Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |7411 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 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
Thanesh Question by Thanesh on May 13, 2024Hindi
Listen
Money

Can I increase my pf contribution it is advisable?? Or can I know invest in SIP??

Ans: Enhancing Retirement Savings: Assessing PF Contribution and SIP Investments
Your inquiry regarding increasing PF contributions or investing in SIPs reflects a proactive approach towards strengthening your retirement savings. Let's evaluate both options to determine the most suitable course of action aligned with your financial goals and risk tolerance.

Assessing PF Contribution Increase
Benefits of Increasing PF Contribution: Increasing your PF contribution offers several advantages, including tax benefits, employer matching contributions (if applicable), and long-term wealth accumulation in a tax-efficient manner.

Considerations: However, before increasing your PF contribution, evaluate your current financial commitments, liquidity needs, and overall retirement savings strategy. Assess whether the additional contribution aligns with your short-term and long-term financial objectives.

Impact on Cash Flow: Increasing PF contributions may reduce your take-home salary, impacting your monthly cash flow. Ensure you have sufficient liquidity for immediate expenses and emergencies before committing to higher PF contributions.

Exploring SIP Investments
Benefits of SIPs: Systematic Investment Plans (SIPs) offer a disciplined approach to investing in mutual funds, allowing you to invest small amounts regularly over time. SIPs provide the benefit of rupee cost averaging and the potential for long-term wealth accumulation.

Flexibility and Diversification: SIPs offer flexibility in investment amount and frequency, making them suitable for investors with varying financial capacities. Additionally, investing in SIPs allows you to diversify your portfolio across different asset classes and investment styles.

Risk and Return Profile: Consider your risk tolerance and investment horizon when selecting SIPs. Equity-oriented SIPs offer higher growth potential but come with increased volatility, while debt-oriented SIPs provide stability but may offer lower returns.

Making an Informed Decision
Evaluate your financial goals, risk tolerance, and investment horizon before deciding whether to increase PF contributions or invest in SIPs. Consider consulting with a Certified Financial Planner (CFP) to assess your overall financial situation and develop a tailored retirement savings strategy.

Conclusion
Both increasing PF contributions and investing in SIPs offer opportunities to enhance your retirement savings. Assess the impact on your cash flow, risk-return profile, and alignment with your financial goals before making a decision. Remember to prioritize long-term financial security and consult with a financial advisor for personalized guidance.

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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7411 Answers  |Ask -

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

Asked by Anonymous - May 02, 2024Hindi
Listen
Money
Hi I am 25 years old with a salary of 90k in hand, out of which I invest 40k in GPF, and 30k in mutual funds (which I started this month, earlier I used to put lumpsum - so total mutual fund is 1.3L) . Shall I decrease my GPF amount and increase the sip amount?.
Ans: You're making excellent strides in investing at such a young age. Let's explore whether adjusting your allocations between GPF and SIPs is beneficial for your financial journey.

Compliments and Understanding
Congratulations on your proactive approach to financial planning at just 25! It's commendable how you're prioritizing savings and investments early on in your career.

Assessing Your Current Strategy
You're currently allocating ?40k to GPF and ?30k to SIPs monthly, along with existing mutual fund investments of ?1.3 lakhs. Let's evaluate if adjusting these allocations could optimize your investment strategy.

Evaluating GPF vs. SIP
GPF (General Provident Fund)
Stability: GPF offers a stable and secure avenue for retirement savings, with guaranteed returns.

Tax Benefits: Contributions to GPF are eligible for tax deductions under Section 80C of the Income Tax Act.

Liquidity: GPF contributions are relatively illiquid, with limited withdrawal options until retirement.

SIP (Systematic Investment Plan)
Market Exposure: SIPs provide exposure to equity markets, offering the potential for higher returns over the long term.

Diversification: SIPs allow for diversification across different mutual funds, spreading risk.

Flexibility: SIPs offer flexibility in investment amounts and can be adjusted based on financial goals and market conditions.

Considerations for Adjustment
Risk Tolerance
Given your age and time horizon, you have the advantage of a longer investment horizon, allowing you to take on higher risk for potentially higher returns.

