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Sanjeev Govila  |441 Answers  |Ask -

Financial Planner - Answered on Feb 10, 2024

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to armed forces officers 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
Amit Question by Amit on Feb 01, 2024Translate

Hi, I am investing 3.5 lacs every month in small and mid cap SIP for the last 2 years. My son will be going to study abroad. Should I fund his education from the MF or should I take a student loan and not touch the MF?

Ans: Deciding between using your mutual fund investments or a student loan for your son's abroad education requires more details like estimated education cost, living expenses, travel expenses, etc.

By considering your inputs, here are some pros and cons:-

Using portfolio for education:-

Pros:- As you have been investing in a mutual fund for the last 2 years, assume that your portfolio is generating potentially higher returns compared to loan interest rates, and in the long-term horizon (5-7 years) your portfolio becomes stabilized and the compounding helps to creates a good corpus for your future goals.

Cons:- If you withdraw the portfolio now, it will affect the compounding and the generated capital gain is taxable & it may also incur the exit load. In the short-term horizon, fluctuating markets might impact the value of the portfolio, potentially falling short of education costs.

Take Education Loan:-

Pros:- Lower interest rates are set off with the portfolio returns and it also provides suitable repayment options. It offers benefits like tax deductions.

Cons:- Add the financial burden on you, if you repay the loan and if your son repays the loan it becomes a debt for him after the completion of education but it also creates a sense of responsibility for your son and he experiences how to manage the finances.

We have explained you to the pros and cons of taking an education loan or using a portfolio for the same. To decide the same please calculate the estimated cost of education and also consider the portfolio return and education loan interest rate.
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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Head, Rank MF - Answered on May 14, 2021

I have a 12 year old child and want to invest 1 lac per year till 2026 for higher education. What is best MF to buy with this time frame and considering I would need the money in 2026?
Fund Name Last price date Last price Total cost Current Value % of Total Total Return Return % pa Remarks
ICICI Pru US Bluechip Eqt Dir-G 2021-02-25 ₹ 42.05 ₹ 321,485.55 ₹ 356,905.85 18.6 ₹ 36,445.70 29.1 Bulk switch over from ICICI Multi asset fund in which I had SIP since 2017 of Rs 1,60,000/- on 28 Aug 20 & Rs 75,000 on 04 Sep 20. SIP @1000 per week from 28 Aug 20. Also switch in from ICICI gold Rs 50,000/- on 04 Dec 20
Motilal Oswal Nasdaq 100 FOF Dir-G 2021-02-25 ₹ 20.35 ₹ 84,346.33 ₹ 95,999.57 5 ₹ 11,653.24 32.3 Started with bulk investment of Rs 50,000/- on 22 Jul 20 & SIP @1250/- weekly since Aug 2020. I am also holding 100 sahres at buying average of 812/- in the ETF of this fund in my demat acct
Kotak Gold Dir-G 2021-02-25 ₹ 19.91 ₹ 75,996.44 ₹ 71,531.64 3.73 -₹ 4,464.81 -11.5 Started with bulk investment of Rs 50,000/- on 10 Jul 20 & SIP @3000 divided into tranches of 1000 on three days a month. Using this as Hedge for a longer period
Axis Bluechip Dir-G 2021-02-25 ₹ 43.60 ₹ 109,087.41 ₹ 143,205.60 7.46 ₹ 41,208.95 40.2 SIP @4000 per month in the fund since 2015 and encashed in 2109 but SIP continuing. SIP divided into three tranches of 1000, 2000 & 1000 on 01st, 10th & 20th of month respectively
SBI Focused Eqt Dir-G 2021-02-25 ₹ 204.70 ₹ 289,178.57 ₹ 377,724.67 19.69 ₹ 95,560.86 54.3 SIP @3000 per month in the fund since 2019 and. SIP revised to 5000 per month since Mar 2020 SIP divided into four tranches of Rs 1250/- on 1st, 8th, 15th & 22nd of every month. Done bulk investment by switch from SBI Blue Chip Direct growth of Rs 1,44,844 (accumlated thru SIP of Rs 4000/- per month from Jun 2017 to Jul 2020) on 13 Jul 20 & SBI MAgnum Gilt of Rs 50,000/- on 15 Sep 20
Kotak Emrgng Eqt Dir-G 2021-02-25 ₹ 62.45 ₹ 81,727.75 ₹ 95,071.60 4.96 ₹ 13,343.87 113.5 Started on 07 Dec 2020 by switching in 65000/- from Kotak Gilt. SIP @Rs 1000/- on 04th, 11th, 17th, 24th and 30th of the month
Parag Parikh Flexi Cap Dir-G 2021-02-25 ₹ 39.73 ₹ 29,999.50 ₹ 33,768.49 1.76 ₹ 3,768.99 75.8 Started on 29 Oct 2020 with initial investment of Rs 10,000 wef 29 Oct 2020 & SIP of Rs 5000/- divided into four tranches of Rs 1250/- on 10th, 15th, 20th & 25th of every month
DSP Eqt & Bond Dir-G 2021-02-25 ₹ 219.73 ₹ 14,000.00 ₹ 14,849.95 0.77 ₹ 849.95 54 Started in Dec 2020 with a SIP of Rs 4000/- divided into four tranches of Rs 1000/- each on 01st, 07th, 14th & 25th of every month
Mutual Funds     ₹ 1,005,821.55 ₹ 1,189,057.37 61.98 ₹ 198,366.75 40.1  

I have attached my protfolio of MFs. Though I have been investing in MFs since 2005, I have been redeeming the same many times like in 2010 for house and in 2014 & 2017 for personal trips abroad with my family.

