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How to smartly invest Rs. 10 lakhs in multi-cap funds for a year?

Ramalingam

Ramalingam Kalirajan  |10270 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 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
Dwarakanath Question by Dwarakanath on Jul 19, 2024Hindi
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Having an amount of Rs10L I am thinking to invest in two different Multicap funds suggest me the best funds after investing I will leave for a duration of 1year then will go for a SWP plan for my monthly expences & also suggest me at what percentage should I withdraw.

Ans: Investing Rs. 10 Lakhs in Multicap Funds: A Strategic Approach
Multicap Funds for Balanced Growth
Multicap funds invest across different market capitalizations. They offer balanced growth potential. These funds adapt to market conditions. Investing in two different multicap funds can diversify your portfolio.

Choosing the Right Funds
Select funds with strong performance records. Look for funds managed by experienced professionals. Check their past returns and consistency. A Certified Financial Planner (CFP) can help in selecting the best options.

One-Year Investment Horizon
Investing for one year requires careful consideration. Multicap funds are suitable for medium to long-term. However, with the right funds, you can still see reasonable growth. After one year, you can switch to a Systematic Withdrawal Plan (SWP).

Systematic Withdrawal Plan (SWP)
An SWP provides regular income from your investments. It allows you to withdraw a fixed amount monthly. This plan helps in managing monthly expenses. It's a flexible and tax-efficient way to use your investment.

Withdrawal Percentage for SWP
The withdrawal percentage should be conservative. A 6-8% annual withdrawal rate is generally safe. This ensures the principal amount lasts longer. Adjust based on your needs and market performance.

Benefits of Actively Managed Funds
Actively managed funds have professional oversight. They adjust portfolios based on market changes. This can lead to better returns compared to index funds. Expert management helps in maximizing your investment.

Risks and Considerations
Investing in multicap funds involves market risks. The value of your investment can fluctuate. Regular monitoring is essential. Stay informed about market trends and fund performance.

Avoid Direct Funds
Direct funds might seem cost-effective. However, they lack professional guidance. Investing through a CFP ensures informed decisions. They provide valuable insights and help in fund selection.

Benefits of Regular Funds
Regular funds offer expert management. A CFP can guide on the best funds. They help in navigating market complexities. Regular funds ensure informed investment decisions.

Final Insights
Investing Rs. 10 lakhs in two multicap funds is a wise choice. Choose funds with strong performance records. Plan for a one-year investment horizon. Then, switch to an SWP for regular income. Keep the withdrawal rate conservative. Regularly monitor your investments and adjust as needed. Consulting a CFP can provide valuable guidance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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 Jul 23, 2020

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Age-37. I am investing in mutual funds since Nov 2018. I am investing Rs 20000 per month in SIPs. I will increase my SIPs by 10-15% every year. Kindly suggest regarding how is my portfolio. Goals: I want Rs. 40 lakhs after 10 years in 2030 for my son’s education who is now 7 years old. I want to accumulate Rs 3.5 to Rs 4 crores for my retirement corpus by March 2043 after 23 years & can I expect 12-13% returns from my these funds till 2043? My portfolio: Parag parikh LTE–Multicap – 5000 Kotak standard multicap- 5000 SBI Small cap – 5000 Mirae asset Midcap – 5000 (Total Rs 20000/month -SIP) Also doing topups of Rs 1000-1500 during nifty50 falls Kindly suggest which focused multicap is the best among these two (axis focused 25 or sbi focused equity)? I will increase my SIPs by 10-15% every year. At present my net loss is around -19% after 1 year 4 months of mutual fund investing. I am also willing to take risk to beat the rising inflation especially after my retirement in year 2043 march month.
Ans:
Name of the Fund Category RankMF Star Rating Recommendation
Parag parikh LTE–Multicap – 5000 Equity - Multi Cap Fund 5 Continue
Kotak standard multicap- 5000 Equity - Multi Cap Fund 2 SmartSwitch to UTI Equity Fund - Growth
 SBI Small cap – 5000 Equity - Small Cap Fund 1 SmartSwitch to Axis ESG Fund  Growth
Mirae asset Midcap Equity - Mid Cap Fund 3 SmartSwitch to DSP Mid Cap Growth
axis focused 25 Equity - Focused Fund 5 Continue
sbi focused equity Equity - Focused Fund 3 SmartSwitch to Axis Focused 25 Growth

With 10% to 15% increase annually, both goals are mostly achievable with a possibility of decent surplus over these goals.

