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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Nov 17, 2022

Mutual Fund Expert... more
Amit Question by Amit on Nov 17, 2022Hindi
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Could you please guide me from where I can invest in mutual funds? Like, should I invest using third party app i.e. Paytm, etc., or, should I invest using their own AMC portal i.e. tata, axis, SBI, L&T, etc? Please let me know safe investment way for future prospects.

Ans: Both ways are fine and safe, via app in one place all the funds can be assessed.

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  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Asked by Anonymous - Jul 14, 2024Hindi
Money
Dear Mr. Ramalingam, I am 44 years old and single. The only investment I have is on PPF. For 15 lakhs. I want to start investing in Mutual funds about 20K per month. A long term investment until I am 58 years old . I have annual 35 lakhs medical insurance . I can invest in high risk as well. Can you please advise me where can I invest in mutual funds please ? Thank you very much in advance .
Ans: Investing in mutual funds is a strategic way to grow your wealth over time. Given your age of 44 and your plan to invest Rs 20,000 per month until you are 58, you have a solid investment horizon. Let's dive into how you can make the most of this opportunity.

Understanding Mutual Funds

Mutual funds are investment vehicles that pool money from many investors to buy a diversified portfolio of stocks, bonds, or other securities. This diversification helps in spreading risk, which is essential for high-risk investments. Considering your openness to high-risk investments, let's explore various mutual fund categories suitable for long-term growth.

Equity Mutual Funds: A High-Growth Potential

Equity mutual funds invest primarily in stocks. They are known for their high growth potential and are ideal for long-term investors. Within equity funds, there are several sub-categories:

1. Large-Cap Funds:

These funds invest in large, well-established companies. While they are less volatile than mid-cap and small-cap funds, they still offer good returns over the long term. Large-cap funds can be the cornerstone of your investment portfolio, providing stability and consistent growth.

2. Mid-Cap Funds:

Mid-cap funds invest in medium-sized companies. These companies have the potential for significant growth, albeit with higher volatility than large-cap funds. Including mid-cap funds in your portfolio can boost returns while balancing risk.

3. Small-Cap Funds:

Small-cap funds invest in smaller companies with high growth potential. These funds are the most volatile but can offer substantial returns. A small allocation in small-cap funds can enhance your portfolio's growth prospects.

4. Flexi-Cap Funds:

Flexi-cap funds invest across large, mid, and small-cap stocks. This flexibility allows the fund manager to adjust the portfolio based on market conditions. Flexi-cap funds provide a balanced approach to risk and return.

Balanced Funds: Diversification with Stability

Balanced or hybrid funds invest in both equities and debt instruments. They offer a balance between growth and stability, making them suitable for investors looking for moderate risk. Within balanced funds, there are aggressive hybrid funds that have a higher allocation to equities and conservative hybrid funds that lean more towards debt instruments.

Debt Funds: Lower Risk with Steady Returns

Debt funds invest in fixed-income securities like government bonds, corporate bonds, and money market instruments. They offer lower risk compared to equity funds but with steady returns. Including a small portion of debt funds in your portfolio can provide stability during volatile market periods.

Sector and Thematic Funds: Targeted Growth

Sector funds invest in specific sectors like technology, healthcare, or finance. Thematic funds follow a particular investment theme, such as infrastructure or consumption. These funds can provide high returns if the sector or theme performs well. However, they come with higher risk due to their concentrated nature.

International Funds: Global Diversification

International funds invest in global markets, offering diversification beyond the Indian economy. They can be a valuable addition to your portfolio, providing exposure to international growth opportunities and mitigating country-specific risks.

SIP: The Smart Way to Invest

A Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly, such as Rs 20,000 per month. SIPs help in averaging the purchase cost and mitigate the impact of market volatility. They instill financial discipline and are ideal for long-term wealth creation.

The Power of Compounding

Investing Rs 20,000 per month for 14 years can lead to significant wealth accumulation due to the power of compounding. Compounding means earning returns on both your initial investment and the returns generated. Starting early and staying invested is key to maximizing this benefit.

Asset Allocation: The Key to Risk Management

Diversifying your investments across different asset classes is crucial for managing risk. A well-balanced portfolio might include a mix of equity, balanced, and debt funds. As you approach your retirement age, gradually shifting towards more stable investments can protect your accumulated wealth.

