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Nikunj

Nikunj Saraf  |308 Answers  |Ask -

Mutual Funds Expert - Answered on Aug 08, 2023

Nikunj Saraf has more than five years of experience in financial markets and offers advice about mutual funds. He is vice president at Choice Wealth, a financial institution that offers broking, insurance, loans and government advisory services. Saraf, who is a member of the Institute Of Chartered Accountants of India, has a strong base in financial markets and wealth management.... more
narendra Question by narendra on Jun 28, 2023Hindi
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Hi i have invested lumpsum in following 12 funds please guide. Whether any funds to be removed and if any new funds to be added Quant Active Fund Growth 2.2 lakhs Canara Robeco Bluechip Equity fund Direct Growth 2 lakhs Pgim India midcap opportunities fund Direct Growth 2lakhs ICICI prudential commodities fund growth. 80,000 Parag Parikh flexi cap fund regular Growth. 90000 Quant Flexi Cap fund growth 90000 Kotak small cap fund regular Growth. 50000 Mahindra Manulife Multi cap fund regular Growth. 50000 Tata small cap fund Regular Growth 50000 Pgim India Midcap opportunities Fund Regular Growth 50000 Canara Robeco small cap Fund regular Growth 50000 Tata Digital India Fund Direct Growth 50000

Ans: Hello Narendra. The detailed overview of your MF portfolio indicates over-diversification with 20k SIP. Hence, I would suggest reconsidering, concising, and reshuffling your portfolio. As part of the portfolio reshuffle, make sure to have AMC diversification as well. Limit yourself to 1-2 schemes in each category. I can see several schemes in different categories for each AMC. I recommend reconsidering the scheme for Navi US scheme to better scheme in same category.
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  |5295 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

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I have invested lumpsum during corrections in the following funds , please advise should I continue investing more in the same funds - HDFC BALANCED ADVANTAGE, ICICI EQUITY AND DEBT, ICICI INDIA OPPORTUNITIES, ICICI MNC , ICICI VALUE DISCOVERY, ICICI MULTI ASSET, NIPPON SMALLCAP, SBI CONTRA , ADITY BIRLA MULTI ASSET ALLOCATION , HDFC FLEXICAP. I have invested 100000 in each fund . I am 62 years old. Kindly advise. Thanks and regards
Ans: Investing in the Right Mix for Your Retirement

Your current investment strategy reflects a thoughtful approach. Diversifying across multiple funds and investing during market corrections is wise. As you are 62 years old, balancing growth with capital preservation is crucial. Let's assess your current investments and explore whether you should continue adding to them.

Assessing Your Current Investments

Your portfolio includes balanced, equity, multi-asset, small-cap, and contra funds. This diversity helps in spreading risk. Each type of fund serves different purposes and offers unique benefits.

Balanced Advantage and Equity-Debt Funds

Balanced advantage and equity-debt funds invest in both equity and debt instruments. They provide growth potential with reduced volatility. These funds are suitable for investors seeking stability along with capital appreciation. Given your age, having such funds in your portfolio is beneficial. They help in managing risk while still aiming for reasonable returns.

Opportunities and MNC Funds

Opportunities and MNC funds focus on specific themes or sectors. They can deliver high returns if the chosen theme performs well. However, they come with higher risk due to concentration. These funds are suitable for investors with a higher risk appetite. At 62, you might want to limit exposure to such funds to avoid excessive risk.

Value Discovery and Contra Funds

Value discovery and contra funds invest in undervalued stocks. They aim to generate high returns by identifying mispriced opportunities. These funds require patience as value investing can take time to yield results. Including these funds in your portfolio adds a contrarian element, which can enhance returns if the market favours these stocks.

Multi-Asset and Flexicap Funds

Multi-asset and flexicap funds offer diversification within a single fund. They invest across various asset classes and market capitalizations. These funds provide flexibility and adaptability to market conditions. They can balance risk and reward effectively. Such funds are particularly beneficial for investors seeking a balanced approach to growth and risk management.

Small-Cap Funds

Small-cap funds invest in smaller companies with high growth potential. These funds can deliver substantial returns but come with higher volatility. They require a longer investment horizon to mitigate risks. At your age, it is important to carefully consider the proportion of small-cap funds in your portfolio to avoid excessive risk.

