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Ulhas

Ulhas Joshi  |279 Answers  |Ask -

Mutual Fund Expert - Answered on Sep 17, 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
Asked by Anonymous - Sep 16, 2024Hindi
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Is it good to invest in only 1 mutual fund instead of 2 funds I am saving monthly 1 lakh from my salary please advise

Ans: Hello and thanks for writing to me.

I am assuming you are investing with a goal for long term wealth creation and are fine with the volatility associated with equity. In such a case, you can consider investing in 2 funds, a multicap fund and a flexicap fund. A multi cap fund will ensure you have exposure to companies across market capitalizations while a flexicap fund can move across market capitalizations.

Do note that I am recommending the fund type without any other information about your objective or risk appetite. If you give me other details, I may recommend other type of schemes.
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  |7322 Answers  |Ask -

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

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Hello sir I am 24 years old. My monthly income is 18000. And I have a two ULIP PLAN in Bajaj Allianz and HDFC sampurna nivesh with monthly 3000 of both. I want to invest more 500 per month in Mutual fund, Is it better to invest?
Ans: it's commendable that you're considering additional investments at such a young age. Let's delve into your options:

Disadvantages of ULIPs: ULIPs, or Unit Linked Insurance Plans, often come bundled with high charges, including premium allocation charges, policy administration charges, and fund management charges. These charges can significantly reduce the returns on your investment over the long term. Additionally, ULIPs typically offer limited flexibility in terms of fund choices and lock-in periods, restricting your ability to adapt to changing financial goals or market conditions.
Advantages of Mutual Funds: Mutual funds offer several advantages over ULIPs. They provide greater transparency regarding charges, allowing you to understand the costs associated with your investment. Moreover, mutual funds offer a wide range of investment options across asset classes, such as equity, debt, and hybrid funds, catering to various risk appetites and investment objectives. Mutual funds also offer flexibility, enabling you to adjust your investment strategy as needed without incurring significant penalties.
Considering your age and income level, investing an additional 500 rupees per month in mutual funds would be a prudent decision. It allows you to benefit from the power of compounding over the long term and diversify your investment portfolio beyond ULIPs. You can choose mutual fund schemes based on your risk tolerance, investment horizon, and financial goals, ensuring a more customized approach to wealth creation.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner
www.HolisticInvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 31, 2024

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Iam 59 yrs old and I invested two laks Rs in 12 mfs of different fund houses of large, small, large&mid cap funds also thematic funds. Is it correct option to invest in more no of funds. Can you suggest me pl.
Ans: You are 59 years old and have invested Rs. 2 lakhs across 12 mutual funds. These funds are diversified across large-cap, small-cap, large & mid-cap, and thematic funds. While diversification is important, over-diversification can lead to a scattered portfolio that is difficult to manage and may not yield optimal returns.

Evaluating the Number of Funds
Investing in too many funds can dilute the benefits of diversification and make it harder to track performance.

Over-Diversification: Holding 12 mutual funds, especially with a relatively small corpus of Rs. 2 lakhs, might not be the most efficient strategy. Each fund may have overlapping stocks, reducing the overall diversification benefit.

Concentration Risk: By spreading your investment across too many funds, you may be inadvertently increasing your risk if these funds are not carefully selected to complement each other.

Simplifying Your Portfolio
A well-structured portfolio typically has a few carefully chosen funds that cover different segments of the market. Here’s how you can simplify:

Consolidate Funds: Consider reducing the number of funds. A portfolio with 3-5 funds can provide sufficient diversification without being overly complex.

Focus on Core Funds: Choose funds that have a strong track record and align with your risk tolerance and financial goals. Large-cap and large & mid-cap funds can form the core of your portfolio, providing stability and growth.

Thematic Funds: These can be a good addition but should be limited to a small portion of your portfolio due to their higher risk. Ensure they align with your long-term goals.

Rebalancing and Portfolio Review
At 59 years old, your investment strategy should also consider the proximity to retirement. It’s important to balance growth with safety.

Review Asset Allocation: Ensure your portfolio is aligned with your retirement goals. This might mean increasing your allocation to debt or hybrid funds to reduce risk.

