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Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 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
Asked by Anonymous - Mar 01, 2024Hindi
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Hello Sir I am 34yr old. Started investing from July 2023 1.6lacs monthly in 8 funds (20k each) I want to create a portfolio of 50crore in 20yrs My funds include 2 small cap funds, 3 mid cap, 1 flexi cap and 2 large n mid cap funds How can I achieve my target. I am looking for 18-20% xirr on my investment

Ans: Congratulations on taking proactive steps towards securing your financial future. Your commitment to investing is commendable.

Creating a portfolio with the goal of reaching 50 crores in 20 years requires careful planning and strategy.

With a monthly investment of 1.6 lakhs distributed across various funds, you've already laid a solid foundation. However, achieving an XIRR of 18-20% may require a slightly more aggressive approach.

Given your portfolio composition of small-cap, mid-cap, flexi-cap, and large and mid-cap funds, you seem to have a diversified mix with exposure to different segments of the market.

To increase the potential for higher returns, you might consider slightly increasing your allocation to small and mid-cap funds, given their historically higher growth potential over the long term.

As a Certified Financial Planner, I advise against relying solely on direct funds. Opting for regular funds through a Certified Financial Planner can provide you with valuable insights and personalized guidance, ensuring your investments are aligned with your goals.

While index funds have their advantages, such as lower expense ratios, they lack the potential for outperformance that actively managed funds offer, especially in dynamic market conditions.

Regularly reviewing your portfolio's performance and making adjustments as needed is crucial to staying on track towards your goal. Additionally, maintaining a long-term perspective and avoiding reactionary decisions during market fluctuations is key.

Keep up the disciplined approach to investing, and with time and patience, you can certainly achieve your target of 50 crores.

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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Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 2024

Asked by Anonymous - Nov 04, 2023Hindi
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My age is 24 years old I investing in mutual fund. For 1 years. 1 Axis Blue chip fund 1000rs 2 Axis small cap fund 1000rs 3 Mirrae asset tax sever Elsa 1000rs 4 Mirrae asset mid cap fund 1000rs 5 quant flexi cap fund 1000 I want to creat 50 lakh in 15 years Plz suggest me about my portfolio
Ans: Your investment journey at such a young age reflects foresight and financial prudence. The portfolio you've crafted showcases a blend of large-cap, small-cap, and diversified funds, which is a good start.

To aim for a 50 lakh corpus in 15 years, let's delve into some considerations:

Consistency is Key: Regularly investing small amounts over time can harness the power of compounding. Stick to your SIPs diligently, and avoid reacting to short-term market fluctuations.
Diversification: While your current portfolio has a mix of funds, consider diversifying further by exploring international funds or sector-specific funds to spread risk and capture global growth opportunities.
Risk and Reward: Understand the risk associated with each fund. Small-cap and mid-cap funds can offer higher returns but come with increased volatility. Ensure your portfolio aligns with your risk tolerance.
Review and Rebalance: Periodically review your portfolio to ensure it remains aligned with your financial goals and market conditions. Rebalance if necessary to maintain desired asset allocation.
Stay Invested, Stay Patient: Investing is a long-term game. Embrace the journey with patience, and resist the temptation to make frequent changes based on market noise.
Remember, investing is not just about chasing returns but aligning your investments with your life goals and aspirations. Continue your financial journey with confidence and discipline.

..Read more

Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 20, 2024

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Dear Sir, I am Praveen, a 36-year-old from Bangalore. I wish to invest in mutual funds for 20 years at ?10,000 per month, targeting ?1 crore. Could you please suggest how to create my portfolio?
Ans: Praveen, your decision to invest Rs 10,000 per month for 20 years is wise. This long-term horizon allows you to benefit from the power of compounding. Targeting Rs 1 crore is achievable with a well-structured portfolio. Let’s break down how you can reach this goal effectively.

Analysing Your Investment Horizon

A 20-year investment period provides a great advantage. You can afford to take on more risk initially, which may lead to higher returns. Over such a long period, market fluctuations tend to smooth out, making equity funds an ideal choice for wealth creation.

