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Hardik Parikh | Answer |Ask -Follow

Tax, Mutual Fund Expert - Answered on Jul 23, 2023

Hardik Parikh is a chartered accountant with over 15 years of experience in taxation, accounting and finance.
He also holds an MBA degree from IIM-Indore.
Hardik, who began his career as an equity research analyst, founded his own advisory firm, Hardik Parikh Associates LLP, which provides a variety of financial services to clients.
He is committed to sharing his knowledge and helping others learn more about finance. He also speaks about valuation at different forums, such as study groups of the Western India Regional Council of Chartered Accountants.... more

Question by Rayees on Jul 21, 2023Hindi

Money

Hello sir, I am working in a private firm and I am getting gratuity every month as salary component so how take income tax exemption on gratuity which I am receiving every month in salary

Ans: Hello Rayees,

I understand your query about the tax exemption on the gratuity amount you're receiving as part of your monthly salary.

Gratuity is a benefit given by the employer to employees. As per the recent amendment, gratuity is now tax-exempt up to Rs 20 lakh, which is an increase from the previous limit of Rs 10 lakh. This comes under Section 10(10) of the Income Tax Act.

However, it's important to note that if an employee receives gratuity during his service, then it is fully taxable as income under the Income Tax Act, 1961. The exemption applies when the gratuity is received at the time of retirement or termination, not during the service period.

I would recommend consulting with a tax advisor or a chartered accountant to understand how this applies to your specific situation and to plan your taxes accordingly.

I hope this information is helpful to you.

Best Regards.

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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Question by Balraj.H.S - Dec 21, 2020Hindi

Money

I have retired from service 31st Oct-2019. My company was covered under payment of gratuity act 1972. I have received Rs 1876910/- My company has mentioned Rs 911642/- as tax exemption and the remaining amount was taxed. I have cross checked with the exemption limit using income tax gratuity tax calculator. it shows my tax exemption limit as Rs 1051895/-. My employer says you are not paid as per gratuity payment act. The company is covered under the act. I do not know other provisions of my company if any. Please advise me the method of calculation

Ans: As per the latest amendment to Gratuity act 1972, least of the following is exempt from tax:

Actual Gratuity received
Rs. 20,00,000 (which has been hiked from Rs. 10 Lakh as per the amendment)
Last salary (basic + DA)* number of years of employment* 15/26

We suggest computing as per above provision and claim tax exemption.

Hardik Parikh | Answer |Ask -Follow

Tax, Mutual Fund Expert - Answered on Jul 23, 2023

Question by Raghavendra - Jul 22, 2023Hindi

Money

Hello Sir, I have received gratuity of ra. 4.15 lakhs in FY 2022-23 upon resigning from my previous organisation, where I served for 16 years. My previous organisation had deducted TDS from the gratuity, but I beleive gratuity is tax-exempt till Rs. 20 Lakhs. Please let me know whether Iam eligible for tax exemption or not.

Ans: Hello Raghavendra,

You're absolutely right. As per the recent amendment by the Centre, the maximum limit of tax-exempt gratuity has been increased to Rs 20 lakh from the previous ceiling of Rs 10 lakh. This means that if you've received a gratuity of Rs. 4.15 lakhs in FY 2022-23, it should be completely tax-exempt.

If your previous organisation has deducted TDS on this amount, I would recommend you to consult with them or a tax consultant to rectify this. You may be able to claim a refund for the TDS deducted when you file your income tax return.

Please note that tax laws can be complex and it's always a good idea to consult with a tax professional to understand your specific situation better.

I hope this helps!

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Question by George - Aug 23, 2023Hindi

Money

Am salaried earning around 50k per month, apart from this am getting a remuneration of Rs. 6000/- per month under section 194J, the company says its mandatory to deduct tax of 10%. Is there any form which can be submitted, so that 10% is not deducted on monthly remuneration. Am not attracting any tax as have home loan, tution fees , investments, medical insurance and NPS.

Ans: You can file application online at Traces portal in Form 13 for obtaining NIL TDS certificate from TDS officer.

Mihir Tanna |964 Answers |Ask -Follow

Tax Expert - Answered on Feb 17, 2024

Asked by Anonymous - Feb 09, 2024Hindi

Money

Dear Sir, Can a private company employee get Gratuity amount more than Rs 20 Lakh , How's the tax treatment above 20 L.

Ans: Income above exemption limit will be taxable at slab rate.

