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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Nov 04, 2022

Mutual Fund Expert... more
Sanjay Question by Sanjay on Nov 04, 2022Hindi
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My goal is long term 15 years and building wealth. I am 46 and have a medium to high risk profile. I Invest 3k to 5k in the following funds. Somewhere I have lost track and increased my portfolio and started investing in multiple funds (Direct and Regular). This was mainly due to switch between different fund houses. I know I messed a bit.

Let me know to exit / rebalance. All funds started in 2016. Separately I have around 10L in debt funds.

SIP and fund name - Direct MF

1. Nippon India large cap fund - 3k

2. L&T value fund growth - 3k

3. ICICI prudential bluechip - 3k

4. Mirae asset emerging blue chip - 5k

5. Axis long term equity - 3k

6. Motilal Oswal 25 fund - 3k

7. HDFC gold direct - 3k

8. ICICI prudential Pharma - 3k

9. Axis small cap growth - 5k

10. ICICI prudential US bluechip eq- 3k

11. ICICI prudential flexi cap - 3k

12. Nippon India Taiwan - 3k

13. HDFC hybrid - 5L no SIP.

Ans: Continue with 4, 5, 6, 9 and 10

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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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on May 13, 2022

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I am 37 years old. I have been investing in Mutual Funds since June 2017. I am an aggressive investor ready to take risks. My investment horizon is long term. I am investing for my Son's higher education which is 13 years away and also for my retirement which is 23 years away. My portfolio comprises of the following mutual funds. 1) HDFC Midcap Opportunities fund Regular growth - ₹4100/- per month with top up of 10% every year.  2) L&T hybrid equity fund Regular growth - ₹5000/- per month with top up of ₹500/- every year.  3) Aditya Birla Sun Life pure value fund Regular growth - ₹4500/- per month with top up of ₹500/- every year.  4) L&T Midcap Fund Regular growth -₹6000/- per month with top up of ₹500/- every year.  5) L&T Emerging Businesses Fund Regular growth -₹6000/- per month with top up of ₹500/- every year.  6) L&T Tax Advantage fund Regular growth -₹4500/- per month with top up of₹500/- every year.  7) Aditya Birla Sun Life Tax Relief '96 fund Regular growth - ₹5000/- per month with top up of ₹500/- every year.  8) UTI Flexi Cap fund Direct growth - ₹1000/- per month.  9) DSP Midcap fund Direct growth - ₹1000/- per month with top up of ₹500/- every year.  10) DSP Equity Opportunities fund Direct growth - ₹1000/- per month with top up of ₹500/- every year.  11) DSP Flexi Cap fund Direct growth - ₹1000/- per month with top up of ₹500/- every year.  12) Aditya Birla Sun Life Equity Advantage fund Direct growth - ₹1000/- per month with top up of ₹500/- every year.  13) Aditya Birla Sun Life Flexi Cap fund - Direct growth - ₹1000/- per month with top up of ₹1000/- every year.  14) ICICI Prudential Technology Plan Direct growth - ₹1000/- per month.  15) Nippon India Small Cap fund Direct growth - ₹1000/- per month with top up of ₹500/- every year.  16) Kotak Emerging Equity fund Direct growth plan - ₹1000/- per month with top up of ₹500/- every year.  17) L&T Flexi Cap fund Direct Growth plan - ₹1000/- per month.  Am I on the right track/path of investing? Please suggest necessary changes in the above portfolio if any or should I continue with the above mutual funds.Also suggest which funds should I Add/Remove from the above portfolio. 
Ans: Too many funds, keep 1 fund in same / similar category. No further addition please! 

..Read more

Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Feb 29, 2024Hindi
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Hello I'm working in private sector and my age is 34. Currently i'm investing in 7 mutual funds for longterm wealth creation. Rs1000 in Quant Small Cap Fund Direct Plan Growth, Rs1000 in Quant Mid Cap Fund Direct Growth, Rs1000 in Quant ELSS Tax Saver Fund Direct Growth, Rs1000 in Parag Parikh Flexi Cap Fund Direct Growth, Rs1000 in Nippon India Nifty Smallcap 250 Index Fund Direct Growth, Rs1000 in Motilal Oswal Nifty Midcap 150 Index Fund Direct Growth, Rs1000 in DSP Nifty 50 Equal Weight Index Fund Direct Growth. Please let me know if you see any need for corrections or changes in my portfolio. Thank you.
Ans: Evaluating and Optimising Your Mutual Fund Portfolio
Commendation on Your Investment Strategy
First, congratulations on your commitment to long-term wealth creation. At 34, you have ample time to grow your investments, and your diversified approach is commendable. Investing in mutual funds is a smart way to build wealth over time.

