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Nikunj

Nikunj Saraf  | Answer  |Ask -

Mutual Funds Expert - Answered on Mar 06, 2023

Nikunj Saraf has more than five years of experience in financial markets and offers advice about mutual funds. He is vice president at Choice Wealth, a financial institution that offers broking, insurance, loans and government advisory services. Saraf, who is a member of the Institute Of Chartered Accountants of India, has a strong base in financial markets and wealth management.... more
Mayank Question by Mayank on Mar 02, 2023Hindi
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Money

Help me with good SIP'S for long term

Ans: Hello Mayank. Please quantify your investment constraints.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 15, 2024

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Pls suggest me 5 best SIP for 10 year duration
Ans: Great! You're thinking long-term! SIPs are a super way to grow your money for big goals like retirement or your child's education. Here are some ideas for funds that might be a good fit for a 10-year investment horizon:
1. Equity Funds with a Diversified Focus
Imagine a basket filled with colorful candies – some sweet, some sour. Equity funds are like that basket, but instead of candies, they hold different company shares. A diversified equity fund spreads your money across many companies in various sectors. This helps balance risk – if a few companies do poorly, the good ones can help balance things out. Over 10 years, equity funds have the potential for good growth, though remember, stock markets can be bumpy along the way!

2. Sectoral Funds – Invest in a Growing Trend
Think of these funds as baskets filled with just one kind of candy, maybe all chocolate! Sectoral funds focus on a specific industry, like technology or healthcare. These can be great for growth, especially if you believe a particular sector will outperform the broader market. But remember, they also carry more risk because you're putting all your eggs in one basket. So, choose wisely and make sure this aligns with your risk appetite.

3. Flexi-Cap Funds – Flexibility is Key
Flexi-cap funds are like those awesome kids who can play with any group. They invest across large, mid, and small-cap companies, giving you a good mix of growth potential and stability. This flexibility helps them navigate different market conditions. They can be a good option if you want a balanced approach within the equity space.

4. Balanced Funds – A Mix of Stocks and Bonds
Balanced funds are like those lunchboxes with both chips and a sandwich. They combine equity and debt investments (like bonds) in a single portfolio. The stock portion offers growth potential, while the debt portion provides stability. The asset allocation (mix of stocks and bonds) can vary depending on the fund's objective. These can be suitable if you want some growth but also prioritize capital protection.

5. Hybrid Funds – Tailored to Your Risk Appetite
Hybrid funds are like lunchboxes that come in different flavors – some with more chips, others with more sandwiches. They offer a wider range of asset allocation options compared to balanced funds. You can choose a hybrid fund that leans more towards equities for higher growth potential or one with a greater debt allocation for more stability.

Remember, choosing the right SIP depends on your risk tolerance, financial goals, and investment timeframe. It's always a good idea to discuss your options with a Certified Financial Planner like myself to create a personalized investment plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 24, 2024

Asked by Anonymous - Oct 20, 2024Hindi
Money
I am 34 years old, planning to resign my job after 10 years, want to invest 20000/month in sip, so that i will a get a good amount after 10 yrs, pls suggest which SIP s i need to choose
Ans: At 34 years old, planning for a 10-year investment horizon is a smart move. Resigning from your job after 10 years means you will need a strong corpus to support your financial needs. Investing Rs. 20,000 per month in SIPs is a solid step, but choosing the right mix of funds is crucial for growth, stability, and capital preservation over the long term.

Let’s go through some strategies that can help you reach your goals. I will also provide insights into SIP selections that suit your situation.

Asset Allocation Strategy
Your investments should be balanced between equity and debt to ensure a steady growth rate while managing risk. Given your 10-year horizon, the majority of your SIPs can be focused on equity mutual funds.

Here’s how you can think about the allocation:

Equity Mutual Funds (70%): These funds can give you high returns over the long term. However, they come with risk, so diversification is essential. Investing in a mix of large-cap, mid-cap, and small-cap funds will give you exposure to different sectors of the market.

Debt Funds (30%): Debt mutual funds offer stability and safety for your investment. They can act as a cushion during market volatility.

This mix will give you a blend of growth and risk management.

