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Ulhas

Ulhas Joshi  |265 Answers  |Ask -

Mutual Fund Expert - Answered on Feb 16, 2024

With over 16 years of experience in the mutual fund industry, Ulhas Joshi has helped numerous clients choose the right funds and create wealth.
Prior to joining RankMF as CEO, he was vice president (sales) at IDBI Asset Management Ltd.
Joshi holds an MBA in marketing from Barkatullah University, Bhopal.... more
Rajesh Question by Rajesh on Oct 18, 2023Hindi
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Hi Hemant, Good day. I am planning to start SIP's (55K per month) in the following Mutual funds for a horizon of 5-7 years to create 1 corpus. Could you please review and suggest if they look fine or need any changes/alternate funds. I am fine to take higher risks. 1 Quant Small Cap Fund Direct Plan Growth 3000 2 Nippon India Small Cap Fund Direct Growth 2500 3 HDFC Small Cap Fund Direct Growth 2500 4 Canara Robeco Small Cap Fund Direct Growth 3000 5 Quant Mid Cap Fund Direct Growth 3000 6 Motilal Oswal Midcap Fund Direct Growth 2000 7 HDFC Mid Cap Opportunities Direct Plan Growth 3000 8 Quant Infrastructure Fund Direct 3000 9 Quant Flexi Cap Fund Direct Growth 3000 10 Parag Parikh Flexi Cap Fund Direct Growth 6000 11 HDFC Flexi Cap Direct Plan Growth 5000 12 ICICI Prudential Technology Direct Plan Growth 3000 13 HDFC Retirement Savings Fund Equity Plan Direct Growth 5000 14 HDFC Balanced Advantage Fund Direct Plan Growth 2500 15 UTI Nifty200 Momentum 30 Index Fund Direct Growth 2500 16 Bandhan Nifty 50 Index Fund Direct Plan Growth 3000 17 Nippon India Growth Fund Direct Growth 5000 Thank You!

Ans: Hello Rajesh & thanks for writing to me. I see lots of funds in your portfolio across multiple categories.

As your horizon is around 5 to 7 years, you can consider reducing exposure to pure equity funds and allocate higher amounts to hybrid funds like balanced advantage funds or multi asset/dynamic asset allocation funds.

I recommend you talk a financial planner who can understand your needs in depth to make a suitable plan for you.
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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Hardik

Hardik Parikh  |106 Answers  |Ask -

Tax, Mutual Fund Expert - Answered on Apr 06, 2023

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Hi Hardik, Good day. This is Rajesh N I am planning to start SIP's (55K per month) in the following Mutual funds for a horizon of 5-7 years to create 1 corpus. Could you please review and suggest if they look fine or need any changes/alternate funds. I am fine to take higher risks. Thanks a lot. Have a Good Day. Canara Robeco Small Cap 4000 Nippon India Small Cap 4000 Quant Small Cap 4000 HDFC Small Cap 4000 HDFC Flexi Cap 5000 Quant Flexi Cap 5000 Parag Parikh Flexi Cap 5000 HDFC Balanced Advantage Fund 6000 ICICI Prudential Balanced Advantage Fund 6000 Motilal Oswal Midcap fund 6000 HDFC Retirements Savings Fund 6000
Ans: Hello Rajesh, it's great to hear about your plan to start investing in mutual funds through SIPs. I would say that your choice of mutual funds looks diversified and suitable for your investment horizon of 5-7 years.

Since you mentioned that you are willing to take higher risks, your choice of small-cap funds such as Canara Robeco Small Cap, Nippon India Small Cap, Quant Small Cap, and mid-cap fund like Motilal Oswal Midcap fund, is appropriate as they have the potential to generate higher returns in the long run.

In addition, you have also selected some flexi-cap funds such as HDFC Flexi Cap, Quant Flexi Cap, and Parag Parikh Flexi Cap, which can help you to diversify your portfolio and provide flexibility to invest across market capitalizations.

