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Is My 15-20 Year MF Investment Plan Through SIP in These Funds Good?

Ramalingam

Ramalingam Kalirajan  |7952 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 20, 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
Anil Question by Anil on Dec 18, 2024Hindi
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Hi Gurus , Finally last month I have started my investment in MF thru sip in following funds *Hdfc mid cap direct 4k* *tata small direct 4k* *Sbi bluechip direct4k* *Paragh flexi direct 4k* I did all sip through grow app I will wait next 15- 20years is this good any suggestions

Ans: Investing in mutual funds is a step in the right direction. Your portfolio showcases diversity and long-term focus. A 15–20-year horizon is excellent for wealth creation. Let’s review and refine your strategy.

Portfolio Review
Mid-Cap Funds
Mid-cap funds offer a mix of growth and risk. They outperform large-caps over the long term.

Small-Cap Funds
Small-cap funds are ideal for aggressive growth. However, they are more volatile.

Large-Cap Funds
Large-cap funds provide stability in your portfolio. They act as a cushion during downturns.

Flexi-Cap Funds
Flexi-cap funds are versatile. They allocate dynamically across market capitalisations.

Disadvantages of Direct Funds
While direct funds save commission costs, they require constant monitoring.

Professional Expertise Lacking
A Certified Financial Planner (CFP) ensures a well-structured portfolio.

Market Timing Risk
Direct investors may make emotional decisions during volatility.

Portfolio Review
Regular funds offer continuous reviews by professionals.

Holistic Financial Guidance
An MFD with CFP certification provides personalised investment advice.

Suggestions for Improvement
Your portfolio is good but can be fine-tuned for better results.

Diversification Across Categories
Add a hybrid or balanced fund to reduce risk.

Sectoral Funds
If confident, allocate a small portion to sectoral funds.

Avoid Overlapping Funds
Check for duplication of holdings in existing funds.

Taxation Impact
New taxation rules make tax-efficient investing important.

Equity Funds
Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.

Short-Term Capital Gains
Gains from investments held for less than one year are taxed at 20%.

Plan Tax-Efficient Withdrawals
Use these rules for optimal tax management at redemption.

Benefits of Staying Invested
Compounding Benefits
Long-term investing amplifies wealth through compounding.

Mitigates Volatility
Staying invested reduces the impact of market fluctuations.

Goal-Oriented Investing
A 15–20-year horizon aligns with long-term goals.

Actionable Steps
Consolidate Portfolio
Avoid too many funds. Stick to 4–5 well-performing ones.

Periodic Reviews
Review your portfolio every year with a CFP for alignment with goals.

Reinvest in Underperformers
Switch funds only if underperformance persists for 2–3 years.

Consider Professional Advice
Switch from direct to regular funds for expert guidance.

Final Insights
Your SIP strategy is on the right track. Small adjustments can optimise it further. Focus on professional advice and consistent reviews to maximise returns.

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.
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Ramalingam

Ramalingam Kalirajan  |7952 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 27, 2024

Asked by Anonymous - Jan 28, 2024Hindi
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I am 38 yr old with 2 daughters 14 n 7 yrs old. I earn a monthly salary of 50k per month.I have invested in SIP just since last 4 months. Aditya Birla Sun Life digital India fund growth: 3000/- ICICI prudential commodities fund direct growth: 500/- Quant small cap : 1000/- SSY: 1000/- I have a monthly emi of 15k. And other expenses of 15k Please help with me know if the MF are fine to go ahead or should I stop. If so...pl suggest better ones.
Ans: At 38, with two daughters and a monthly salary of 50k, your commitment to investing for your family's future is commendable. Let's review your current SIP investments:

Aditya Birla Sun Life Digital India Fund: This fund offers exposure to the digital revolution, which can be a high-growth sector. Given the increasing digitalization trend, it's a promising choice for long-term growth.
ICICI Prudential Commodities Fund: Commodities can be volatile and subject to market fluctuations. While they offer diversification benefits, they may not be suitable for all investors due to their inherent risk.
Quant Small Cap: Small-cap funds can offer high growth potential, but they also come with higher volatility. They're best suited for investors with a high-risk tolerance and a long-term investment horizon.
Sukanya Samriddhi Yojana (SSY): This government-backed scheme is an excellent choice for securing your daughters' future education and marriage expenses. It offers tax benefits and guaranteed returns, making it a reliable investment option.
Given your financial responsibilities and investment horizon, it's essential to ensure that your portfolio is well-balanced and aligned with your risk tolerance. Consider consulting with a Certified Financial Planner who can assess your financial goals and recommend suitable investment options.

While your current SIPs show diversity, you may want to review the ICICI Prudential Commodities Fund due to its higher risk profile. Instead, you could consider adding a diversified equity fund or a balanced fund to your portfolio for stability and growth potential.

Remember, regular review and adjustment of your investment strategy are essential to ensure it remains in line with your financial goals and risk tolerance. With careful planning and professional guidance, you can build a robust investment portfolio that secures your family's future aspirations.