Latest Questions

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Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 20, 2024Hindi

Money

Hello sir, Am doing sip following in following mutual funds and time horizon is 15 - 17 years. Please analyse. 1. Motilal Oswal midcap fund 2400/- 2. Quant smallcap fund 2400/- 3. Motilal Oswal microcap fund 3600/- 4. Parag parikh flexicap fund 2000/-

Ans: Investing with a 15–17 year horizon is a wise decision, as it allows compounding to work effectively. Let’s assess your portfolio with insights to optimise it further.

Portfolio Overview
You are investing Rs 10,400 monthly across four funds.
The portfolio includes mid-cap, small-cap, micro-cap, and flexi-cap categories.
These investments reflect a growth-oriented strategy.
A well-diversified portfolio can potentially meet your long-term financial goals.
Key Strengths of Your Portfolio
1. Diversification Across Market Caps
Exposure to mid-cap, small-cap, and micro-cap ensures high growth potential.
The flexi-cap fund adds stability by diversifying across all market caps.
2. Long Investment Horizon
A 15–17 year horizon allows you to absorb market volatility.
It enables compounding to enhance your returns over time.
3. Growth-Focused Allocation
Small-cap and micro-cap funds can deliver substantial returns in the long run.
Mid-cap funds provide balanced growth and moderate risk.
Areas That May Need Attention
1. High Allocation to Smaller Market Caps
Nearly 80% of your portfolio is allocated to small, micro, and mid-cap funds.
This creates higher risk, as these funds can be volatile in the short to medium term.
2. Sectoral or Stock Concentration Risk
Some funds in your portfolio may have concentrated sectoral bets.
Over-concentration can increase risk during sector-specific downturns.
3. Flexi-Cap Allocation Is Low
Flexi-cap funds provide diversification and stability, especially during market corrections.
A low allocation to this category may reduce your portfolio’s balance.
4. Taxation Implications
Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.
A high-growth portfolio may result in significant taxable gains.
Recommendations for Portfolio Optimisation
1. Rebalance Market Cap Allocation
Increase exposure to large-cap or flexi-cap funds to stabilise your portfolio.
A balanced allocation reduces risk while retaining growth potential.
2. Limit Micro-Cap Allocation
Micro-cap funds carry significant risk and longer recovery periods.
Restrict micro-cap allocation to 10%-15% of your portfolio.
3. Increase Flexi-Cap Allocation
Flexi-cap funds provide adaptive strategies across market conditions.
Raise this allocation to 25%-30% of your portfolio for better risk management.
4. Review Sectoral Exposure
Check if any fund has high exposure to a single sector.
Diversify to avoid dependence on specific industries.
5. Continue Investing Regularly
SIPs are the best way to handle market volatility.
Continue disciplined investing, even during market corrections.
Tactical Steps for Long-Term Wealth Creation
1. Set a Clear Corpus Goal
Estimate the corpus needed for your post-retirement lifestyle.
Account for inflation and your expected life span.
2. Increase SIPs Over Time
Gradually increase your SIPs as your income grows.
This helps you build a larger corpus by leveraging the power of compounding.
3. Monitor Performance Periodically
Review your portfolio every six months to ensure alignment with your goals.
Retain funds that consistently outperform their benchmarks and peers.
4. Adopt a Debt Allocation Near Retirement
Begin shifting a portion of your portfolio to debt funds 5–7 years before retirement.
This safeguards your corpus against equity market volatility closer to your goal.
Addressing Direct Funds and Regular Plans
Benefits of Investing Through Regular Plans
Direct plans may lack professional guidance and personalised advice.
Regular plans offer curated fund selection based on your risk profile.
A Certified Financial Planner ensures better alignment with your financial goals.
Why Active Funds Outperform Index Funds
Active funds capture opportunities in undervalued sectors and stocks.
Index funds lack the flexibility to capitalise on market changes.
For long-term investors, active funds offer superior potential returns.
Tax Planning Insights
Equity gains above Rs 1.25 lakh annually are taxed at 12.5%.
Consider redeeming investments in phases to minimise tax liability.
Plan withdrawals strategically to manage tax efficiency during retirement.
Final Insights
Your portfolio is growth-focused and aligned with your long-term goals. However, reducing micro-cap exposure and increasing flexi-cap allocation will optimise it further. Regularly review and rebalance your portfolio to manage risk and maximise returns. Stay disciplined with SIPs and increase investments periodically for a larger retirement corpus.