Tax Efficiency: Maximizing Your Returns

Mutual funds offer tax benefits that can enhance your overall returns. Equity funds held for more than one year qualify for long-term capital gains (LTCG) tax at a favorable rate. Equity-Linked Savings Schemes (ELSS) provide tax deductions under Section 80C, making them a tax-efficient investment option.

Regular Review and Rebalancing

Regularly reviewing and rebalancing your portfolio ensures it stays aligned with your financial goals and risk tolerance. Market conditions change, and so do your personal circumstances. Adjusting your investments accordingly helps in maintaining an optimal portfolio.

Choosing the Right Funds

While specific scheme recommendations are beyond this discussion, selecting funds managed by reputable fund houses with a consistent track record is essential. Look for funds with a clear investment strategy and strong performance history. Consulting a Certified Financial Planner can help tailor your investment choices to your unique needs.

Avoiding Common Pitfalls

Investing in mutual funds requires patience and discipline. Avoid timing the market or making impulsive decisions based on short-term market movements. Stick to your investment plan, and focus on long-term growth.

The Role of a Certified Financial Planner

A Certified Financial Planner (CFP) can provide personalized advice, helping you navigate the complexities of mutual fund investments. They can assist in creating a comprehensive financial plan, ensuring your investments align with your long-term goals.

Staying Informed and Educated

Keeping yourself informed about market trends and mutual fund performance is crucial. Regularly reading financial news, attending investment seminars, and staying updated with fund house communications can empower you to make informed decisions.

Appreciating the Journey

Investing is a journey towards financial independence and security. Your decision to invest Rs 20,000 per month in mutual funds is commendable. It shows foresight and a commitment to securing your future. Celebrate each milestone, and stay focused on your goals.

Health and Wealth: A Balanced Approach

While building wealth is important, maintaining good health is equally crucial. Your annual medical insurance coverage of Rs 35 lakhs is a wise move. It ensures you have a safety net for unforeseen medical expenses, allowing you to focus on your financial goals without worry.

Market Volatility: Staying Calm and Composed

Market fluctuations are a part of investing. During volatile periods, it’s essential to stay calm and avoid making hasty decisions. Trust in your investment plan and remember that market downturns are often followed by recoveries.

Inflation: The Silent Eroder

Inflation erodes the purchasing power of your money over time. Investing in mutual funds, particularly equity funds, helps combat inflation by providing returns that outpace inflation. This ensures your wealth grows in real terms.

Retirement Planning: A Long-Term Vision

Your goal of investing until 58 aligns with a long-term vision for retirement. Building a substantial corpus through mutual funds will provide you with financial independence and the ability to enjoy your retirement years without financial stress.

Regular Investments: The Path to Success

Consistency is key to successful investing. Regular investments through SIPs ensure you stay committed to your financial goals. Even during market lows, continue investing to benefit from lower purchase costs and higher future returns.

Final Insights

Investing in mutual funds is a smart choice for long-term wealth creation. By diversifying across different fund categories and staying committed to your investment plan, you can achieve your financial goals. Your readiness to take on high risk for potentially higher returns is commendable. Keep educating yourself, consult with a Certified Financial Planner, and stay focused on your long-term vision.

Investing is a journey, and each step you take brings you closer to financial independence. Keep up the great work, and enjoy the fruits of your disciplined approach.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 04, 2024

Money
Hello sir . I am 43. I want to invest in mutual funds.but which is the best and safest platform for investment sir.
Ans: Investing in mutual funds is a wise decision that can offer great growth potential. However, the choice of platform for investing is crucial. While online platforms have become popular, investing through a certified Mutual Fund Distributor (MFD) stands out for several reasons. I will discuss why choosing an MFD is often a better option, especially for Indian investors like you, and address some important aspects of mutual fund investments.

Let's walk through some critical points.

The Human Touch of MFDs vs. Online Platforms

Online platforms might look convenient at first glance. But they cannot replace the personalized, human touch of a professional MFD.

Certified Financial Planners and MFDs can give you tailored advice. They understand your unique financial goals and family needs.

Emotional guidance is another vital aspect that no online platform can provide.

