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Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 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
Saurav Question by Saurav on Apr 05, 2023Hindi
Money

Hello Sir.. Im 41 years old. My portfolio comprises as below: 1. Mirae asset emerging bluechip fund - ₹2500 per month 2. Axis long term equity fund - ₹5000 per month 3. Nippon ELSS growth fund - ₹5000 per month 4. Axis mid cap fund - ₹1500 per month 5. Kotak emerging equity fund growth plan - ₹2000 per month Im looking at accumulating ₹3 cr. in next 20 years. Pls suggest

Ans: Creating a corpus of Rs 3 crore in 20 years is a significant but achievable goal. Your current portfolio has a good mix of equity and ELSS funds. Let's review your portfolio and suggest an optimized plan to achieve your target.

Assessing Your Current Mutual Fund Portfolio
Your portfolio includes various equity funds, which is essential for long-term growth. However, fine-tuning can help optimize your returns and achieve your goal of Rs 3 crore.

Equity Funds
Equity funds are crucial for wealth creation over the long term. They offer higher returns compared to other asset classes. Your portfolio has a mix of large-cap, mid-cap, and emerging equity funds, which is a good strategy for capturing market growth.

ELSS Funds
ELSS funds provide tax benefits under Section 80C and also offer equity exposure. This dual advantage makes them a valuable addition to your portfolio. Your investments in ELSS funds are a wise strategy for tax-efficient growth.

Evaluating Direct and Regular Funds
Disadvantages of Direct Funds
Direct funds might seem cost-effective due to lower expense ratios. However, they lack professional advice and guidance. Investing through a Certified Financial Planner (CFP) ensures you get valuable insights and tailored strategies.

Benefits of Regular Funds Through MFD
Regular funds, managed by Mutual Fund Distributors (MFD) with CFP credentials, offer expert advice. They help you navigate market fluctuations and optimize your portfolio for better returns. This guidance can significantly impact your investment success.

Optimizing Your Portfolio for Rs 3 Crore in 20 Years
To achieve Rs 3 crore in 20 years, consider these adjustments and additions to your portfolio:

Increase Equity Exposure
Allocate more to equity funds for higher growth potential. Equity funds generally outperform other asset classes over the long term. Increasing your investment in diversified and large-cap equity funds can help you achieve your target.

Focus on Actively Managed Funds
Actively managed funds can adapt to market changes and aim to outperform benchmarks. Choose funds with strong track records and experienced fund managers. Actively managed funds have the potential to provide better returns compared to passive index funds.

Systematic Investment Plans (SIPs)
Continue with SIPs to maintain discipline and average out costs. SIPs are effective for long-term wealth creation and mitigating market volatility. Regular investments through SIPs ensure you benefit from compounding and market fluctuations.

Diversify Across Asset Classes
While equity should dominate your portfolio, maintaining some exposure to hybrid and debt funds can ensure a balanced risk-return profile. This diversification provides stability and reduces overall portfolio risk.

Regular Monitoring and Rebalancing
Review your portfolio regularly and rebalance it to maintain alignment with your goals and risk tolerance. Regular monitoring ensures your investments stay on track and are adjusted according to market conditions and your evolving financial situation.

Suggested Investment Plan
Based on your current investments and the goal of Rs 3 crore, consider the following approach:

Equity Funds
Increase your SIPs in diversified and large-cap equity funds. These funds offer higher growth potential and are less volatile than small-cap funds. A balanced mix of large-cap and mid-cap funds can enhance your portfolio’s growth.

ELSS Funds
Continue investing in ELSS funds for tax benefits and equity exposure. Ensure these investments align with your overall asset allocation strategy. ELSS funds can play a vital role in achieving your long-term goals while providing tax efficiency.

Hybrid and Debt Funds
Maintain or slightly increase your investment in hybrid and debt funds. They offer stability and moderate returns, balancing your overall portfolio risk. This ensures that part of your portfolio is protected against market downturns.

Professional Guidance
Seek regular advice from a Certified Financial Planner (CFP). They can provide tailored strategies and help optimize your portfolio based on market conditions and your goals. Professional guidance ensures your investment decisions are well-informed and aligned with your objectives.

Conclusion
Your current portfolio is diversified and suitable for long-term growth. By increasing your equity exposure and focusing on actively managed funds, you can achieve your goal of Rs 3 crore in 20 years. Regular monitoring and professional guidance will keep your investments on track and help you navigate market fluctuations effectively.

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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I am 45 and currently doing MF SIP of close to 45k per month for last 3 years. My target is to accumulate portfolio of close to 3 cr in next 10 year. Pls advise how to go abt it. Also below is my current portfolio as I need advise whether I need to change / switch anything on them. Regards//Sukhvinder 1. Axis Midcap Fund-Reg(G) 2. Parag Parikh Flexi Cap Fund-Reg(G) 3. ICICI Pru Bluechip Fund(G) 4. Kotak Flexicap Fund(G) 5. Mirae Asset Large Cap Fund-Reg(G) 6. HDFC Hybrid Equity Fund(G)
Ans: Dear Sukhvinder,

Thanks for asking about your financial goals. You have been investing INR 45,000 each month for the last three years and want to reach INR 3 crores in the next 10 years. Let's see if that's possible, considering your past investments.