Evaluating the Need for Continued Investment

Considering your age, risk tolerance, and investment goals, here are some factors to evaluate whether to continue investing in the same funds:

Risk Tolerance and Time Horizon

Your risk tolerance decreases as you approach retirement. It is crucial to protect your capital while aiming for growth. Balanced advantage, equity-debt, and multi-asset funds provide a safer approach. Limiting exposure to high-risk funds like small-cap and sectoral funds can reduce volatility in your portfolio.

Diversification and Rebalancing

Your portfolio is already well-diversified. However, periodic rebalancing is essential to maintain the desired risk-reward ratio. Rebalancing involves adjusting your investments based on market performance. It ensures that your portfolio remains aligned with your financial goals and risk tolerance.

Income Generation Needs

At 62, generating a steady income might be a priority. Balanced advantage, equity-debt, and multi-asset funds can provide regular income through dividends and interest. Consider focusing more on these funds to ensure a steady income stream during retirement.

Consulting a Certified Financial Planner

A Certified Financial Planner (CFP) can provide personalized advice based on your unique situation. They can help you evaluate your current investments and suggest adjustments. CFPs assist in creating a tailored investment strategy that aligns with your retirement goals and risk tolerance.

Considering Other Investment Options

While your current portfolio is diversified, consider adding funds that offer capital preservation and income generation. Here are some options:

Debt Funds

Debt funds invest in fixed-income securities like bonds and debentures. They provide stable returns with lower risk compared to equity funds. Including debt funds can enhance capital preservation and provide regular income. They are suitable for conservative investors nearing retirement.

Hybrid Funds

Hybrid funds invest in both equity and debt instruments. They offer a balanced approach to growth and income. These funds are less volatile and can provide steady returns. Adding hybrid funds can enhance stability in your portfolio.

Systematic Withdrawal Plan (SWP)

A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount regularly from your investments. It provides a steady income stream during retirement. Consider setting up an SWP from your balanced advantage or multi-asset funds to meet your income needs.

Conclusion

Your current investments reflect a thoughtful and diversified strategy. To ensure continued growth and capital preservation, focus on balanced advantage, equity-debt, and multi-asset funds. Limit exposure to high-risk funds and consider adding debt and hybrid funds for stability. Regularly review and rebalance your portfolio to maintain alignment with your goals. Consulting a Certified Financial Planner can provide personalized guidance and help you achieve a secure and comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Sep 20, 2023

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Hi i have invested lumpsum in following 12 funds please guide. Whether any funds to be removed and if any new funds to be added Quant Active Fund Growth 2.2 lakhs Canara Robeco Bluechip Equity fund Direct Growth 2 lakhs Pgim India midcap opportunities fund Direct Growth 2lakhs ICICI prudential commodities fund growth. 80,000 Parag Parikh flexi cap fund regular Growth. 90000 Quant Flexi Cap fund growth 90000 Kotak small cap fund regular Growth. 50000 Mahindra Manulife Multi cap fund regular Growth. 50000 Tata small cap fund Regular Growth 50000 Pgim India Midcap opportunities Fund Regular Growth 50000 Canara Robeco small cap Fund regular Growth 50000 Tata Digital India Fund Direct Growth 50000 I need analysis on this whether to continue or close the mutual funds
Ans: Overall, you have over-diversified your investments. It is always better to invest in one or maximum two funds of the same category.

Although, all funds chosen by you have good fundamentals, but they carry a high level of risk with them. Without the risk profile and investment time horizon, it is difficult to comment on how long to stay invested in these funds. We should not only focus on funds’ performance but also our risk appetite and investment time horizon.

Special recommendation on sectoral/thematic funds are as follows:

Tata Digital India Fund Direct Growth: It invests primarily in companies related to digital technology and innovation in India. The fund has delivered average annual returns of 20.65% since inception. You may need to review it every six months or in case of any material change in the fund or industry. As of now, the fundamentals seem good, but sectoral funds come with very high risk.

ICICI Prudential Commodities Fund: It invests in equity-related securities of companies engaged in commodities and commodities-related sectors. The fund has delivered a higher return as compared with the category average, and should be reviewed every six months or in case of any material change in the industry.

