Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |8241 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
Sanjeev Question by Sanjeev on Sep 26, 2023Hindi
Listen
Money

Hello Sir This Sanjeev Kumar, From Himachal Pradesh. Below are my Investments. Sir I would like to known that Is my portfolio good enough to get better return. I want to accumulate 20 to 30 lakhs in next 10 to 12 years from below investment. Also suggest me that whether, below MF are good enough, or reshuffling is required. 1. Aditya Birla Sun life Multi Cap Fund-regular growth --- Rs 1000/- 2. Invesco India Flexi Cap Fund-regular plan growth ---- Rs 1000/- 3. Invesco Multicap fund-Regular growth --- Rs 1000/- 4. Kotak Emerging Equity fund growth ---- Rs 1000/- 5. Kotak tax saver fund growth (ELSS) ---Rs 500 /- 6. Kotak multi cap fund --------- Rs 1000/- 7. Union long term equity fund growth regular plan ----- Rs 1500/- 8. Nippon India Flexi cap fund ----------- Rs 1000/- 9. LIC ------------------ 51000 /- (Annually). 10. PPF -------------- 1.5 lac (Annually, Since 2015). 11. NPS ------------ 50000 /- (Annually).

Ans: Hello Sanjeev,

Your investment portfolio appears to be diversified with a mix of mutual funds, insurance, and other instruments. Diversification is key to managing risk and potentially achieving better returns over the long term. However, it's essential to periodically review and rebalance your portfolio to ensure it aligns with your financial goals and risk tolerance.

Consider assessing the performance of each mutual fund regularly and comparing it with benchmark indices and peer funds. If any fund consistently underperforms or if your investment goals change, you may consider reshuffling your investments.

Additionally, continue contributing to instruments like PPF and NPS, as they offer tax benefits and long-term wealth accumulation opportunities. Remember, investing is a journey, and staying disciplined while focusing on your goals will increase your chances of achieving financial success.
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8241 Answers  |Ask -

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

Asked by Anonymous - Apr 13, 2024Hindi
Listen
Money
My age is 32 and I earn 40,000 PM. I invest 11400/ month in MF. My investments are 2000 in UTI index equity fund, 2000 in Parag Parikh Flexi Fund, 2000 Quant Midcap Fund, 1500 Tata Small Cap fund, 1500 Nippon small cap fund, 1200 in Quant flexi cap, and 1200 in Axis Small cap. I have also invested a lump sum of 60,000 in Quant Infrastructure fund. Kindly advise if my portfolio is okay
Ans: Evaluating Your Mutual Fund Portfolio
At 32, investing in mutual funds with a disciplined approach is a commendable step towards building wealth for the future. Let's evaluate your current portfolio to ensure it aligns with your financial goals and risk tolerance.

Portfolio Composition
UTI Index Equity Fund:

Provides exposure to a diversified portfolio of large-cap stocks, tracking the performance of the underlying index. Offers stability and long-term growth potential.
Parag Parikh Flexi Fund:

A well-managed fund with a flexible investment approach across equity and debt securities. Known for its focus on quality stocks and global diversification.
Quant Midcap Fund:

Invests primarily in mid-cap companies with growth potential. Offers the opportunity for higher returns but comes with higher volatility.
Tata Small Cap Fund and Nippon Small Cap Fund:

Small-cap funds focus on companies with small market capitalization, offering high growth potential. However, they are more volatile and suitable for investors with a higher risk appetite.
Quant Flexi Cap and Axis Small Cap Fund:

Flexi-cap and small-cap funds provide flexibility to invest across market capitalizations. Ensure you're comfortable with the risk associated with small-cap investments.
Quant Infrastructure Fund (Lump Sum):

Infrastructure funds invest in companies involved in infrastructure development, such as construction, energy, and transportation. Consider the long-term prospects of the infrastructure sector and the fund's performance.
Assessing Portfolio Diversification
Your portfolio includes a mix of large-cap, mid-cap, and small-cap funds, offering diversification across market capitalizations. However, it's essential to review the overlap between funds to avoid concentration risk and ensure adequate diversification.