Regular Monitoring: Keep an eye on the performance of your remaining funds. Periodic reviews will help you make informed decisions about rebalancing or further consolidation.

Final Insights
While diversification is crucial, over-diversification can lead to a diluted and hard-to-manage portfolio. Simplifying your investment by consolidating into a few well-chosen funds can provide better returns and easier management. As you approach retirement, ensure your portfolio is balanced to provide both growth and safety, aligning with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Milind

Milind Vadjikar  |790 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 30, 2024

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Hi Myself Sanjeev Kumar from Himachal Pradesh, I am in mutual funds from last 3 years on below mutual funds 1. Aditya birla multicap fund (regular growth) ---- Rs 1000 monthly 2. Invesco India flexi Cap fund (Plan growth) ------ Rs 1000 monthly 3. Invesco India Multicap fund (regular growth) ---- Rs 1000 monthly 4. Kotak multicap fund (regular) ------------------------- Rs 1000 monthly 5. Kotak emerging equity fund (growth) --------------- Rs 1000 monthly 6. Kotak ELSS tax saver fund ------------------------------- Rs 500 monthly 7. Union tax saver fund (ELSS) ---------------------------- Rs 1500 monthly 8. Bandhan Nifty 200 momentum 30 index fund (regular plan) --- Rs 1000 monthly (started a month ago) Apart from above, I am investing in below also 1. PPF ---------------- 1.5 lac annually 2. NPD ---------------- 0.5 lac annually 3. LIC ----------------- 0.5 lac annually Si/mam i want to ask is my portifoilio good enough to produce at least 60- 70 lakhs in next 10-12 years returns or some reshuffling is required. If yes kindly suggest some good funds. Hoping to hear from you soon Thanks
Ans: Hello;

Your mutual fund monthly sip of 8 K need to be increased to 10 K ( maybe you can add 2 K additional investment in Kotak ELSS tax saver fund).

PPF and other investment should continue as planned.

This will ensure your MF corpus + PPF will reach 60 L+ in value over 12 years.

LIC policy maturity sum and NPD will be bonus.

Funds are good. No need to change.

Happy Investing;

..Read more

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Ramalingam

Ramalingam Kalirajan  |7322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 23, 2024

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Hi Mr. Ramalingam, Can I check New Asset class (Specialized Investment Fund SIF) for 10 lakhs investment for my kids education(Right now 4months old). Thank you for your response.
Ans: Investing Rs 10 lakhs for your child’s education is a thoughtful decision.

Your child is 4 months old, so you have a long investment horizon.

Currently, SIF is not yet launched or operational.

Equity Mutual Funds: A Reliable Option
Equity mutual funds are proven for long-term goals like education.

They offer inflation-beating growth over a 15-18 year period.

Start investing now to benefit from compounding.

Choose funds with a consistent track record.

Wait and Observe SIF Performance
SIF is a new asset class and lacks a performance track record.

It’s wise to wait for its launch and review its stability.

Assess the fund's returns, risk profile, and management quality.

Investing in an untested asset could increase risks unnecessarily.

Diversify Investments Over Time
Initially, focus on equity mutual funds for growth.

Later, as SIF stabilises and performs well, consider it.

Diversify across asset classes gradually based on market insights.

Final Insights
Begin with equity mutual funds for your child’s education fund.

Monitor SIF's launch and performance over the next few years.

Decide on SIF only after it demonstrates a solid track record.

Keep your investments aligned with your long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Milind

Milind Vadjikar  |790 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Dec 23, 2024

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I& my wife is 32. What would our ideally retirement corps. I assume 20Cr. Correct me if I'm wrong. My current saving & income are below - 1) Rs 2,40,000 take home per month combined. 2) We both have PPF for the last 7 years contributing 1.5L each year from starting and plans to continue till 60. 3) LIC will give us 2Cr when we hit 60. 4) NPS we contribute 1L per each year form 2022 combined plans continue till 60. 5) Mutual Fund of SIP Rs 10,000 each month for last 1 year combined plans continue till 60. 6) APY we will get 5000 per month at 60. 7) FDs of Rs 36Lakh 8) Gold of Rs 15Lakh bonds 9) Got Inherited Rs 1.6Cr in form of FDs 10) Have Medeclaim of 40Lakhs and have own house. 11) Monthly expenses is around 40,000. 12) Have 1 year old Kid. 13) Have PF of 8 lakhs and will grow till 60. Also taking Gratuity in account.
Ans: Hello;

Your current monthly income need of 2.4 L will grow up to 12.27 L after 28 years (At your retirement age of 60) considering 6% inflation.