Moreover, your choice of balanced advantage funds such as HDFC Balanced Advantage Fund and ICICI Prudential Balanced Advantage Fund, which invest in a combination of equity and debt, can help to manage market volatility and generate stable returns.

Lastly, your choice of HDFC Retirement Savings Fund is a good option for long-term retirement planning.

Overall, I believe that your choice of mutual funds is well-diversified, and suitable for your investment horizon and risk appetite. However, it's always important to review your portfolio periodically and make necessary changes based on market conditions and your financial goals.

..Read more

Ulhas

Ulhas Joshi  |265 Answers  |Ask -

Mutual Fund Expert - Answered on Oct 19, 2023

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Hi Ulhas, Good day. I am planning to start SIP's (55K per month) in the following Mutual funds for a horizon of 5-7 years to create 1 corpus. Could you please review and suggest if they look fine or need any changes/alternate funds. I am fine to take higher risks. 1 Quant Small Cap Fund Direct Plan Growth 3000 2 Nippon India Small Cap Fund Direct Growth 2500 3 HDFC Small Cap Fund Direct Growth 2500 4 Canara Robeco Small Cap Fund Direct Growth 3000 5 Quant Mid Cap Fund Direct Growth 3000 6 Motilal Oswal Midcap Fund Direct Growth 2000 7 HDFC Mid Cap Opportunities Direct Plan Growth 3000 8 Quant Infrastructure Fund Direct 3000 9 Quant Flexi Cap Fund Direct Growth 3000 10 Parag Parikh Flexi Cap Fund Direct Growth 6000 11 HDFC Flexi Cap Direct Plan Growth 5000 12 ICICI Prudential Technology Direct Plan Growth 3000 13 HDFC Retirement Savings Fund Equity Plan Direct Growth 5000 14 HDFC Balanced Advantage Fund Direct Plan Growth 2500 15 UTI Nifty200 Momentum 30 Index Fund Direct Growth 2500 16 Bandhan Nifty 50 Index Fund Direct Plan Growth 3000 17 Nippon India Growth Fund Direct Growth 5000 Thank You!
Ans: Hi Rajesh and thanks for writing to me. I assume that your goal is create a corpus of Rs.1 Crore. If your investments grow at around 12% XIRR, then you need to invest around Rs.76,000 every month to achieve your goal.

While most of the funds are pure equity funds, you can consider not investing in thematic funds like Infrastructure Fund or Technology funds and instead increase your allocation to flexi cap funds.

Similarly, you can also consider not investing in a balanced advantage fund and rather invest the sum in equity funds.

Note that these suggestions are made considering that you are fine with high risks associated with equity. If you share your risk profile, I may recommend some other funds.

..Read more

Dev

Dev Ashish  |48 Answers  |Ask -

MF Expert, Financial Planner - Answered on Oct 21, 2023

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Hi Dev, Good day. I am planning to start SIP's (55K per month) in the following Mutual funds for a horizon of 5-7 years to create 1 corpus. Could you please review and suggest if they look fine or need any changes/alternate funds. I am fine to take higher risks. 1 Quant Small Cap Fund Direct Plan Growth 3000 2 Nippon India Small Cap Fund Direct Growth 2500 3 HDFC Small Cap Fund Direct Growth 2500 4 Canara Robeco Small Cap Fund Direct Growth 3000 5 Quant Mid Cap Fund Direct Growth 3000 6 Motilal Oswal Midcap Fund Direct Growth 2000 7 HDFC Mid Cap Opportunities Direct Plan Growth 3000 8 Quant Infrastructure Fund Direct 3000 9 Quant Flexi Cap Fund Direct Growth 3000 10 Parag Parikh Flexi Cap Fund Direct Growth 6000 11 HDFC Flexi Cap Direct Plan Growth 5000 12 ICICI Prudential Technology Direct Plan Growth 3000 13 HDFC Retirement Savings Fund Equity Plan Direct Growth 5000 14 HDFC Balanced Advantage Fund Direct Plan Growth 2500 15 UTI Nifty200 Momentum 30 Index Fund Direct Growth 2500 16 Bandhan Nifty 50 Index Fund Direct Plan Growth 3000 17 Nippon India Growth Fund Direct Growth 5000 Thank You!
Ans: You have chosen an unnecessarily large number (17) of funds to invest Rs 55,000 monthly. If you combine the underlying stock portfolio of all these funds then you would have hundreds of stocks and be running effectively a Nifty500 kind of portfolio. So no need to complicate it. In my view, just having 3-4 funds would be more than enough for your requirements. Assuming you have at least a moderately aggressive risk appetite, you can invest 10-15K in one largecap index fund, 15-20K in one flexicap/large&midcap fund, 10K in one midcap fund and remaining in smallcap fund. This allocation enough will be more than enough for your portfolio requirements

