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Seeking financial advice: Is ELSS a good investment?

Ramalingam

Ramalingam Kalirajan  |9854 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 12, 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
Saibal Question by Saibal on Jul 21, 2024Hindi
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Hello Sir, Please note that all are direct plans, starting in 2021. please let me if any change is required. My SIP is as mentioned below Motilal elss Direct - 1500 Mirae asset ELSS -2500 Mirae asset Large and Mid Direct -2000 Parag Parekh Flexi Cap Direct -2000 DSP ELSS -1000 SBI Small Cap 1000 Quant ELSS 1000 Motilal Large and Midcap 1500 Quant small Cap 1000 Mirae asset Multicap 2000 Motilal small cap 1000 ICICI prudential Bharat 22 FOF 1000 Aditya Birla PSU 2000

Ans: Assessing Your Current SIP Portfolio
Your SIP portfolio is well-diversified across various mutual fund categories. Investing in multiple funds helps reduce risk and enhances potential returns. However, it's important to review and make necessary adjustments for optimal growth.

Diversification Analysis
Diversification Across Categories

Your portfolio includes large-cap, mid-cap, small-cap, flexi-cap, and ELSS funds. This diversification is commendable. It allows you to tap into different segments of the market.

You have significant exposure to ELSS funds. While these offer tax benefits, ensure they align with your long-term goals. Too many funds in a single category might not add value.

The inclusion of flexi-cap funds like Parag Parikh Flexi Cap is wise. These funds provide flexibility by investing across market capitalizations.

Risk Management

Small-cap funds are part of your portfolio, which is good for long-term growth. However, they are more volatile. Keep a close watch and limit exposure to manage risk effectively.

The presence of large and mid-cap funds ensures stability. These funds are less volatile and can provide steady returns over time.

Direct Plans: A Closer Look
Disadvantages of Direct Plans

While direct plans offer lower expense ratios, they require active monitoring. Without expert advice, it can be challenging to make informed decisions.

Regular plans, through a Certified Financial Planner, offer guidance and regular portfolio reviews. This ensures your investments remain aligned with your financial goals.

Regular Plans Through MFD with CFP Credential

Investing through a CFP allows for ongoing professional support. A CFP can provide insights and adjustments based on market conditions and personal financial changes.

Regular plans might have higher expense ratios but offer value in terms of expert advice and management.

Suggested Adjustments
Streamlining Your ELSS Investments

You have multiple ELSS funds, which might lead to overlapping holdings. Consider consolidating to one or two well-performing ELSS funds to simplify your portfolio.

Focus on ELSS funds with a strong track record of performance and consistency.

Review Small-Cap Allocation

Small-cap funds are a high-risk, high-reward option. Ensure that your allocation does not exceed 20-25% of your total investment.

You might want to reduce the number of small-cap funds and reallocate to more stable options like large-cap or hybrid funds.

Consider Hybrid Funds

Hybrid funds, which invest in both equity and debt, can provide a balance between risk and return. They are less volatile and offer a buffer during market downturns.

Allocating a portion of your portfolio to hybrid funds can enhance stability and reduce overall risk.

Tax Efficiency and Goal Alignment
Maximizing Tax Benefits

ELSS funds offer tax deductions under Section 80C. However, ensure that your investment in ELSS is aligned with your overall tax-saving strategy.

Don't over-invest in ELSS just for tax benefits. Focus on funds that also meet your long-term financial goals.

Aligning with Financial Goals

Review your portfolio to ensure it aligns with your financial goals. Whether it's long-term wealth creation or tax savings, your investments should support your objectives.

If your goal is wealth creation, prioritize funds with strong growth potential and a proven track record.

Final Insights
Your SIP portfolio is diversified and shows a clear understanding of different market segments. However, consider streamlining your ELSS and small-cap funds to avoid redundancy. Regular plans, through a Certified Financial Planner, offer valuable guidance and management. Reassess your portfolio to ensure it aligns with your long-term goals and risk tolerance.

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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Ramalingam

Ramalingam Kalirajan  |9854 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

Latest Questions
Nayagam P

Nayagam P P  |9497 Answers  |Ask -

Career Counsellor - Answered on Jul 28, 2025

Career
My son got crl 87588 and ews 12449 in jee main how much his chance to get svnit mechanical in csab round
Ans: Akash Sir, With an All-India CRL of 87 588 and an EWS rank of 12 449 in J Main, securing a seat in B.Tech Mechanical Engineering at SVNIT Surat through the CSAB Special round is highly unlikely. In the most recent CSAB closing data (Round 5 2024), the EWS closing ranks were 6 013 (Home State) and 4 854 (Other State), and the OBC-NCL closing ranks were 21 559 (Home State) and 10 419 (Other State); both are far below your ranks, indicating minimal chance of allotment.

