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Vivek

Vivek Shah  | Answer  |Ask -

Financial Planner - Answered on Feb 14, 2023

Vivek Shah is a SEBI registered investment advisor and certified financial planner from FPSB India. He has over 18 years of experience in financial planning.
Shah founded Finrise, a financial planning and wealth management firm, in 2011. He believes that equity investment is the only way to generate long term wealth.
He has an MBA in finance, a degree in chartered accountancy and is a registered life planner from Kinder Institute of Life Planning, USA.... more
ASHISH Question by ASHISH on Feb 13, 2023Hindi
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Hello Mr. Vivek. I want to know what should be the split of our investments in terms of investment categories

Ans: Hello Mr Ashish,

First of all as an investor and also managing your family finances, you need to answer following questions before deciding on which instrument you want to invest

1) Goal or financial goal or purpose of doing investment.
This will matter a lot as a goal of child education and retirement needs to see with different perspective and also should have asset allocation and market cap exposure accordingly.

2) Time Horizon of your goals- this is very important as it will help you to select the asset class and it's allocation based on your time period of financial goals. This is where investor makes biggest mistake of misalignment of asset time cycle and goals time period. If you allign this properly, your journey will be quite smooth.

3) Optimum Return expectations on your capital invested-
If you are saving and investing for some better future to fulfill your goals offcourse you will ask something in return which should be respectable higher returns than inflation for long term period( more than 7 years). If you are investing in India than equity return assumptions and calculations should be based on 12% return expectations and debt it should be 6.5%. Remember that you should assume practical return assumptions ( not the highest or what your friend says) as you can put any number in the excel sheet for your mental satisfaction😃

4) Risk taken on your capital-
Risk is a very negative word being taken in india but actually it's the risk appetite and risk acceptance of an investor which makes his outcome/ returns favourable. Understand one thing that if you want high returns you have to assume high risk and there is no option for it or an investor has to be happy with sub optimal returns if he is not ready to take risk.

Risk according to me is the capacity of a person until where and when he will not have any palpation in his stomach and he can absorb the downside easily( both realised and majority of time unrealised).

You should remember one thing that after deciding on above parameters, TIME IN THE MARKET IS MORE IMPORTANT RATHER THAN TIMING THE MARKET. As an investor, wealth is created over a period of decade and have your allocation to equity accordingly and enjoy the journey of markets which is going to be up and down.

After looking at all these parameters you can think of taking allocations to equity mutual funds and decide how much allocation to equity mutual funds is comfortable to you. If you dont have any prior expertise in investing in mutual funds or equity markets, its better to hire an advisor to help you do that or start with allocation in Equity Diversified mutual funds which will help you to take exposure in stocks.

And after all that, i would say it's your behaviour and emotions management which will help you create wealth in the equity market.

I hope this helps. Happy investing
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  |9709 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 06, 2024

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Hi I am 39 years old, I would like to invest in mutual funds. Below is my portfolio Have one Flat worth 1cr and i am staying in that. Have 3 plots each worth 50Lacs. And have loan of 42 Lac Emi is 43000 and expense is 30K. And 2Lac school fee every year for kid one Monthly take home is 1.3Lac Mutual funds have 1Lac investment. PPF 5Lac, PF 21Lac, NPS 10Lac. Sukanya 5Lac. Current Savins EPF 20000pm, NPS - 10000pm, Mutual funds- 8K. Term insurance 1cr, health insurance 10lac i have I would like to create corpus for retirement, kids education and marriage, have two kids 7 and 1 year. Please suggest how to allocate . Following is my Mutual fund portfolio, 1000sip in all categories, large cap, mid cap, small cap, multi and flexi cap, balanced advantage fund.
Ans: It's wonderful to see your proactive approach to financial planning, especially considering your family's future needs and goals. Let's discuss how to allocate your investments to create a solid corpus for retirement, kids' education, and marriage:

• First, let's address your existing assets – your flat and plots. These are valuable assets that can contribute to your overall net worth.
• However, it's crucial not to rely solely on real estate for your investment portfolio diversification.

• With regards to your loans, it's advisable to prioritize paying off high-interest debts, like your loan with a 42 lakh balance.
• By reducing debt, you can free up more funds for investments and increase your financial flexibility.