..Read more

Ramalingam

Ramalingam Kalirajan  |5295 Answers  |Ask -

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

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Good evening Ramalingam Sir I am 47 years old, I have started my journey in mutual funds for the last 3 years and wanted to do continue for the next 8 years. I have 1.5 CR in different instruments like MF, NPS and PPF. Sir I am inviting 38000/month in 7 different funds. Sir I have approx 80 lacs in bank FD and wanted to put in mutual funds. Can I do lump sum in existing funds or there can be different from these funds 1 Axis small cap 2 ICICI Prudential pure equity retirement 3 HDFC retirement pure equity fund 4 SBI Contra fund 5 Quant Mid Cap fund 6 Mahindra Manulife Small cap 7 Nippon India large cap Sir please suggest me about lump sum, wheather I have to choose different funds or do in existing 7 funds
Ans: It's impressive that you've accumulated ?1.5 crore in various instruments like mutual funds, NPS, and PPF. Additionally, saving ?80 lakhs in bank FDs shows financial prudence. Your current SIP of ?38,000 per month in seven different mutual funds is a commendable strategy. Now, you’re considering investing the ?80 lakhs from FDs into mutual funds.

Evaluating Your Investment Strategy
Existing Mutual Fund Investments
Your seven mutual funds cover a diverse range of market segments. This diversification helps in spreading risk and potentially enhancing returns. These funds include small-cap, pure equity, contra, mid-cap, and large-cap categories, giving you broad exposure.

Advantages of Lump Sum Investments
Potential for Higher Returns: Investing a lump sum can lead to higher returns, especially in a rising market. Timing the market is crucial here.

Cost Efficiency: Lump sum investments incur fewer transaction costs compared to spreading investments over time.

Risks of Lump Sum Investments
Market Volatility: Lump sum investments are susceptible to market timing risk. If the market dips after your investment, you could see short-term losses.

Stress and Anxiety: A significant market downturn can cause stress and anxiety, especially with a large investment.

Considering Systematic Transfer Plan (STP)
Instead of investing the entire ?80 lakhs as a lump sum, consider a Systematic Transfer Plan (STP). Here’s why:

Reduced Market Timing Risk: STP spreads your investment over a period, reducing the impact of market volatility.

Regular Investment: STP allows regular investments from your FD to mutual funds, leveraging rupee cost averaging.

Allocating Your Investment
Reviewing Existing Funds
Assess Performance: Review the performance of your current funds. Ensure they meet your investment goals and risk tolerance.

Diversification: Ensure your existing portfolio remains diversified. Avoid over-concentration in any single market segment.

Adding New Funds
Balanced Funds: Consider adding balanced funds to your portfolio. These funds mix equity and debt, offering growth and stability.

International Funds: Adding international mutual funds can provide global exposure, reducing country-specific risk.

Professional Guidance
Engaging with a Certified Financial Planner (CFP) can optimize your investment strategy. A CFP can:

Tailored Advice: Provide advice based on your specific financial situation and goals.

Portfolio Management: Help manage and rebalance your portfolio, ensuring it aligns with market conditions and your risk tolerance.

Implementing Your Plan
Step-by-Step Approach
Emergency Fund: Ensure part of your ?80 lakhs remains in a liquid fund for emergencies.

STP from FD to Mutual Funds: Set up an STP to transfer funds from your FD to your mutual funds systematically.

Review and Adjust: Regularly review your portfolio with your CFP. Adjust investments based on performance and changing market conditions.

Conclusion
Transitioning your ?80 lakhs from FDs to mutual funds is a wise decision. Using STP to invest systematically can mitigate risks and leverage market opportunities. Diversifying further with balanced and international funds can enhance your portfolio.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Asked by Anonymous - Jul 15, 2024Hindi
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I am 45 with 7 LPA salary. I have a purchased plot. I want to move out of my current house in 2 years. Should I build a house or purchase a flat?
Ans: Your Current Situation
At 45 years old with a salary of Rs 7 lakhs per annum, you own a plot and plan to move out of your current house in 2 years.

Key Considerations
Let's evaluate whether you should build a house or purchase a flat based on several factors.

Financial Assessment
Building a House
Pros:

Customization: You can design it according to your preferences and needs.

Potential Cost Savings: Building can be cheaper per square foot compared to buying a ready-made flat, depending on the area.

Appreciation: The value of a well-built house on your own plot may appreciate more over time.

Cons:

Time-Consuming: Construction can take a long time, potentially more than 2 years.

Management: Requires constant supervision and dealing with contractors, which can be stressful.