Assuming your expenses at retirement will reduce so you may need 75% of this income to cover your expenses at that time therefore you may need a monthly income of 9.2 L.

To generate this income you may need a corpus of 27 Cr(Min.) at the age 60 that may generate post-tax monthly income of around 9.2 L.

Your investments will grow as follows,

1. PPF: 1.5 L per person per year for 35 years will grow into a corpus of around 4.32 Cr. (6.9% return assumed)

2. LIC: policy maturity proceeds will provide 2 Cr at age 60.

3. NPS: 1 L per person per year may grow into a sum of 2.5 Cr at 60.(8% return considered)

4. MF sip of 10 K may grow into a sum of 2.05 Cr at 60. (10% return considered)

5. FD of 36 L will grow into a sum of 2.1 Cr if held till 60. (6.5% return assumed)

6. Gold in form of bonds if reinvested into gold mutual funds and held till 60 may yield a corpus of around 1.1 Cr. (7% return assumed)

7. Inherited funds if held in FD till the age of 60 may yield a corpus of 9.9 Cr.
(6.5% return considered)

8. EPF is expected to grow into a sum of around 1.8 Cr at the age of 60.(7% return considered)

A summation of investment values at 60 indicates a sum of around 25.77 Cr thereby hinting at a gap of around 1.23 Cr.

You may begin another monthly sip of 7 K now which may grow into a sum of around 1.3 Cr by 60 age.(10% return assumed)

If the mediclaim policy is from employer, do buy a personal health care cover after 50-55 for your family for post retirement needs.

I presume you both have adequate term life insurance cover apart from LIC policy.

The financial goal for your kid's education and family expansion, if any, is not factored here. You may need to plan for it suitably.

Also it appears that your allocation to equity is quite low, may be due to limited risk appetite but you have time on your side and although short to medium term(5-7 yr) equity asset class may be impacted due to volatility but over a long-term(10 yr+) they have demonstrated good inflation adjusted returns so may be you may consider to increase allocation through hybrid funds suiting your risk appetite.

Happy Investing;
X: @mars_invest

...Read more

Ramalingam

Ramalingam Kalirajan  |7322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 23, 2024

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Meri family ki income 80 lakhs hai yearly aur 40 lakhs expense hai aur age meri 48 hai capital family ki 4 cr hai to unko kaise manage aur kaha invest kare
Ans: Current Financial Snapshot
Annual Income: Rs 80 lakhs
Annual Expenses: Rs 40 lakhs
Capital Available: Rs 4 crores
Age: 48 years
Your income and existing capital provide a strong foundation. With proper planning, you can secure your financial future and achieve your goals.

Key Financial Goals
Retirement Planning: Build a corpus to sustain your post-retirement lifestyle.
Wealth Growth: Invest capital for inflation-beating returns.
Risk Management: Ensure adequate insurance coverage for family security.
Tax Efficiency: Optimise investments to reduce tax liabilities.
Suggested Investment Allocation
1. Emergency Fund
Maintain 6-12 months of expenses (Rs 20-40 lakhs) in liquid funds or a high-interest savings account.
This ensures liquidity for any unforeseen circumstances.
2. Equity Mutual Funds
Allocate 50-60% of your capital (around Rs 2-2.4 crores) to equity mutual funds.
Use diversified funds like large-cap, flexi-cap, and mid-cap funds for growth.
Avoid index funds due to lack of flexibility and active management.
Invest monthly through systematic investment plans (SIPs) for disciplined investing.
3. Debt Investments
Invest 20-25% of your capital (Rs 80 lakhs-1 crore) in debt mutual funds or fixed-income instruments.
Choose funds with low risk to ensure stability and predictable returns.
These funds act as a safety net during market downturns.
4. Children’s Education or Marriage
Allocate funds for long-term goals like education or marriage.
Invest in balanced advantage funds or equity mutual funds for higher returns.
5. Retirement Planning
At 48, focus on building a retirement corpus.
Allocate 20% of your capital (Rs 80 lakhs) to retirement-specific investments.
Use a mix of equity and debt for growth and safety.
Risk Management
Life Insurance
Ensure you have a term insurance cover of at least Rs 2-3 crore.
This protects your family’s financial future in your absence.
Health Insurance
Take a family floater health insurance plan of Rs 25-30 lakh.
Include critical illness coverage to address rising healthcare costs.
Tax Efficiency
Maximise Section 80C benefits by investing in ELSS mutual funds or PPF.
Use NPS for additional tax deductions under Section 80CCD.
Invest in tax-efficient instruments to reduce liabilities.
Regular Monitoring
Review your investments every six months with a Certified Financial Planner.
Rebalance your portfolio to align with market trends and life changes.
Final Insights
You have a strong financial base with high income and significant capital.