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.

..Read more

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Ans: Aryan, please update your status as of now in July 2024 to enable me to answer. All the BEST.

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Ramalingam

Ramalingam Kalirajan  |4605 Answers  |Ask -

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

Asked by Anonymous - Jun 08, 2024Hindi
Money
Hi Sir Iam 54 years old with health issues. I have personal debts to a tune of 70 lakhs. I have a small business which gives me an average monthly income of Rs 30000. On an average my monthly requirement is 1.5lakh. I own a property which is worth around 4 to 5 crore. I have a few options: Option 1: Take half the property, develop it into plots and sell it. Here I will initially need to put in money towards project expenses, which means some more borrowing. Else I can wait to pre sell about 4 plots, which will help me to cover the expenses to develop the plots and then later sell the balance plots and repay my existing debts and then put deposit the balance money in the bank and see if the interest will sustain my monthly requirements. This option has the usual risks of delayed sale of plots etc. Option 2: just sell part of the land as it is. I will get around 1.5 cores if I do this. Out of this 1.5 I will use 70 lakhs towards debt repayment. If I deposit the balance 70lakhs in the bank, how much interest will I get monthly? Option 3: Sell the entire property for about 4 to 5 crores. Repay the 70 lakh debt and invest the balance in bank etc. But this means I will not own anything, and will have to rent a house etc. So my monthly requirement will go upto 2 lakhs per month. Here, the down side is I will be giving up all my assets, which I had retained would have grown in value. Please advise. Thanks.
Ans: At 54, with health issues and a substantial personal debt of Rs 70 lakhs, you are managing a small business that brings in Rs 30,000 per month. Your monthly financial requirement is Rs 1.5 lakhs. You own a valuable property worth around Rs 4-5 crores. You have three main options to consider for managing your debt and ensuring a steady income.

Assessing Your Options
Let's explore each option with a detailed analysis:

Option 1: Develop and Sell Plots
Developing your property into plots and selling them could be lucrative. However, this option involves significant upfront costs and the risk of delays in sales.

Advantages:

Higher Potential Returns: Selling plots can yield higher returns compared to selling the property as a whole.

Retain Ownership: You still retain a portion of the property.

Disadvantages:

Initial Investment: You will need to invest money upfront for development costs, leading to more borrowing.

Risk of Delays: There’s a risk of delayed sales, which can affect your ability to repay debts on time.

Project Management: Managing such a project can be stressful and time-consuming, especially given your health issues.

Option 2: Sell Part of the Land
Selling part of the land can provide immediate funds without the need for further borrowing. This option seems less risky than developing plots.

Advantages:

Immediate Funds: You get immediate funds to repay the Rs 70 lakhs debt.

Reduced Risk: Fewer risks compared to developing plots, as it does not involve further borrowing or project delays.

Disadvantages:

Limited Funds: Selling only part of the land may not generate sufficient funds for long-term sustainability.

Interest Income: Interest from Rs 70 lakhs may not cover your monthly requirement of Rs 1.5 lakhs.

Option 3: Sell Entire Property
Selling the entire property can clear your debts and provide a substantial amount for future investments. This option, however, means giving up ownership and potentially increasing your monthly expenses due to rent.

Advantages:

Debt-Free: You can repay the Rs 70 lakhs debt completely.

