

 

It is a consumption asset, not a growth asset.

 

It depreciates every year. Its value goes down, not up.

 

So the cheaper the total cost, the better for your wealth.

 

Option 1: Use Own Money Fully
Pros

No interest cost. You save on total expenses.

 

You are free from monthly EMI pressure.

 

Car becomes fully yours from day one.

 

No need to deal with bank, forms, hypothecation etc.

 

Cons

Your liquid money reduces.

 

You may not have enough cash for emergencies.

 

Opportunity loss if you had invested that money.

 

Option 2: Take Vehicle Loan & Keep Own Money in FDR or Liquid Mutual Fund
Let’s evaluate this with care.

Vehicle Loan Pros

You can preserve your savings for emergencies.

 

EMI can be budgeted monthly, if income is stable.

 

Some banks offer competitive interest rates.

 

Vehicle Loan Cons

You will pay interest on a depreciating item.

 

Loan adds to your monthly obligations.

 

You must pay insurance, EMI, fuel, and service together.

 

FDR and Liquid Mutual Funds give lower returns than loan cost.

 

So you will likely lose more in interest than you gain.

 

Let's Compare: Interest Rate vs Investment Return
Vehicle loan interest is usually 9% to 11% per year.

 

FDR gives around 6% to 7% before tax.

 

Liquid mutual funds give 6% to 7.5% on average.

 

So you pay more to the bank than you earn from investment.

 

Tax on interest or gains reduces actual return further.

 

This means taking a car loan and investing your own money leads to net loss.

 

Best Option for You: Smart Compromise Approach
Let me share a wise solution.

 

Don’t use full own money. Don’t take full loan either.

 

Instead, pay 70–80% from own funds.

 

Take a small car loan for the remaining 20–30% only.

 

This keeps EMI low and retains some liquidity.

 

You reduce interest cost and also keep Rs.50,000–Rs.1 lakh aside.

 

Park that in liquid fund for any urgent need.

 

Repay this small loan fast in 1–2 years.

 

Only Take a Car Loan If:
Your job income is stable.

 

You already have 3–6 months emergency fund ready.

 

You don’t have big loans running now.

 

You can pay EMI without affecting savings.

 

You commit to close the loan early.

 

Avoid This Mistake:
Never buy a more expensive car because loan makes it “feel affordable.”

 

Loan should not expand your car budget.

 

Whether you buy with loan or cash, pick a simple car within limits.

 

i10 is a wise, middle-ground choice. Good thought.

 

Tax Angle (If Business Use)
If you are using the car for business, vehicle loan interest may be tax-deductible.

 

But for personal use, there is no tax benefit.

 

So do not take loan just for imagined tax saving.

 

Final Insights
A car is a need, not an investment.

 

Using your own money fully keeps things simple and cheap.

 

Taking a full car loan and investing the money gives net negative return.

 

Best option is a split approach — pay major part from own funds.

 

Take small loan only if needed and close it early.

 

Always keep emergency money aside before buying.

 

Avoid emotional buying or overbudget cars.

 

Your financially balanced approach is very appreciable.

 

Best Regards,
 
K. Ramalingam, MBA, CFP,
 
Chief Financial Planner,
 
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...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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