A structured approach ensures you achieve financial independence post-retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

Pradeep Pramanik |180 Answers |Ask -Follow

Career And Placement Consultant - Answered on Nov 21, 2024

Question by Sheetal - Nov 20, 2024Hindi

Career

Heyy sir my maths subject is drop in class 12th HSC but now I want to give maths exam and go for engineering side. So which exam should I gave??

Ans: Dear Ms.Sheetal , If you are confident that you have imprved your Maths and take up JEE , You can go ahead . If you need any additional support you may join any reputed coaching Institute which will thoroughly guide you for the exam.

Pradeep Pramanik |180 Answers |Ask -Follow

Career And Placement Consultant - Answered on Nov 21, 2024

Question by Mathew - Nov 20, 2024Hindi

Career

My son has done Vocational High School during plus two for course ECE, then Diploma on the same now completed his Btech for the same again. What more he needs to shape his future? Do you think he should go abroad or work in India? Pls advice

Ans: Dear Mr. Mathew,

We understood that your son is a graduate Engineer with ECE which is not anyless as far as qualification for job is concerned however ECE engineers are not in demand due to market situation however , he can get into any technocommercial assignments with equally good package within India . For a fresher , I don't think going to a foreign countries is not a right decision . Thanks

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Question by Siddharth - Nov 16, 2024Hindi

Money

sbi small cap direct growth 15 year return tell me sir ? and if i invest 15k month sip then how many year create 1 cr and more that ?

Ans: Investing in small-cap funds can offer high returns over the long term. However, they come with higher volatility and risks. Let’s address your question about achieving Rs 1 crore through a Rs 15,000 SIP and the performance of small-cap funds.

Historical Returns and Small-Cap Funds
Small-cap funds have historically delivered returns ranging from 12% to 15% annually over 10-15 years.

These funds perform well during bullish market cycles but may underperform during downturns.

Always consider the long-term horizon to average out market volatility and benefit from compounding.

Time to Achieve Rs 1 Crore with Rs 15,000 SIP
At an assumed return of 12%, it takes 19 years to reach Rs 1 crore.

At an assumed return of 15%, it takes 15 years to reach Rs 1 crore.

Staying disciplined and investing consistently is critical to achieving your financial goals.

Disadvantages of Direct Funds
Direct funds require market expertise, time, and effort for continuous tracking.

Many investors face challenges in monitoring performance and making timely decisions.

Investing through a Certified Financial Planner ensures better fund selection and portfolio optimisation.

Regular funds provide personalised guidance, helping maximise your returns efficiently.

Importance of Small-Cap Funds in Your Portfolio
Small-cap funds are ideal for long-term investors looking for aggressive growth.

These funds can deliver substantial wealth but carry higher risk compared to large- and mid-cap funds.

Balancing small-cap funds with other categories diversifies risk and improves stability.

Actively Managed Funds vs. Index Funds
Actively managed funds leverage fund managers' expertise to identify growth opportunities.

Small-cap segments often outperform benchmarks through active management due to inefficiencies in the market.

Index funds, in comparison, are passive and miss out on stock-specific opportunities.

Actively managed funds ensure dynamic adjustments based on market conditions, unlike index funds.

Monitoring Your Investment
Regular reviews help track your SIP’s progress toward Rs 1 crore.

Rebalancing your portfolio periodically maintains an ideal asset allocation.

Seek professional guidance for optimising returns while managing risks.

Taxation for Small-Cap Funds
Long-term capital gains (LTCG) over Rs 1.25 lakh are taxed at 12.5%.

Short-term capital gains (STCG) are taxed at 20% for equity mutual funds.

Consider these taxes while calculating the net growth of your portfolio.

Finally
A Rs 15,000 SIP in small-cap funds can help you achieve Rs 1 crore in 15 years at 15%.

Focus on long-term discipline and diversify your portfolio for consistent growth.

Prefer actively managed funds for small-cap investments to capitalise on professional expertise.

Stay committed to your financial plan while regularly reviewing and rebalancing your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Prof Suvasish Mukhopadhyay |154 Answers |Ask -Follow

Career Counsellor - Answered on Nov 21, 2024

Question by Gir - Nov 15, 2024Hindi

Career

I have a total of 16 years of experience in embedded firmware development, with my current package being ?34 lakhs per year. I have been working at a product-based MNC for the past 10 years, and throughout my career, I have switched companies thrice. My current role is as a Subject Matter Expert (SME) in software touch technology. I would like your advice on whether it would be beneficial for me to consider changing my company at this stage of my career. Additionally, I am seeking your recommendations on any specific programming languages or skills that could facilitate further growth in my field. Thank you for your guidance and support.