Portfolio Review and Optimization
Risk Assessment:

Evaluate your risk tolerance and investment horizon to determine if the current allocation aligns with your financial goals.
Performance Review:

Monitor the performance of individual funds and compare them against their benchmarks and peer group. Consider making adjustments if any funds consistently underperform.
Asset Allocation:

Ensure your asset allocation is balanced and in line with your risk profile. Consider rebalancing if necessary to maintain the desired mix of equity and debt investments.
Professional Advice:

Consider consulting with a Certified Financial Planner to review your portfolio and receive personalized recommendations based on your financial situation and goals.
Conclusion
Your mutual fund portfolio shows a diversified mix of investments across market capitalizations and sectors. Regularly review and assess your portfolio's performance to ensure it remains aligned with your financial objectives. Remember, investing is a long-term journey, and periodic adjustments may be necessary to navigate market fluctuations and achieve your wealth accumulation goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8241 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 2024

Listen
Money
Hi Experts! I am 36 years old, married 1 year ago. I have Rs.223000 invested in Mutual Fund. Per Month 10k in Parag Parikh Flexi Cap Fund, Rs.1250 in DSP ELSS Tax Saver Fund Direct Growth, Rs.1000 in Kotak ELSS Tax Saver Fund Direct Growth, PGIM India Tax Saver Fund Direct Growth, Rs.2000 in Nippon India Small Cap Fund Direct Growth, Rs.2000 in Quant Multi Asset Fund Direct Growth and Rs.2000 in ICICI Prudential BHARAT 22 FDF Direct Growth. Apart from this I pay Rs.10k/month in PPF and 1.5 lac/year in SBI Life Insurance. Please let me know if this is a good portfolio or should I modify anything in this. What kind of Future return I will be expecting here with this portfolio.
Ans: Congratulations on your recent marriage and your proactive approach towards financial planning. It's evident that you're committed to securing your financial future.

Your investment portfolio reflects a diversified approach, which is a positive sign. Diversification helps spread risk and can enhance long-term returns. Let's delve into your portfolio to assess its effectiveness and potential for future returns.

Investing in Parag Parikh Flexi Cap Fund offers exposure to a diversified portfolio across various sectors and market capitalizations. This fund's flexible investment strategy allows it to capitalize on emerging opportunities, potentially leading to attractive returns over time.

ELSS Tax Saver Funds like DSP and Kotak offer tax benefits under Section 80C of the Income Tax Act while providing exposure to equities. These funds have a lock-in period of three years, aligning with your long-term investment horizon.

Nippon India Small Cap Fund and Quant Multi Asset Fund offer exposure to smaller companies and multiple asset classes, respectively. Small-cap funds have the potential for higher growth but come with increased volatility. Ensure they align with your risk tolerance.

ICICI Prudential BHARAT 22 FDF provides exposure to a diversified basket of public sector enterprises and select private sector companies. This fund can add stability to your portfolio while offering growth potential.

Your investments in PPF and SBI Life Insurance contribute to your overall financial security and tax planning. PPF offers stable returns with tax benefits, while life insurance provides protection for your family's future financial needs.

Considering your age and investment horizon, this portfolio has the potential to generate attractive returns over the long term. However, periodically review and rebalance your portfolio to ensure alignment with your financial goals and risk tolerance.

For a more comprehensive analysis and personalized advice, consider consulting a Certified Financial Planner who can tailor recommendations to your specific needs and objectives.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8241 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Money
Col Sanjeev Govila, good evening. I am Col P Venkatachalam, retd from MCEME as HOD FIET in 2006. I want to invest Rs 10 lacs. Please advise me.
Ans: Your disciplined decision to invest Rs 10 lakhs is deeply respected. Let's carefully assess the options for you.

This response is structured for your complete understanding and peace of mind.