Analysis of Your Current Portfolio
Understanding Your Choices:

You are currently investing Rs. 1,000 each in seven mutual funds. Your portfolio includes small-cap, mid-cap, ELSS tax saver, flexi-cap, and index funds. This diversification helps spread risk across different market segments.

Pros:

Diversification: Your investments cover various market capitalisations and sectors, reducing risk.
Growth Potential: Small-cap and mid-cap funds can offer high growth potential over time.
Tax Savings: ELSS funds provide tax benefits under Section 80C.
Cons:

Overlapping Investments: Multiple funds in similar categories can lead to overlapping, reducing overall diversification.
Management Effort: Managing many funds can be time-consuming and may require frequent monitoring.
Assessing Direct Funds vs. Regular Funds
Direct Funds:

Lower Expense Ratios: Direct funds have lower expense ratios, meaning more of your money is invested.
Requires Expertise: Direct investing requires a good understanding of the market and funds.
Regular Funds:

Professional Guidance: Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) provides expert advice.
Active Management: Professional fund managers actively manage your investments, aiming to outperform the market.
Evaluating Actively Managed Funds vs. Index Funds
Actively Managed Funds:

Potential for Higher Returns: Fund managers actively select stocks to beat the market, potentially offering higher returns.
Personalised Management: These funds can be tailored to market conditions and investment goals.
Index Funds:

Market Performance: Index funds aim to replicate the market, which may limit returns.
Lower Fees: They generally have lower fees but lack the flexibility of active management.
Suggested Portfolio Adjustments
To optimise your portfolio, consider the following adjustments:

Reduce Overlap:

Consolidate Funds: Streamline your investments by consolidating funds with similar objectives. This reduces overlap and simplifies management.
Increase Active Management:

Professional Management: Shift some investments from index funds to actively managed funds. This leverages the expertise of professional managers.
Balance Risk and Return:

Diversify Wisely: Ensure a good mix of high-growth potential funds and stable investments. This balances risk and return effectively.
Empathy and Understanding Your Financial Goals
Your dedication to investing and building wealth is admirable. It’s essential to align your investments with your long-term goals. By reviewing and adjusting your portfolio, you can enhance its performance and achieve financial success.

Conclusion
Your current investment strategy is on the right track. With some adjustments and professional guidance, you can optimise your portfolio for better returns. Diversification, professional management, and balancing risk will help you achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

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Hi Vivek.. I am 42 years old.. Have accumulated around 1.3 Crores as of today in MF(51.5 L), PPF/SSY (36 L) and EPF(46 L). Target is to reach around 10 crores in the next 13-15 years. I am a High Risk investor. I am investing in the below mutual funds for a minimum tenure of another 13 years.. UTI Nifty 50 Index (13k), Mirae Asset Large and Midcap (3k), UTI Nifty 200 Momentum 30 (18k), Quant Midcap (35k), Invesco India Midcap (35k) , Axis Small Cap (18k), Parag Parikh Flexicap (20k) and Quant Flexicap (20k) and Mirae Asset MidSmall400 Momentum Quality 100 ETF FoF (18k). Apart from this will continue investing in PPF (1.5 L yearly), Sukanya Samriddhi Yojana (1.5 L yearly) and EPF (3.4 L yearly). Am I aligned to reach the goal with the funds selected or any changes needs to be done. Pls. suggest.
Ans: Assessment of Current Portfolio

You've done a commendable job of accumulating Rs. 1.3 crores across mutual funds, PPF, SSY, and EPF. Your goal of reaching Rs. 10 crores in the next 13-15 years is ambitious yet achievable given your high-risk appetite and consistent investment strategy. Let's break down your portfolio and investment strategy to see if you're on the right track.

Mutual Fund Investments

Your mutual fund investments are diversified across various categories:

Large-cap funds for stability
Mid-cap and small-cap funds for higher growth potential
Flexi-cap funds for a balanced approach
This diversification is crucial for managing risk and optimizing returns. However, there are a few points to consider:

High Allocation to Mid-cap and Small-cap Funds: While mid-cap and small-cap funds offer higher growth potential, they are also more volatile. Ensure that you are comfortable with this level of risk, especially since a significant portion of your investments is in these categories.