• Now, let's focus on your monthly expenses, including your child's school fees and other living expenses.
• It's essential to budget wisely and ensure that your investment contributions don't compromise your day-to-day financial stability.

• Your existing investments in PPF, PF, NPS, and Sukanya are commendable. These provide a solid foundation for your financial future.
• You can continue contributing to these instruments while also exploring additional investment avenues to diversify your portfolio.

• Considering your investment horizon and risk tolerance, mutual funds offer an excellent opportunity for long-term growth.
• Your current SIP portfolio across different categories – large cap, mid cap, small cap, multi, and flexi cap – is well-diversified.

• As a Certified Financial Planner, I would suggest reviewing your asset allocation and ensuring it aligns with your financial goals.
• Allocate a portion of your monthly savings towards increasing your SIP contributions to mutual funds, aiming for a balanced mix across categories.

• Additionally, consider increasing your contributions to retirement-focused instruments like NPS, which offer tax benefits and long-term wealth accumulation.
• For your children's education and marriage goals, consider setting up separate SIPs or investment accounts dedicated to these objectives.

• Lastly, ensure you have adequate insurance coverage, including term insurance and health insurance, to protect your family's financial well-being.
• Regularly review your financial plan, adjust as needed, and stay committed to your long-term goals.

By following these steps and staying disciplined with your investments, you'll be well-prepared to achieve your financial aspirations and provide for your family's future needs. Keep up the good work, and remember that consistency and patience are key to success!

..Read more

Ramalingam

Ramalingam Kalirajan  |9709 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 24, 2024

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Hello sir, I am 32 yrs old, I want your advice as to the distribution of investments. How much in MF, equity, gold, etc.
Ans: At 32, it's great that you're thinking about asset allocation. Here’s a breakdown to help you navigate your investments effectively:

1. Assessing Your Goals and Risk Profile
Financial Goals: Identify and prioritize your financial objectives. Common goals might include:

Retirement Savings: Building a nest egg for retirement.
Home Purchase: Saving for a down payment on a house.
Education Fund: Funding your or your children’s education.
Emergency Fund: Ensuring you have enough liquidity for unforeseen expenses.
Risk Tolerance: Your risk tolerance depends on factors like age, income stability, and personal comfort with market fluctuations. Typically, younger investors can afford to take on more risk because they have more time to recover from potential losses.

2. Optimal Allocation Strategy
Balanced Approach: At 32, a balanced portfolio might lean more towards growth-oriented investments like equities but also include safer assets like debt instruments. Here’s a rough guideline:

Equities: 60-70%
Debt Instruments: 20-30%
Gold and Other Assets: 5-10%
3. Equity Mutual Funds
Understanding Equity Mutual Funds: These funds invest in stocks of various companies, offering diversification and professional management. The primary types include:

Large-cap Funds: Invest in large, well-established companies.
Mid-cap Funds: Focus on medium-sized companies with potential for growth.
Small-cap Funds: Target smaller companies with higher growth potential but also higher risk.
Active vs. Passive Funds:

Active Funds: Managed by professionals who make decisions to try to outperform the market.
Passive Funds: Track a market index like the Nifty 50 or S&P 500, generally with lower fees.
4. Benefits of Active Management
Potential for Higher Returns: Active managers aim to outperform the market through strategic stock selection and market timing.
Risk Management: Managers can shift investments to safer assets during market downturns.
Research and Expertise: Active funds benefit from the fund managers’ research and market insights.

5. Gold Investments
Gold as a Hedge: Gold is traditionally considered a safe-haven asset. It performs well during inflationary periods and economic uncertainty.
Gold ETFs: Exchange-Traded Funds (ETFs) that invest in physical gold offer the benefits of liquidity and ease of trading without the hassles of owning physical gold.

6. Avoiding Real Estate
High Capital Requirement: Real estate investments often require significant upfront capital.
Liquidity Issues: Selling property can take time, making real estate less liquid compared to other asset classes.
Market Knowledge: Successful real estate investing requires substantial knowledge and expertise.

