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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Sep 20, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
narendra Question by narendra on Aug 30, 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 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.
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  |3744 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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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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