Goal – 40 lakh after 10 years– Achievable

Goal – 3.5 to 4 Crs after 23 years – Achievable

..Read more

Ramalingam

Ramalingam Kalirajan  |10270 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Money
Hi Team, Is Flexi fund good or Multicap fund good to invest for next 15 years
Ans: Flexicap and Multicap funds are both equity mutual funds, but they have key differences. Both categories offer diversification, but their strategies in stock selection vary.

Flexicap Funds: These funds invest in companies of any market capitalization—large, mid, or small cap. Fund managers have the freedom to shift between different market caps based on market conditions, offering flexibility. If the market favors large caps, they can increase allocation to them, and vice versa with mid and small caps. This adaptability is crucial for long-term wealth creation.

Multicap Funds: These funds are required by regulation to allocate a minimum of 25% each in large, mid, and small cap stocks. This gives the fund a more balanced exposure to all three segments, but the fund manager has less flexibility to navigate changing market conditions. Multicap funds are ideal for investors who want steady exposure across different market caps at all times.

For a 15-year horizon, the decision between the two should depend on your risk tolerance and financial goals.

Flexicap Funds: Strengths and Considerations
Market Timing Flexibility: The fund manager’s ability to move across market caps based on opportunities can lead to better returns over time. If large caps are expected to underperform and small caps are set to rise, the fund manager can dynamically adjust the portfolio.

Lower Volatility: Flexicap funds can reduce risk by allocating more to large caps during market downturns. This strategy gives some downside protection, as large-cap companies tend to be more stable during volatile times.

Growth Potential: In a rising market, the flexibility to invest in small and mid-cap stocks can offer high growth. Historically, small and mid-cap stocks have outperformed large-cap stocks over the long term, though they carry more risk.

However, Flexicap funds are more dependent on the skill of the fund manager. A less skilled manager might not take advantage of the flexibility, leading to lower returns.

Multicap Funds: Strengths and Considerations
Balanced Exposure: Multicap funds provide exposure to all market segments—large, mid, and small caps. This allocation ensures that your portfolio is not overly concentrated in one type of stock. With 25% in each category, these funds capture the potential of all market segments.

Steady Growth: The balanced nature of Multicap funds ensures that you participate in the growth of small and mid-caps, while large-cap stocks provide stability. This makes multicap funds a suitable choice for long-term investors who seek consistent exposure.

Risk Mitigation: By maintaining a minimum allocation in large-cap stocks, multicap funds have a buffer against volatility. Large-cap companies tend to provide a cushion during market downturns.

However, the regulatory requirement of a fixed allocation to each market cap means that the fund manager cannot shift the portfolio freely. In a downturn for small or mid-cap stocks, the fund may underperform compared to Flexicap funds that can adjust to safer large-cap stocks.

15-Year Investment Horizon and Wealth Creation
For a 15-year investment horizon, both Flexicap and Multicap funds have the potential to create substantial wealth. Over the long term, equity investments tend to outperform other asset classes, and both fund categories are well-positioned to ride through market cycles.

Wealth Growth: Both Flexicap and Multicap funds are designed for long-term wealth creation, but Flexicap funds may offer higher growth potential due to their flexibility. However, this depends heavily on market conditions and the fund manager's ability to allocate correctly.

Risk and Volatility: Over 15 years, both funds will experience periods of volatility. While Multicap funds may provide more balanced exposure to mitigate risk, Flexicap funds offer the flexibility to move into safer large caps during downturns.

Investment Discipline: Regardless of the fund type, staying invested for the entire period is crucial. Markets are cyclical, and periods of downturns are often followed by strong recoveries.

Choosing the Right Fund for You
Consider Flexicap Funds If:
You prefer flexibility and trust the fund manager’s ability to shift across market caps based on market conditions.

