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Ramalingam

Ramalingam Kalirajan  |9924 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 17, 2025

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 - Jun 16, 2025
Money

Hello Sir, I want to redeem a mutual fund to reduce number of fund in my portfolio. This fund is of 5% allocation of my total portfolio and has not beaten the benchmark. I want to how to reinvest this redeemed amount to another MF, should I do SIP or lumpsum. Will lumpsum investment at current market effect the return or I should invest lumpsum without timing the market. My investment horizon is for 15 years. Also will this effect the compounding

Ans: You are thinking in the right direction. Streamlining your mutual fund portfolio is a smart move. Managing fewer, better-performing funds will help you get more focused growth.

You are planning to redeem a fund that has underperformed. That shows your awareness as an investor. Let us now look at the right way to reinvest the amount. Your investment horizon is long—15 years—which is an advantage.

Let us evaluate every angle in detail.

Why It’s Okay to Exit an Underperforming Fund
You mentioned this fund has only 5% weight in your portfolio. It has not beaten its benchmark. That’s a clear red flag.

Reasons to exit:

Fund not beating benchmark for 3 years or more

Fund manager or strategy changed

Poor consistency in performance

Other funds doing better in same category

Selling such funds is wise. It makes your portfolio clean and growth-focused.

One bad performer can pull down overall return. Removing it improves portfolio efficiency.

You made a good decision.

Where to Reinvest the Redeemed Amount
After selling, your goal is to reinvest in another mutual fund. Let us plan it properly.

You asked whether to do SIP or lumpsum. Both are useful, but must be used wisely.

First, identify where this money should go.

What type of fund should you choose:

If your existing fund mix is strong, add to an existing winner

Or choose a new fund with consistent 5-year and 10-year track record

Choose only actively managed funds, not index funds

Why avoid index funds:

Index funds copy the market without intelligence

They fall when the market falls. No protection

No chance to beat benchmark

Passive nature reduces wealth-building capacity

Fund manager has no freedom to select better stocks

Actively managed funds give you:

Expert decision-making

Freedom to shift between sectors

Better downside protection

Superior long-term results in Indian market

So always prefer actively managed mutual funds via regular plans.

SIP vs Lumpsum: Which One is Better?
Let us now come to your main question.

You want to know how to reinvest the amount. SIP or lumpsum?

Your investment horizon is 15 years. This is very long. So you can take equity exposure fully.

Still, timing matters when investing lumpsum.

Let us assess both methods side by side:

When Lumpsum Makes Sense
Lumpsum means investing full amount at once. It works in these conditions:

Market is already corrected or trading low

You are not emotionally affected by short-term falls

You will stay invested for full 15 years

You have chosen a good fund with strong past record

You don’t need this money for short-term goals

Benefits of lumpsum in long-term:

Full compounding starts from day one

Money is fully exposed to market

No waiting time, no idle money

Higher returns if market performs well after entry

But don’t forget, lumpsum needs mental stability.

What if market falls after lumpsum?

You may feel anxious

You may exit early due to fear

Short-term losses can affect your patience

That’s why timing does affect short-term performance. But not long-term growth if you stay invested for 15 years.

When SIP is Better
SIP is the habit of investing every month.

Even for lumpsum amounts, you can do STP (Systematic Transfer Plan).

STP means:

Keep the lump amount in liquid fund

Transfer fixed amount every month into the equity fund

Example: Rs. 50,000 per month for 6–10 months

Why STP is useful:

Reduces risk of market timing

Avoids investing entire amount at peak

Keeps you emotionally stable

Avoids regret in case of short-term correction

Creates smoother entry into equity

Use STP when:

Market is at all-time highs

Volatility is increasing

You are not sure about market direction

You want peace of mind during investment

So, STP is a balanced way to invest lump amounts.

Will Lumpsum Affect Compounding?
This is an important question.

Let us understand compounding clearly.

