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Ramalingam

Ramalingam Kalirajan  |6345 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 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
Ramasamy Question by Ramasamy on Jul 20, 2023Hindi
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Hello Hardik, Iam 40 Years and have started investing in SIP for the past 6 months.Below are my monthly investment 1. Parag Parikh Flexi Cap Regular Growth - 3500 2. Canara Robeco Small Cap Fund Growth - 3000 3. HDFC Retirement Savings Fund Equity Growth - 3000 4. NPS - 3500 I am planning for 18 Years of investment and aiming to slowly increase the SIP to achieve corpus of 2.5-3.0 Cr. Kindly review and advice. Regards, Ram

Ans: Hi Ram,

It's great to see that you've started investing systematically towards your long-term financial goals. Here's a review of your current SIP investments:

Parag Parikh Flexi Cap Regular Growth: This fund follows a diversified approach across various market caps and geographical regions, which can provide stability to your portfolio. It's suitable for long-term wealth creation.
Canara Robeco Small Cap Fund Growth: Small-cap funds can be volatile in the short term but have the potential to offer high returns over the long term. Ensure you're comfortable with the risk associated with small-cap investments.
HDFC Retirement Savings Fund Equity Growth: This fund is designed to provide wealth accumulation for retirement. It's aligned with your long-term investment horizon and retirement goal.
NPS: The National Pension System (NPS) is a retirement-focused investment option offering tax benefits. It's prudent to contribute to NPS alongside other investments for retirement planning.
To achieve your target corpus of 2.5-3.0 Cr over 18 years, consider periodically reviewing your SIP contributions and adjusting them based on changes in your income, expenses, and market conditions. Additionally, diversify across asset classes to manage risk effectively.

As your financial goals evolve, consider consulting with a Certified Financial Planner to ensure your investment strategy remains aligned with your objectives.
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  |6345 Answers  |Ask -

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

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Hi I have following SIPs. Can you suggest whether they are good, bad or ugly and suggest changes if any. Quant small cap direct growth-10000 Canara robecco small cap DG- 10000 PGIM india mid cap Opp DG-10000 SBI contra Direct plan growth-10000 Parag parik flexi cap DG-10000 Quant infrastructure DG-10000 ICICI prudential tech fund-10000 Tata digital India regular plan-10000 Aditya birla sun life digital India regular plan -10000 - I hv started investing in last 6months and aim is to make atleast 3cr by next 10yrs. I hv certain other investments in SIPs, equity and PF (about 50000 per month) Thank you
Ans: Your portfolio seems well-diversified across different categories and themes, which is a good approach. However, there are a few considerations to keep in mind:

Small Cap Exposure: Having significant exposure to small-cap funds like Quant Small Cap and Canara Robeco Small Cap can add volatility to your portfolio. While they have the potential for high returns, they also come with higher risk. Ensure you have a high-risk tolerance and a long-term investment horizon if you intend to stay invested in these funds.
Sectoral and Theme Funds: Funds like ICICI Prudential Tech Fund, Tata Digital India, and Aditya Birla Sun Life Digital India focus on specific sectors/themes. While these can offer opportunities for growth, they also carry concentration risk. Monitor these funds closely and be prepared for volatility, considering the dynamic nature of sectoral investments.
Mid Cap and Flexi Cap: PGIM India Mid Cap Opp and Parag Parik Flexi Cap provide exposure to mid-cap and flexible-cap segments, which can complement your small-cap investments. Ensure you review the performance and portfolio composition of these funds regularly to confirm they align with your investment objectives.
Regular Review: Given your long-term goal of reaching 3 crores in 10 years, regularly review your portfolio's performance and make adjustments as necessary. Consider rebalancing periodically to maintain your desired asset allocation and risk level.
Risk Management: Since you have a significant amount invested across various funds, ensure you have an adequate emergency fund and insurance coverage to mitigate any unforeseen risks.
Overall, your portfolio appears to have the potential to achieve your long-term financial goals, but it's essential to monitor and adjust it periodically based on your changing financial situation and market conditions. Consider consulting with a financial advisor for personalized advice tailored to your specific needs and objectives.