..Read more

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Janak

Janak Patel  |17 Answers  |Ask -

MF, PF Expert - Answered on Feb 13, 2025

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In early 2018, I had faced some financial problems (monthly Rs. 10,000 deficit) as I was working with a public sector enterprise. At that time, I was searching for a loan and got an agency that can provide Rs. 10,000 as Payday loan (monthly basis maximum 35 days) and rate of interest was 1% per day. These loan products were from NBFCs. I took this loan and this was the starting point. Due to my financial problems, I started taking these type loans from various agencies and rate of interest 0.7%-1% per day. In 2022, I had almost 15 payday loans amounting Rs. 10 lakhs. After that, I have been applying for a loan from almost all banks and NBFCs to close these paydays, but nobody is able to provide a loan due all payday loans have been shown in CIBIL as well as few bounces of my personal loan I had already with Kotak Bank. Now the situation is like that I have more than 25 payday loans amounting to more than Rs. 15 lakhs. Last 2 years I have been applying for a personal loan to close these but no banks and NBFCs are not providing. Every month I am giving and taking payday loans and the interest amount is too high. I have a Tata AIA pension policy as well as PF, both cannot be surrendered at this moment. Now, the major issue is how to overcome this financial mess I did. I don't have any options left at this moment. So I would request you if anybody can provide me assistance through your sources / channels to solve my financial problem. I can return the amount on a monthly installment basis and give my Tata AIA pension policy as well as PF documents for security. I have been working in an engineering consultancy firm and monthly income is almost Rs. 2 lakhs
Ans: HI Jitu,

In summary, you have 15 lakhs loans at 1% per day interest (= 365% per annum). No options to borrow from any other organized sources like Bank/NBFC. So monthly Interest is 4.5 lakhs.
Monthly Income is 2 lakhs.

This is called a Debt Trap, where your income is less than your outflow (debt), so you are in a negative balance always and keep borrowing to fill the gap. No point in going into the history of the situation but I hope this has been a big life lesson for you.

Borrowing against you Pension policy can be considered but depends on the company and note that this will be at a high interest rate.
Borrowing from PF funds is only under certain situations (e.g. illness, education, marriage) and so even that is ruled out.
I assume you have already considered all/any asset you may own to repay.

The solution cannot be a very simple one. But I can recommend a couple of options which you can see if they help. You plan should simple -
1. Find a source of funds to repay your current loans
2. Stay with bare minimum requirement for next few years and repay maximum amount towards new loan
3. Do not take any new loans and stay on track for next few years, no matter what.

With a salary of 2 Lakhs, you should take a hard look at your living expenses and cut out all except the basic necessities. At least on paper come up with a number that you can discuss with prospective lenders mentioned below. Give them confidence of your ability to pay back every month with a realistic number e.g. over 1 lakh per month. Make this as high as you can make it. Make compromises everywhere possible and evaluate each expense to see what you can eliminate for the next couple of years, except food and absolutely basic needs, compromise on everything else. And ensure you make this work no matter what. You will have to be strong willed to achieve this and make it work.

Check with any close friends/family members/relatives who will trust you and provide you with some loan and provide you with time to repay. Offer to pay them interest which is higher than FD but reasonable for you and you can go as high as 20% per annum. At 20% you can pay back 55~60K per month for 3 years and payback the loan with interest.

Assuming you have a bank account for direct salary deposit, approach the bank and explain your situation truthfully to them and request an overdraft/loan and offer them to recover an agreed amount at an agreed interest rate from your account directly as soon as your salary is deposited. Again the interest rate will be high but if this works, you will be on your way to recovery. Even if they offer an interest rate of 30%~40% per annum and recover in 3 years, your EMI will be around 62K~70K per month.

Approach your employer and discuss if a loan can be provided to you at a reasonable rate of interest and recovered from your salary each month. If you have been employed with them for over a year or longer, and if they consider to extend a loan this may be the best solution you can get. You can offer to sign a contract for this (stay with employer for a period or until loan is paid up).

Is there any other source of funds you can approach with a similar proposal then do so, as long as you can get a chance to payoff your current set of loans and have a manageable EMI amount to pay back over the next few years, just take the best option and keep every desire aside and stay focused on getting back on track.

Please note that borrowing from an alternate source is not going to work if you take a loan and relax after that. You have already impacted your CIBIL score which makes lenders stay away. Now your top priority will be to find a source of funds at reasonably high interest rate between 20% to 40% resulting in an EMI of 55K to 70K for 3 years, and ensure you do not default the payments and clear this ASAP. If you can pay higher amount each month, then do that and get out of these loans as quickly as possible.

With honesty and sincerity if you continue to stay on track, you can eventually start coming back to normal life where you can plan your expenses and save and invest too. But do remember to live within your means and save as much as possible. Over time build back your CIBIL score for future requirements.

Hope this is helpful in some way.

Thanks & Regards
Janak Patel
Certified Financial Planner.

...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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