Compounding depends on:

Time invested

Return generated

Amount invested

Whether you do lumpsum or SIP, the key is how long money stays invested.

Lumpsum helps compounding start early. SIP creates compounding gradually.

In long term (15 years):

Lumpsum grows faster if invested at right level

SIP grows steadily but reduces entry timing risk

Both will give good results if fund is right

So yes, lumpsum helps compounding better if done at right time.

But STP gives you that benefit with safety.

You get smoother growth and still early compounding.

Ideal Strategy for Your Case
Let us now give you a proper, full-scope recommendation.

Step-by-Step Plan:
Redeem the underperforming fund.

Park the money in a liquid mutual fund (not savings account).

Start a 6-month STP to a high-quality active mutual fund.

Choose the fund after checking its 5-year, 10-year consistency.

Avoid new index funds or ETFs.

Use regular plans through Certified Financial Planner channel.

After STP ends, monitor that new fund every year.

This plan will:

Reduce timing risk

Start compounding early

Bring emotional comfort

Keep your investing smooth

Increase overall return stability

Additional Things to Keep in Mind
Since your money is being shifted, some more factors to remember:

Mutual Fund Capital Gains Tax Rules (Updated):

Equity fund LTCG above Rs. 1.25 lakh taxed at 12.5%

STCG (below 1 year) taxed at 20%

These are recent rules. Plan redemptions smartly

Avoid frequent switches to reduce tax impact

Emotional Behaviour Risk:

Do not panic if market dips during STP

Do not stop investing after seeing short-term fall

Compounding works best when you do not interrupt

Yearly Review Required:

Check your fund’s performance yearly

Compare with peers in same category

Use this to decide future additions or redemptions

Work with a CFP to do regular health check-up of portfolio

Finally
You are thinking smart. Trimming funds and reallocating is a sign of maturity.

But always shift money with a goal and method.

Use these steps:

Avoid underperforming and index funds

Reinvest using STP into active mutual funds

Prefer regular plans with CFP guidance

Let money stay invested for full 15 years

Don't check NAV daily. Focus on yearly growth

Review fund quality yearly

Avoid timing the market too much

Stick with this method and your wealth will grow steadily.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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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Mutual Funds, Financial Planning Expert - Answered on Apr 25, 2024

Asked by Anonymous - Mar 19, 2024Hindi
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Hello Sir.I am 30 year old from Kolkata,I have been investing in Mutual Fund for SIP of Rs.5000/- monthly since October 2021 with a plan for long term investment.My Portfolio has this equity diversification i.e.Axis Focused 25 Fund Direct Plan Growth,Mirae Asset Large and Mid Cap- Direct Growth plan,Nippon India Small Cap Fund Direct plan growth,HSBC Small Cap fund Direct growth plan and SBI Small Cap Fund Direct Plan Growth. All these all together have accumulated alongwith profit and loss amount of Rs.152000/- .Now whether can i withdraw profit amount only and invest in lumpsum to different fund manager without stopping existing SIP? Also suggest me good portfolio with good return over long term.Please Sir Thanks and Regards Praveen Das
Ans: Hello Praveen,

It's great to see your proactive approach towards long-term investing at 30. Building a diversified equity portfolio through SIPs reflects a disciplined savings habit and a focus on wealth creation.

Regarding your query about withdrawing the profit amount and investing it lumpsum in a different fund without stopping the existing SIPs, it's absolutely feasible. You can choose to reinvest the profit amount in a lumpsum in a different fund manager while continuing your SIPs. However, before making any changes, consider the tax implications and exit load, if any, on the profit amount.

Now, for suggesting a portfolio with good returns over the long term, it's essential to have a balanced approach with exposure to various market segments. Given your existing holdings, you might consider adding a large-cap or flexi-cap fund to provide stability to your portfolio. Additionally, having exposure to international funds or thematic funds can provide diversification and potentially enhance returns.

