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Ramalingam Kalirajan |9412 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 20, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Dr on Jun 16, 2025Hindi

Dear sir iam 34 years old i started in SIP this month large cap 1000,flexy cap 1000,mid cap 1000,small cap 2000 can you advice for my portfolio

Ans: You are 34 and have just started your SIPs. That is a very good decision. You have taken the right step at the right time. Starting early is always better.

Let’s now understand your investment choices from a 360-degree angle. I will assess your portfolio’s strengths and offer suggestions for better outcomes. This will be done using simple terms and short sentences.

Your Current SIP Portfolio – Quick Summary
You have invested:

Rs. 1000 in Large Cap

Rs. 1000 in Flexi Cap

Rs. 1000 in Mid Cap

Rs. 2000 in Small Cap

Total monthly SIP: Rs. 5000

Your plan is clear. But, there is a better way to balance the risk and returns.

Strengths in Your Portfolio
You are investing in equity funds. That is good.

SIP method reduces timing risk. So, smart approach.

You are including all four equity categories. Very good diversification attempt.

Rs. 5000 SIP is a good start. You can always increase gradually.

Starting at 34 gives you enough time to create long-term wealth.

You must appreciate yourself for taking action. Many wait too long.

Need for Portfolio Rebalancing
There are some imbalances in your current SIP mix. Let us analyse carefully.

Over-Allocation to Small Cap
Rs. 2000 out of Rs. 5000 is in small cap.

That is 40% of your total SIP.

Small caps are high risk. They also have sharp volatility.

Over time they may give better return, but short-term falls are steep.

At 34, you still have time. But portfolio must be protected from deep falls.

Underweight in Large and Flexi Cap
Large cap and flexi cap SIPs are only Rs. 1000 each.

These are safer and more stable funds.

Flexi cap can shift allocation between segments. That is a big advantage.

You must give more weight to these funds for better balance.

Mid Cap is Acceptable
Rs. 1000 in mid cap is fair.

Mid caps can offer good return with moderate risk.

But you must monitor regularly.

Suggested SIP Allocation Pattern
Let us consider a better proportion. You can keep the same Rs. 5000 total.

Try this split instead:

Rs. 1500 in Large Cap

Rs. 1500 in Flexi Cap

Rs. 1000 in Mid Cap

Rs. 1000 in Small Cap

This gives better balance. Less risk. Steady growth.

You can shift your funds slowly. No need to stop current SIPs suddenly. Just adjust monthly.

Reasons Why This Allocation is Better
Large Cap offers steady growth with lower volatility.

Flexi Cap brings flexibility across market caps.

Mid Cap brings growth with moderate risk.

Small Cap offers higher growth but very high risk. So lesser allocation is safer.

Such balance will help you during market ups and downs. You stay in control.

Importance of Goal Planning
Ask yourself this: Why am I investing?

You must link SIPs to goals. For example:

Child’s education after 10 years

Retirement corpus after 25 years

House down payment in 8 years

When you have goal clarity, fund selection becomes more focused.

Also, duration of goal decides which fund to choose:

Long-term goal: More equity

Short-term goal: Less equity

So, match goals and duration properly.

Invest through Certified Mutual Fund Distributor + CFP
If you are investing through direct funds, please pause and reflect.

Disadvantages of direct funds:

No expert review or handholding

No rebalancing support

No emotional control during market fall

No goal linking and no 360-degree tracking

Regular plans via Certified Mutual Fund Distributor (MFD) + Certified Financial Planner (CFP) gives:

Portfolio tracking help

Tax-efficient withdrawal planning

Rebalancing support

Goal planning assistance

Fees in regular plans are justified for the service quality and discipline they bring. It is always better to grow with expert guidance.

Role of Emergency Fund and Insurance
Before investing, first ensure protection.

Emergency fund should cover 6 months’ expenses.

Keep it in liquid funds or bank.

Also check:

Life insurance (term plan only, not ULIP or endowment)

Health insurance (family floater and personal cover)

If you have any insurance-cum-investment policies like ULIP or LIC endowment:

Please review them.

Most of these give poor returns.

If no major lock-in, better to surrender.

Reinvest that money in mutual funds.

Pure investment must stay separate from insurance.

Increase SIP Every Year
Rs. 5000 is a good start. But increase your SIP yearly.

Try to raise SIP amount by 10% to 15% every year.

For example:

Rs. 5000 in year 1

Rs. 5500 to Rs. 5750 in year 2

Rs. 6000+ in year 3

This builds wealth faster. It is called Step-Up SIP.

This small habit has very big impact in long term.

Stay Away from Index Funds
Many people talk about index funds. But they are not always better.

Index funds have these issues:

No flexibility to exit bad stocks

Poor returns during market crash

Not actively managed

In contrast, actively managed funds give:

Better downside protection

Scope to beat market through expert stock picking

Regular rebalancing and review

So, for better wealth building, always prefer actively managed funds.

Taxation Rules You Must Know
Equity mutual funds are taxed as below:

If held over 1 year: LTCG above Rs. 1.25 lakh taxed at 12.5%

If sold within 1 year: STCG taxed at 20%

So, invest for long term. That reduces tax and gives better compounding.

Debt funds are taxed as per your income tax slab. So not as attractive.

Tracking and Review
Don’t invest and forget.

Review your mutual fund SIP portfolio every 6 months.

Check for:

Consistency in fund performance

Change in fund manager or strategy

Goal tracking – are you on track?

Do this with help of your Certified Financial Planner.

This ensures course correction happens at the right time.

Avoid Common Mistakes
Here are some mistakes to avoid:

Don’t stop SIP during market fall

Don’t check NAV every day

Don’t follow tips blindly

Don’t change funds too often

Don’t mix insurance and investment

Just stay consistent and patient. Wealth will grow.

Finally
You are 34. You have started investing. That’s a big win.

Your current SIPs are good but need better balancing.

Reduce small cap exposure. Add more to large and flexi caps.

Link SIPs to your goals. Review and increase SIP yearly.

Avoid direct funds. Stay with regular funds through Certified MFD + CFP.

Protect yourself with term insurance and emergency funds.

Avoid ULIPs and low-return LIC policies.

Track your portfolio. But stay patient. Let compounding do the work.

With disciplined investing, you will reach all your goals in time.

Wishing you a successful and peaceful financial journey.

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

Asked on - Jun 20, 2025 | Answered on Jun 20, 2025

Thank you very much sir given better suggestion to me

Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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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