Momentum Funds: Momentum funds can offer good returns during bullish markets but can be risky in volatile markets. Monitor these investments closely and be prepared to rebalance if needed.

Flexi-cap Funds: These funds provide flexibility in allocation and can adjust according to market conditions, which is beneficial. Keep a close eye on the fund managers' performance to ensure they are capitalizing on this flexibility effectively.

Disadvantages of Index Funds and Direct Funds

Index Funds: While index funds are low-cost and provide market-average returns, they lack the potential for outperformance. Actively managed funds, like the ones you have, can potentially deliver higher returns due to active stock selection and market timing.

Direct Funds: Direct funds may save on expense ratios but lack the professional advice and guidance provided by mutual fund distributors (MFDs) with CFP credentials. Regular funds, through an MFD, offer ongoing advice, market insights, and portfolio reviews, which are invaluable for long-term financial planning.

PPF, SSY, and EPF Investments

Your continued investments in PPF (Rs. 1.5 lakhs yearly), SSY (Rs. 1.5 lakhs yearly), and EPF (Rs. 3.4 lakhs yearly) provide a solid foundation of safe and tax-efficient returns. These instruments offer guaranteed returns and tax benefits, which are essential for risk management and ensuring a stable portion of your portfolio.

Suggestions for Improvement

Review Fund Performance Regularly: Actively review the performance of your mutual funds. Ensure they consistently outperform their benchmarks and peers. If a fund underperforms over an extended period, consider switching to a better-performing alternative.

Consider Professional Advice: Engage with a Certified Financial Planner (CFP) to review your portfolio periodically. They can provide personalized advice, help you navigate market volatility, and make informed decisions.

Rebalance Your Portfolio: Regularly rebalance your portfolio to maintain your desired asset allocation. This ensures you are not overexposed to any single asset class and helps in managing risk.

Emergency Fund: Ensure you have an adequate emergency fund in place. This should cover at least 6-12 months of your expenses. It provides a safety net during unforeseen circumstances without disturbing your investment strategy.

Final Insights

You have a well-diversified portfolio aligned with your high-risk tolerance and long-term goals. Your disciplined approach to investing in mutual funds, PPF, SSY, and EPF is commendable. Regular reviews, professional advice, and portfolio rebalancing will help you stay on track to achieve your goal of Rs. 10 crores in the next 13-15 years.

Stay focused and keep monitoring your investments to ensure they continue to meet your financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 05, 2024

Money
Hi Dev.. I am 42 years old.. Have accumulated around 1.3 Crores as of today in MF(51.5 L), PPF/SSY (36 L) and EPF(46 L). Target is to reach around 10 crores in the next 13-15 years. I am a High Risk investor. I am investing in the below mutual funds for a minimum tenure of another 13 years.. UTI Nifty 50 Index (13k), Mirae Asset Large and Midcap (3k), UTI Nifty 200 Momentum 30 (18k), Quant Midcap (35k), Invesco India Midcap (35k) , Axis Small Cap (18k), Parag Parikh Flexicap (20k) and Quant Flexicap (20k) and Mirae Asset MidSmall400 Momentum Quality 100 ETF FoF (18k). Apart from this will continue investing in PPF (1.5 L yearly), Sukanya Samriddhi Yojana (1.5 L yearly) and EPF (3.4 L yearly). Am I aligned to reach the goal with the funds selected or any changes needs to be done. Pls. suggest.
Ans: You're doing a great job with your investments. At 42 years old, you've accumulated around Rs 1.3 crores in various investment avenues. That's commendable. You're on the right track towards your goal of Rs 10 crores in the next 13-15 years. Let’s analyze and evaluate your current investment strategy, its alignment with your goals, and potential areas of improvement.

Mutual Fund Investments: A Deep Dive
Overview and Assessment
You've diversified your mutual fund investments across various categories, which is a good strategy. Here's a closer look:

UTI Nifty 50 Index and UTI Nifty 200 Momentum 30: These funds focus on large-cap stocks and momentum strategies. While they offer stability, they might not match your high-risk appetite. Actively managed funds could provide better returns.

Mirae Asset Large and Midcap: This fund offers a balance between large and mid-cap stocks, providing a mix of stability and growth potential.

Quant Midcap and Invesco India Midcap: Midcap funds offer higher growth potential but come with increased volatility.

Axis Small Cap: Small-cap funds can offer high returns but are riskier. Given your high-risk tolerance, this fits well in your portfolio.

Parag Parikh Flexicap and Quant Flexicap: Flexicap funds provide the flexibility to invest across market capitalizations, which can be beneficial in changing market conditions.