We’ll explore all angles: safety, growth, liquidity, and suitability for your life stage.

Let’s proceed step-by-step.

Understanding Your Needs First

Before investing, it's important to check a few things:

Do you need regular income from this amount?

Do you want to keep this money safe from loss?

Or, are you looking for long-term growth for legacy or future use?

Are you okay with some ups and downs in value for better returns?

Once your objective is clear, investment selection becomes easier and more purposeful.

If Your Priority Is Capital Safety with Some Growth

You may want to protect your money and still grow it better than FDs.

These types of investments are suitable for short-term or medium-term use.

You may explore actively managed short-duration debt mutual funds.

These funds give better returns than bank FDs in most cases.

Returns are not fixed but are usually in the range of 6% to 7.5% per year.

They also offer better tax efficiency compared to bank FDs.

You can redeem partially anytime if you need money.

These funds are managed by experts and reviewed regularly.

If Your Priority Is Monthly Income

If you want steady cash flows, you can consider this route.

Keep 6 to 12 months of expenses in a liquid fund.

Use the rest in a Systematic Withdrawal Plan (SWP) from a balanced hybrid fund.

SWP gives regular cash flow without touching your capital much.

You also get better post-tax returns than bank interest.

You can increase or stop SWP anytime you want.

If Your Priority Is Long-Term Wealth Creation

If you don’t need this money for at least 5 to 7 years, then growth becomes key.

You can consider investing in an actively managed equity mutual fund.

Your capital grows over the long term with the power of compounding.

You have already seen 5x growth in past equity investments.

That patience has rewarded you. Same can happen here.

Select only regular plans of equity funds through MFDs with CFP credentials.

Don’t choose direct plans as they give no guidance and no service.

Avoid index funds. They follow market blindly. They don’t manage risks well.

Actively managed funds perform better in changing market conditions.

Why Not Index Funds or Direct Plans

Many suggest index funds or direct mutual funds without understanding your life stage.

Index funds copy an index. No human checks or risk control.

During market falls, they fall just like the market. No safety layer.

They may not suit senior citizens looking for safer growth.

Also, direct plans have no support.

A Certified Financial Planner and MFD will guide and update you regularly.

They also ensure rebalancing and switching at the right time.

What to Avoid at This Stage

Don’t go for market-linked insurance plans like ULIPs or combo policies.

Don’t keep Rs 10 lakh idle in a savings account or low-interest FD.

Don’t lock the entire amount in long-term non-liquid products.

Don’t invest in real estate for rental income. It’s illiquid and stressful.

Tax Aspects to Keep in Mind

If you redeem your equity fund after 1 year, capital gains above Rs 1.25 lakh are taxed at 12.5%.

For debt funds, gains are taxed as per your income slab.

SWP from equity funds is treated as capital gains. So, tax is lower.

You can plan redemptions smartly to keep tax low.

Avoid dividend payout plans in equity funds. They deduct tax before payout.

Instead, choose growth option and withdraw through SWP. That’s tax-friendly.

Sample Allocation for Rs 10 Lakh Based on Your Profile

This is a balanced idea assuming you don’t need regular income.

Rs 2 lakh in liquid fund – for emergency or unexpected needs

Rs 3 lakh in short-duration debt fund – for medium-term use

Rs 5 lakh in actively managed large and mid-cap equity mutual fund – for long-term growth

If you need monthly income, then replace Rs 5 lakh equity with a balanced fund and start SWP.

This will give you regular income with capital protection.

Flexibility and Liquidity

All these options offer full liquidity. You can withdraw anytime.

No fixed lock-in like insurance or annuities.

You stay in control of your money.

You also avoid penalty or surrender loss.

Review and Adjust Every Year

Check the performance every year with a Certified Financial Planner.

Rebalance between equity and debt based on your age and goals.

Make sure you are not taking more risk than needed.

If markets have performed well, book some profit and move to safer options.