Importance of Actively Managed Funds
Many investors consider index funds or ETFs as low-cost alternatives, but in your case, actively managed funds might serve you better.

Here’s why:

Index Funds vs. Actively Managed Funds: Index funds track the market, meaning they cannot outperform it. However, actively managed funds have professional fund managers who select stocks and bonds to outperform the market. This can lead to higher returns over time.

Flexibility in Actively Managed Funds: Fund managers can adjust the portfolio based on market conditions. In volatile times, they can switch to safer assets or sectors. This kind of active management adds value, especially when you're looking at a 10-year investment horizon.

Benefits of Regular Plans over Direct Plans
While direct funds have lower expense ratios, they don’t offer professional guidance. In your case, it’s best to invest in regular funds through a Mutual Fund Distributor (MFD) with Certified Financial Planner (CFP) credentials.

Here’s why:

Better Guidance: An MFD with CFP certification offers valuable insights into market conditions and the best performing funds. This ensures that your investments are reviewed regularly.

Portfolio Monitoring: Direct funds put the responsibility of managing your portfolio on you. With regular plans, the MFD monitors your portfolio, ensuring your SIPs align with your goals.

Equity Fund Categories to Consider
When investing Rs. 20,000 monthly, diversification is essential. Here are some key fund categories that you should consider, without naming specific schemes:

Large-Cap Funds: These funds invest in stable and well-established companies. They offer steady returns over time with lower risk compared to mid or small-cap funds. Large-cap funds are ideal for core holdings in your portfolio.

Mid-Cap Funds: These funds focus on companies that are in their growth phase. While they are riskier than large-cap funds, they can provide higher returns. Having exposure to mid-cap funds can boost your overall returns.

Small-Cap Funds: These funds target small companies with high growth potential. They come with a higher risk, but over a 10-year period, they have the potential to generate significant returns. Invest in small-cap funds only if you are comfortable with short-term market fluctuations.

Flexi-Cap Funds: These funds invest across market capitalizations (large, mid, and small). They offer flexibility and help you benefit from different market conditions. Flexi-cap funds provide a balanced approach to growth and risk management.

Balanced Advantage Funds: These funds switch between equity and debt based on market conditions. They provide stability in volatile markets and can be a part of your SIP strategy to protect your corpus from excessive risk.

Role of Debt Funds in Your Portfolio
While equity funds will drive your growth, debt funds play an important role in reducing volatility. These funds are safer but offer lower returns. Since you are investing for 10 years, you can allocate a portion of your monthly SIP to debt funds to provide stability to your portfolio.

Some categories to consider include:

Short-Term Debt Funds: These funds offer good liquidity and are less sensitive to interest rate changes. They can provide steady returns while keeping risk low.

Corporate Bond Funds: These funds invest in high-rated corporate bonds. They offer slightly higher returns than government bonds but come with a bit more risk.

Lump Sum Investment for Long-Term Growth
You mentioned having Rs. 3 lakhs to invest as a lump sum. A good approach would be to invest this amount in a Systematic Transfer Plan (STP).

Here’s how it works:

STP Strategy: Invest the Rs. 3 lakh lump sum into a low-risk debt fund initially. Then, gradually transfer a fixed amount into an equity mutual fund over time. This ensures you benefit from rupee-cost averaging and reduces the risk of investing a large amount during a market high.

Diversified Equity Fund: You can transfer the lump sum into a diversified equity fund. This will allow you to benefit from market growth while reducing the impact of short-term market fluctuations.

Tax Implications to Keep in Mind
When investing for a 10-year period, it’s important to be aware of the tax implications of your investments.

Equity Mutual Funds: Long-term capital gains (LTCG) on equity funds over Rs. 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%. Keep this in mind when redeeming units after 10 years.

Debt Mutual Funds: Both LTCG and STCG on debt mutual funds are taxed as per your income tax slab. This means your returns from debt funds will be added to your income for tax purposes.

This taxation aspect is crucial when planning withdrawals after 10 years.

Increasing Your SIP Contribution
Given your income of Rs. 1.80 lakh monthly and no existing liabilities, it’s advisable to increase your SIP contributions gradually.