Mirae Asset MidSmall400 Momentum Quality 100 ETF FoF: This fund focuses on momentum and quality factors, aligning with your aggressive investment style.

Analysis and Recommendations
Actively Managed Funds Over Index Funds

Your portfolio includes index funds like UTI Nifty 50 Index. Index funds track market indices, offering average market returns. Actively managed funds can potentially outperform index funds due to skilled fund management, especially in a high-risk strategy. Consider reallocating some investments from index funds to actively managed large-cap funds.

Risk and Reward Balance

You're heavily invested in midcap and small-cap funds, which aligns with your high-risk tolerance. However, ensure you're comfortable with the potential volatility. Maintaining a balance with some stable large-cap or balanced advantage funds could cushion against market downturns.

Regular Monitoring and Adjustments

It's essential to regularly review and adjust your portfolio based on market conditions and fund performance. Consider consulting a Certified Financial Planner (CFP) for personalized advice.

Power of Compounding and Long-Term Growth
Compounding: Your Best Ally
The power of compounding is your best ally in achieving your Rs 10 crore goal. Reinvesting earnings generates earnings on earnings, exponentially increasing your wealth over time. With a 13-15 year horizon, your investments have ample time to grow significantly through compounding.

Systematic Investment Plans (SIPs)
Your SIPs in mutual funds are a disciplined approach to investing, mitigating market volatility and averaging cost. Continue this strategy, as it leverages the power of compounding effectively.

Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY)
Stability and Tax Benefits
Your annual investments in PPF (Rs 1.5 lakh) and SSY (Rs 1.5 lakh) offer stability and tax benefits under Section 80C. These instruments provide guaranteed returns and are risk-free, balancing your high-risk mutual fund investments.

Employee Provident Fund (EPF)
Secure and Reliable
Your EPF contributions (Rs 3.4 lakh yearly) offer a secure, long-term saving avenue with tax benefits. The EPF is a cornerstone for retirement planning, providing a steady growth rate.

Evaluating Your Current Strategy
Alignment with Goals
Your current strategy is robust, focusing on a mix of high-risk, high-reward mutual funds and stable, tax-efficient instruments like PPF, SSY, and EPF. This diversified approach aligns well with your Rs 10 crore goal.

Potential Adjustments
Increase Allocation to Actively Managed Funds: Shift some investments from index funds to actively managed funds to potentially enhance returns.
Diversify Within High-Risk Funds: Ensure your high-risk mutual fund portfolio is diversified across various sectors to mitigate specific sector risks.
Regular Reviews: Conduct regular portfolio reviews and rebalancing to stay aligned with market conditions and personal goals.
Final Insights
Your proactive approach to financial planning is commendable. You've created a diversified portfolio with a mix of high-risk mutual funds and stable, tax-efficient investments. This strategy is well-aligned with your goal of accumulating Rs 10 crores in the next 13-15 years.

Consider the following:

Reallocate some investments from index funds to actively managed funds for potentially higher returns.
Maintain a balance between high-risk and stable investments to cushion against market volatility.
Regularly review and adjust your portfolio to stay on track with your goals.
Stay disciplined with your SIPs and leverage the power of compounding. Your commitment to a long-term investment horizon will pay off.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

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

Asked by Anonymous - Nov 12, 2024Hindi
Money
I am investing 100000 every month as SIP and 50000 annually. My present SIP Corpus is nearly 2Cr. How much is expected to be the total corpus in 2030 if I manage to continue the same investment model.
Ans: I appreciate your consistent commitment to investing. Systematic Investment Plans (SIPs) and annual investments are powerful tools to build substantial wealth over the long term. Your current SIP portfolio is already impressive, and with continued discipline, you are well on your way to achieving significant financial goals by 2030.

Below, I will offer a detailed breakdown of your current investment strategy and provide an in-depth assessment to project where your portfolio could potentially reach by 2030. Additionally, I will share some insights on how you can maximise your investment returns while keeping your tax efficiency in mind.

Let’s explore the factors that will influence your future corpus.

1. Current Investment Strategy: A Strong Foundation
You are currently investing Rs 1,00,000 monthly through SIPs and an additional Rs 50,000 annually.

Your present SIP corpus stands at Rs 2 Crore, which shows your disciplined approach.

Continuing this strategy till 2030 will be highly beneficial, given the power of compounding over time.

The consistent monthly SIP ensures rupee cost averaging, reducing market volatility impact.