If You Already Have Any LIC, ULIP, or Combo Plans

If any LIC or ULIP policies exist, kindly check surrender value.

If they are giving poor return, consider surrendering and reinvest in mutual funds.

Many old plans give less than 5% return.

Mutual funds offer more transparency and liquidity.

Make sure to shift wisely and not impulsively.

You Have Already Done Well

You are retired and still planning ahead. That is very admirable.

You also understand that income from equity mutual funds is not guaranteed.

Your discipline in sticking with equity for long term is wise.

It’s rare to see 5 times growth. You must have chosen well and held strong.

Finally

Based on your need, risk comfort, and goal, we can mix liquid, debt, and equity.

Avoid products which lock your capital or give poor return.

Prefer actively managed mutual funds with guidance.

Avoid index funds, direct plans, and fixed-return insurance schemes.

Keep part of your money flexible for any future need.

Ensure that your capital works hard but remains under your full control.

Periodic review with a trusted Certified Financial Planner is a must.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8241 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Money
I am retired and have invested in equity mutual fund dividend payout for monthly dividends. I also understand that dividend is not certain and I need not to depend on this dividend for monthly survivals. Now the question before the veterans is: 1) should I continue the equity fund Dividend payout; many advising for senior citizen investing in equity fund is not suggestiable, but it was invested a loooong time back and getting regular and uninterrupted dividend plus the amount invested was grown 5 times; or 2) should I redeem or transfer to growth fund or debt fund; or 3) redeem or submit for SWP (where I don't require or having any financial commitment with the redemption or SWP) any redemption will again need to invested in mutual fund. please advise.
Ans: You have managed your investments thoughtfully over the years. Investing long ago in equity mutual funds and letting them grow 5 times is truly smart. Now, as a retired investor, it’s wise to review the next steps from all angles.

Let us evaluate your current equity mutual fund dividend strategy with a full 360-degree view.

Understanding Your Current Position

You have invested in equity mutual funds under the dividend payout option.

You are receiving uninterrupted dividends regularly for a long time.

The investment value has grown 5 times over the years.

You do not depend on these dividends for monthly living expenses.

You have no pressing need to redeem or shift to SWP right now.

You are considering whether to:

continue as is,

shift to growth or debt funds,

opt for SWP.

Key Strengths in Your Current Setup

The investment already grew 5 times. This shows long-term wealth creation has worked well.

Regular dividends, though not guaranteed, show fund health and consistent past performance.

You are not financially dependent on dividends. This gives you freedom to make strategic changes.

No urgent need to redeem or change plan adds flexibility in planning next moves.

Limitations with Equity Dividend Option

Dividend is not fixed. It depends on market condition and fund’s surplus.

In uncertain market years, fund may stop or reduce dividend payouts.

Dividend payout reduces NAV. It is like withdrawing from your own investment.

No compounding benefit as dividends are paid out and not reinvested.

Tax is deducted at source. Dividend is added to your income and taxed at your slab.

Advantages of Switching to Growth Option

Entire profit stays invested. You get full compounding benefit.

NAV keeps growing without reduction due to payout.

You control when to redeem and how much.

If held for long, equity gains have tax advantage. First Rs 1.25 lakh LTCG is tax free. Then 12.5% tax.

Ideal for long-term wealth preservation and growth beyond retirement too.

You avoid uncertainty of future dividend declarations.

How SWP Scores Better Than Dividend Option

SWP gives you regular income like dividends.

But you fix the amount and frequency as per your comfort.

Withdrawals are from your own corpus. So there is clarity and control.

No dependency on AMC or market performance for payout.

Taxation is more efficient. Only capital gains are taxed, not full amount withdrawn.

SWP from growth plan gives you stability, predictability, and better tax handling.

You can increase, decrease or pause SWP as per your needs anytime.

How Debt Funds Fit In – Should You Shift?

Debt funds are suitable if you want capital protection and lower volatility.

They give more stable returns, usually between 5% to 7% per year.