Financial Goals
Consider your short-term and long-term financial goals. If your primary objective is wealth accumulation for the long term, a higher allocation to SIPs may align better with this goal.

Proposed Adjustment
Decrease GPF, Increase SIP
Considering your age and long-term investment horizon, decreasing your GPF contribution slightly and increasing your SIP amount could be advantageous.

Benefits of Increased SIP
Higher Growth Potential: Increased SIP contributions can potentially boost wealth accumulation over time, leveraging the power of compounding.

Diversification: SIPs allow for diversification across different asset classes, reducing concentration risk.

Alignment with Goals: Aligning your investment strategy with long-term goals like wealth accumulation and retirement planning.

Monitoring and Review
Regularly review your investment strategy and adjust allocations as needed based on changing financial goals, market conditions, and risk tolerance.

Conclusion
Adjusting your allocations by decreasing GPF contributions and increasing SIP amounts can potentially optimize your investment strategy, considering your age, risk tolerance, and long-term financial goals. Consulting a Certified Financial Planner can provide personalized recommendations tailored to your specific circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7411 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 2024

Listen
Money
Can I increase my pf contribution or can I invest money in SIP? PLS suggest which is best
Ans: Choosing Between Increasing PF Contribution and Investing in SIP
Evaluating Your Options
When deciding between increasing your Provident Fund (PF) contribution and investing in a Systematic Investment Plan (SIP), it’s important to consider your financial goals, risk tolerance, and the potential returns from each option.

Benefits of SIP Investments
Higher Potential Returns: Equity mutual funds generally offer higher returns compared to traditional savings schemes like PF. Over the long term, SIPs in well-managed equity funds can significantly outperform fixed-income investments.

Diversification: SIPs provide exposure to a diversified portfolio of stocks, which helps in spreading risk. This is particularly beneficial in the long term, as it reduces the impact of volatility on your investments.

Flexibility: SIPs offer flexibility in terms of investment amounts and the ability to pause or stop contributions if needed. This is particularly useful for managing cash flow.

Liquidity: Investments in mutual funds are more liquid compared to PF. You can redeem your SIP investments partially or fully without much hassle, depending on the fund’s exit load and redemption norms.

Tax Efficiency: While PF contributions are tax-free, SIPs in Equity Linked Savings Schemes (ELSS) offer tax benefits under Section 80C. Additionally, long-term capital gains from equity funds are taxed at a favorable rate, enhancing post-tax returns.

Considerations for SIP Investment
Risk Appetite: Equity investments come with market risk. Ensure that your risk tolerance aligns with the volatility associated with equity markets.

Investment Horizon: SIPs are most effective when invested for the long term (5-10 years or more). This allows you to benefit from the compounding effect and market growth over time.

Goal Alignment: Align your SIP investments with specific financial goals such as retirement, children’s education, or buying a home. This helps in disciplined saving and tracking progress.

Recommended Strategy
Start or Increase SIPs: Begin or enhance your SIP investments in diversified equity funds. Given your age and long-term horizon, focus on a mix of large-cap, mid-cap, and flexi-cap funds to balance risk and reward.

Review Periodically: Monitor the performance of your SIPs regularly and make adjustments as needed. Rebalancing your portfolio ensures alignment with your financial goals and market conditions.

Continue PF Contributions: While SIPs are advantageous, maintaining your PF contributions is also important for a stable retirement corpus. PF provides a secure, risk-free return, which complements the higher-risk equity investments.

Conclusion
Investing in SIPs is a better choice for achieving higher returns and flexibility compared to increasing PF contributions. Ensure that your investment strategy aligns with your financial goals, risk tolerance, and long-term planning.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7411 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Asked by Anonymous - Jul 09, 2024Hindi
Listen
Money
Hello Sir, I am 25 years old.I am investing 23,000 Evey month in MF(60% in mid cap, 30% large cap and 10 to 15% around small cap). I will increase my SIP with my salary like if I got 15 to 20% hike. I want to increase my SIP accordingly. I want 20 crore of age of 45. Pls guide me. how can I achieve my Goal. My salary is 2 lakh per month!!!
Ans: You want Rs. 20 crores by age 45. This is a significant goal, but achievable with disciplined investing.