A Certified Financial Planner can offer personalized advice, analyzing your risk profile, financial goals, and investment horizon. They can guide you on optimizing your portfolio, ensuring a mix of funds that align with your objectives and risk tolerance.

Remember, investing is a journey, and staying invested with a long-term perspective while periodically reviewing and rebalancing your portfolio can help you achieve your financial goals. Best wishes on your investment journey!

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Ramalingam Kalirajan  |9924 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2024

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I invested in mf sip of sbi contra fund Reg G,Quant small cap fund Reg G, Sbi small cap fund Dir G, And also lumpsum of ?5000 in Parag parikh flexi cap fund Dir G, Nippon India nifty small cap 250 index fund Dir G, Sbi nifty small cap 250 index fund Dir G. Kindly advice is it required any reallocation required,if yes suggest pl.
Ans: It's excellent that you're investing in mutual funds through SIPs and lump-sum investments, which can help you build wealth over the long term. Let's assess your current portfolio and see if any reallocation is needed.

Your portfolio consists of a mix of actively managed funds and index funds, covering different market segments like contra, small-cap, and flexi-cap. This diversification is good, but it's essential to periodically review and rebalance your portfolio to ensure it remains aligned with your financial goals and risk tolerance.

Firstly, let's evaluate your actively managed funds. SBI Contra Fund, Quantum Small Cap Fund, and SBI Small Cap Fund are actively managed funds with varying investment strategies. It's crucial to monitor their performance and ensure they continue to meet your expectations. If any of these funds consistently underperform or deviate from their investment mandate, you may consider reallocating your investments to better-performing alternatives within the same category.

Regarding your lump-sum investments, Parag Parikh Flexi Cap Fund is known for its diversified approach across market caps and sectors, providing flexibility and potential for growth. However, it's essential to review its performance periodically to ensure it continues to deliver results.

Nippon India Nifty Small Cap 250 Index Fund and SBI Nifty Small Cap 250 Index Fund are passive funds tracking the Nifty Small Cap 250 Index. While index funds offer low-cost exposure to specific market segments, they may not outperform actively managed funds consistently. However, they provide diversification and can be a valuable component of a well-rounded portfolio.

There are some advantages to consider direct funds, and the cost savings can be significant in the long run. However, there are some potential benefits to using a regular MFD:
Advantages of Investing Through a Mutual Fund Distributor (MFD):
• Personalized Advice: MFDs can be helpful for beginners or those who lack investment knowledge. They can assess your risk tolerance, financial goals, and investment horizon to recommend suitable mutual funds. This personalized guidance can be valuable, especially if you're new to investing.
• Convenience: MFDs handle all the paperwork and transactions on your behalf, saving you time and effort. They can help with account setup, SIP registrations, and managing your portfolio across different funds.
• Investor Support: MFDs can be a point of contact for any questions or concerns you may have about your investments. They can provide ongoing support and guidance throughout your investment journey.

Consider your investment goals, risk tolerance, and time horizon when evaluating the need for reallocation. If any fund significantly underperforms or if your financial circumstances change, you may need to rebalance your portfolio accordingly.

It's advisable to consult with a Certified Financial Planner who can provide personalized advice based on your specific financial situation and goals.

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www.holisticinvestment.in

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Financial Planner - Answered on Sep 13, 2024

Asked by Anonymous - Sep 10, 2024Hindi
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I am 50-year-old with investment in MFs. I want to invest Rs 20 lakh – part of it lumpsum say Rs 5 lakh and remaining 15 lakh as SIPs over next 8 years till I retire. Please suggest how I can go about it?
Ans: For your investment plan of Rs 20 lakh, split into Rs 5 lakh as a lump sum and Rs 15 lakh through SIPs over 8 years, here’s a diversified approach based on your retirement timeline and goal of maximising returns while managing risk:

Lump Sum Investment (Rs 5 lakh):

Invest in more stable, balanced funds since lump-sum investments tend to have higher exposure to market volatility.
• HDFC Balanced Advantage Fund -- 30 per cent (Rs 1.5 lakh)