But equity funds may outperform in long term even after retirement.

Since you do not need capital immediately, equity growth suits your goal better.

Debt funds make sense only for emergency buffer or short-term needs.

For wealth preservation and tax efficiency, SWP from equity growth is better than debt switch.

Key Factors to Evaluate Before Any Shift

What is the current total value of this investment?

What is the actual dividend amount you receive monthly or yearly?

Do you have other debt or liquid investments to cover emergencies?

Do you wish to pass this fund to family members later?

Are you comfortable with small market fluctuations in equity NAV?

Do you expect to use this money after 3, 5 or 10 years?

Are you comfortable handling minor tax paperwork under SWP?

Suggested 360 Degree Action Plan

Keep a part of this investment in equity growth plan for compounding.

Shift from dividend payout to growth option in the same fund.

Begin a small SWP from this fund if you want some monthly income.

Reinvest SWP amount in short-term debt fund or savings account if not used.

Monitor SWP yearly and adjust amount based on fund value.

This way, you get control, tax efficiency, and compounding together.

Keep dividend payout only if emotionally attached or enjoy seeing it as “income”.

If dividend amount is very small, better to fully move to growth + SWP.

Avoid These Common Mistakes

Do not redeem the full fund just to re-invest elsewhere.

Do not move everything to debt fund without reason.

Do not keep depending on uncertain dividend payout for future planning.

Do not chase high SWP amount. That may reduce fund value quickly.

Avoid frequent shifting or redemption which may affect long-term growth.

A Word on Index Funds – Why Not to Choose Now

Index funds are passive and follow index blindly.

They do not beat the market in sideways or falling conditions.

Active funds manage risk better in volatile markets.

You already hold actively managed fund that grew 5 times.

No need to shift to index now after seeing strong performance.

And a Note on Direct Funds – Please Stay Cautious

Direct funds look cheaper, but offer no guidance or emotional handholding.

You may miss rebalancing or strategy updates.

Investing through MFDs with Certified Financial Planner gives 360 degree support.

You need someone who understands you and not just the product.

MF Taxation Rules You Should Know (New Rules from FY25)

For equity mutual funds, LTCG above Rs 1.25 lakh is taxed at 12.5%.

Short-term capital gains (STCG) taxed at 20%.

For debt funds, capital gains taxed at your income slab, both STCG and LTCG.

Dividend is added to income and taxed as per your slab.

Sample Plan for You (No Fund Name)

Stop dividend payout. Switch to growth in same scheme.

Start SWP for Rs 5,000 or Rs 10,000 per month.

Use only part of fund. Leave rest for compounding.

Review SWP amount once every 12 months.

Ensure fund type suits your long-term risk capacity.

Keep emergency corpus in liquid fund separately.

Final Insights

You have done a great job growing your equity investment 5 times.

You are not financially dependent on this investment. This is a good position.

Dividend payout is convenient but not sustainable or tax-friendly.

Growth plus SWP strategy is more tax-efficient and gives full control.

Use this fund wisely and let compounding work longer.

Take help from a Certified Financial Planner to create a full retirement portfolio.

Include debt, equity, liquid funds, health cover, and emergency buffer in your plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8241 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Asked by Anonymous - Apr 15, 2025Hindi
Money
Hello Sir, I am 34 years old with a kid 4 years and a wife. I earn roughly 85k monthly. I have a home loan of 7.2Lakhs with emi of 31k and 9.15% rate. I have 3.7L in pf and my dad had gifted me three lic policies(with a premium paying period of 35 yrs) as below Two Lic jeevan anand 149 started on 2013 One lic jeevan saral 165 started on 2009 Should I surrender my Lic policies to clear my home loan? If I surrender jeevan saral 165 I get 7Lakhs(I am getting more than I paid in premiums) If I surrender jeevan anand 149 I get 1Lakhs(50k loss on premium paid) Or should I keep paying for these policies and continue the home loan emi for 2yrs? I plan to buy another house in future. Please advise.
Ans: You are thinking in the right direction.