7. Consider Debt Instruments
Types of Debt Instruments:

Debt Mutual Funds: Invest in government and corporate bonds, providing steady returns.
Fixed Deposits (FDs): Offer guaranteed returns over a fixed period, typically with lower risk.
Benefits: Debt instruments provide stability and regular income, making them ideal for balancing the risk in your portfolio.

8. Diversification Strategy
Why Diversify?: Diversification reduces risk by spreading investments across various asset classes, sectors, and geographies.
How to Diversify: Invest in a mix of equities, debt, gold, and possibly international assets to protect against market volatility.

9. Review and Rebalance
Regular Review: Periodically (at least annually) review your portfolio to ensure it still aligns with your goals and risk tolerance.
Rebalancing: Adjust your investments to maintain your desired asset allocation. For instance, if equities have grown significantly, you might sell some and invest more in debt instruments to rebalance.

10. Insurance Policies like LIC and ULIPs
Evaluate Performance: Assess the returns and costs associated with insurance-cum-investment products like LIC policies and ULIPs.
Consider Surrendering: If these policies are underperforming or have high costs, it might be wise to surrender them and reinvest in more efficient investment vehicles like mutual funds.

11. Seek Professional Advice
Certified Financial Planner (CFP): A CFP can help tailor a personalized financial plan considering your specific circumstances, goals, and risk tolerance.
Holistic Advice: Professional advice can provide a comprehensive view, including tax planning, retirement planning, and estate planning.

Final Insights
Stay Informed: Keep up-to-date with market trends and changes in economic conditions.
Stay Diversified: Ensure your investments are spread across various asset classes to mitigate risk.
Regularly Reassess: Life circumstances and financial goals can change, so regularly reassess and adjust your financial plan accordingly.

By following this detailed approach, you can build a robust investment portfolio tailored to your goals and risk profile, setting yourself up for a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9709 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2024

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Hello expert, I hope this message finds you well. My name is Hemanth, and I have recently completed my BTech. I am about to start my career in an IT company with a monthly salary of ?60,000. I am keen on planning my investments wisely and would like to seek your expertise on the matter. Specifically, I am interested in understanding how I can allocate my funds across different sectors to ensure a balanced and growth-oriented portfolio.
Ans: Hemanth, congratulations on your new job! Starting your career is a big milestone, and planning your investments early is a wise decision. Let’s dive into how you can allocate your funds across different sectors to create a balanced and growth-oriented portfolio.

Understanding Your Financial Goals

Before we jump into investment options, it’s important to understand your financial goals. Since you're just starting your career, you may have short-term goals like buying gadgets or a bike, and long-term goals like buying a house or retirement. Having clear goals will help you plan your investments better.

Building an Emergency Fund

The first step in financial planning is building an emergency fund. Aim to save 3-6 months' worth of expenses. This fund should be easily accessible, so consider keeping it in a savings account or a liquid mutual fund. An emergency fund provides financial security during unforeseen circumstances.

Allocating Funds for Investments

After setting aside your emergency fund, let’s allocate your Rs. 60,000 monthly salary. A good starting point is to follow the 50-30-20 rule:

50% for essential expenses (rent, groceries, utilities)
30% for discretionary spending (entertainment, dining out)
20% for savings and investments
Mutual Funds: A Core Investment Option

Mutual funds are a great way to start investing. They offer diversification and professional management, which are essential for beginners. Let’s break down the different types of mutual funds:

Equity Mutual Funds

Large-Cap Funds: These invest in large, well-established companies. They offer stability and moderate returns. Ideal for long-term goals.
Mid-Cap and Small-Cap Funds: These invest in mid-sized and smaller companies. They have higher growth potential but also higher risk. Suitable for long-term investment if you have a higher risk tolerance.
Sectoral/Thematic Funds: These invest in specific sectors like technology, healthcare, etc. They can offer high returns but come with higher risk. Good for investors with a good understanding of market trends.
Debt Mutual Funds

Short-Term Debt Funds: These invest in short-term fixed-income securities. They are less risky than equity funds and are good for short-term goals.
Long-Term Debt Funds: These invest in long-term fixed-income securities. They offer stable returns with moderate risk.
Liquid Funds: Ideal for parking surplus funds for short periods. They offer better returns than savings accounts with high liquidity.
Hybrid Mutual Funds