Balanced fund that adjusts equity-debt mix based on market conditions, reducing risk.
• Mirae Asset Hybrid Equity Fund -- 25 per cent (Rs 1.25 lakh)

Equity-oriented hybrid fund with a good balance of risk and reward.
• ICICI Prudential Multi-Asset Fund -- 25 per cent (Rs 1.25 lakh)

A fund that invests in equity, debt, and other asset classes like gold, providing diversification.
• HDFC Short Term Debt Fund -- 20 per cent (Rs 1 lakh)

SIP Plan (Rs 15 lakh over 8 years):

You can set up a monthly SIP of Rs 15,625 to achieve this. Here’s a diversified set of funds:
• Axis Bluechip Fund -- Rs 4,000/month

Large-cap fund with a solid track record of lower volatility and stable returns.
• Mirae Asset Emerging Bluechip Fund -- Rs 3,500/month

Large and mid-cap exposure for a combination of growth and stability.
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Balanced exposure to mid-cap and large-cap companies.
• Kotak Emerging Equity Fund -- Rs 2,625/month

Mid-cap focused fund, known for good long-term growth.
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Ramalingam Kalirajan  |9924 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 02, 2024

Asked by Anonymous - Nov 30, 2024Hindi
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Hi Sir, I have lumpsum amount of Rs. 3 lakh that I want to do invest in mutual fund. Do i have to invest in Sip mode or lumpsum? I dont want this money for next 10 years. Please suggest which mutual fund i can invest and how to invest..
Ans: Your investment horizon of 10 years is a good decision. Long-term investments build wealth. Both lump sum and SIP investments have their merits. Let us analyse each method to suit your needs.

Understanding Lump Sum Investment
Advantages of Lump Sum Investment
Immediate exposure to the market allows capital to grow from the start.

Beneficial during low market levels or corrections.

Suitable if you already have disciplined financial planning in place.

Disadvantages of Lump Sum Investment
Entire amount is exposed to market volatility instantly.

May not be ideal in highly fluctuating markets.

Risks higher loss in case of a sudden downturn after investing.

Evaluating Systematic Investment Plan (SIP)
Benefits of SIP Investment
Breaks your investment into smaller portions, reducing market timing risks.

Suitable during a volatile or upward-trending market.

Encourages disciplined and regular investment over time.

Limitations of SIP Investment
Capital deployment is slower, resulting in delayed compounding.

Less effective during stable or bullish markets compared to lump sum.

Requires you to wait for the full amount to be invested.

Which Method is Better for You?
Since you have Rs. 3 lakh, consider the following:

If the market is currently stable or undervalued, go for lump sum investment.

If markets are highly volatile, split your investment into SIP over 6-12 months.

Combining both approaches can also work well. Invest a portion as lump sum and the rest via SIP.

Selecting the Right Type of Mutual Fund
Equity Mutual Funds
Ideal for long-term wealth creation over 10 years.

Suitable for investors seeking higher returns with some risk.

Actively managed equity funds often outperform passive options.

Hybrid Mutual Funds
Balanced funds mix equity and debt for moderate risk.

Provide stability during market fluctuations while offering decent returns.

Debt Mutual Funds
Low-risk option but less suitable for a 10-year horizon.

Useful for conservative investors seeking capital preservation.

Why Avoid Index Funds?
Disadvantages of Index Funds
Index funds simply replicate market indices and lack flexibility.

Fund managers cannot adapt to market changes or crises effectively.

Actively managed funds aim to outperform markets through strategic decisions.

Investing Through a Certified Financial Planner
Benefits of Investing Through Regular Plans
Access to professional guidance for portfolio review and rebalancing.

CFPs offer tailored advice based on market conditions and financial goals.

Regular plans provide support and accountability throughout the investment journey.

