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Ramalingam

Ramalingam Kalirajan  |6268 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

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
Karthikeyan Question by Karthikeyan on May 04, 2024Hindi
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Iam 38 years old i need 5cr corpus in 55 years i have started sip of amount 7500 with 15% returns now value 1 lakh.

Ans: It's excellent that you're planning for your financial future by investing in SIPs. Here's a breakdown of your goal and how you can achieve it:

Goal: You aim to accumulate a corpus of 5 crore by the time you turn 55. This is a significant amount and requires disciplined investing over the years.
Current SIP: You've started with a monthly SIP of 7500 with an assumed return rate of 15%. At present, your SIP value is 1 lakh.
Investment Strategy:
Increase SIP Amount: Consider gradually increasing your SIP amount over time. As your income grows or expenses decrease, channel a higher portion towards your investments.
Diversify Portfolio: While it's great to have high-return expectations, it's crucial to diversify your portfolio to manage risk. Consider investing in a mix of equity, debt, and other asset classes.
Regular Review: Regularly review your investment portfolio and adjust your SIP amount or asset allocation as needed. Market conditions and personal circumstances can change, so it's essential to stay flexible.
Long-Term Perspective: Keep in mind that building a 5 crore corpus over the next 17 years requires patience and discipline. Stick to your investment plan even during market fluctuations, and avoid making impulsive decisions.
Professional Guidance: Consider consulting a Certified Financial Planner (CFP) to fine-tune your investment strategy and ensure it aligns with your financial goals and risk tolerance.
Emergency Fund: While focusing on long-term goals, don't forget to maintain an emergency fund to cover unexpected expenses. Aim for at least 6-12 months' worth of living expenses in a liquid and easily accessible account.
By following a systematic investment approach, staying committed to your financial goals, and seeking professional advice when needed, you can work towards building a substantial corpus for your future.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
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  |6268 Answers  |Ask -

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

Asked by Anonymous - Apr 14, 2024Hindi
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Hi Sir Sangayya hear from Karnataka my age is 43 from last 3 years I started my SIP details r as below 1 ELSS - 5 sips each 1k 2. Large & mid cap fund - 3 sips 1k each 3. Thematic fund - Franklin India opp - 5k 4. Multi asset allocator - Tata 5k 5.Flexi cap fund - 2 Sips 1k each 6. Dynamic Asset - Edelweiss balanced Adv fund 1k 7. Small cap - Nippon India 1k Total monthly 22k is my investment kindly suggest I want to build my corpus 1cr in another 10 year
Ans: You've made a good start with your SIP investments across various categories. To achieve a corpus of 1 crore in 10 years, you'll need an average annual return of around 12%, considering your current investment of 22k per month.

Here are some suggestions to optimize your portfolio:

ELSS: Great for tax-saving, but remember the lock-in period. Ensure you're comfortable with the fund's performance and risk profile.

Large & Mid-cap: These funds offer a balanced approach. Monitor the performance and consider consolidating into a top-performing fund if necessary.

Thematic Fund: These are more focused and can be riskier. Ensure it aligns with your investment goals and risk tolerance.

Multi-Asset Allocator: Offers diversification across asset classes. A good choice for balanced growth. Ensure the fund's strategy aligns with your goals.

Flexi Cap & Dynamic Asset Allocation: These provide flexibility to invest across market caps and adjust to market conditions. Ensure they complement each other and don't overlap too much.

Small Cap: High growth potential but higher risk. Ensure it fits your risk profile and consider monitoring closely due to higher volatility.

General Recommendations:

Review & Rebalance: Regularly review your portfolio's performance and adjust if necessary. Consider shifting funds to top performers or reallocating based on market conditions.

Risk Assessment: Ensure your portfolio aligns with your risk tolerance and investment horizon.

Costs: Opt for direct plans to reduce costs and improve returns.

Diversification: Ensure your portfolio is well-diversified across asset classes and not overly concentrated in one sector or fund.