Importance of Diversification

Diversification is key to managing risk while aiming for high returns. It’s essential to spread your investments across different types of funds. This way, you protect your portfolio from market volatility and maximize growth potential.

Large-Cap Equity Funds: Stability with Growth

Large-cap funds invest in well-established companies. These funds provide stability and consistent growth, especially over a long period like 20 years. They are less volatile compared to mid-cap and small-cap funds.

Mid-Cap Funds: Capturing Growth Potential

Mid-cap funds invest in companies with medium market capitalisation. These companies have the potential for high growth, although they come with higher risk compared to large-cap funds. Including mid-cap funds in your portfolio can boost returns during bull markets.

Small-Cap Funds: High-Risk, High-Reward

Small-cap funds invest in smaller companies that are often in the early stages of growth. These funds are the riskiest among equity funds but can offer significant returns if the companies perform well. Given your long-term horizon, a small allocation to small-cap funds can be beneficial.

Flexi-Cap Funds: Flexibility and Balance

Flexi-cap funds invest across large, mid, and small-cap stocks. They provide flexibility to fund managers to allocate investments based on market conditions. This flexibility helps in capturing opportunities across different market segments and can add balance to your portfolio.

Balanced Advantage Funds: Managing Market Fluctuations

Balanced advantage funds dynamically allocate between equity and debt based on market conditions. These funds offer equity growth potential while managing downside risk through debt investments. They are ideal for reducing overall portfolio risk, especially as you near your goal.

Avoiding Index Funds

While index funds are popular for their low cost, they simply mirror the performance of an index. This means they cannot outperform the market, limiting your return potential. In an actively managed fund, the fund manager can make strategic decisions to outperform the index, especially in a volatile market.

The Pitfalls of Direct Funds

Direct funds might seem attractive due to lower expense ratios. However, they lack the professional guidance that regular funds offer through a Certified Financial Planner (CFP). Investing in regular funds through a CFP ensures that you receive personalized advice, regular monitoring, and expert insights. These benefits far outweigh the slightly higher cost of regular funds.

Building Your Mutual Fund Portfolio

Now, let’s structure your portfolio with a Rs 10,000 monthly SIP.

Large-Cap Fund: Allocate Rs 3,000 to a large-cap equity fund. This provides stability and consistent returns over the long term.

Mid-Cap Fund: Allocate Rs 2,500 to a mid-cap fund. This captures growth opportunities in medium-sized companies.

Small-Cap Fund: Allocate Rs 1,500 to a small-cap fund. This adds high-growth potential to your portfolio, albeit with higher risk.

Flexi-Cap Fund: Allocate Rs 2,000 to a flexi-cap fund. This adds flexibility and balance to your portfolio by investing across different market segments.

Balanced Advantage Fund: Allocate Rs 1,000 to a balanced advantage fund. This helps in managing market fluctuations, especially as you get closer to your investment goal.

Regular Monitoring and Rebalancing

Investing is not a one-time activity. Regularly monitoring your portfolio and rebalancing it is crucial. As you approach your goal, you might want to shift more of your investments to safer funds, such as large-cap or balanced advantage funds, to protect your accumulated wealth.

Leveraging the Expertise of a Certified Financial Planner

Investing through a Certified Financial Planner (CFP) ensures that your portfolio is aligned with your financial goals. A CFP provides personalized advice, taking into account your risk tolerance, investment horizon, and financial objectives. They also offer regular reviews and adjustments to keep your portfolio on track.

Final Insights

Praveen, your goal of Rs 1 crore is achievable with a disciplined approach. A diversified portfolio, regular SIPs, and professional guidance are the key elements to reaching this target. Your long-term horizon allows you to take advantage of equity growth, while a well-structured portfolio helps manage risk.

Stay committed to your plan, review your portfolio regularly, and make adjustments as needed. With the right strategy and discipline, you are well on your way to achieving your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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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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