Current Investment Strategy
SIP Allocation
60% in mid-cap funds

30% in large-cap funds

10% in small-cap funds

Monthly Investment
Rs. 23,000 per month currently
Future SIP Increases
Plan to increase SIP with salary hikes
Evaluating Your Current Strategy
Mid-Cap Funds
Growth Potential: Mid-cap funds offer high growth potential.

Risk: They are riskier compared to large-cap funds.

Large-Cap Funds
Stability: Large-cap funds are stable and provide steady returns.

Lower Risk: Less volatile compared to mid-cap and small-cap funds.

Small-Cap Funds
High Growth: Small-cap funds can provide high returns.

High Risk: They are the most volatile.

Recommendations to Achieve Rs. 20 Crores
Increase SIPs Regularly
Annual Increases: Increase your SIPs by 15-20% annually.

Bonus Investments: Invest additional income from bonuses.

Diversify Your Portfolio
Balanced Approach: Consider adding debt funds for stability.

Reduce Risk: Balance high-risk investments with safer options.

Consider Actively Managed Funds
Expert Management: Actively managed funds can outperform index funds.

Regular Reviews: Ensure fund managers are adjusting to market conditions.

Avoid Direct Funds
Lack of Guidance: Direct funds lack professional guidance.

Benefits of Regular Funds: Investing through a Mutual Fund Distributor (MFD) with CFP credentials ensures expert advice.

Long-Term Investment Discipline
Stay Invested
Market Volatility: Do not panic during market downturns.

Long-Term Focus: Keep your focus on the long-term goal.

Rebalance Your Portfolio
Regular Reviews: Review your portfolio every six months.

Adjust Allocations: Rebalance based on performance and market conditions.

Tax Efficiency
Utilize Tax-Saving Instruments
ELSS Funds: Consider Equity Linked Savings Scheme for tax benefits.

NPS: National Pension System offers tax benefits and long-term growth.

Emergency Fund
Maintain Liquidity
Emergency Savings: Keep 6-12 months of expenses in a liquid fund.

Avoid Withdrawal: Do not dip into your SIP investments for emergencies.

Professional Guidance
Certified Financial Planner
Expert Advice: Consult a Certified Financial Planner for personalized strategies.

Regular Check-ins: Schedule regular reviews with your planner.

Final Insights
To achieve Rs. 20 crores by age 45, increase your SIPs regularly and diversify your portfolio. Balance high-risk investments with safer options and consider actively managed funds. Stay disciplined, review your portfolio regularly, and seek professional advice to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Career

Career Coach  |49 Answers  |Ask -

Workplace Expert - Answered on Jan 03, 2025

Asked by Anonymous - Jan 03, 2025Hindi
Listen
Career
Hi, I’m a second year undergraduate student, and my friend told me about the CUET PG exam . Honestly, I’m still a bit confused about what exactly this exam is for. Is it just for admissions into central universities, or do private and state universities also accept CUET PG scores? I want to pursue my master’s degree, but I’m not sure if this is the right exam for me or if there are other options I should consider. Could you please explain the purpose of CUET PG and how it works?
Ans: Dear Student,

It's great that you're thinking about your postgraduate options early on in your undergraduate degree. The CUET PG exam is indeed a significant one for students in India, and it's good you're seeking clarity. Let me break it down for you:

What is CUET PG?

CUET PG stands for Common University Entrance Test (Postgraduate). It's a national-level entrance exam conducted by the National Testing Agency (NTA) for admissions into various postgraduate programs. Think of it as a gateway to higher education after your bachelor's degree.

Who Accepts CUET PG Scores?

You're right to ask about the scope of this exam. Primarily, CUET PG scores are used for admission to Central Universities across India. However, its reach is expanding. Many State Universities and even some Private Universities have also started accepting CUET PG scores for their postgraduate programs. This means a wider range of options for you based on your performance in a single exam.

Is CUET PG Right for You?

Whether CUET PG is the "right" exam for you depends on where you want to study and what you want to study.

• If you're aiming for a Central University, CUET PG is essential.
• If you're considering State or Private Universities, check if they accept CUET PG scores. This information is usually available on the university's admission website or the CUET PG information bulletin.

