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Samraat

Samraat Jadhav  |1852 Answers  |Ask -

Stock Market Expert - Answered on May 16, 2023

Samraat Jadhav is the founder of Prosperity Wealth Adviser.
He is a SEBI-registered investment and research analyst and has over 18 years of experience in managing high-end portfolios.
A management graduate from XLRI-Jamshedpur, Jadhav specialises in portfolio management, investment banking, financial planning, derivatives, equities and capital markets.... more
SANJAY Question by SANJAY on May 15, 2023Hindi
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SIR HOLDING SHARES IN DR MOREPEN LAB AND MRPL SINCE LONG TIME, NO INCOME FROM THEM. ANY POSITIVE DEVELOPMENT LIKELY IN THESE 2 COMPANIES?

Ans: MRPL:
Growth in Net Profit with increasing Profit Margin (QoQ)
Increasing profits every quarter for the past 2 quarters
Book Value per share Improving for last 2 years
Company with Zero Promoter Pledge
FII / FPI or Institutions increasing their shareholding

DR. Morepen Lab:
Degrowth in Revenue and Profit
Decline in Net Profit with falling Profit Margin (QoQ)
Decline in Quarterly Net Profit with falling Profit Margin (YoY)

Personally speaking - exit from both and invest in other quality companies. Quality is always rewarding.

Disclaimer: Investments in securities are subject to market RISKS. Read all the related documents carefully before investing. The securities quoted are for illustration only and are not recommendatory. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
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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Mutual Funds, Financial Planning Expert - Answered on Jul 14, 2024

Asked by Anonymous - Jul 14, 2024Hindi
Money
I am 37 years old and a govt servant.i just recently started sip in four funds 1.Mirae asset large and midcap fund direct growth. _1k 2.quant large and mid cap fund direct growth_1k 3.kotak equity opportunities fund direct growth_1k 4.icici prudential retirement fund pure equity plan direct growth -5k Is it good for a term like 10 years?and if i want to invest 5k more then where should i invest for a term of 15 to 20 years.please advice .thank you
Ans: As a government servant at 37, planning for the future is crucial. Starting SIPs in mutual funds is a wise step, but evaluating and refining your strategy can optimize your returns. This analysis will guide you through your current investments and suggest additional avenues for a long-term horizon.

Current SIP Analysis

You've begun SIPs in four mutual funds with a 10-year perspective:

Mirae Asset Large and Midcap Fund
Quant Large and Midcap Fund
Kotak Equity Opportunities Fund
ICICI Prudential Retirement Fund Pure Equity Plan
Your current allocation in these funds is commendable. Let's evaluate the benefits and potential improvements.

1. Mirae Asset Large and Midcap Fund

This fund invests in both large and midcap stocks. It offers growth potential from midcaps and stability from large caps. This balanced approach can yield good returns over the long term.

2. Quant Large and Midcap Fund

Similar to the Mirae Asset Fund, this fund also diversifies between large and midcap stocks. Diversification is a key strategy to mitigate risk while aiming for growth.

3. Kotak Equity Opportunities Fund

This fund focuses on equity opportunities across market caps. It's known for good management and consistent performance. It adds diversity to your portfolio.

4. ICICI Prudential Retirement Fund Pure Equity Plan

This fund is designed for long-term goals like retirement. It invests primarily in equities, which can offer higher returns over an extended period.

Your portfolio currently has a good mix of large-cap stability and mid-cap growth potential. However, since you're considering a long-term investment horizon of 15-20 years, let's explore where you can invest an additional Rs 5,000 per month.

Evaluating Direct Funds vs Regular Funds

You've invested in direct plans, which typically have lower expense ratios. However, regular funds through a Certified Financial Planner (CFP) have their advantages. A CFP provides personalized advice, timely reviews, and adjustments to your portfolio. These services can potentially enhance your investment performance, justifying the slightly higher expense ratios.