You are comfortable with a higher degree of fund manager involvement and are willing to accept more volatility in exchange for potentially higher returns.

You want the ability to take advantage of changing market trends without being constrained by a set allocation to large, mid, or small caps.

Consider Multicap Funds If:
You want a balanced, steady approach that invests in large, mid, and small caps consistently, regardless of market conditions.

You prefer a more predictable structure where the fund does not deviate much from its mandate of exposure to all market segments.

You want diversification across all caps but prefer less reliance on the fund manager’s ability to time the market effectively.

Disadvantages of Direct Funds and Importance of Professional Guidance
If you are investing in direct mutual funds, you may miss out on valuable advice. A certified financial planner can offer personalized advice on portfolio selection, allocation, and periodic review. While direct plans have a lower expense ratio, the lack of professional guidance could result in suboptimal returns.

Regular plans, when invested through a qualified MFD (Mutual Fund Distributor) with CFP credentials, offer more comprehensive service. The expertise of a CFP ensures your investments are aligned with your long-term financial goals, while providing regular reviews and adjustments. They can also help with tax-efficient withdrawals and retirement planning, which is crucial for a 15-year horizon.

Long-Term Strategy
For the next 15 years, it is important to focus on growth while managing risk. Here are key points to consider:

Review Periodically: Regardless of whether you choose a Flexicap or Multicap fund, periodic review of your portfolio is essential. Your risk appetite may change over time, and your financial goals may evolve.

Stay Invested During Volatility: Both fund types will experience market volatility. A long-term horizon means you should not be overly concerned with short-term market fluctuations. Focus on staying invested and letting your corpus grow.

Asset Allocation: In addition to Flexicap or Multicap funds, consider having a balanced asset allocation. As you approach the end of your 15-year horizon, you may want to gradually shift to safer instruments like debt funds.

Tax-Efficient Withdrawals: At the end of your investment period, you may want to set up a systematic withdrawal plan (SWP) to ensure tax-efficient withdrawals for income generation.

Final Insights
Both Flexicap and Multicap funds offer potential for growth over a 15-year period, but the choice depends on your comfort level with fund manager flexibility versus structured exposure.

Flexicap funds are ideal if you seek higher returns with a dynamic approach, while Multicap funds offer balanced, diversified exposure.

It’s important to have a certified financial planner by your side to ensure you are making the most of your investments and taking advantage of market opportunities.

Periodic reviews, staying invested through market cycles, and maintaining a long-term perspective are key to wealth creation.

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

..Read more

Ramalingam

Ramalingam Kalirajan  |10270 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 20, 2025

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Dear Sir, Please advice, what is your suggestion to me as far as investment (SIP) in Mutual Fund is concerned, SIP in Multi Cap is good or Flexi Cap is good (for achieving goals like wealth accumulation, retirement etc.)? Regards, Ashish
Ans: When deciding between Multi-Cap and Flexi-Cap mutual funds for your SIP investments, it's important to evaluate your financial goals, risk tolerance, and time horizon. Both types of funds have unique characteristics that can help in wealth accumulation and retirement planning.

Multi-Cap Funds: Key Characteristics
Diversified Portfolio: Multi-Cap funds invest across large, mid, and small-cap stocks. This provides diversification, which can help manage risks.

Risk Level: The fund is usually less volatile compared to funds that focus only on small or mid-cap stocks. However, it does carry some risk due to exposure to smaller-cap stocks.

Long-Term Growth: These funds tend to perform well over long investment horizons. They aim to balance between growth and stability.

Suitable for Moderate to Conservative Investors: If you're looking for a mix of stability and growth, multi-cap funds might be suitable.

Flexi-Cap Funds: Key Characteristics
Flexibility in Allocation: Flexi-Cap funds have the flexibility to invest across all market capitalizations – large, mid, and small-cap stocks – based on market conditions. They can adjust their portfolio dynamically.

Higher Potential for Growth: Since these funds can tilt more towards mid-cap or small-cap stocks when the market is favorable, they can offer higher growth potential in bullish markets.