Tax Implications of Mutual Fund Investments
Tax on Equity Mutual Funds
Long-Term Capital Gains (LTCG) above Rs 1.25 lakh taxed at 12.5%.

Short-Term Capital Gains (STCG) taxed at 20%.

Tax on Debt Mutual Funds
Both LTCG and STCG taxed as per your income tax slab.

Suitable for those in lower income tax brackets.

Strategies to Maximise Your Investment Returns
Diversify across equity, hybrid, and thematic funds for balance.

Reinvest returns or dividends to enhance compounding.

Review and adjust the portfolio every 6-12 months.

Final Insights
A 10-year horizon gives you ample time to grow wealth. Choose lump sum or SIP based on current market conditions. Prefer actively managed funds for better potential returns. Work with a Certified Financial Planner to ensure tailored and disciplined investments. Stay committed to your financial goals.

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Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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Ramalingam Kalirajan  |9924 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 2025

Asked by Anonymous - Jul 12, 2025Hindi
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And we are still investing in mutual funds and plan to do so for next 5 years,my husband invests 30 k ,and i invest 45k
Ans: You and your husband are doing a fantastic job with your monthly investments. Investing Rs. 75K every month shows strong financial discipline. This consistent approach builds wealth and protects your future. Let us now assess your mutual fund journey from all angles.

? Current SIP Strength and Long-Term Potential

– Monthly SIP of Rs. 75K is a solid starting base.
– Over 5 years, this creates a strong corpus.
– Assuming growth, this will accumulate significant wealth.
– Your investing period of 5 years needs careful product selection.
– Short-to-medium term investing demands stability, not aggressiveness.
– Hence, fund selection must match time horizon and risk appetite.
– A Certified Financial Planner can guide scheme selection based on goals.

? Importance of Investment Tenure

– Five years is not a very long horizon.
– Hence, aggressive small-cap funds carry higher volatility.
– Stick to flexi-cap, large-cap, and balanced advantage categories.
– These offer better risk-reward balance in 5-year timeframe.
– Avoid overly sector-specific or thematic funds.
– Asset allocation should favour stability over chasing returns.

? Regular Plan Advantage vs Direct Plan Disadvantage

– Many investors choose direct plans for saving expense ratio.
– But they miss out on expert guidance from Certified Financial Planners.
– This increases chances of wrong fund selection or wrong exit timing.
– Wrong asset allocation or overlapping funds also impact returns.
– Regular plans through CFP-backed MFD offer holistic hand-holding.
– You receive periodic rebalancing, performance monitoring, and personalised reviews.
– The cost difference is minor compared to guided wealth creation.
– A goal-based approach with CFP supervision reduces regret and errors.

? Stay Away from Index Funds – Understand Why

– Index funds may look simple and low cost.
– But they carry hidden disadvantages often overlooked.
– Index funds invest passively in top companies of the index.
– They offer no downside protection in falling markets.
– No active strategy during volatile or sideways periods.
– Also, they follow market blindly, without fundamentals.
– In India, market inefficiencies offer space for active managers.
– Actively managed funds outperform index funds in India consistently.
– They are agile, selective, and dynamic in asset picking.
– Certified Financial Planners help choose best-performing active funds.

? SIP Strategy Review – Risk Alignment and Suitability

– Check how much of your Rs. 75K goes into high-risk funds.
– Avoid high exposure to small-cap and mid-cap segments.
– Cap allocation to these at 20%-30% max.
– Majority should be in balanced, large, or multi-cap funds.
– This reduces downside and improves consistency.
– Each fund must have a clear role and no overlap.
– Avoid too many funds for diversification.
– Keep portfolio compact with 5-7 funds only.

? Goal Planning – Tie Investments to Life Events

– If you have specific financial goals, allocate accordingly.
– Short-term goals should be in low-risk hybrid funds.
– Long-term goals may include child’s education, retirement, etc.
– Discuss these in detail with a CFP.
– This helps match investment type with goal duration.
– Also aligns growth expectation and exit strategy.
– Many investors miss their goals due to mismatched funds.
– Avoid this mistake by goal-based investment planning.