Ans: If work atmosphere is bad you change 10 times, no issue. But for small financial gain don't switch again and again. A rolling stone gathers no moss. You can go for a certificate course in AI&ML. Because in coming days and years these two things will dominate the market. Know MATLAB thoroughly. Just follow me. MAY GOD BLESS YOU. Professor..............:)

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Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Question by azad - Nov 19, 2024Hindi

Money

Dear Sir, I am investing 40000/- per month since 2 years my Goal is to create 2 Cr till i reach 60. I am 45 now. My Investment HDFC Flexi, Parag Flexi, Nippon small cap, SBI large & Mid cap, Axis Blue chip, HDFC mid-cap oppourtunites, kotak emerging, Nippon India multi-cap fund, HDFC pharma, HSBC value fund. Pls advise. Thank You

Ans: You are investing Rs. 40,000 per month across various mutual funds. This disciplined approach is commendable. At 45, your goal to accumulate Rs. 2 crore by 60 is achievable. Let’s evaluate your portfolio and optimise it to align with your goal.

Strengths of Your Investments
Diversification Across Market Caps: Your portfolio includes small-cap, large-cap, and multi-cap funds.
Sectoral Exposure: The inclusion of a pharma fund offers specific growth potential.
Blend of Strategies: Value and growth strategies are present, providing balance.
Consistency: A monthly SIP for two years reflects financial discipline.
Areas That Need Improvement
1. Overlapping Funds
Many funds in your portfolio have similar objectives.
This results in unnecessary duplication and reduces efficiency.
2. Sectoral Overexposure
The pharma fund increases sector-specific risks.
Sectoral funds should be a minor part of a balanced portfolio.
3. Lack of Focus on Goal Alignment
The portfolio lacks a clear connection to your Rs. 2 crore goal.
Optimising fund selection is necessary to stay on track.
4. Limited Allocation to Large-Cap Funds
Large-cap funds provide stability and consistent growth.
Your current allocation to large-caps is inadequate.
5. Tax-Efficiency Awareness
New tax rules for mutual funds need consideration.
Restructuring may help minimise tax liabilities in the future.
Recommendations for Portfolio Optimisation
1. Streamline Your Portfolio
Reduce overlapping funds to improve returns.
Retain 5-7 funds that cover all market caps and investment styles.
2. Increase Focus on Large-Cap Funds
Large-cap funds offer lower volatility and steady growth.
Increase allocation to ensure a balanced portfolio.
3. Minimise Sectoral Funds
Limit sectoral funds to 5-10% of your portfolio.
Diversify across sectors instead of focusing on one.
4. Add a Balanced or Hybrid Fund
Hybrid funds provide stability during market downturns.
Consider allocating a portion of your investment here.
5. Target Your Rs. 2 Crore Goal
Increase SIP contributions if possible.
Factor in inflation to ensure the corpus retains its value.
6. Review Your Portfolio Regularly
Monitor fund performance every 6-12 months.
Replace underperforming funds with guidance from a Certified Financial Planner.
7. Opt for Regular Funds Through a CFP
Regular funds offer professional advice and support.
This helps in managing your portfolio effectively.
Key Insights on Direct Funds and Actively Managed Funds
Disadvantages of Direct Funds:

Requires extensive market knowledge.
Lack of professional guidance increases risk.
Time-intensive for monitoring and decision-making.
Benefits of Regular Funds via CFP:

Get expert advice for fund selection and rebalancing.
Avoid emotional investment decisions.
Align investments with financial goals.
Actively Managed Funds vs Index Funds:

Actively managed funds can outperform benchmarks over the long term.
Fund managers adjust portfolios for changing market conditions.
Index funds lack flexibility and may deliver lower returns.
Additional Steps to Strengthen Your Finances
1. Emergency Fund
Ensure 6-12 months’ expenses are saved in liquid funds.
This provides a financial cushion during emergencies.
2. Adequate Insurance Coverage
Have term insurance with Rs. 1 crore coverage.
Maintain health insurance for yourself and your family with Rs. 20 lakh coverage.
3. Plan for Post-Retirement Income
Invest in balanced funds or SWP for steady income post-retirement.
Avoid products with low returns like annuities.
4. Tax Efficiency
Keep ELSS funds for tax-saving under Section 80C.
Review fund taxation under the new capital gains rules.
5. Focus on Goal-Based Investing
Define clear financial goals for retirement and other needs.
Allocate investments to each goal for better clarity and planning.
Final Insights
Your current investment strategy shows great discipline. However, reducing overlapping funds and sectoral overexposure will optimise returns. Adding large-cap and hybrid funds will balance growth and stability. Increase your SIP or invest surplus funds to meet your Rs. 2 crore target comfortably. Seek professional advice to align your portfolio with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ramalingam Kalirajan |7089 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Question by Akanksha - Nov 13, 2024Hindi

Money

I am invested in Quant small cap MF for 4 months now and since then I sm experiencing negative returns. should I stay invested or switch? If stay invested, then advise approx time to invest patiently in this fund?

Ans: Small cap funds invest in emerging companies with high growth potential.
These funds are volatile, with sharp short-term ups and downs.
They require patience as they perform well over long periods.
Evaluating the Current Situation

A four-month period is too short to judge a small cap fund's performance.
Small cap funds need at least 5–7 years to show consistent results.
Market cycles often affect small cap funds more than other categories.
Negative returns over a short term are normal for this category.
Market Volatility and Fund Performance

Recent market fluctuations may impact small cap returns temporarily.
Small cap funds perform better during market recovery or growth phases.
Historical data shows small caps can outperform over longer periods.
Why Staying Invested May Be the Best Option
Long-Term Potential

Small cap funds reward investors with long-term patience.
Early-stage companies in the portfolio need time to grow and deliver returns.
Recovery in Market Cycles

Small caps tend to recover strongly after market downturns.
A long holding period ensures you benefit from this recovery.
Professional Management

Actively managed funds, especially through MFDs with CFPs, allow expert handling.
Fund managers rebalance portfolios based on market trends.
Switching May Not Be Ideal Right Now
Short-Term Returns Are Misleading

Short-term performance doesn’t reflect the fund’s future potential.
Switching based on 4-month returns could lead to missed opportunities.
Exit Loads and Taxation

Switching now could attract exit loads and short-term capital gains tax.
This reduces the overall value of your investments unnecessarily.
Approximate Investment Horizon
Recommended Holding Period

Small cap funds need at least 7–10 years for optimal returns.
This allows companies in the fund to mature and capitalise on growth opportunities.
Mid-Term Reviews

Review fund performance annually, not monthly or quarterly.
Ensure the fund aligns with your financial goals and risk tolerance.
Key Considerations Before Staying or Switching
Reassess Your Risk Tolerance

Small cap funds are not for low-risk investors.
Ensure you are comfortable with high volatility and short-term losses.
Verify the Fund’s Quality

Check the fund’s historical performance over at least 3–5 years.
Assess the consistency of returns and the fund manager’s expertise.
Ensure Portfolio Diversification

Avoid overexposure to small caps. Balance your portfolio with large and mid-cap funds.
This reduces risk while ensuring steady returns.
Stay Patient and Focused on Goals

Small cap funds demand patience for wealth creation.
Stick to your financial plan without reacting to short-term market changes.
Final Insights
Your investment in small cap mutual funds requires patience and a long-term perspective. Negative returns in the short term are expected but not indicative of future performance. Exiting now could lead to unnecessary costs and missed opportunities for growth.

Continue investing for at least 7–10 years to maximise your returns. Regularly review your portfolio with a Certified Financial Planner to ensure it aligns with your goals. Focus on building a well-diversified portfolio to balance risks and rewards effectively.

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

Ramalingam Kalirajan |7089 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Question by Ssayantan - Nov 12, 2024Hindi

Money

We know that compounding takes pretty long time to happen. If I take out my entire amount (invested + gained) from a poorly performing MF and invest it in a new better MF and carry on the SIP in the new MF, will the chain of compounding be broken? Or, it will continue as is?

Ans: Compounding is a powerful concept where your returns generate further returns over time. When you stay invested in a mutual fund, compounding accelerates with long-term holding. However, moving your money from one fund to another does not break compounding but resets the compounding chain in the new fund.

Will Compounding Continue if You Switch Funds?
Switching funds involves redeeming your investments in one fund and reinvesting in another. Here’s what happens:

Compounding Resets:
The new fund starts its compounding process afresh from the reinvested amount.