The present state of my MFs is given above. My horizon is for long and hence my questions are as follows:

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Moneywize   |58 Answers  |Ask -

Financial Planner - Answered on Feb 24, 2024

Asked by Anonymous - Feb 23, 2024Translate
What are balanced advantage funds and would you recommend how I should go about investing in such funds?
Ans: Balanced Advantage Funds are a type of mutual fund that dynamically manages the allocation between equity and debt instruments based on market conditions. These funds aim to provide investors with a balance between growth (through equity exposure) and stability (through debt exposure). The allocation between equity and debt is adjusted by fund managers based on various factors such as market valuations, interest rates, and economic indicators.

Here's a breakdown of the key features and considerations for investing in Balanced Advantage Funds:

1. Dynamic Asset Allocation: These funds have the flexibility to shift allocation between equity and debt depending on market conditions. When equity markets are expensive or overvalued, the fund manager may reduce equity exposure and increase allocation to debt instruments, and vice versa.

2. Risk Management: Balanced Advantage Funds tend to offer lower volatility compared to pure equity funds due to their ability to switch between asset classes based on market conditions. This can potentially reduce downside risk during market downturns.

3. Goal-based Investing: They can be suitable for investors with medium to long-term investment horizons who seek a balance between capital appreciation and capital preservation. These funds are often used for goals like retirement planning or wealth creation with a moderate risk profile.

4. Professional Management: Investors benefit from the expertise of professional fund managers who actively manage the asset allocation and investment decisions based on thorough research and analysis.

5. Tax Implications: From a taxation perspective, gains from equity investments held for more than one year are taxed at a lower rate (long-term capital gains tax), whereas gains from debt investments held for more than three years are taxed as per the investor's income tax slab. Balanced Advantage Funds may offer tax efficiency due to their equity exposure.

6. Expense Ratio: Investors should consider the expense ratio of the fund, which represents the annual fees charged by the fund house for managing the fund. Lower expense ratios can enhance returns over the long term.

As for whether you should invest in Balanced Advantage Funds, it depends on your investment objectives, risk tolerance, and financial goals.

If you're seeking a balanced approach with the potential for higher returns than pure debt funds but with lower volatility compared to pure equity funds, then these funds could be suitable for you. However, it's essential to consult with a financial advisor who can assess your individual circumstances and recommend the most appropriate investment strategy.

If you decide to invest in Balanced Advantage Funds, you can do so through various platforms such as mutual fund distributors, online investment platforms, or directly through the fund house's website. Here's a general guide on how to invest:

1. Research: Understand the different Balanced Advantage Funds available in the market, their investment objectives, performance track record, and expense ratios.

2. Select a Fund: Choose a fund that aligns with your investment goals, risk tolerance, and time horizon.

3. KYC Compliance: Complete the Know Your Customer (KYC) process as required by regulatory guidelines. This typically involves providing identity and address proof documents.

4. Investment Process: Decide on the mode of investment, whether lump sum or systematic investment plan (SIP), based on your convenience and investment strategy.

5. Online Platform or Distributor: If investing through an online platform, create an account and follow the instructions to invest in your chosen Balanced Advantage Fund. If using a mutual fund distributor, approach them with your investment decision, and they will assist you with the investment process.

6. Monitor and Review: Keep track of your investments periodically and review your portfolio to ensure it remains aligned with your financial goals.

Remember that all investments carry some level of risk, including the potential loss of capital. Diversification and a long-term investment approach are generally recommended to mitigate risk and achieve your financial objectives.

Anu Krishna  |725 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Feb 24, 2024

Asked by Anonymous - Feb 21, 2024Translate
Good Morning, We are married for almost 27 years and at various stages of my wife like, beginning days when Girls had dream of her happy married life beginning, honeymoon, pregnancy, fostering the child, mid-age crisis and now Menopause I have been very unfair & sometime very cruel to my wife. I am tryint to please her in my possible ways but whenever I am planning something exciting & pleasurable for her it turn out to be flop show & nightmare. I want her to be happy but don't know why it gets spoiled due to one or other reason. Despite of all this she is always giving me chance and prepare herself for new beginning. But now I fear & feel gradually I will become a big liability on her, health wise as I am diabetic and even after taking high dose of medicines it doesn't get controlled. I am worried that though the beginning was not good our end should be Peaceful & graceful. Need your guidance
Ans: Dear Anonymous,
No point revisiting what has already happened. It seems like your wife wants a new beginning; then why not actually plan on how you want your life together to be from now on? What are the things that you have missed out on earlier, bring it all back and slowly start experiencing what life could be living in that harmony...
As for diabetes, getting the right medicine and taking it in the right dosage is important to see a change. Also, exercise, attempt to keep stress levels low and eat right...these help in keeping your blood sugar levels low...
Don't talk about the END when there is a NEW beginning in sight...

All the best!
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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