Investing is not just about numbers. There are emotional ups and downs, especially in volatile markets. MFDs can help you remain calm during these times. This keeps you from making hasty or emotional decisions.

Online platforms are good for those who have deep knowledge of the markets. But for regular investors, a trusted human MFD is a better guide.

Actively Managed Funds Over Index Funds

Actively managed mutual funds are a great option for those looking for higher returns. Fund managers actively track the market and make decisions to beat the benchmark index. This personalized touch often brings in better returns, especially in markets like India.

Index funds, while simple and cheap, don't perform as well in volatile or emerging markets. They just mirror the market index, and there's no active management involved. This might work in developed markets, but in India, active funds often do better.

Also, index funds don’t give you protection during market crashes. When the market falls, the entire index fund value also falls. In contrast, actively managed funds can take defensive positions and protect your investment.

So, avoid getting attracted to the low-cost structure of index funds. It's better to focus on performance and risk management.

Regular Funds vs. Direct Funds

Another key decision is whether to invest in direct mutual funds or regular funds through an MFD.

Direct funds might seem cheaper because they don’t have distributor commissions. However, the hidden risk is that you’re on your own. You don’t get professional advice, which can cost you in the long term.

Regular funds come with professional guidance from an MFD, who helps you track your investments and advises when to buy or sell.

Most investors don’t have the time or expertise to track and rebalance their portfolios regularly. This is where an MFD steps in and makes life easier.

The small cost you pay for this service is well worth it in the long run, as you’ll likely earn better returns with sound advice.

The Importance of Diversification

Any good MFD will recommend diversification in your mutual fund investments. This means spreading your money across various sectors, asset classes, and fund types.

By diversifying, you reduce the risk of heavy losses. If one sector or asset class performs poorly, others can compensate.

For example, you can invest in equity, debt, and hybrid funds. Equity funds offer higher growth potential, while debt funds offer stability and safety. A mix of both gives a balanced approach.

An MFD helps you choose the right funds that align with your risk tolerance and goals. They will ensure you don’t put all your eggs in one basket, which online platforms rarely focus on.

Emotional Discipline in Volatile Markets

Investing through an MFD helps you maintain emotional discipline during volatile market conditions.

Online platforms can be tempting, as they allow you to react quickly to market changes. But this can lead to impulsive decisions like selling in panic during a market crash.

An MFD will help you stay calm, reminding you of the long-term strategy. This ensures you don’t make decisions based on short-term market noise.

Mutual fund investments should be treated like a marathon, not a sprint. Long-term patience often results in better returns.

Taxation of Mutual Funds: New Rules Explained

It’s also important to understand how mutual funds are taxed.

For equity mutual funds, Long-Term Capital Gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.

Debt mutual funds follow your income tax slab rates for both long-term and short-term gains.

It’s crucial to plan your investments keeping these tax rules in mind. A good MFD will help you optimize your investment plan to minimize tax liabilities. They can guide you on when and how to redeem your funds to reduce tax burdens.

The Role of Certified Financial Planners in Mutual Fund Investments

Certified Financial Planners (CFPs) add value by understanding your entire financial situation. They take a holistic approach, considering your goals, family needs, and risk appetite.

They are well-trained professionals who can guide you through life stages—whether you’re planning for retirement, your child's education, or saving for a big purchase.

A CFP will also consider your non-mutual fund investments, like PF, PPF, or insurance policies, to give you a comprehensive investment strategy.

They focus not only on wealth creation but also on wealth protection. If you have insurance policies that aren't performing well, a CFP can suggest alternatives like mutual funds to boost your returns.

Investment Strategy for Specific Goals

Investing in mutual funds should always align with your financial goals.

For example, if you’re saving for your child’s education, you may need a combination of equity and debt funds to match your time horizon. Equity funds will help you grow your investment, while debt funds will provide stability as you approach the goal.

If you're saving for retirement, an MFD can create a plan that balances risk and reward based on how many years you have left before retirement.

The key is to invest with a goal in mind. Random investments often lead to lower returns or missed opportunities.

Final Insights

Choosing the right platform and method for investing in mutual funds is a crucial decision. While online platforms offer convenience, they lack the personalized touch and emotional guidance that comes from an experienced MFD.