? Rebalance and Review Periodically

– SIPs need annual review to ensure alignment.
– Fund performance can vary due to many factors.
– A fund lagging for over 12 months needs attention.
– Also review sector exposure, overlap, and tax impact.
– A Certified Financial Planner will do this periodically.
– Rebalancing helps protect from over-concentration.
– It also captures gains and shifts to better opportunities.

? Tax Planning within Mutual Fund Framework

– Mutual fund taxation impacts your net returns.
– For equity funds, STCG is taxed at 20%.
– LTCG above Rs. 1.25 lakh is taxed at 12.5%.
– For debt funds, gains taxed as per income slab.
– Plan exits smartly to reduce tax outgo.
– Use tax-harvesting if nearing 1.25 lakh LTCG.
– Align exit strategy with fund performance and tax limits.
– Don't ignore taxation; it quietly erodes final returns.

? Avoiding Insurance-Cum-Investment Products

– If you or your husband have LIC, ULIP, or money-back plans, evaluate them.
– These offer poor returns and low flexibility.
– Surrender such policies if lock-in is over.
– Reinvest in mutual funds with proper planning.
– This boosts compounding and improves goal alignment.
– Don’t mix insurance with investment ever.
– Treat them as separate needs for better results.

? Protecting Your Investment Journey

– SIPs should not stop even in bad markets.
– Market dips are best times to accumulate more units.
– Avoid emotional decisions during correction periods.
– Stay patient and continue monthly contributions.
– Rupee Cost Averaging helps reduce risk over time.
– If income reduces, lower SIP, but never stop.
– Stay consistent and disciplined for long-term success.

? Emergency Fund and Insurance Backup

– Ensure emergency fund is at least 6 months’ expenses.
– This avoids disturbing SIPs during sudden financial stress.
– Also review life and health insurance coverage.
– Ensure it is sufficient and updated.
– Use term insurance for life cover, not ULIPs.
– Use family floater health insurance for medical needs.

? When 5 Years End – Exit and Reinvestment

– Start planning your exit 12-18 months before maturity.
– Move funds gradually to safer options.
– This protects capital from market corrections.
– Consider conservative hybrid funds near withdrawal time.
– Don’t wait till last month to act.
– Also plan next set of goals and reinvestment.
– Don’t keep funds idle after 5 years.
– Reinvest based on new goals or income needs.

? Keep Emotions Out, Data In

– Emotional investing leads to poor decisions.
– Don’t chase top performers each year.
– Choose funds with consistent 5+ year track records.
– Also check downside protection, not just returns.
– Use data, not marketing material, for fund choices.
– A Certified Financial Planner uses professional tools for selection.
– Stay objective, not reactive.

? Avoid Investment Myths and Social Advice

– Friends or relatives may suggest schemes casually.
– Their risk appetite may not match yours.
– Also avoid YouTube tips or WhatsApp forwards blindly.
– Many half-truths and old advice circulate online.
– Follow structured and professional guidance only.
– Choose investments based on your family needs.
– Don’t compare portfolios or returns with others.
– Your journey is unique.

? Final Insights

– Your joint SIP effort of Rs. 75K/month is admirable.
– Continue this for 5 years with discipline and strategy.
– Choose funds based on goal, risk, and time.
– Avoid index and direct funds to stay protected.
– Take guidance from Certified Financial Planner regularly.
– Link each investment to a goal and review annually.
– Protect capital near goal maturity using low-risk funds.
– Use regular plans for full support and peace of mind.
– Don’t mix insurance with investment at any stage.
– Maintain emergency fund and review risk coverage.
– Reinvest matured corpus based on next life phase.
– Keep simplicity, discipline, and patience in investing.
– Long-term wealth is created through consistency, not luck.
– Keep up your good work and grow steadily.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

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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