Initial Costs: High initial outlay for construction materials and labor.

Purchasing a Flat
Pros:

Convenience: Ready to move in, no waiting period or construction hassle.

Amenities: Flats often come with amenities like security, maintenance, gym, pool, etc.

Fixed Cost: Fixed price with no unexpected expenses compared to potential construction overruns.

Cons:

Less Customization: Limited to the builder's design and layout.

Maintenance Costs: Monthly maintenance charges can be high in some apartments.

Appreciation: Flats may appreciate less compared to individual houses on plots.

Lifestyle Considerations
Building a House
Privacy: More privacy and space compared to flats.

Expansion: Easier to expand or modify in the future as per your needs.

Community: Less communal living; more suited for those who prefer privacy.

Purchasing a Flat
Community Living: Better community interaction, good for families.

Security: Enhanced security measures compared to independent houses.

Maintenance: Professional maintenance of common areas and facilities.

Long-Term Goals
Financial Goals
Investment Potential: Consider long-term appreciation potential. A well-built house may offer better returns.

Future Expenses: Think about long-term maintenance and repair costs for both options.

Personal Goals
Retirement Plans: Consider which option suits your retirement lifestyle better. Flats often offer a more carefree lifestyle with less personal responsibility for maintenance.

Family Needs: Assess the needs of your family. Flats might be more suitable for small families or those who value community amenities.

Final Insights
Recommendation
Based on your situation, I recommend assessing the following before making a decision:

Time and Stress: If you have the time and are willing to manage construction, building a house can be rewarding. If not, purchasing a flat is convenient and less stressful.

Financial Position: Ensure you have a clear budget. Building a house can have unexpected costs. Flats have fixed pricing.

Long-Term View: Consider your long-term living and investment goals. Flats offer convenience and community, while a house offers privacy and potential higher appreciation.

Ultimately, the decision depends on your personal preferences, financial readiness, and long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5295 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

Asked by Anonymous - Jul 15, 2024Hindi
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I am 40 year old. Monthly take home 4L(Standard EPF of 1800 deducted). 2 kids 8 year girl and 1 year boy. 55L in Mutual Fund 36L in PF 30L in NPS Land of current value 70L Emergency Fund 10L Health insurance 1Cr, Term Insurance 3Cr and Parental Insurance 25L 1. 56K EMI for HomeLoan (24L due) 2. 20K VPF 3. 52.5K NPS 3. 1.5L Mutual Fund 4. 40K school Fees 5. 12.5K Suknya Yojna 6. 20K debt fund 7. 60K monthly Expenses 8. 11K Gold What will be the strategy to retire in next 15 year by keeping enough money for retirement and Child Education?
Ans: Evaluating Your Current Financial Situation
You have a good income and diversified investments. Let’s analyse your current assets and liabilities to strategise for retirement and child education.

Assets Overview
Mutual Funds: Rs. 55 lakh
Provident Fund (PF): Rs. 36 lakh
National Pension System (NPS): Rs. 30 lakh
Land: Rs. 70 lakh
Emergency Fund: Rs. 10 lakh
Health Insurance: Rs. 1 crore
Term Insurance: Rs. 3 crore
Parental Insurance: Rs. 25 lakh
Liabilities Overview
Home Loan EMI: Rs. 56,000 (24 lakh due)
Monthly Expenses: Rs. 60,000
Children’s Education and Future: Significant future costs
Current Monthly Investments
Voluntary Provident Fund (VPF): Rs. 20,000
NPS: Rs. 52,500
Mutual Funds: Rs. 1,50,000
Sukanya Samriddhi Yojana: Rs. 12,500
Debt Fund: Rs. 20,000
Gold: Rs. 11,000
Retirement and Child Education Strategy
Define Your Goals
Retirement in 15 Years
Children’s Education Fund
Retirement Planning
Step 1: Calculate Retirement Corpus
Estimate your retirement expenses. Factor in inflation and life expectancy. Assume Rs. 1 lakh monthly expenses at retirement. With 6% inflation, this becomes Rs. 2.4 lakh per month in 15 years.