It is good that you are evaluating long-term LIC policies seriously. Most people delay it.

Let us now assess your situation in a structured and complete manner.

Your Current Situation
Age: 34 years

Family: Wife and one child (4 years)

Income: Rs 85,000 per month

Home Loan: Rs 7.2 lakh with Rs 31,000 EMI at 9.15% interest

Provident Fund: Rs 3.7 lakh

LIC Policies:

Two traditional endowment plans from 2013 (35-year term)

One traditional money-back plan from 2009

Jeevan Saral gives Rs 7 lakh surrender value (profit)

Jeevan Anand gives Rs 1 lakh surrender value (loss of Rs 50,000)

Let Us Look At Your LIC Policies First
Why LIC Policies Are Not Wealth Creators
These are low-yield, long-term insurance plans.

They give average returns of 4% to 5% annually.

This return is lower than inflation over 20 to 30 years.

Your premium paying term is 35 years — very long duration.

You get maturity at 60 to 70 years — very late for life planning.

These plans offer poor wealth accumulation and flexibility.

The surrender charges in early years are high.

They lock your money without decent compounding.

Even the loyalty additions at maturity are not attractive.

Should You Continue or Surrender?
Let us look at each policy carefully.

Policy 1: Jeevan Saral 165 (Started in 2009)
Surrender value is Rs 7 lakh

You have already earned more than what you paid

You are exiting with profit

There is no reason to keep this low-return policy

You have held it for 15+ years — enough duration already

No future compounding benefit is expected

Take the Rs 7 lakh and use it productively

Policy 2 and 3: Jeevan Anand 149 (Started in 2013)
Only Rs 1 lakh surrender value

Rs 50,000 loss on premium paid

You have held it for 11+ years already

Still 24 years of premium left

Future surrender value may still not justify returns

Loss of Rs 50,000 is painful, but continuing is worse

The value erosion will be higher over time

You are tying your money for 35 years for poor returns

Take the small loss now and invest better

What Should You Do With the Surrender Amount?
Now let us create a 360-degree plan for the Rs 7 lakh and Rs 1 lakh.

1. First, Close the Home Loan
Outstanding principal is Rs 7.2 lakh

Home loan EMI is Rs 31,000

Interest rate is high — 9.15%

Clearing this loan will give instant mental relief

It improves monthly cash flow by Rs 31,000

Use the Rs 7 lakh from Jeevan Saral to close most of the loan

You can arrange the balance Rs 20,000 from savings or PF

This clears your loan fully and frees up EMI burden

2. Stop Paying Premiums on LIC Policies
Surrender the two Jeevan Anand policies now

You get Rs 1 lakh total

Use this amount to build emergency corpus

This gives you financial cushion for 6 months expenses

You avoid any more losses in the future

What Happens When You Free Up Rs 31,000 EMI?
Your monthly savings increase by Rs 31,000

This is a huge jump in cash surplus

You can create a strong wealth building system now

Smart Allocation Of The Surplus
Let us divide this Rs 31,000 wisely:

1. Rs 10,000 — Invest in Child Future
Create a mutual fund SIP in your child’s name

Choose child-focused equity mutual fund via regular plan

Invest through a Mutual Fund Distributor who is also a Certified Financial Planner

Regular plan has guidance, monitoring, and discipline support

Avoid direct plan — it lacks personalisation and emotional anchoring

Avoid index funds — they lack flexibility, give average returns, and don't beat market