Large Corpus: You will have a significant corpus to invest for future income.

Disadvantages:

No Ownership: You will lose ownership of the property, which could appreciate in value over time.

Increased Expenses: Renting a house will increase your monthly financial requirement to Rs 2 lakhs.

Evaluating the Best Option
Given your health issues and the need for a stable monthly income, it's crucial to choose an option that minimizes stress and ensures financial security.

Option 1: Feasibility and Risks
Developing and selling plots can be profitable, but the upfront investment and potential delays pose significant risks. At your age and with health concerns, managing such a project might be too demanding.

Option 2: Immediate Debt Relief
Selling part of the land seems like a balanced approach. You can repay the Rs 70 lakhs debt immediately and invest the remaining Rs 70 lakhs. However, you need to evaluate if the interest income from Rs 70 lakhs is enough to meet your monthly requirements.

Bank Interest Income:

Interest Rate: Assume an average bank interest rate of 6% per annum.

Monthly Income: Rs 70 lakhs * 6% / 12 = Rs 35,000 per month.

With Rs 35,000 from interest and Rs 30,000 from your business, your total monthly income would be Rs 65,000, which is insufficient to meet your Rs 1.5 lakhs requirement.

Option 3: Long-Term Security
Selling the entire property provides a substantial amount to invest. Post repayment of the Rs 70 lakhs debt, you will have approximately Rs 3.3-4.3 crores for investment.

Investment Strategy:

Diversified Portfolio: Invest in a mix of fixed deposits, mutual funds, and bonds to generate a steady income.
Recommended Strategy
Considering the analysis, Option 3 seems the most viable for ensuring long-term financial security despite its downsides. Here’s a detailed plan:

Debt Repayment and Initial Investment
Repay Debt: Use Rs 70 lakhs to clear the debt.

Remaining Funds: Invest the remaining Rs 3.3-4.3 crores wisely.

Investment Allocation
Fixed Deposits: Allocate 20% (Rs 66 lakhs to Rs 86 lakhs) to fixed deposits for a stable, risk-free income.

Mutual Funds: Invest 50% (Rs 1.65-2.15 crores) in mutual funds for higher returns.

Bonds and Debentures: Allocate 20% (Rs 66 lakhs to Rs 86 lakhs) to bonds and debentures for moderate risk and steady income.

Emergency Fund: Keep 10% (Rs 33-43 lakhs) in a liquid fund as an emergency reserve.

Monthly Income from Investments
Fixed Deposits: Rs 66 lakhs at 6% annual interest = Rs 3.96 lakhs per year or Rs 33,000 per month.

Mutual Funds: Assuming an average annual return of 10%, Rs 1.65 crores = Rs 16.5 lakhs per year or Rs 1.37 lakhs per month.

Bonds and Debentures: Rs 66 lakhs at 7% annual interest = Rs 4.62 lakhs per year or Rs 38,500 per month.

Total Monthly Income: Rs 33,000 + Rs 1.37 lakhs + Rs 38,500 = Rs 2.08 lakhs.

This income exceeds your monthly requirement of Rs 1.5 lakhs, ensuring a comfortable lifestyle.

Addressing Concerns
Health Issues
Your health issues require careful consideration. A stress-free and secure financial strategy is crucial. Selling the entire property and investing wisely reduces financial stress and ensures a steady income.

Ownership and Future Value
While losing ownership of the property is a concern, investing the proceeds in diversified assets can provide better financial security. Properties can appreciate, but they also come with risks and responsibilities.

Increased Expenses
Renting a house will increase your monthly expenses. However, the proposed investment strategy generates sufficient income to cover this increase.

Final Insights
Your situation demands a careful balance of debt repayment, investment, and monthly income generation. Considering your health and financial needs, selling the entire property and investing the proceeds in a diversified portfolio seems the most secure option. This strategy ensures debt repayment, generates sufficient monthly income, and reduces financial stress. Always consult with a certified financial planner to tailor this strategy to your specific needs and ensure optimal results.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

...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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