Impact of Redeeming Poorly Performing Funds:
A switch allows your capital to grow better in a fund with higher returns.

Compounding Not Broken:
The chain is not broken if the new fund performs well and you stay invested for the long term.

Evaluating Whether to Exit a Poor Performer
Before switching, carefully evaluate the underperformance of the current fund.

Temporary vs. Persistent Underperformance:
Check if the fund is underperforming for a prolonged period (3+ years).

Compare with Peers:
Assess the fund’s performance relative to its category peers and benchmarks.

Review Fund Management:
Investigate changes in fund management, strategy, or market conditions causing the underperformance.

Tax and Exit Load:
Keep in mind LTCG and STCG tax rules and exit load charges before redeeming.

Benefits of Switching to a Better Fund
Switching to a well-performing fund can boost long-term wealth creation.

Improved Returns:
A fund with consistent returns provides better compounding benefits.

Aligned Goals:
A better fund aligns with your financial goals and risk tolerance.

Optimised Portfolio:
Switching can improve overall portfolio efficiency and diversification.

Role of Actively Managed Funds in Compounding
Actively managed funds are better suited for wealth creation compared to passive funds like index funds.

Potential for Outperformance:
Skilled fund managers can outperform benchmarks, especially in volatile markets.

Flexibility:
Actively managed funds adapt to market changes for better returns.

Importance of Professional Guidance
Making the right switch requires expert advice.

Certified Financial Planners:
Seek guidance from a Certified Financial Planner to select suitable funds.

Investing Through MFDs:
Regular plans through MFDs ensure personalised service and monitoring of investments.

Avoiding Direct Funds:
Direct funds lack professional monitoring, which can affect long-term compounding.

Tax Implications of Switching
Switching funds involves redeeming investments, triggering tax liabilities.

Equity Mutual Funds:
LTCG above Rs. 1.25 lakh is taxed at 12.5%. STCG is taxed at 20%.

Debt Mutual Funds:
Gains are taxed as per your income slab, regardless of holding period.

Exit Loads:
Redeeming within the exit load period incurs additional charges.

SIP Continuation in the New Fund
Continuing your SIP in the new fund ensures disciplined investing.

No Disruption in Investments:
The regular contributions in SIPs help maintain wealth-building momentum.

Rupee Cost Averaging:
SIPs average out market fluctuations, ensuring better returns over time.

Long-Term Growth:
Staying consistent in SIPs is key to maximising compounding benefits.

Factors to Consider When Switching Funds
If you decide to switch, evaluate the following factors:

Fund Category:
Choose a fund category matching your financial goals.

Risk-Return Profile:
Ensure the new fund aligns with your risk tolerance.

Track Record:
Select a fund with a consistent performance history over at least 5 years.

Investment Horizon:
Stay invested in the new fund for 5-10 years to maximise compounding.

Final Insights
Switching from a poorly performing mutual fund to a better one does not break compounding. Instead, it resets the growth process in a more suitable fund. Evaluate underperformance carefully before switching and consider tax implications.

Work with a Certified Financial Planner to select the right fund and ensure long-term wealth creation. Stay disciplined in SIPs and maintain a diversified portfolio for consistent compounding benefits.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

Ramalingam Kalirajan |7089 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Question by Juber - Nov 11, 2024Hindi

Money

Hi, i need to have advice on my current Mutual Fund Holding allocation, Axis Blue Chip Fund SIP -10K HSBC Midcap Fund - SIP -10K ICICI Pru Equity and Debt Fund SIP -15K Mirae Asset Large and Mid Cap Fund - 15K Kotak Flexi Cap Fund- 10K SBI Small Cap Fund - 15k I am looking for a long term horizon for my retirement monthly income post 60, currently i am 45 and holding the above fund since 2019. I would like to seek your expert advice on the above and any suggestion will be highly appreciated

Ans: It’s inspiring to see your commitment to retirement planning through mutual funds. Since your goal is a secure retirement corpus, let’s analyse your portfolio and provide a well-rounded perspective.

