Hello Ulhas joshi sir, All our corpos mostly 90% is in debt(in the form of FDR's, SSSC, LIC etc) and rest 10% in MF and ULIP. I am 32 years and my mother is 61 years. I am working professional in tier 2 city and mother is retired from government job. I am seeking a financial advice to balance out the investments in debt and want some exposure in equity by investing through MF's. We have a total of 3 cr in debt and approx 40 lacs in equity market. Please suggest us the suitable mix so that our corpus would also grow and expenses would also meet out. Our total expenses per month would be around 35 K. Please also suggest the names of mutual funds to start investing?? Regards, Bharat Manik

Ans:

Answer 1.

Answer 2. You may consider short duration funds, corporate bond funds and banking and PSU funds for debt investments

 

Ans: Hello Apurv and thanks for writing to me.

Note that I only discuss mutual funds in this column and so will not advise for or against any other asset classes.

To generate inflation beating returns, given that you are retired and would not like to take undue risk, I believe a mix of balanced advantage funds and multi asset funds will be ideal to invest in for a period of around 3 years. Starting SWP's from those schemes after 3 years will help you meet living expenses while your corpus continues to grow.

You can consider investing your funds equally in:
1-ICICI Prudential Regular Savings Fund
2-SBI Conservative Hybrid Fund
3-Tata Balanced Advantage Fund
4-Aditya Birla Sun Life Balanced Advantage Fund
5-Nippon India Multi Asset Fund

Ans: Hello Bharat Manik,

It's commendable that you're looking to diversify your investments and seek growth opportunities in equity markets. Here are some suggestions to achieve a balanced portfolio:

Asset Allocation:
Considering your age difference and risk tolerance, you may adopt a balanced approach to asset allocation.
Allocate a significant portion of your portfolio (around 60-70%) to debt instruments to provide stability and income generation, especially considering your mother's retirement.
Allocate the remaining portion (around 30-40%) to equity investments to benefit from potential growth opportunities over the long term.
Mutual Fund Selection:
For equity exposure, consider investing in a mix of large-cap, multi-cap, and balanced funds to diversify across market segments and manage risk effectively.
Opt for funds with a consistent track record of performance, experienced fund managers, and a strong investment philosophy aligned with your objectives.
Regular Review:
Regularly review your portfolio to ensure it remains aligned with your financial goals, risk tolerance, and market conditions.
Rebalance your portfolio as needed to maintain the desired asset allocation and optimize returns.
Emergency Fund:
Ensure you have an adequate emergency fund set aside in liquid instruments to cover unforeseen expenses and emergencies.
Consultation:
Consider consulting with a Certified Financial Planner to receive personalized advice tailored to your specific needs and goals.
They can help you develop a comprehensive financial plan that addresses your investment objectives, risk tolerance, and retirement needs.
By adopting a balanced approach to asset allocation and investing in diversified mutual funds, you can work towards achieving your financial goals while managing risk effectively.

Ans: Hello Bharat,

It's commendable that you're seeking to balance your investments and diversify into equity through mutual funds. Here's a tailored recommendation for you and your mother:

Balancing Debt and Equity:

Emergency Fund: Ensure you have an emergency fund equivalent to at least 6-12 months of expenses kept in liquid instruments like savings accounts or short-term debt funds.
Debt Investments: Since you already have a substantial portion of your corpus in debt instruments, continue to maintain this allocation to ensure stability and regular income. Consider diversifying across different types of debt instruments for optimal risk management.
Equity Investments: Given your age and long-term investment horizon, it's prudent to gradually increase your exposure to equity through mutual funds. Start with allocating a portion of your investable surplus to equity funds.
Suitable Mutual Funds:

Diversified Equity Funds: Look for well-managed diversified equity funds with a proven track record of consistent performance. These funds offer exposure to a broad range of stocks across sectors and market capitalizations.
Balanced Advantage Funds: These funds dynamically manage the equity-debt allocation based on market conditions, making them suitable for investors seeking a balanced approach.
Large Cap Funds: Consider large-cap equity funds for stability and lower volatility. These funds invest in large, established companies with a track record of stable earnings.
Hybrid Funds: Opt for hybrid funds, which invest in both equity and debt instruments, offering a balanced approach to risk and return.
For personalized recommendations and to ensure your investment strategy aligns with your financial goals and risk tolerance, I recommend consulting with a Certified Financial Planner (CFP) or a qualified financial advisor. They can provide customized guidance based on your unique circumstances and help you navigate the complexities of financial planning.