Step 2: Increase Contributions
NPS: Continue with Rs. 52,500. This will accumulate significant corpus.
Mutual Funds: Continue Rs. 1.5 lakh. Increase by 5-10% annually to keep pace with inflation.
Step 3: Diversify Investments
Equity Exposure: Focus on equity mutual funds for growth. They offer higher returns over long-term.
Debt Exposure: Maintain a balanced portfolio. Keep investing in debt funds for stability.
Child Education Planning
Step 1: Estimate Education Costs
Education costs are rising. Assume Rs. 50 lakh for each child’s higher education.

Step 2: Dedicated Investments
Sukanya Samriddhi Yojana: Continue Rs. 12,500 for your daughter.
Equity Mutual Funds: Allocate Rs. 50,000 monthly for both children’s education. Increase annually.
Managing Liabilities
Home Loan Repayment
Accelerate EMI: Pay an additional EMI yearly if possible. This reduces interest and tenure.
Prepay Loan: Use bonuses or increments to prepay the home loan. Aim to close it within 5-7 years.
Emergency Fund
Maintain Rs. 10 lakh for emergencies. Ensure it covers at least 6 months of expenses.

Insurance Coverage
You have adequate health, term, and parental insurance. Regularly review and adjust coverage if needed.

Gold Investments
Continue Rs. 11,000 in gold for diversification. It’s a good hedge against inflation.

Final Insights
To retire comfortably and fund your children's education:

Continue and increase current investments.
Focus on equity for long-term growth.
Maintain a balanced portfolio.
Prepay home loan to reduce liabilities.
Regularly review and adjust your financial plan with a Certified Financial Planner.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5295 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

Asked by Anonymous - Jul 14, 2024Hindi
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Sir my name is khekaho from nagaland Iam married with one son and one daughter,both me and my wife are state government employees with the monthly salary of rupees 54 thousand and 53 thousand respectively.I would like you to give us an ideas of how to secure our feature when we retired .
Ans: Name: Khekaho
Location: Nagaland
Marital Status: Married with one son and one daughter
Employment: Both state government employees
Monthly Salaries: Rs 54,000 and Rs 53,000
Financial Planning Goals
Retirement Security
Children's Education
Emergency Fund
Wealth Creation
Step-by-Step Financial Plan
1. Assess Your Current Financial Situation

Monthly Combined Income: Rs 1,07,000
Expenses: List all monthly expenses
Savings: Calculate your current savings and investments
2. Create an Emergency Fund

Amount: 6-12 months of expenses
Investment: High-interest savings account or short-term FDs
3. Children's Education Fund

Estimate Costs: Project future education costs
Investment: SIPs in diversified mutual funds or child education plans
4. Retirement Planning

Employee Provident Fund (EPF)

Contribution: Both you and your wife contribute to EPF
Benefit: Tax-free and compounding interest
Public Provident Fund (PPF)

Contribution: Invest in PPF for tax benefits
Tenure: 15 years with partial withdrawals allowed after 5 years
Mutual Funds

Diversification: Invest in a mix of equity and debt mutual funds
SIP: Start monthly SIPs to benefit from rupee cost averaging
National Pension System (NPS)

Contribution: Invest in NPS for retirement corpus
Benefit: Tax benefits under Section 80C and 80CCD
5. Insurance Planning

Life Insurance

Term Plan: Both should have a term insurance plan
Coverage: At least 10-15 times your annual income
Health Insurance

Family Floater Plan: Cover the entire family
Sum Assured: Adequate to cover medical emergencies
6. Debt Management

High-Interest Loans: Pay off any high-interest debt
Home Loans: Ensure timely payments to avoid penalties
7. Wealth Creation

Diversified Investments

Equity Mutual Funds: For long-term growth
Debt Mutual Funds: For stability and regular income
Regular Monitoring

Review Portfolio: Regularly review and adjust your investments
Rebalance: Ensure your portfolio aligns with your risk tolerance and goals
Benefits of Regular Funds Over Direct Funds
Expert Management

Regular Funds: Managed by experienced professionals
Benefit: Better risk management and returns
Convenience

Ease: Investing through Certified Financial Planners offers personalized advice
Disadvantages of Index Funds
Limited Flexibility

Tracking: Index funds strictly follow market indices
Drawback: Lack of active management to adapt to market changes
Lower Returns

Potential: Actively managed funds can outperform index funds
Final Insights
Start Early: The sooner you start, the better
Diversify: Spread investments across different asset classes
Consult a CFP: Professional advice ensures a comprehensive plan
Review Regularly: Adjust your plan as needed to stay on track
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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