Investing is not just about numbers; it’s about staying disciplined, especially during market volatility. An MFD provides that extra layer of comfort and assurance, ensuring that your investments stay aligned with your goals.

By focusing on actively managed funds, regular plans, and maintaining emotional discipline, you can maximize your returns and reduce risks. Diversification, goal-based investing, and tax planning are essential parts of a successful investment strategy.

In conclusion, always remember that investing is a long-term journey. Choose a certified MFD to guide you through this journey with wisdom and care.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

..Read more

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Milind

Milind Vadjikar  |702 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 26, 2024

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Hi Experts, I seek your guidance on my mutual fund portfolio. Below are the details: Total Portfolio Details: - Total Invested Amount: ?15,76,159 - Current Value: ?19,35,234 - Total Returns: ?3,59,075 (+22.78%) - XIRR: 20.75% Monthly SIP Contribution: ?1,18,000 Breakdown of monthly SIP contributions across funds: 1. Parag Parikh Flexi Cap Fund Direct Growth – ?30,000 2. SBI Large & Midcap Fund Direct Plan Growth – ?15,000 3. SBI Magnum Mid Cap Fund Direct Plan Growth – ?20,000 4. Nippon India Large Cap Fund Direct Growth – ?30,000 5. Nippon India Small Cap Fund Direct Growth – ?7,500 6. ICICI Prudential Technology Direct Plan Growth – ?10,000 7. Quant Small Cap Fund Direct Plan Growth – ?7,500 8. HSBC Small Cap Fund Direct Growth – ?5,000 9. Edelweiss US Technology Equity Fund of Funds Direct Growth – ?5,000 Can you suggest if I am on track to create 5 CR corpus in 10 years I have ?25 lakh invested in a Fixed Deposit (FD) in my mother’s account, earning an interest rate of 7.75%, to generate tax-free returns. Additionally, I’m planning to purchase a plot worth ?30–50 lakh in the next 1–2 years. Is it a good idea to keep the money in FD for now, or are there better short-term investment options I should consider to maximize returns while keeping the funds accessible for my future purchase? Looking forward to your suggestions! Thank you!
Ans: Hello;

Your monthly sip value adds upto 1.3 L however you have claimed it to be 1.18 L. (Maybe a typo).

Existing corpus(19.35 L) and monthly sip (1.3 L) won't reach 5 Cr in 10 years.

You have two options to make it happen:

1. Increase monthly sip amount to 1.9 L.

2. Top-up current monthly SIP of 1.3 L by minimum 10% each year for 10 years.

Both ways will lead you to a corpus of 5 Cr over 10 years.

You may consider money market mutual funds for parking your funds for a 1 year horizon. Returns may be comparable to FD returns but with flexibility to withdraw anytime. They typically have low to moderate risk.

Happy Investing;
X: @mars_invest

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Nayagam P

Nayagam P P  |3928 Answers  |Ask -

Career Counsellor - Answered on Nov 26, 2024

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Is doing BBA + Law (Honors) from BITS Law is worth
Ans: Anju, prior to addressing the question, I would like to draw your attention to a recent article in 'The Times of India' which indicates that a majority of law graduates tend to favor employment in corporate settings over practicing in courts. Now, coming to your question, please note, BITS Law School's BBA + LLB (Hons) program is a 5-year program that combines business administration with legal studies. The program focuses on areas such as corporate law, intellectual property, business laws, and dispute resolution. The program offers a strong multidisciplinary approach, preparing students for careers in corporate law, legal consultancy, and management. Its strengths include a business + legal acumen curriculum, industry-driven curriculum, and a reputation for excellence in education and placement opportunities. However, it lacks the legacy and alumni network of top-tier law schools and can be expensive. Career opportunities include corporate and business law, management roles, consulting, entrepreneurship, academia/research, international arbitration, cyber and technology law, corporate governance, and intellectual property rights. The program is worth considering if you aim for a corporate or business law career, are comfortable with the cost and value of the BITS brand, and have excellent industry connections and internships. Build your profile well by the time you complete your BBA+LLB & improve your all other skills required. All the BEST for Your Prosperous Future.

To know more on ‘ Careers | Education | Jobs’, ask / follow Us here in RediffGURUS.

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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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