Here’s why:

Step-Up SIP: This is a facility where you increase your SIP amount each year. By doing this, your corpus grows faster, allowing you to reach your goal sooner. A small increase of 10-15% each year can make a big difference over 10 years.

Compounding Effect: By increasing your SIP every year, you benefit from the power of compounding. The longer you stay invested and the more you invest, the greater your returns will be over time.

Emergency Fund Consideration
You mentioned that you have Rs. 60 lakh in Fixed Deposits (FDs). While this is a good emergency fund, you might want to reallocate a portion to debt mutual funds. Debt mutual funds can provide better returns than FDs over time, with similar safety.

Here’s how you can manage this:

FDs vs. Debt Funds: FDs offer fixed returns but are less tax-efficient. Debt mutual funds, on the other hand, offer slightly higher returns and are more tax-efficient, especially if held for the long term.

Emergency Fund Size: Keep a portion of your FD as an emergency fund, but consider shifting the rest into debt mutual funds. This way, you’ll still have liquidity, but your money will work harder for you.

Final Insights
Your current SIP investments are well-diversified, but there is room for improvement. Increasing your SIP gradually, rebalancing between equity and debt, and using a systematic transfer plan for lump sum investments will all help boost your corpus over the next 10 years.

Additionally, keep an eye on tax implications when planning withdrawals.

With a disciplined approach, you can achieve your goal of building a solid corpus by the time you plan to resign.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Ravi

Ravi Mittal  |450 Answers  |Ask -

Dating, Relationships Expert - Answered on Dec 03, 2024

Asked by Anonymous - Dec 03, 2024Hindi
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Relationship
Hello, my wife is Ugandan and I’m of English national, 30 years old and she’s 26, we met nearly a year ago and got married in uk with some of her friends and small family. We haven’t done kuchala (not sure if that’s correct spelling) yet and I’m feeling anxious for when the time comes. She said her family will kneel when they greet me and being white this is already stinging my moral (due to history). I also talked about moving in together before the meet the parents happen however she says she’s rather move in after? Currently this could take two years before going to Uganda, how should I proceed without overstepping her cultural beliefs as after all we are married and by my culture we should already be living together
Ans: Dear Anonymous,
It is very nice of you to be so considerate and sensitive while handling these cultural nuances. Let's discuss the kneeling tradition. It's a sign of respect and it's deeply rooted in Ugandan culture. While I understand your point of view, you also have to remember that it can have significant meaning to her and her family. I suggest you politely express your feelings and let her know why it is uncomfortable for you to see her family kneel. When you explain, mention how much her culture means to you as well. I am sure both of you can communicate and come to a compromise that makes you both happy. Just in case, they persist in following the ritual, just look at it as a gesture of love and respect and not submission.

About the moving in together part, in certain parts of the world, couples living together before the traditional wedding is not considered respectful. But since you are already married, you can try explaining to your wife how the living situation does not go against her cultural expectations. But if it is a really big deal for her and her family, consider seeing it from her perspective.

Communication is everything here. Look at every problem as a team; it's not your problem vs her problem. It's both of you vs the problems.

I hope this helps

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Radheshyam

Radheshyam Zanwar  |1088 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Dec 03, 2024

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Career
I have received a job offer from Siecorp ,a Singapore based company though my posting would be at my hometown . They have asked me to submit all credentials related to education & job experiences which is quite normal but they have asked the following documents also which they said would help me to arrange through some agent by payment & the same would be reimbursed during first month of employment . Earlier also another overseas company asked for the same & I denied to make payment before having the job in hand . 1. Construction Health and Safety Technician (CHST) – Compulsory 2. OSHA Safety Certificate – Compulsory 3. Safety Trained Supervisor (STS) – Non-Compulsory Kindly advise whether these certificates are really required to be submitted to join any foreign company or any sort of cheating business regards,
Ans: Hello Bipradas.
From your query, it is clear that you have offered by job by a Singapore-based company and they are giving you a posting in your home town. You did not mention anything about the work culture of the company. It simply indicates that you are supposed to work from home which is always related to computers. I think there is no harm in producing the required documents through an agent if they are offering you a handsome salary. The requirement for documents differs from company to company. There is no harm in submitting the mentioned documents. If have fear in your mind, then please go through the profile of the company in detail before submitting the documents. There are many ways to check the authenticity of the company. There are some chances of cheating, but everybody is not indulged in the same category. But take the steps with utmost precaution.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
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Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 03, 2024