This Rs 10,000 monthly will build a good education corpus in 15 years

2. Rs 10,000 — Retirement SIP For You and Wife
Start a diversified equity SIP in your name

Also start Rs 5,000 SIP in wife’s name if she is not earning

Keep this SIP for at least 20 years

This will give you good retirement support

Retirement is your biggest financial goal

3. Rs 5,000 — Emergency Fund & Insurance
Add Rs 1 lakh from surrender value to savings

Add Rs 5,000 every month till you reach 6 months’ expenses

This is your family’s safety net

Also review your health insurance

Ensure you have minimum Rs 5 lakh family floater cover

Buy term life insurance of Rs 50 lakh to Rs 1 crore

This gives full protection to your family

4. Rs 6,000 — Home Planning Fund
You mentioned buying another house in future

Start a SIP in a balanced hybrid mutual fund for this

Invest Rs 6,000 per month in this fund

Use this for down payment after 5 to 7 years

What About Your Provident Fund?
You already have Rs 3.7 lakh in PF

Let it continue for retirement

Don’t withdraw unless it is urgent

PF is good for long-term safety

Should You Still Consider Buying Another House?
Do not rush to buy second home

First focus on becoming debt free and financially secure

Buying another house creates EMI pressure again

Rental yield is very low in India

Property value grows slowly in most locations

Instead, build a strong mutual fund portfolio

It is liquid, transparent, and better compounding

Final Insights
Surrender LIC policies and close your home loan

Free up EMI and use it for smart investment

Protect your family with insurance

Build education, retirement and home funds step-by-step

Mutual funds give better long-term growth than LIC or real estate

Use regular plans with CFP-led guidance

Track and review yearly with your MFD-turned-CFP

Keep focus on long-term goals — child, retirement, wealth

Make money work for you, not sit idle in poor plans

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8241 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Money
Hello Sir, Over last few years I have created the below mutual fund portfolio on my own. My goal is to maximise returns for wealth creation and time horizon is 15 years. I am 42 now and can take a more aggressive approach for next 8-10 years. Post that I may want to preserve my wealth more. I am investing total of 43k which i can increase to 50k. Please have a look and suggest. 1. Invesco India contra fund - 9k 2. HDFC midcap fund - 9k 3. Kotak Flexi cap - 4k 4. Mirae Asset large cap (SIP Stopped due to poor performance) 5. SBI Focused equity - 6k 6. PPFAS Flexi cap - 10k 7. SBI Small Cap - 5k
Ans: You have done a great job so far. Taking charge of your finances with a clear long-term goal shows discipline and maturity.

You are 42 now and planning for a 15-year journey. That gives you a solid runway. The next 8–10 years are ideal for growth-focused investing. After that, wealth protection becomes the priority.

Let me do a full 360-degree assessment of your portfolio and give you specific insights.

Your Current Portfolio Snapshot
You have a mix of the following fund categories:

Contra fund

Midcap fund

Flexicap fund

Large cap (SIP stopped)

Focused equity fund

Flexicap fund (second one)

Small cap fund

This mix is mostly aggressive, which suits your growth objective well for the next decade.

Strengths in Your Portfolio
Good equity exposure: 100% of your SIPs are in equity. This is ideal for long-term wealth creation.

Diversification by category: You have exposure to midcap, small cap, flexicap, and contra. This creates growth potential with some balance.

Reasonable fund count: You hold 6–7 schemes. This is manageable and not over-diversified.

SIP discipline: SIP of Rs 43,000 monthly is a solid commitment. Increasing it to Rs 50,000 will compound well.

Clear time horizon: 15 years gives enough time to absorb market volatility.

High risk appetite in early phase: Your willingness to stay aggressive for the next 8–10 years is suitable.

Gaps and Risks in Your Portfolio
Overlap between funds
Midcap, small cap, focused, and flexicap funds may hold similar stocks. This can create redundancy.

Two flexicap funds
You are holding two flexicap funds. This may lead to duplication of large holdings.

Stopped SIP in large cap fund
You stopped a large cap fund due to poor performance. But judging funds by short-term returns is risky. Equity needs time.

No separate large cap anchor
Currently, there is no dedicated large cap fund. Flexicap funds are partly large cap but not fully reliable.

Overexposure to mid and small cap
14k out of 43k (almost 33%) is in mid and small caps. This is fine now, but needs pruning later.

