Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 17, 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 - Apr 19, 2024Hindi

Hello Sir, I need some financial advice and modification if needed. I am 32 yo and I am investing below funds since 2 years - 1)Parag Parikh Flexi Cap Fund Direct Growth 5K 2)Axis Midcap Fund - Growth 2K 3)SBI Contra Direct Plan Growth 10K 4)Nippon India Small Cap 5K 5)Canara Robaco Small Cap 5K 6)Quant Small Cap Fund Direct Plan Growth 5K 7)Tata Digital India Direct Growth 10K Please suggest if i should continue this or change this. I am planning to invest for next 15-20 yrs.My goal is to create a corpus for my kids education and retariment.

Ans: Diversified Investment Strategy
You have a well-diversified portfolio, which is crucial for mitigating risks and achieving long-term growth.

Diversifying across various market capitalizations can balance risk and reward effectively.

Your portfolio covers flexi-cap, mid-cap, contra, small-cap, and sector-specific funds.

Evaluating Current Funds
Flexi-cap funds provide flexibility to invest across market capitalizations, adapting to market conditions.

Mid-cap funds can offer higher growth potential compared to large-cap funds but come with higher risks.

Contra funds invest in undervalued stocks, potentially offering high returns when the market corrects.

Small-cap funds have high growth potential but are also highly volatile.

Sector-specific funds, like digital funds, can benefit from sectoral growth but carry higher risk if the sector underperforms.

Suggested Modifications
Consider reducing exposure to small-cap funds to mitigate volatility.

Reallocate some investment to more stable, less volatile funds for better balance.

Evaluate the performance and expense ratios of your current funds regularly.

Benefits of Actively Managed Funds
Actively managed funds offer professional management and can outperform the market.

These funds can adapt to market changes, making strategic decisions to maximize returns.

Considerations for Long-Term Goals
Aligning your investments with your long-term goals, like children's education and retirement, is crucial.

Evaluate the risk tolerance and time horizon for each goal.

Higher-risk investments are suitable for long-term goals but ensure you balance with lower-risk options.

Direct vs Regular Funds
Direct funds have lower expense ratios but require more effort in fund selection and monitoring.

Regular funds, through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP), provide professional guidance.

Regular funds can help you make informed decisions, balancing risks and returns effectively.

Rebalancing Your Portfolio
Periodic rebalancing ensures your portfolio aligns with your goals and risk tolerance.

Review your investments at least annually or when significant market changes occur.

Rebalancing helps in capturing profits and reinvesting in underperforming assets, maintaining your desired asset allocation.

Your commitment to investing for your family's future is commendable.

You have made informed choices in diversifying your investments, which is excellent.

Long-term investing requires patience and discipline, and you are on the right track.

Conclusion
Your diversified portfolio is a good foundation for long-term goals.

Consider reducing small-cap exposure and reallocating to more stable funds.

Regular review and rebalancing are essential for continued success.

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.