..Read more

Ramalingam

Ramalingam Kalirajan  |6345 Answers  |Ask -

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

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Hii i am investing in SIP since 1 year in ICICI prudential commodities Fund direct growth Rs200 monthly, Tata digital India und direct growth Rs150 Monthly, HDFC Technology Fund direct growth Rs100 monthly, ICICI prudential Technology direct plan growth Rs100 monthly, Nippon India Pharma fund direct growth Rs300 monthly, Nippon India small cap fund direct growth Rs300 monthly, axis nifty IT index fund direct growth Rs1000 monthly, ICICI prudential bluechip fund direct growth Rs250 monthly, Aditya Birla Sun Life digital India fund direct growth Rs100 monthly, ICICI prudential NASDAQ 100index fund direct growth Rs300 monthly, HDFC transportation and logistics fund direct growth Rs200 monthly so I invested in above SIPs Total monthly i invest Rs3000 so please give me some suggestions or modifications if required
Ans: Your Current SIP Portfolio
You have been investing ?3,000 monthly across various SIPs for a year. Your chosen funds focus on technology, healthcare, commodities, and other sectors. This shows a good start towards disciplined investing.

Concentration in Technology Sector
A significant portion of your investments is in technology-focused funds. Technology funds can offer high returns but also come with high volatility.

Sector-Specific Funds
You also have investments in healthcare, commodities, and logistics funds. Sector-specific funds can be very volatile as they depend on the performance of their respective sectors.

Diversification
Your portfolio lacks diversification. Investing too much in a single sector increases risk. Diversification helps in balancing risk and returns.

Importance of Broad Market Exposure
Diversifying across different market segments reduces risk. Balanced exposure to large-cap, mid-cap, and small-cap funds is crucial. This strategy ensures you are not overly dependent on one sector's performance.

Adding Stability with Debt Funds
Including debt funds can provide stability. Debt funds offer regular returns and reduce the overall risk in your portfolio. This balance is vital for long-term growth.

Benefits of Actively Managed Funds
Actively managed funds can outperform index funds due to professional management. Fund managers actively select stocks to maximize returns. This can be advantageous, especially in volatile markets.

Disadvantages of Index Funds
Index funds mirror the market index and do not aim to outperform it. They lack flexibility in changing market conditions. Actively managed funds, on the other hand, adapt to market changes, providing better growth potential.

Direct Funds vs. Regular Funds
Direct funds have lower expense ratios but require thorough research and monitoring. Regular funds, through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP), offer professional guidance and management. This can be valuable for optimizing returns and managing risks effectively.

Suggested Modifications
Reduce Sector-Specific Overweight

Reduce the number of technology and sector-specific funds. This will help in balancing the portfolio and reducing sector-specific risks.

Increase Broad Market Exposure

Allocate more funds to diversified equity funds. Large-cap and multi-cap funds provide stable returns and reduce overall risk.

Include Debt Funds for Stability

Add debt or hybrid funds to your portfolio. This will provide regular returns and reduce the volatility of your overall investment.

Suggested Allocation
Technology Funds: Choose one or two funds to maintain some exposure but reduce concentration.
Broad Market Funds: Increase investment in large-cap and multi-cap funds for stable growth.
Debt Funds: Allocate a portion to debt funds for stability.
Regular Monitoring and Review
Monitor your investments regularly. Review fund performance annually and adjust your portfolio based on your financial goals and market conditions.