Long-term Investment Strategy

For a long-term investment horizon of 15-20 years, consider the following factors:

Diversification: Spread investments across different asset classes and sectors.
Risk Tolerance: Understand your risk appetite and invest accordingly.
Consistent Review: Regularly review and adjust your portfolio based on market conditions and personal goals.
Recommended Investment Avenues

To invest an additional Rs 5,000 per month, here are some funds and strategies to consider:

1. Flexi Cap Funds

Flexi cap funds invest in stocks across market capitalizations. They offer flexibility to shift investments between large, mid, and small caps based on market conditions. This dynamic allocation can capture opportunities across the spectrum and provide robust returns over the long term.

2. Mid Cap Funds

Mid cap funds focus on medium-sized companies with high growth potential. These companies often grow faster than large caps and can offer higher returns. However, they come with higher risk, suitable for a long-term horizon.

3. Sectoral or Thematic Funds

These funds invest in specific sectors like technology, healthcare, or financial services. Investing in a growing sector can yield substantial returns. However, they are riskier and require careful selection and timing. For example, the healthcare sector in India is poised for significant growth due to increasing health awareness and spending.

4. International Funds

Investing in international funds provides exposure to global markets. This diversification can reduce risk associated with the Indian market. It also allows you to capitalize on the growth of developed economies and emerging markets. For instance, a fund investing in US technology stocks can offer high growth potential.

5. Balanced or Hybrid Funds

Balanced funds invest in both equity and debt instruments. They provide growth potential with equity and stability with debt. This mix can be suitable for moderate risk tolerance and long-term investment. These funds can provide a cushion during market volatility, ensuring smoother returns.

6. Multi-Asset Funds

Multi-asset funds diversify across various asset classes, including equity, debt, and gold. This diversification reduces risk and can provide steady returns. Investing in multiple assets helps in balancing the portfolio against market fluctuations.

The Benefits of Actively Managed Funds

While index funds passively track market indices, actively managed funds have fund managers making strategic decisions. Actively managed funds aim to outperform the market, providing higher returns. They adjust portfolios based on market trends, economic conditions, and company performance. This active management justifies the slightly higher expense ratios, as it can potentially lead to better returns than passive funds.

Implementing the Strategy

Based on the analysis, here's a suggested allocation for your additional Rs 5,000 investment:

Flexi Cap Fund: Rs 1,500
Mid Cap Fund: Rs 1,000
Sectoral/Thematic Fund: Rs 1,000
International Fund: Rs 1,000
Multi-Asset Fund: Rs 500
This allocation provides a balanced mix of growth potential and risk mitigation.

Regular Review and Adjustment

Investing is not a one-time activity. Regularly review your portfolio to ensure it aligns with your goals. A Certified Financial Planner can assist in this process, providing insights and adjustments based on market trends and your evolving financial situation.

Final Insights

Investing for the long term requires a strategic approach. Your current SIPs are a good start, and with the additional Rs 5,000 investment, you can further strengthen your portfolio. Diversification across different asset classes and sectors is key to maximizing returns and minimizing risk.

Consider the benefits of regular funds through a Certified Financial Planner. While they have higher expense ratios, the personalized advice and active management can enhance your investment performance.

Focus on a balanced mix of flexi cap, mid cap, sectoral/thematic, international, and multi-asset funds. This diversified approach can capture growth opportunities across markets and sectors, ensuring a robust and resilient portfolio.

Regularly review your investments, adjust based on performance and market conditions, and stay committed to your long-term goals. With careful planning and strategic investments, you can build a substantial corpus for your future needs.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |4660 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 14, 2024

Asked by Anonymous - Jul 14, 2024Hindi
Money
I am 28 years old, I have 18 lakhs invested in stocks and close to 8 lakhs with now monthly SIP of 45000 in MF. I hold no FDs and I have close to 7 lakhs as liquid fund. I do not own my house, I live with my parents in hometown and unmarried. How should I diversify my investments ? Also what are the suggestions as I currently do not own house and Car
Ans: Your current financial landscape includes a healthy mix of stocks, mutual funds, and liquid funds. You’re 28 years old, unmarried, and living with your parents, which gives you a strong base to diversify and grow your investments. Let’s delve into how you can optimize your portfolio and plan for your future needs.

