I am 44 years of age , I want to invest 1.50 lakh to 2 lakh in Mutual Funds on lumpsum basis for long term for 10 to 15 years. Kindly suggest some funds
Ans: It is really encouraging that at age 44, you are planning to invest Rs.1.50 lakh to Rs.2 lakh in mutual funds through a lump sum route. This step will definitely add long-term value to your personal finances. You are thinking with clarity and vision. That itself is a solid first step towards financial freedom.
Let me now share a detailed, 360-degree perspective that helps you invest wisely.
» Asset Allocation Clarity Comes First
– Decide how much to allocate to equity and debt.
– For a 10 to 15-year horizon, equity should be the major part.
– Around 80% to equity and 20% to debt is ideal in most cases.
– This brings balance and lowers overall risk.
– It also gives stability during market dips.
– Don’t skip asset allocation. It is the base of every smart portfolio.
» Time Horizon Helps Reduce Risk
– You are aiming for 10 to 15 years.
– That’s a great time horizon for equity investments.
– Longer duration means more time to ride out volatility.
– It helps your funds benefit from compounding.
– Historical data shows risk reduces over long-term in equity.
– So your decision is mature and well-aligned with wealth creation.
» Choose Diversified Equity Mutual Funds
– Go for well-diversified funds managed by strong AMCs.
– Look for consistent long-term performers.
– Choose funds with 10+ year track records in both bull and bear markets.
– Actively managed diversified equity funds give flexibility to fund managers.
– They shift sectors or stocks when needed to protect returns.
– These actively managed funds beat index funds over the long term.
– Index funds lack human judgement. They follow markets blindly.
– During downturns, index funds don’t exit poor stocks.
– Actively managed funds avoid this by intelligent stock picking.
» Stay Away from Index Funds
– Many think index funds are safe. That’s half truth.
– Index funds don’t manage downside risks well.
– They fall fully when the market falls.
– No exit from bad performing stocks is possible.
– No protection against volatility is built in.
– In India, markets are not fully efficient yet.
– So active fund managers can still beat indices.
– Thus, go with quality actively managed funds.
– Let skilled fund managers manage the risk and reward.
» Avoid Direct Mutual Funds If You Seek Expert Guidance
– You may have heard of direct mutual fund plans.
– Direct plans avoid distributor commissions.
– But they lack support, advice, and monitoring.
– That’s not ideal for long-term investors like you.
– Mistakes due to lack of guidance can be costly.
– A Certified Financial Planner helps you choose, monitor, and rebalance.
– Also, regular plans come with after-investment service.
– You won’t have to track markets daily or worry about fund changes.
– Your long-term peace is worth more than the small commission saved.
– So investing through a CFP with mutual fund distributor license is wiser.
» Choose Debt Funds with Care
– Allocate around 15% to 20% in debt mutual funds.
– Don’t go fully into equity even for long term.
– This debt part gives stability to your portfolio.
– Choose funds with short to medium duration.
– Avoid credit risk and long-duration debt funds.
– This helps you avoid interest rate volatility.
– Look for debt funds with low credit risk and good quality papers.
» Rebalance Once in a Year
– After a year, rebalance the equity-debt ratio.
– For example, if equity grows too much, shift some gains to debt.
– If equity underperforms, add more into equity.
– Rebalancing helps you follow buy-low, sell-high automatically.
– A Certified Financial Planner will do this yearly checkup for you.
– This avoids greed in highs and fear in lows.
» SIP is Not for You Now, But Could Be Used Later
– You are investing lump sum now.
– SIP is for monthly investing, not one-time.
– But you can use STP to shift funds gradually into equity.
– For example, park your lump sum in a liquid fund.
– Use Systematic Transfer Plan (STP) to move money into equity funds monthly.
– This reduces timing risk and smoothens the entry.
– A CFP can help setup this STP strategy well.
» Understand Mutual Fund Taxation
– Equity mutual funds held over 1 year give long-term gains.
– LTCG above Rs.1.25 lakh is taxed at 12.5%.
– Short-term gains (less than 1 year) are taxed at 20%.
– For debt funds, both long and short-term gains are taxed as per your slab.
– Holding for 3 years or more doesn’t give tax benefit in debt funds now.
– Plan redemptions carefully to lower tax impact.
» Avoid Insurance-Based Investments
– If you hold LIC, ULIP, or endowment policies, review them now.
– These give low returns and poor liquidity.
– Many mix insurance with investment. That’s not wise.
– If possible, surrender them.
– Reinvest in mutual funds for better long-term gains.
– Keep insurance and investment separate.
– For insurance, only term plans work best.
» Stay Invested for the Full Term
– Avoid frequent withdrawals or switching of funds.
– Markets may go up and down in short term.
– Long-term investing rewards patience.
– Don’t get carried away by market noise or media.
– Let the compounding do its magic over time.
» Keep Emergency Fund Ready
– Before investing, have at least 6 months expenses in a savings account or liquid fund.
– This prevents you from breaking mutual fund investment in emergencies.
– Mutual fund returns work best only when you stay invested.
– Liquidity outside of investments keeps you worry free.
» Track Only Once in 6 Months
– Don’t track mutual fund performance daily or weekly.
– It creates unnecessary panic or excitement.
– Review it once in 6 months or once in a year.
– A Certified Financial Planner will give you annual review reports.
– These reviews will show you progress towards your goals.
– And help in reshuffling funds if needed.
» Keep Nominee and KYC Updated
– Register nominee for every mutual fund.
– Complete FATCA and KYC fully before investing.
– These small steps avoid legal issues later.
– Keep PAN and Aadhaar linked to your MF folio.
– Also use the same email and mobile across all funds.
– This helps in easy tracking and consolidation.
» Use Joint Holding for Spouse If Needed
– You can invest jointly with spouse.
– Use either or survivor mode for joint holding.
– This gives peace of mind in case of emergencies.
– Also consider SIPs in spouse’s name in future.
– It helps in tax planning and asset diversification.
» Keep Paperless Record of All Investments
– Use a common platform to view all your funds.
– Avoid investing in multiple apps or portals.
– That makes tracking difficult.
– Your CFP can give you a consolidated view.
– Keep all folio statements and investment proof digitally.
» Set Realistic Expectations
– Mutual funds won’t give fixed returns.
– Equity funds can give 12% to 15% over long term.
– Debt funds may give 6% to 8%.
– These are not guaranteed, but based on market trends.
– Focus on long-term wealth, not short-term returns.
» Finally
– You are on the right path.
– Investing at 44 still gives you 15+ years to grow your wealth.
– Mutual funds are flexible, liquid, and transparent.
– With the help of a Certified Financial Planner, you can plan well.
– You can also plan for retirement, children’s education, or any future goals.
– A disciplined and guided approach will help you reach financial independence.
– Stay focused, stay consistent, and let time and compounding do their part.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Binita on Apr 21, 2024Hindi