Asked by Anonymous - Nov 29, 2024Hindi
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Hi , I am 46 year old and trying to see if i can take an early retirement in next 2 years. Below is my financial condition; - Mutual fund 40Lakh - FD 30 Lakhs - 2 rental yielding flat with total rent of 55000 per month - Own house with no loan. - PF 80 Lakhs - NPS 10 Lakhs - PPF 20 Lakhs - Term insurance 50Lakhs
Ans: Your financial position shows good planning and discipline.

Assets Summary:

Mutual Funds: Rs 40 lakh
Fixed Deposits: Rs 30 lakh
Rental Income: Rs 55,000 per month from two flats
Own House: Fully paid, no loan liabilities
Provident Fund (PF): Rs 80 lakh
National Pension System (NPS): Rs 10 lakh
Public Provident Fund (PPF): Rs 20 lakh
Term Insurance: Rs 50 lakh
You have built a diversified portfolio across multiple asset classes.

Assessing Early Retirement Feasibility
Early retirement in two years can be achieved with strategic planning.

Key Factors to Evaluate:

Monthly Expenses: Calculate post-retirement expenses, including inflation.
Income Sources: Ensure rental income, investments, and withdrawals meet your needs.
Wealth Growth: Balance corpus growth with income stability.
Monthly Expense Coverage
Assume your future monthly expense is Rs 1.25 lakh.

Existing Income Streams:

Rental Income: Rs 55,000 monthly provides 44% of estimated expenses.
Corpus Withdrawals: Use investments to cover remaining expenses.
Adjust for Inflation:

Plan for a 6% inflation rate to protect purchasing power.
Investment Strategy
Align your portfolio for growth, stability, and liquidity.

Mutual Funds:

Continue investing in equity-oriented funds for long-term growth.
Opt for actively managed funds through Certified Financial Planners.
Avoid index funds; they limit opportunities for alpha generation.
Fixed Deposits:

Reallocate a portion to debt mutual funds for better post-tax returns.
Retain some FDs for emergencies and short-term needs.
NPS and PPF:

Maximise NPS contributions for additional tax savings.
Allow PPF to mature for risk-free, tax-exempt growth.
Corpus Withdrawal Plan
A systematic withdrawal strategy ensures steady income.

Use Systematic Withdrawal Plans (SWP) in mutual funds for monthly cash flow.
Keep withdrawal rates below 4% annually to sustain the corpus.
Children’s Education Planning
Your son’s education may require significant funds.

Steps to Plan for Education Costs:

Use PPF maturity or mutual fund proceeds for higher education.
Avoid using retirement corpus for educational expenses.
Risk Management
Protecting your family is as critical as building wealth.

Term Insurance Coverage:

Rs 50 lakh is adequate for income replacement.
Ensure policies are active and nominees updated.
Health Insurance:

Opt for a comprehensive family floater policy with Rs 20–25 lakh coverage.
Keep health-related emergency funds for additional expenses.
Tax Planning
Efficient tax planning maximises post-retirement income.

Mutual Fund Taxation:

Equity fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
Short-term gains are taxed at 20%. Plan withdrawals carefully.
Fixed Deposit Interest:

FD interest is taxable as per your slab. Consider this in income planning.
Real Estate Considerations
Your rental flats provide steady income.

Points to Consider:

Avoid further real estate investments for better liquidity.
Keep properties well-maintained to ensure uninterrupted rental income.
Healthcare and Emergency Funds
Unplanned medical costs can affect your finances.

Steps to Safeguard:

Maintain Rs 10–15 lakh in liquid assets for emergencies.
Regularly review health insurance coverage to meet rising costs.
Assessing Early Retirement Timing
Your early retirement is achievable by 48 years with careful execution.

Why This is Feasible:

Rental income and portfolio can meet monthly needs.
A diversified asset base ensures sustainable returns.
Finally
Early retirement is within your reach with disciplined planning.

Review your financial plan annually and adjust for changes in needs or markets.

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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