Conclusion
Your dedication to investing through SIPs is commendable. With a few adjustments, you can achieve a balanced and diversified portfolio. This will help you meet your long-term financial goals with reduced risk.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6345 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 25, 2024

Asked by Anonymous - May 24, 2024Hindi
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Hi I am 25 year old and have started investing in SIPs for the first time since last hear. I do 1. HDFC Index Fund Nifty 50 -5,500 2. MIRAE Asset Midcap fund - 3500 3. Axis small cap - 2500 4. JM Flexicap - (one time investment) - 20,000 5. Aditya Birla Sun Life PSU equity - (one time) - 6000 6. Quant Mid cap - 3,500 7. Quant Infrastructure- 1,000 8. ICICI Prudential retirement - 1000 9. QUANT ELSS - 1,000 10. Parag Pareikh - 1000 11. Nippon India - 1000 12. SBI PSU - 1000 Overall my monthly SIP goes around 25,000-30,000 and my plan is to retire at the age of 50 with 5 Crore. XIRR - 27.33% Please suggest if i need to make any changes
Ans: It's impressive to see a 25-year-old like you investing diligently in SIPs. Your commitment to securing your financial future early is commendable. Let's evaluate your portfolio and see if any changes are necessary to help you achieve your goal of Rs 5 crore by the age of 50.

Diversification and Allocation
You have a diverse portfolio with investments across different categories:

Large-cap Index Fund

Mid-cap Funds

Small-cap Fund

Flexi-cap Fund

Sector Funds (PSU, Infrastructure)

Retirement Fund

ELSS Fund

This diversification helps spread risk and capture growth from various market segments.

Disadvantages of Index Funds
Index funds, like your HDFC Index Fund Nifty 50, track the market and offer average returns. They cannot outperform the market. Actively managed funds, managed by experts, aim to beat the market, offering potential for higher returns. Given your long investment horizon, actively managed funds could be more beneficial.

Benefits of Actively Managed Funds
Actively managed funds are overseen by professional managers who make strategic decisions to outperform the market. These funds can provide better returns, especially in volatile markets. With the right selection, actively managed funds can significantly enhance your portfolio's performance.

Disadvantages of Direct Funds
Direct funds have lower costs but lack professional guidance. Investing through a Mutual Fund Distributor (MFD) with a CFP credential ensures you receive expert advice. This professional support helps in making informed decisions and aligning investments with your financial goals.

Assessing Your Sector Funds
Your investments in sector funds like Quant Infrastructure and SBI PSU can offer high returns but also come with high risk. Sector funds are dependent on the performance of specific sectors. Diversifying too much into sector funds can increase risk. Consider limiting exposure to sector funds to balance your portfolio.

Importance of Reviewing Portfolio
Regularly reviewing your portfolio is essential to ensure it aligns with your financial goals. Market conditions and personal circumstances change over time. A periodic review helps in rebalancing your portfolio and maintaining the desired risk-return profile.

Evaluating Long-Term Goals
Your goal of Rs 5 crore by the age of 50 is ambitious but achievable with a disciplined approach. Considering the power of compounding and historical market returns, maintaining a consistent investment strategy will be key to reaching your target.

Projecting Future Returns
While exact future returns are unpredictable, a diversified portfolio with a mix of actively managed funds and strategic investments can provide good growth. Historically, equity mutual funds have delivered around 12-15% annual returns. Adjusting your portfolio to optimize for this growth can help achieve your long-term goal.

Suggestions for Improvement
Increase Allocation to Actively Managed Funds: Shift some investments from index funds to actively managed funds to potentially achieve higher returns.

Reduce Sector Fund Exposure: Limit investments in sector-specific funds to manage risk better.

Regular Reviews and Rebalancing: Periodically review and rebalance your portfolio to ensure it remains aligned with your goals and market conditions.

Conclusion
Your current investment strategy is strong and diversified, setting a solid foundation for future growth. With some adjustments to focus more on actively managed funds and regular portfolio reviews, you can enhance your chances of achieving your Rs 5 crore goal by the age of 50. Consulting with a Certified Financial Planner can provide tailored advice to optimize your investment strategy.

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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