2. Estimated Growth of Your SIP Corpus by 2030
Assuming you continue with Rs 1,00,000 monthly SIP and Rs 50,000 annually, your investments will grow significantly.

The market’s historical average returns for equity mutual funds can range between 10% to 15% per annum. However, actual returns can vary due to market conditions.

Compounding will exponentially boost your returns, especially if you remain invested without withdrawals.

By 2030, your SIP portfolio can potentially cross Rs 6 Crore, given stable market conditions.

This estimate considers a conservative growth rate. However, equity markets have been known to outperform during bullish periods.

3. Active Fund Management: The Better Choice
Many investors lean towards index funds, but actively managed funds often outperform in the Indian context.

Active funds have skilled fund managers who adjust portfolios based on market dynamics.

They can exploit opportunities in specific sectors and stocks to generate alpha over benchmarks.

Index funds, while low-cost, are purely passive. They mirror indices without considering market trends.

Actively managed funds may have higher expense ratios, but the potential for superior returns justifies the cost.

Especially in volatile or uncertain markets, active fund management can make a substantial difference.

4. Investing Through a Mutual Fund Distributor (MFD)
Direct funds may seem cost-effective as they have lower expense ratios. However, they lack professional guidance.

Regular funds, managed through an MFD with a Certified Financial Planner (CFP) credential, offer holistic support.

An MFD can help you align your investments with your financial goals, provide tax planning, and adjust your portfolio as needed.

Regular reviews by an MFD ensure your portfolio is optimised for changing market conditions.

Direct funds require you to track performance, handle documentation, and monitor taxation—all on your own.

Engaging with a Certified Financial Planner through MFDs helps you focus on strategy, not execution.

5. Tax Implications: Managing Your Gains Efficiently
The recent tax changes impact equity mutual funds’ gains. Long-term capital gains (LTCG) over Rs 1.25 lakh are taxed at 12.5%.

Short-term gains (STCG) are taxed at 20%, while debt funds’ gains are taxed as per your income slab.

Efficient tax planning is crucial. Consult with your CFP to time redemptions and optimise tax liabilities.

Regular fund investments offer better tax management compared to direct funds, given the advisory support.

6. Market Volatility and Economic Factors
While investing in equity funds, market volatility is a reality. However, the long-term growth potential outweighs short-term fluctuations.

SIPs protect your investments from timing the market. Rupee cost averaging ensures that you buy more units when prices are low.

Focus on staying invested even during market downturns. History shows markets rebound, and long-term investors benefit the most.

With India's economic growth prospects, equity funds have the potential to deliver strong returns in the coming years.

7. Diversification and Portfolio Rebalancing
Continue diversifying within mutual funds to reduce concentration risk.

Allocate your SIPs across large-cap, mid-cap, and multi-cap funds for a balanced approach.

Rebalance your portfolio annually with your Certified Financial Planner to align with changing market conditions.

Consider thematic or sectoral funds cautiously, as they carry higher risks.

Reinvest dividends and gains to harness compounding benefits further.

8. Emergency Fund and Liquidity Considerations
Maintain a separate emergency fund to cover at least 6 months of expenses. This will prevent premature withdrawals from your SIPs.

Avoid liquidating your investments for short-term needs. Instead, use other sources like fixed deposits or liquid funds.

9. Aligning Investments with Financial Goals
Define clear goals, such as retirement planning, children’s education, or buying a property.

Each goal requires a tailored investment approach. For instance, retirement planning should focus on growth funds.

Engage with your Certified Financial Planner for goal-based investment planning.

Long-term SIPs work best when aligned with specific objectives, ensuring a disciplined approach.

10. Tracking and Monitoring Your Investments
Review your portfolio semi-annually to ensure it’s performing as expected.

Monitor fund performance and exit underperformers if needed, based on your Certified Financial Planner’s advice.

Keep an eye on changes in taxation rules and market regulations that could impact your returns.

Ensure your SIPs continue automatically. If cash flows change, adjust SIP amounts accordingly.

Finally: Staying Committed to Your Financial Journey
The journey to Rs 6 Crore or beyond is achievable with consistency.

Avoid impulsive decisions based on short-term market movements.

Keep your focus on the long-term horizon and stick to your investment plan.

Seek periodic advice from your Certified Financial Planner to stay on track.

The discipline and patience you’ve shown so far are commendable. Continue this momentum.

By following these strategies, your SIP investments can help you achieve significant financial milestones by 2030 and beyond.

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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