Professional Advice: Consider consulting a financial advisor for personalized guidance based on your financial goals and risk profile.

In summary, continue your disciplined approach with SIPs, regularly review and adjust your portfolio, and stay invested for the long term to achieve your goal of 1 crore in 10 years.

..Read more

Ramalingam

Ramalingam Kalirajan  |6268 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

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Age 34.Am doing sip in. quant elss 9k, tata infra MF 4k, SBI technology fund 7k , quant psu fund 3k , Nasdaq 500 for 2.5k and stocks with 15% returns. I also have efo around 2 lacs. I want to make corpus of 2cr in 10 years. Currently holding around 20laks
Ans: Assessing Your Current Financial Position
You have made an excellent start in building a diversified investment portfolio. Your current investments include mutual funds and stocks, and you have an emergency fund of ?2 lakhs. Your goal to accumulate ?2 crores in 10 years is ambitious but achievable with the right strategy.

Evaluating Your Investments
Mutual Funds
Equity-Linked Savings Scheme (ELSS): Investing ?9,000 in ELSS funds is wise. These funds provide tax benefits under Section 80C and have the potential for high returns due to equity exposure.

Sector Funds: Your investments in infrastructure, technology, and PSU funds indicate a focus on specific sectors. While sector funds can offer high returns, they come with higher risks due to their limited diversification.

International Funds: Investing ?2,500 in the Nasdaq 500 fund adds geographical diversification. International funds can hedge against domestic market risks and offer exposure to global growth.

Stocks
Your stock investments are yielding a 15% return, which is commendable. Stocks can provide significant growth but require regular monitoring and expertise to manage risks effectively.

Emergency Fund
Maintaining an emergency fund of ?2 lakhs is prudent. This ensures financial security during unforeseen events without disrupting your investment strategy.

Recommendations for Portfolio Adjustments
Enhance Diversification
Balanced Allocation: Consider adding more diversified equity funds to balance the high-risk sector funds. Diversified funds reduce risk by spreading investments across various sectors.

Debt Funds: Incorporate some debt funds to provide stability to your portfolio. Debt funds are less volatile and can offer steady returns, balancing the high risk of equity investments.

Increase SIP Contributions
Annual Increase: Gradually increase your SIP contributions annually. This combats inflation and helps you reach your financial goal faster.

Top-Up SIPs: Utilize the top-up SIP option if available. This allows you to increase your SIP amounts periodically with ease.

Focus on High-Growth Assets
Actively Managed Funds: Continue focusing on actively managed funds rather than index funds. Actively managed funds can outperform the market through expert management.

Regular Fund Review: Regularly review the performance of your funds. Replace consistently underperforming funds with better-performing ones to optimize returns.

Tax Efficiency
Tax Planning: Ensure your investments are tax-efficient. ELSS funds are already part of your portfolio, but consider other tax-saving instruments as well.

Tax-Efficient Withdrawals: Plan withdrawals from your investments in a tax-efficient manner to maximize your net returns.

Achieving ?2 Crores in 10 Years
Targeted Growth Rate
Consistent Growth: Aim for a consistent annual growth rate of 12-15%. This is achievable with a well-diversified equity-focused portfolio.

Regular Monitoring: Regularly monitor your portfolio to ensure it stays on track. Adjust allocations based on market conditions and personal goals.

Risk Management
Portfolio Rebalancing: Periodically rebalance your portfolio to maintain the desired asset allocation. This helps in managing risk and optimizing returns.

Emergency and Contingency Planning: Maintain a robust emergency fund. Consider additional health and life insurance coverage as your family grows.

Long-Term Strategy
Financial Freedom
Calculate Future Expenses: Estimate your future monthly expenses considering inflation. This helps in determining the corpus needed for financial freedom.

Determine Retirement Corpus: Calculate the corpus required to generate a monthly income that covers your expenses. Use a conservative withdrawal rate to ensure the longevity of your corpus.

Continuous Learning
Stay Updated: Keep learning about market trends and investment strategies. This enhances your decision-making and helps in optimizing returns.