Other Options to Consider:

While CUET PG is a major exam, there are other options depending on your chosen field:

• University-Specific Entrance Tests: Some universities, especially well-established ones, might conduct their own entrance tests in addition to or instead of CUET PG.
• National-Level Exams: For certain fields like management (CAT, XAT), engineering (GATE), or pharmacy (GPAT), there are specific national-level exams.

How CUET PG Works:

• Exam Format: CUET PG is a computer-based test (CBT) with multiple-choice questions (MCQs).
• Syllabus: The syllabus generally covers subjects you've studied in your undergraduate program.
• Scoring: You'll receive a score based on your performance, which you can then use to apply to participating universities.
• Counseling: Each university will have its own counseling process based on CUET PG scores.

My Advice:

1. Explore Your Interests: Decide on the specific master's program you want to pursue. This will help you narrow down your university options.
2. Research Universities: Make a list of universities offering your desired program and check their admission criteria, including whether they accept CUET PG scores.
3. Check CUET PG Eligibility: Ensure you meet the eligibility criteria for CUET PG, which usually involves having a bachelor's degree in a relevant field.
4. Prepare Strategically: If you decide to take CUET PG, start preparing early and focus on the syllabus relevant to your chosen program.

I understand the importance of making informed decisions about your education. I hope this explanation helps you understand CUET PG better.

...Read more

Samraat

Samraat Jadhav  |2136 Answers  |Ask -

Stock Market Expert - Answered on Jan 03, 2025

Nayagam P

Nayagam P P  |4022 Answers  |Ask -

Career Counsellor - Answered on Jan 03, 2025

Listen
Ramalingam

Ramalingam Kalirajan  |7411 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 03, 2025

Asked by Anonymous - Jan 03, 2025Hindi
Listen
Money
I have invested in ICICI Prudential Nifty 50 index SIP. I have noticed that from past 6 months the fund is not performing. Should I keep this fund or liquidate and invest in in multi asset fund?
Ans: The ICICI Prudential Nifty 50 Index Fund replicates the Nifty 50 index. It is a passive fund that mirrors the index performance. The last six months have been volatile for the stock market, which has affected index funds. This is expected in short-term market conditions and does not reflect the long-term potential of index-based funds.

However, relying on index funds for wealth creation in volatile markets may not always be optimal. Active funds offer the flexibility of stock selection, better risk management, and potential for higher returns.

Why Active Funds May Be a Better Choice
Volatility Management: Active fund managers adjust the portfolio based on market trends. This flexibility helps during volatile times.

Higher Growth Potential: Actively managed funds can outperform index funds by investing in sectors and stocks with higher potential.

Diversification: Multi-asset funds allocate across equity, debt, and other asset classes. This reduces risk and provides stability.

Assessing Your Current Investment
Index Fund Performance: While the last six months may seem disappointing, index funds are designed for long-term investors.

Cost Factor: Index funds have lower expense ratios but lack active management during market fluctuations.

Active vs Passive: Actively managed funds are better during periods of market instability. They offer professional stock selection and sector rotation.

Benefits of Multi-Asset Funds
Balanced Portfolio: Multi-asset funds invest in equities, bonds, and gold, diversifying your investment.

Risk Mitigation: Allocation to multiple asset classes reduces portfolio volatility.

Stable Returns: These funds aim to provide consistent returns, even during volatile markets.

Suggested Action Plan
Reevaluate Goals: Align your investment decisions with your financial goals and risk tolerance.

Shift to Active Funds: Consider shifting from the Nifty 50 index fund to an actively managed multi-cap or multi-asset fund.

Monitor Performance: Choose funds with a strong track record and consistent performance across market cycles.

Consult a Certified Financial Planner: A planner can help you select the right actively managed funds and align your investments with your financial plan.

Final Insights
While index funds like ICICI Prudential Nifty 50 are suitable for passive investors, active funds offer an edge in volatile markets. Shifting to a multi-asset or actively managed fund may help you achieve better returns and stability.

Invest wisely, monitor regularly, and stay disciplined to maximise your wealth creation journey.

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x