With disciplined investing, risk management, and tax efficiency, you can grow your wealth and achieve your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 23, 2024

Asked by Anonymous - Dec 22, 2024Hindi
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Namaskar Sir, I am 30 years old and want to start SIP @10,000/-pm in Mid cap mutual fund for next 30 years for a target of Rs 20 Cr (18-20%/year). You are requested to guide me about risks may come in future in MF industry and risk regarding sustainability of the fund house for next 30 years.
Ans: Investing Rs. 10,000 monthly in a mid-cap mutual fund is a commendable strategy. It shows your commitment to achieving a robust corpus of Rs. 20 crore in 30 years. However, there are risks and considerations to address.

1. Potential Risks in the Mutual Fund Industry
Market Volatility
Mid-cap funds are more volatile than large-cap funds.

Short-term fluctuations can impact returns during market corrections.

Economic Slowdowns
Economic instability can adversely affect mid-cap stocks.

Such slowdowns could lower the growth trajectory of the fund.

Regulatory Changes
SEBI and government regulations may impact mutual fund operations.

For example, changes in taxation or investment limits can affect returns.

Inflation Risk
Inflation can erode purchasing power and real returns over 30 years.

This risk must be factored into your long-term goal.

2. Risks of Fund House Sustainability
Fund House Stability
A fund house with a poor track record may not survive for 30 years.

Choose an established and reputed fund house with strong governance.

Fund Manager Risk
Performance depends on fund manager decisions.

Manager changes may impact the strategy and consistency of the fund.

Operational Risks
Fund houses may face risks like technology failures or poor compliance.

Verify the operational strength and risk management policies of the fund house.

3. Realistic Return Expectations
Expecting 18-20% annualised returns over 30 years is optimistic.

Historical data shows mid-cap funds average around 12-15% returns.

Relying on higher returns can lead to unrealistic expectations.

4. Diversification for Stability
Do not rely solely on mid-cap funds for your goal.

Diversify with large-cap or flexi-cap funds to reduce volatility.

Balanced funds can provide a mix of growth and stability.

5. Importance of Periodic Review
Monitor your SIP performance regularly, at least once a year.

Assess fund performance against benchmarks and peers.

Make necessary adjustments to align with your goals.

6. Role of Active Fund Management
Actively managed funds can outperform benchmarks during volatile markets.

Fund managers actively track market changes and rebalance portfolios.

This approach offers an edge over passively managed index funds.

7. Tax Implications on Returns
Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%.

Short-term capital gains (STCG) are taxed at 20%.

Understanding tax implications helps plan withdrawals effectively.

8. 360-Degree Financial Planning
Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses.

This ensures financial stability during unforeseen situations.

Adequate Insurance
Secure yourself with adequate life and health insurance.

Avoid using ULIPs or investment-linked insurance for this purpose.

Retirement Planning
Parallelly invest in retirement-specific instruments for long-term security.

Diversify your portfolio to include stable growth options.

Education and Marriage
Plan separate investments for future education and marriage expenses.

Diversify investments to balance risk across different life goals.

Finally
Mid-cap funds are a promising option for wealth creation, but they come with risks. Diversify, review periodically, and adjust your strategy as needed. Consult a Certified Financial Planner to build a robust, long-term investment plan tailored to your goals.

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.

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