Professional Guidance: Regularly consult a certified financial planner. They provide expert advice on portfolio management, tax planning, and goal setting.

Conclusion
Your current investment strategy is strong and well-diversified. By continuing to review and adjust your investments, increasing SIP contributions, and focusing on tax efficiency, you are on the right path to achieve your goal of ?2 crores in 10 years. Keep focusing on high-growth assets and maintain a balanced portfolio to achieve financial freedom.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6268 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2024

Money
My age is 35 ihave an lic of 1 cr , ppf want to invest 25000 in sip for corpus of 5 cr at 55 - 60 kindly guide
Ans: I see you’re looking to build a corpus of Rs. 5 crores by the age of 55-60. That’s an excellent goal! Let's dive into how you can achieve this with a systematic investment plan (SIP).

Starting with SIPs is a smart move. It helps in disciplined investing, takes advantage of market volatility, and offers the power of compounding. You’re on the right track with wanting to invest Rs. 25,000 monthly.

Evaluating Your Current Financial Situation

You have an LIC policy worth Rs. 1 crore, which provides good insurance coverage. You also have a PPF account, which is a safe investment with tax benefits. These are solid foundations for your financial plan.

Now, let's talk about your SIP investments. With Rs. 25,000 per month, you can diversify across various mutual fund categories to balance risk and reward.

Understanding Mutual Funds and Their Categories

Large Cap Funds:

Large cap funds invest in companies with a large market capitalization. These companies are typically well-established and stable, offering moderate returns with lower risk.

Mid Cap Funds:

Mid cap funds invest in medium-sized companies. These funds have the potential for higher returns than large cap funds but come with higher risk.

Small Cap Funds:

Small cap funds invest in smaller companies. These funds can offer substantial returns, but they also come with higher volatility and risk.

Flexi Cap Funds:

Flexi cap funds have the flexibility to invest across different market capitalizations. This adaptability can help manage risk and seize opportunities across the market.

Sectoral/Thematic Funds:

These funds invest in specific sectors or themes. They can provide high returns if the sector performs well, but they also carry higher risk due to concentration in one sector.

Advantages of Actively Managed Funds

Actively managed funds have professional fund managers who aim to outperform the market. They make informed decisions based on research and market trends. Although these funds may have higher fees, the potential for higher returns often justifies the cost.

Power of Compounding

Compounding is a powerful tool in wealth creation. By reinvesting your earnings, you can generate returns on your returns. This process accelerates your wealth growth over time. The earlier you start, the more you benefit from compounding.

Disadvantages of Index Funds

Index funds simply replicate a market index, offering average returns. They lack the potential to outperform the market, which actively managed funds aim to do. Index funds also don’t provide personalized management, missing opportunities to capitalize on market changes.

Disadvantages of Direct Funds

Investing directly in mutual funds might save you on fees, but it lacks professional guidance. A Certified Financial Planner (CFP) can offer personalized advice, ensuring your investments align with your goals and risk tolerance. The expertise and insights from a CFP are invaluable for navigating the complexities of the market.

Risk Management and Diversification

Diversification spreads your investments across different asset classes and sectors, reducing risk. By not putting all your eggs in one basket, you can protect your portfolio from market volatility. Your plan to invest in multiple mutual fund categories is a good diversification strategy.

Reviewing Your LIC Policy

Having an LIC policy is great for life coverage. However, it's crucial to ensure it aligns with your investment goals. If the LIC policy has high premiums with low returns, you might consider surrendering it and reallocating the funds into mutual funds for better growth prospects.

Investing in Mutual Funds: A Detailed Approach

Large Cap Funds Allocation:

Allocate around 30% of your SIP to large cap funds. These funds provide stability and steady growth. They are less volatile compared to mid and small cap funds.

Mid Cap Funds Allocation:

Allocate around 20% to mid cap funds. These funds offer a balance between risk and return. They can outperform large cap funds in a growing economy.