No tax planning around equity
With new tax rules, exit strategy is important. Not planning it may lead to surprise taxation.

Suggested Portfolio Restructuring
Let us now work towards simplifying and optimising your portfolio. We will focus on:

Growth in first 8–10 years

Wealth protection post that

Balanced risk

Sector and stock diversification

Fund manager consistency

Tax efficiency

Here is the revised structure:

Ideal Portfolio Structure (for 50k SIP)
Let us group funds into 4 buckets. This helps with purpose-driven investing.

1. Flexicap Fund – Rs 12,000
Gives you all-cap exposure.

Works as your core portfolio.

Dynamic allocation across cap sizes.

Good for long-term consistency.

Why only one flexicap?
Two flexicap funds increase overlap. Retain only the better performer.

Action: Stop SIP in the second flexicap. Continue with only one high-quality flexicap fund.

2. Midcap Fund – Rs 10,000
Good for 8–10 years horizon.

Outperforms large caps in long term.

Needs patience during volatility.

Limit to one scheme.
Too much midcap increases risk. 20% allocation is enough.

Action: Continue SIP in one good midcap fund.

3. Small Cap Fund – Rs 5,000
High return potential.

But high risk and deep drawdowns.

Ideal to cap exposure at 10%.

Action: Continue SIP. Don’t increase allocation.

4. Contra or Focused Fund – Rs 8,000
Contra brings non-consensus picks.

Focused funds bring high conviction bets.

You can hold either one, not both.
Keep the one with better long-term track record.

Action: Choose one between contra and focused. Exit the other. Continue SIP in selected fund.

5. Large & Midcap or Multi-Cap Fund – Rs 10,000
Brings structure to the portfolio.

Multi-cap ensures fixed allocation to all three market caps.

Large & midcap has 35% in each, offers balance.

This will replace the stopped large cap fund.

Action: Add one fund from this category. It will add stability.

What You Should Avoid
Avoid index funds
Index funds give average returns. They blindly follow index. They don’t beat the market.

Actively managed funds have professional stock selection.

Fund managers adapt to market trends. This gives higher potential return.

Avoid direct mutual funds
Direct funds need DIY management. Most investors can't track portfolios properly.

Investing through regular plans via a MFD with CFP credential gives guided portfolio review.

You also get rebalancing advice and emotional handholding during market falls.

What You Can Improve From Here
Increase SIP gradually
Move from Rs 43k to Rs 50k as planned. Add Rs 7k to your core fund.

Review portfolio every year
Remove underperformers. Stick to funds with consistent returns and experienced fund managers.

Rebalance post 8–10 years
Slowly move some SIPs to hybrid or large cap funds. Reduce mid and small cap exposure after age 50.

Consider goal-wise investing
Assign funds to goals. One for retirement. One for child’s future. This makes tracking easier.

Final Insights
You have built a strong base already. That’s truly impressive. With small changes, your portfolio will become sharper.

Your equity exposure is rightly aggressive now. Stay with that approach for the next 8–10 years.

From age 50 onwards, gradually reduce volatility. That way, you protect the gains created in earlier years.

Make sure your exit strategy is tax-efficient. Under the new rules:

Equity LTCG above Rs 1.25 lakh is taxed at 12.5%

STCG is taxed at 20%

So, staggered redemptions make more sense later.

You don’t need annuities, real estate, or index funds in your journey. Equity mutual funds, when guided by a Certified Financial Planner, offer better long-term benefits.

Just stay disciplined. Keep SIPs running. Avoid panic exits. Review yearly. Stick to one scheme per category. That’s your best route to wealth creation.

You’re already doing great. Just refine the edges.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ravi

Ravi Mittal  |572 Answers  |Ask -

Dating, Relationships Expert - Answered on Apr 15, 2025

Mayank

Mayank Chandel  |2200 Answers  |Ask -

IIT-JEE, NEET-UG, SAT, CLAT, CA, CS Exam Expert - Answered on Apr 15, 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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x