Portfolio Overview
You are investing Rs 75,000 per month across six funds.
Your portfolio has a mix of large-cap, mid-cap, flexi-cap, and small-cap funds.
A hybrid equity-debt fund adds a conservative element to your portfolio.
Your investment horizon is long-term, with 15 years until retirement.
Key Strengths of Your Portfolio
Diverse Fund Categories: Your portfolio spans multiple categories, ensuring balanced exposure to risk and reward.
Allocation to Small and Mid-Cap Funds: These funds could deliver high returns over the long term.
Hybrid Equity-Debt Fund: This adds stability during volatile markets.
Long-Term Horizon: This allows compounding to work effectively on your corpus.
Areas That May Need Attention
1. Fund Overlap
Holding multiple funds may lead to overlapping stock allocations.
Large-cap and flexi-cap funds often invest in similar companies.
This duplication can dilute diversification and increase portfolio risk.
2. Small and Mid-Cap Allocation
Small-cap funds have higher risk and longer recovery times.
A 30% allocation to these categories may be slightly aggressive.
3. Hybrid Equity-Debt Fund Role
The hybrid fund may underperform pure equity funds over 15 years.
Reassess its allocation considering your long-term growth needs.
4. Tax Efficiency
Be mindful of tax implications under the new rules for equity and debt funds.
LTCG above Rs 1.25 lakh is taxed at 12.5%, while STCG is taxed at 20%.
Regular monitoring can ensure your portfolio remains tax-efficient.
Recommendations for Optimising Your Portfolio
1. Streamline Your Fund Selection
Consolidate overlapping large-cap and flexi-cap funds.
Retain 1-2 high-performing funds in each category for focus and efficiency.
2. Balance Risk Across Categories
Limit small-cap exposure to 15%-20% of your portfolio.
Mid-cap funds offer a balanced risk-reward ratio; retain their current allocation.
3. Increase Allocation to Large-Cap Funds
Large-cap funds provide stability during market downturns.
Consider raising large-cap allocation to 30%-35% of the portfolio.
4. Reassess Hybrid Fund Allocation
Hybrid funds suit moderate-risk investors with shorter horizons.
Replace it with a pure equity fund or a flexi-cap fund for better growth.
5. Explore Index Fund Alternatives Carefully
Index funds have lower expense ratios but lack active fund management.
Active funds add value by capturing opportunities missed by indices.
6. Invest via Regular Plans
Direct funds don’t offer professional guidance and personalised advice.
Regular plans through a Certified Financial Planner ensure strategic alignment with goals.
Tactical Steps for Long-Term Wealth Creation
1. Set Up a Retirement Corpus Target
Calculate your retirement corpus based on desired monthly income post-retirement.
Factor in inflation and life expectancy while estimating.
2. Increase SIPs Gradually
Increase SIP amounts periodically to match salary hikes.
This will amplify the power of compounding over time.
3. Monitor Performance Periodically
Review your portfolio every six months to ensure it aligns with your goals.
Replace underperforming funds based on consistent results, not short-term fluctuations.
4. Consider a Debt Allocation Closer to Retirement
Move part of your portfolio to debt instruments 5-7 years before retirement.
This safeguards your corpus against market volatility near the goal.
Addressing Tax Efficiency
Continue tracking gains to ensure they stay within the Rs 1.25 lakh LTCG exemption annually.
Long-term equity investments are still tax-efficient compared to other instruments.
Debt fund withdrawals may attract tax based on your income slab. Plan these withdrawals carefully.
Final Insights
Your portfolio is well-structured and aligned with your retirement goals. Streamlining overlapping funds and rebalancing small-cap exposure can optimise it further. Focus on active fund management and regular monitoring for consistent returns.

Retirement planning requires periodic adjustments to accommodate market changes. Stay disciplined and committed to your goal for financial independence post-60.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Prof Suvasish Mukhopadhyay |154 Answers |Ask -Follow

Career Counsellor - Answered on Nov 21, 2024

Question by Anirban - Nov 20, 2024Hindi

Career

Dear Sir, I am 70 years old - BE and ME from Jadavpur University and double Fellow in IT. I retired from my active life in 2020. Now I found myself to be outdated on topics like AI, ML, Deep Learning, Dada Science etc. I am looking for some FREE courses from IITs etc. to keep me updated in basic concepts. Will you please help me by sending some links for free courses so that I can pass my free time and keep myself technically updated. Like you, I have been IT Faculty (part time) for nearly forty years in parallel with my corporate service. My ex students are guiding me but with paid courses.

Ans: Dear Sir, I request you to go through the UDEMY lectures free of cost and free NPTEL lectures by IIT faculties on any relevant topic. I think you must have passed BE from Jadavpur in 1978/1979. That was the golden era of Education in West Bengal.Regards.Professor..........................:)

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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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