Assuming you've earned an average return of 12% per year (which is a good estimate for a diverse set of investments), the amount you've already invested in the past three years should be around INR 21.6 lakhs. If you keep investing INR 45,000 each month for the next 10 years and continue to earn 12% per year, you'll have about INR 1.08 crores in 10 years. Adding the past investments to this amount, you'll have around INR 1.29 crores in total.

To reach your target of INR 3 crores, you'd need to earn around 23% per year, which is very high and not very likely. One way to get closer to your goal is to invest more each month. If you increase your monthly investment to INR 75,000 and still earn 12% per year, you could have around INR 1.80 crores in 10 years. Adding your past investments, you'll have about INR 2.01 crores in total. It's not INR 3 crores, but it's more realistic given the risks involved.

Your current investments include a mix of midcap, flexicap, large-cap, and hybrid funds, which is good. But it's important to keep an eye on how each fund is performing compared to others in the same category. If any of your funds aren't doing well, think about switching to better ones.

In the end, reaching INR 3 crores in 10 years might not be possible with your current investments and a 12% return. But by investing more each month and keeping your investments diverse, you can still build a good amount of savings. Make sure to review your investments regularly and make changes as needed.

Best of luck on your financial journey!

Warm Regards,
Hardik Parikh

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Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 18, 2024

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My current portfolio is approx 45 Lac in PF, 5 Lac in NPS another 35 Lac in different MF & direct stocks, I am currently investing: 1) PF - Rs 42000 (Including company contribution) 2) NPS - Rs 22000 3) Aditya Birla Sun Life Focused Fund - Growth-Regular Plan - Rs 3000 4) Kotak Small Cap Fund - Direct Plan- Growth - Rs 7000 5) PGIM India Midcap Opportunities Fund - Direct Plan - Growth - 7000 6) Tata Digital India Fund Direct Plan Growth - Rs 10000 7) Nifty50 index fund - Rs 17500 8) Direct Stocks - Rs 10000 9) PGIM India Large cap Opportunities Fund - Direct Plan - Growth - Rs 4000 My goal is around 5 Cr in the next 9-10 years. Kindly advise, I can increase my monthly contribution if needed
Ans: To achieve 5 Cr in 9-10 years, your current investments need to be reviewed and possibly increased. Here's a brief analysis:

PF & NPS: These are good long-term savings. Ensure you're invested in equity-oriented options within NPS for better returns.
MFs & Direct Stocks: Diversified portfolio, but ensure it aligns with your risk profile.
MF SIPs: Consider increasing SIP amounts annually by at least 10-15% to match inflation and meet your goal.
Direct Stocks: Risky, ensure proper research or consider shifting to diversified mutual funds.
New Investments: You can increase monthly contributions across MFs and consider adding more to equity funds for better growth potential.
Review and rebalance your portfolio annually to align with your financial goals and risk tolerance. Consult a financial advisor for personalized advice.

..Read more

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Hi, I am 36 years old. I am investing 60k per month in mutual funds as of 2024 with 5%step up every year. I started investing since 2018 with 8k per month sip and gradually increased the amount every year till i reached 60k per month in 2024. My current mutual fund portfolio is 63 lakh with a cagr of 22%. (100% equity mutual fund with equal distribution in large ,mid and small caps) It touched 67 lakh last month but due to recent fall it has lost clode to 4 lakh in one month. I intend to continue invest 60k with 5% increment till i am 50 years old. I also have a stock portfolio of 35 lakh. Ppf- 12.30 lakh (investing 50k yearly) Epf- 15.71(2.4 lakh yearly employer and employee combined) Us stock portfolio - 10k usd(casual investment) Gold - 2.5 lakh(casual investment) Nps - 3 lakh(2.5 lakh tier 1 and 50k tier 2) investing 50k annually in nps tier 1. I want to accumulate 10 cr in next 14 years when i turn 50. Please guide me on the changes needed in my approach. Thanks, Jimmy
Ans: Hello;

It is good to note your disciplined approach towards investing at a relatively early age.

Only suggestion from my side is to to do annual sip top-up by minimum of 8%, better if you can do 10%, instead of 5% to reach the intended target at 50.

All other investments are assumed to continue as stated(ppf, EPF, nps).

You may reduce direct stock exposure as you reach closer to retirement to avoid corpus impairment due to market volatility. Similarly gains from equity funds should be transferred to liquid or ultra short duration debt funds to protect it against market volatility.

Also note though NPS is factored in retirement corpus calculation, it can accrue to you only at 60 years of age. Unless of course you are ready to annuitize 80% of NPS corpus for premature exit.

Happy Investing;

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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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