Evaluating Your Current Portfolio
You’ve made some great strides already. Having Rs 18 lakhs in stocks and Rs 8 lakhs in mutual funds is commendable. You also have a monthly SIP of Rs 45,000, which is substantial and shows commitment to regular investing. Your Rs 7 lakhs in liquid funds offer a good emergency cushion.

However, diversification is key to mitigating risks and maximizing returns. Let’s explore how you can enhance your portfolio for better balance and growth.

Enhancing Your Mutual Fund Investments
While your SIP of Rs 45,000 is impressive, it's important to assess the mix of mutual funds you’re invested in. It’s crucial to have a blend of large-cap, mid-cap, and small-cap funds to spread out risk and potential returns.

Benefits of Actively Managed Funds

Actively managed funds, as opposed to index funds, offer professional management and the potential for higher returns. Fund managers use their expertise to pick stocks that they believe will outperform the market. This active selection can lead to better performance, especially in a volatile market.

Expanding Your Investment Horizons
Debt Funds for Stability

Given that you don’t have fixed deposits, consider adding some debt funds to your portfolio. Debt funds can provide stability and regular income, which can counterbalance the volatility of your equity investments. They are generally less risky and can offer better returns than traditional fixed deposits.

Gold Investments for Hedging

Gold has always been a trusted asset in India. It acts as a hedge against inflation and currency fluctuations. Investing in gold ETFs or sovereign gold bonds can be a good way to add this asset to your portfolio without the hassle of physical storage.

Exploring New Investment Avenues
International Funds for Global Exposure

To truly diversify, consider investing in international mutual funds. These funds invest in global markets, giving you exposure to international equities. This can spread your risk further and tap into the growth potential of developed and emerging markets.

Sectoral and Thematic Funds

If you have a keen understanding of certain sectors, like technology or pharmaceuticals, sectoral funds can be a good choice. These funds focus on specific sectors, allowing you to benefit from sector-specific growth. However, they come with higher risks, so ensure you balance them with broader-based funds.

Building for Future Goals
Retirement Planning

Starting early with retirement planning is wise. Consider investing in equity-linked savings schemes (ELSS) for tax benefits and long-term growth. Also, look into setting up a Public Provident Fund (PPF) account, which offers tax benefits and a secure return.

Insurance for Security

Ensure you have adequate insurance coverage. Health insurance is crucial to cover any medical emergencies. Additionally, a term insurance policy will provide financial security to your dependents in case of any unforeseen events.

Saving for a Home and Car
You mentioned not owning a house or car. While it’s not urgent, planning for these big purchases is essential.

Home Purchase Planning

Given the rising real estate costs, it's smart to start a dedicated savings plan for your home purchase. Consider a mix of safer debt instruments and balanced funds for this purpose. The goal is to have a sizeable down payment ready when you decide to buy a home.

Car Purchase Planning

For a car, set up a separate savings account or a recurring deposit. This will ensure that you have the funds when you're ready to make the purchase without disrupting your long-term investment plans.

Leveraging Professional Guidance
While you’ve done a great job managing your investments so far, it might be beneficial to seek advice from a Certified Financial Planner. They can provide tailored advice based on your goals and risk appetite, ensuring your investments are optimized for your needs.

Disadvantages of Index Funds

Index funds, which aim to replicate the performance of a specific index, lack the flexibility to adapt to market changes. They may not perform well in volatile markets and offer no potential for outperforming the market. Actively managed funds, in contrast, can be adjusted based on market conditions and provide opportunities for better returns.

Advantages of Regular Funds
Investing through a Mutual Fund Distributor (MFD) with CFP credentials offers several benefits over direct funds. MFDs provide valuable advice, portfolio management, and timely rebalancing. They help you navigate through market complexities and make informed decisions, which is crucial for maximizing returns and managing risks.

Final Insights
You are in a strong position financially, and with thoughtful diversification, you can enhance your portfolio further. By balancing your investments across various asset classes and ensuring you have a mix of stability and growth, you can secure your financial future.

Remember, financial planning is a continuous process. Regularly review your portfolio, stay updated with market trends, and adjust your investments as needed. Your commitment to saving and investing will pay off in the long run.

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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