Given this, it is prudent to explore reputable private engineering colleges in Northern India that admit students in the OBC-NCL/EWS categories with JEE Main ranks in the 80 000–120 000 CRL range or equivalent category ranks. Below is a list of ten institutions where your son’s profile would be competitive for Mechanical Engineering through CSAB: Chandigarh University, Mohali with category closing ~40 000–60 000. Lovely Professional University, Jalandhar with category closing ~50 000–80 000. Amity University, Noida with category closing ~30 000–50 000. Sharda University, Greater Noida with category closing ~70 000–90 000. Galgotias University, Greater Noida with category closing ~60 000–85 000. Jaypee Institute of Information Technology, Noida with category closing ~45 000–70 000. Dr Akhilesh Das Gupta Institute of Technology & Management, New Delhi with category closing ~100 000–130 000. ABES Engineering College, Ghaziabad with category closing ~80 000–110 000. IILM College of Engineering & Technology, Greater Noida with category closing ~90 000–120 000. Thapar Institute of Engineering & Technology, Patiala with category closing ~25 000–45 000. Recommendation: Given the negligible chance at SVNIT Surat Mechanical through CSAB, focus on securing admission at one of the above private colleges. These institutions maintain solid infrastructure and placement records, and your son’s rank aligns well within their recent closing trends.

As backup options (excluding state-level exam seats), consider LPU, Amity Noida, Sharda, Jaypee Institute, and ADGITM Delhi, all of which have consistently admitted OBC-NCL/EWS candidates with category ranks up to ~120 000. All the BEST for a Prosperous Future!

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Nayagam P

Nayagam P P  |9497 Answers  |Ask -

Career Counsellor - Answered on Jul 28, 2025

Career
Sir my CRL-67471 and Obc-ncl-20585, can I get cse(AI and ML) in good IIIT's??
Ans: Parth, With an OBC-NCL JEE Main rank of 20585, securing a seat the AI & ML specialization at top IIITs and NITs through CSAB Special rounds is challenging but not impossible. Among IIITs, the lowest closing rank for B.Tech in Computer Science & Artificial Intelligence at IIIT Lucknow was 24684 in CSAB 2024, meaning you fall well within this range and have a strong likelihood of allotment there. IIIT Kottayam’s OBC-NCL closing rank for B.Tech Artificial Intelligence was 70657, making it comfortably accessible. Conversely, IIIT Allahabad’s OBC-NCL AI-related streams closed at around 15221, placing your rank outside its cutoff. At NITs, newer campuses with AI & ML are more attainable: NIT Sikkim’s OBC-NCL AI & ML closing rank was 48269, and its opening rank around 45786, both above your rank, indicating good chances. NIT Uttarakhand and NIT Nagpur AI & ML cutoffs are expected in the 30–40 k range, so your rank could be sufficient there. However, premier NITs like Surathkal, Trichy and Calicut typically close AI & ML around 3000–7000, making them out of reach for your rank.

Recommendation: Consider locking a seat at IIIT Lucknow or IIIT Kottayam for AI & ML through CSAB, or at NIT Sikkim/NIT Uttarakhand in AI & ML, and prepare for Private College options as prudent backups.

List of Private Engineering Colleges in Northern India Accepting OBC-NCL Rank ~20585 for AI & ML

Chandigarh University, Mohali (AI & ML specialization)

Lovely Professional University, Jalandhar (B.Tech AI & ML)

Amity University, Noida (B.Tech AI)

Sharda University, Greater Noida (B.Tech CSE with AI)

Galgotias University, Greater Noida (B.Tech AI & Data Science)

Jaypee Institute of Information Technology, Noida (B.Tech CSE-AI)

Indraprastha Institute of Information Technology, Delhi (B.Tech CSE-AI)

Thapar Institute of Engineering & Technology, Patiala (B.Tech CSE-AI)

SRM University, Delhi-NCR (B.Tech AI & ML)

ABES Engineering College, Ghaziabad (B.Tech CSE with AI)

Backup private options (excluding state-level exams) include LPU, Amity Noida, Sharda and Jaypee, all of which admit OBC-NCL ranks above 20000 through JEE Main. All the BEST for a Prosperous Future!

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Dr Dipankar

Dr Dipankar Dutta  |1783 Answers  |Ask -

Tech Careers and Skill Development Expert - Answered on Jul 28, 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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