Risk-Return Trade-Off: While they can offer high returns in the long run, flexi-cap funds can also be more volatile than multi-cap funds.

Best for Long-Term Growth: If you are focused on wealth accumulation and are willing to take on a bit more risk for higher returns, flexi-cap funds are a good option.

Comparison and Evaluation for Your Financial Goals
Wealth Accumulation: Both multi-cap and flexi-cap funds can help you accumulate wealth over the long term. However, flexi-cap funds generally have the edge in terms of potential returns due to their dynamic asset allocation strategy. The flexibility allows them to outperform during market rallies.

Retirement Planning: If your goal is to build a solid retirement corpus with moderate risk, multi-cap funds provide a balanced approach. These funds tend to be less volatile while providing a decent return in the long run.

Risk Consideration: Since flexi-cap funds invest more actively, they are prone to higher market fluctuations. If you are comfortable with market ups and downs, flexi-cap funds might suit you better. On the other hand, if you want lower volatility with steady growth, multi-cap funds are a safer option.

Actively Managed Funds vs Direct Plans
Why Regular Funds (via MFD) are Beneficial: When investing in mutual funds, you can invest either in direct plans or regular plans. While direct plans offer lower expense ratios, they require substantial knowledge and time to manage investments.

Professional Management: By investing through a Certified Financial Planner (CFP) or a Mutual Fund Distributor (MFD), you benefit from professional fund management. Your advisor can help tailor your SIP strategy to your goals and regularly assess fund performance, ensuring your investment remains aligned with market conditions and your risk profile.

Avoid Direct Plans if Not Knowledgeable: Direct plans may seem attractive due to lower fees, but they are suitable for those with in-depth market knowledge. Regular funds via an MFD provide you with an extra layer of support and expertise, which can be especially useful for managing volatile market conditions and long-term goals.

Final Insights
When choosing between Multi-Cap and Flexi-Cap funds, the best approach depends on your risk tolerance and financial goals. Multi-Cap funds offer diversification and stability, making them suitable for moderate risk-takers and long-term wealth accumulation. Flexi-Cap funds offer more growth potential but with higher volatility, making them ideal for those who are comfortable with higher risks for potentially higher returns.

For retirement planning, consider a mix of both types of funds, depending on your age, financial situation, and risk appetite. It's essential to periodically review your investment strategy and consult a Certified Financial Planner to ensure your SIP is on track for your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

..Read more

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Nayagam P

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Hello sir, my son is getting admission in IIIT bho p al CSE, CSE in KNIT Sultanpur and mining in IISERNIT Shivpur. Which one is best ?
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Ramalingam

Ramalingam Kalirajan  |10270 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 18, 2025

Money
I am 31 years old, and i have dept of 30 laks in last 4 years, personal loan Credit card Relative loan Friend loan And cash for interest, total emi of 90k My salary was 50k.. Home rent My son school fee Monthly expenses are excluding 90k, i was very very struggled situation.. Anyone help me
Ans: You are showing courage in sharing your situation. Many people keep debt struggles hidden. At 31, you still have long years of earning ahead. You also have your family responsibilities. Your debts are very high compared to your income. But with step-by-step plan, you can slowly come out. Let us look at this in detail from all angles.

» Present Position

– Total debt around Rs 30 lakh.
– Loans from personal loan, credit card, relatives, friends, and cash borrowings.
– EMI burden Rs 90k every month.
– Monthly salary Rs 50k.
– House rent, child education, and family expenses are separate.
– Present income is not enough to cover EMIs.

This is creating high stress. Debt from many sources adds more pressure.

» Why Situation Became Hard

– EMIs exceed your salary.
– Borrowing for past expenses may have rolled into more borrowing.
– Credit card interest and informal cash loans usually charge very high rates.
– Relatives and friends loans bring emotional stress too.

All these make it a difficult position. But the first step is awareness. You already took it.

» Income vs Outflow

Monthly salary Rs 50k. Monthly EMI Rs 90k. So you have a gap of Rs 40k even before paying rent and other expenses. This means borrowing more every month to survive. It is a debt trap. Without strong action, debt will only grow.