Small Cap Funds Allocation:

Allocate around 20% to small cap funds. These are high-risk, high-reward investments. Over a long period, they can provide substantial returns.

Flexi Cap Funds Allocation:

Allocate around 20% to flexi cap funds. These funds provide flexibility to invest across different market caps, adapting to market conditions.

Sectoral/Thematic Funds Allocation:

Allocate around 10% to sectoral or thematic funds. These funds can offer high returns if the chosen sector performs well. However, they carry higher risk due to concentration.

Monitoring and Rebalancing Your Portfolio

Regularly monitor your investments to ensure they align with your goals. Market conditions and personal circumstances change, so it’s essential to review and rebalance your portfolio periodically. A CFP can help you with this, providing professional insights and adjustments as needed.

Maximizing Tax Benefits

Investing in mutual funds can offer tax benefits, especially with Equity Linked Savings Schemes (ELSS). These schemes provide tax deductions under Section 80C, up to Rs. 1.5 lakhs annually. Consider allocating a portion of your SIP to ELSS for tax-efficient investing.

Emergency Fund and Contingency Planning

While focusing on long-term goals, don’t forget to maintain an emergency fund. This fund should cover at least 6-12 months of living expenses. It ensures financial stability in case of unforeseen events, without disrupting your investment strategy.

Retirement Planning and Beyond

Your goal is to build a corpus of Rs. 5 crores by 55-60. With disciplined SIP investing, diversified across various mutual funds, you’re well on your way. Remember, retirement planning is not just about building a corpus. It’s also about ensuring a sustainable income post-retirement. Consider strategies like systematic withdrawal plans (SWPs) to provide regular income during retirement.

Empowering Yourself with Financial Knowledge

Stay informed and educated about your investments. Understanding market trends, economic factors, and investment principles will empower you to make informed decisions. A CFP can guide you, but personal knowledge enhances your confidence and control over your financial future.

Final Insights

Achieving a corpus of Rs. 5 crores by the age of 55-60 is an ambitious yet achievable goal. Your disciplined approach to SIP investing, combined with strategic diversification, is commendable. Regular monitoring and professional guidance from a Certified Financial Planner will ensure you stay on track.

Stay focused, stay disciplined, and continue investing in your future. Your journey towards financial independence is a marathon, not a sprint. With patience and persistence, you’ll reach your destination.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Nitin

Nitin Narkhede  |5 Answers  |Ask -

MF, PF Guru - Answered on Sep 11, 2024

Asked by Anonymous - Sep 10, 2024Hindi
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I have 10 lakh rupees which I want invest in MF. Please suggest some fund for lump sum amount to invest for 1 and half years.
Ans: Dear Friend,
Thank you for your query. 1.5 Years is a very short time for getting high returns. Investing Rs 10 lakhs in mutual funds for a short-term horizon of 1.5 years requires a cautious approach. For such small period, you should look for low to moderate-risk funds that offer stability with reasonable returns, as investing in high-risk equity funds might be too volatile for a short time frame. Since your investment horizon is just 1.5 years, avoid high-risk equity mutual funds as they can be volatile in the short term. Check for exit loads and tax implications before investing. Most short-term capital gains (if you withdraw before 3 years) from debt funds are taxed according to your income tax slab.
You have to evaluate your risk Appetite , Short-Term Debt Funds are invested in government securities, corporate bonds, and other debt instruments with short maturities, offering stability and moderate returns. For a 1.5-year investment, these are ideal as they are less volatile. you can expect 5-7% per annum Returns. You can think of
• ICICI Prudential Short Term Fund
• HDFC Short Term Debt Fund
• Axis Short Term Fund
• ICICI Prudential Corporate Bond Fund
• HDFC Corporate Bond Fund
• Aditya Birla Sun Life Corporate Bond Fund.
Best regards,
Nitin Narkhede
Founder & MD, Prosperity Lifestyle Hub https://Nitinnarkhede.com
Free Webinar https://bit.ly/PLH-Webinar

...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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