Balanced Funds: These invest in a mix of equity and debt. They offer a balance of risk and return. Good for investors looking for moderate growth with lower risk.
Monthly Income Plans (MIPs): These primarily invest in debt with a small portion in equity. They offer regular income with lower risk.
Benefits of Mutual Funds

Diversification: Spreads your investment across various assets, reducing risk.
Professional Management: Managed by experienced fund managers who make investment decisions.
Liquidity: You can easily buy and sell mutual fund units.
Power of Compounding: Reinvesting returns can significantly grow your investment over time.
Systematic Investment Plan (SIP)

A SIP is a great way to invest in mutual funds. It allows you to invest a fixed amount regularly, say monthly. Benefits of SIP:

Rupee Cost Averaging: You buy more units when prices are low and fewer when prices are high, averaging out the cost.
Discipline: Encourages regular saving and investment.
Flexibility: You can start with a small amount and gradually increase it.
Avoiding Index Funds

Index funds are passively managed and track a market index. While they have low fees, they lack the potential for higher returns that actively managed funds offer. Actively managed funds are overseen by fund managers who can adjust the portfolio based on market conditions, potentially leading to better returns.

Direct Funds vs. Regular Funds

Direct funds may seem attractive due to lower fees, but they require you to manage your investments actively. Regular funds, managed through a Mutual Fund Distributor (MFD) with Certified Financial Planner (CFP) credentials, offer professional advice and guidance. This can be invaluable, especially for new investors.

Investing in Public Provident Fund (PPF)

PPF is a long-term savings scheme backed by the government. It offers tax benefits and attractive interest rates. It’s a safe option for building a retirement corpus.

National Pension System (NPS)

NPS is a retirement-focused investment option. It offers tax benefits and a mix of equity and debt investments. It’s a good option for long-term retirement planning.

Equity-Linked Savings Scheme (ELSS)

ELSS is a type of mutual fund that offers tax benefits under Section 80C. It has a lock-in period of three years and invests predominantly in equities. It’s a good option for tax-saving and wealth creation.

Health Insurance

Ensure you have adequate health insurance. Medical emergencies can be financially draining. A good health insurance policy protects you and your family from unexpected medical expenses.

Term Insurance

Consider taking a term insurance policy. It offers a high sum assured at a low premium. It ensures financial security for your family in case of an unfortunate event.

Gold Investment

Investing in gold can be a good way to diversify your portfolio. However, instead of buying physical gold, consider paperless gold options like Gold ETFs or Sovereign Gold Bonds. They offer better returns and are hassle-free.

Monitoring and Reviewing Your Portfolio

Regularly monitor and review your investment portfolio. Market conditions and your financial goals can change over time. Adjust your investments accordingly to stay on track.

Seeking Professional Advice

While it's great to have a basic understanding of investments, seeking advice from a Certified Financial Planner can be beneficial. They can help you tailor your investment strategy to your specific needs and goals.

Final Insights

Hemanth, starting your investment journey early gives you a significant advantage. By diversifying your investments and focusing on long-term goals, you can build a robust financial portfolio. Remember to regularly review your investments and adjust them as needed. With careful planning and discipline, you can achieve financial security and growth.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Nayagam P

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I have got 3064 rank in srmjee phase 3, and i opted for cse with software engineering in ktr campus. I just wanted to know that will i get the opted branch and college or if not will my chance to alppy for any other be closed?
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Sir please tell which one is better for Btech CSE Program Pimpri Chinchwad University Pune , BIT Mesra Jaipur off Campus or JK Laxmipath University Jaipur
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Nayagam P P  |8658 Answers  |Ask -

Career Counsellor - Answered on Jul 12, 2025

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My son got 60206 in jee mains, GEN category from kolkata. BITS score 193. Msc maths or physics dual degree will be helpful or which course/ college is advisible from jee mains score?
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Asked by Anonymous - Jul 12, 2025Hindi
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Sir, my daughter has got 11790 rank in kcet. Through counseling she can get EEE in BMSCE basavanagudi college and electonics, cybersecurity and information science in Bangalore institute of technology .....can you help by guiding which one to choose ?
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Career Counsellor - Answered on Jul 12, 2025

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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