» First Actions

– Stop using credit cards for any new expenses.
– Control spending only to essential items.
– Write down exact family expenses.
– Discuss openly with your spouse for support.
– Inform friends and relatives that repayment will need more time.

These steps reduce new pressure.

» Debt Prioritisation

You cannot pay all loans together with present income. So you must prioritise.

– First, list all loans, their amounts, and interest rates.
– Credit card and cash loans have highest rates.
– Personal loans from banks come next.
– Family and friend loans are last priority, but you must communicate honestly.

Start planning repayment by attacking highest-cost loans first. But since your EMI burden is higher than your income, you need to restructure.

» Restructuring and Negotiation

– Approach your bank and ask for debt restructuring. Sometimes banks allow longer tenure. That reduces EMI.
– If you have multiple personal loans, explore loan consolidation. One larger loan at lower rate can replace many small loans.
– Negotiate with friends and relatives. Ask them for more time. Assure them of gradual repayment.
– Credit card dues must be converted into EMI plans if possible. This reduces very high interest.

Restructuring is a must in your case. Otherwise, the mismatch will continue.

» Income Improvement

Only reducing cost will not solve fully. You must increase income also.

– Explore part-time or freelance work after office hours.
– Consider shifting to higher salary job.
– Discuss with spouse if she can support with income for few years.
– Any asset or skill can be used to generate extra income.

Even Rs 20k to Rs 25k extra monthly can make difference.

» Expense Control

– Prepare family budget strictly.
– Avoid lifestyle expenses until debt clears.
– School fee is priority, but cut unnecessary tuition or activity costs if possible.
– Rent is fixed, but look if smaller house can reduce cost.

These cuts may look hard but are temporary. Once debt clears, life becomes smoother.

» Emotional Strength

Debt creates shame and guilt. But remember, many professionals face this. Always communicate openly with spouse. Do not hide. Sharing reduces stress. Slowly, children will also understand when family says “no” to extra spending. This honesty builds strength.

» Emergency Planning

You may feel emergency fund is impossible now. But even Rs 2000 per month kept aside is useful. Without emergency buffer, any small issue will push you to new borrowing. Keep a small savings habit alive even during debt period.

» Insurance Cover

Check if you have term insurance and health insurance. Even though debt is high, these are important. A term plan will protect your family in case of death. Health insurance avoids fresh loans during hospitalisation. If you don’t have, take at least basic cover immediately.

» Avoid Wrong Products

Do not try to solve debt by investing in risky options. Some people try stock tips or trading. That increases loss. Do not go for chit funds or unverified schemes. They will trap you deeper. Wait until debt reduces before any investments.

» Role of Certified Financial Planner

A Certified Financial Planner can prepare repayment strategy and budgeting roadmap. They can guide in consolidating loans and balancing income and expense. Regular follow-up from CFP keeps you disciplined. Self-management often fails under stress. Guidance brings clarity.

» Long-Term Perspective

At 31, you still have 25 to 30 years to earn. So this debt situation, though very heavy, is not the end. Once you close high-cost debt, you can rebuild. After few years, you can again focus on investments, child education, and retirement. The key is to survive next 3 to 5 years with discipline.

» Practical Steps in Sequence

– Stop using credit cards now.
– Prepare list of all loans with interest rates.
– Negotiate with bank for consolidation or restructuring.
– Convert credit card dues to EMI or personal loan if possible.
– Pay small cash lenders first to stop harassment.
– Communicate with friends and relatives for more time.
– Increase income by new job or side work.
– Cut lifestyle expenses and prepare strict budget.
– Maintain minimum emergency buffer.
– Protect family with term and health insurance.
– Review progress every three months with a Certified Financial Planner.

Following these steps one by one will slowly bring balance.

» Finally

Your present situation looks very tough. But with clarity and courage, you can come out. Discipline in expenses, negotiation with lenders, and focus on higher income will reduce stress. Debt will not vanish in one year, but every step will improve position.

You are still young, and you have time. Stay patient, stay disciplined. Life after debt freedom will be more peaceful. You and your family will grow stronger through this experience.

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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