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Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 22, 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
Kunal Question by Kunal on May 22, 2024Hindi
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Hi sir , I am investing in ICICI prudential india opportunities fund direct growth (sip 3000 pm) & Edelweiss mid cap fund regular growth ( sip 3000 pm) how much corpus should i expect in 5 years

Ans: You have made a commendable decision by investing through Systematic Investment Plans (SIPs) in mutual funds. Investing in ICICI Prudential India Opportunities Fund Direct Growth and Edelweiss Mid Cap Fund Regular Growth reflects a good blend of growth-oriented funds. Let’s analyze how much corpus you can expect in five years and how to optimize your investment strategy.

Understanding Your Current Investments
ICICI Prudential India Opportunities Fund
This fund focuses on capital appreciation by investing in opportunities across sectors and themes. It is a diversified equity fund with potential for high returns over the long term.

Edelweiss Mid Cap Fund
Edelweiss Mid Cap Fund invests in mid-sized companies with high growth potential. Mid-cap funds generally offer higher returns but come with higher volatility compared to large-cap funds.

SIP Contributions and Expected Returns
SIP Details
ICICI Prudential India Opportunities Fund: ?3,000 per month
Edelweiss Mid Cap Fund: ?3,000 per month
Total SIP Investment: ?6,000 per month
Estimating Returns
Mutual fund returns are subject to market risks and cannot be predicted with absolute certainty. However, historical data and market trends can help in estimating potential returns. For simplicity, we will assume an annualized return rate.

Historical Performance and Return Expectations
ICICI Prudential India Opportunities Fund: Historical returns have ranged between 10-15% per annum.
Edelweiss Mid Cap Fund: Historical returns have typically ranged between 12-18% per annum.
Projected Corpus in 5 Years
Calculation Approach
Using a SIP calculator or a financial formula, we can estimate the future value of your SIP investments based on different return rates.

Expected Corpus
ICICI Prudential India Opportunities Fund: Assuming a 12% annual return, the corpus after 5 years could be around ?2.1 to ?2.2 lakhs.
Edelweiss Mid Cap Fund: Assuming a 15% annual return, the corpus after 5 years could be around ?2.3 to ?2.5 lakhs.
Combining both, your total expected corpus could range between ?4.4 to ?4.7 lakhs.

Investment Strategy and Tips
Diversification
While your current investments are well-chosen, consider further diversifying across different fund categories to balance risk and return.

Long-Term Horizon
Equity mutual funds perform better over the long term. If possible, extend your investment horizon beyond five years to maximize returns.

Regular Review
Periodically review your portfolio to ensure it aligns with your financial goals. Adjust your SIP amounts or switch funds if necessary.

Advantages and Disadvantages of Your Fund Choices
Actively Managed Funds
Benefits
Professional Management: Expert fund managers make informed decisions.
Higher Return Potential: Potential for higher returns through active fund management.
Drawbacks
Higher Fees: Actively managed funds have higher expense ratios.
Market Risks: Returns are subject to market volatility.
Comparing Direct and Regular Plans
Direct Plans
Lower Expense Ratios: Lower fees lead to higher returns.
Direct Management: Suitable for informed investors who manage their investments actively.
Regular Plans
Advisor Support: Financial advisors help in managing investments.
Higher Costs: Higher expense ratios due to advisor commissions.
Recommendations for Future Investments
Consider Large-Cap Funds
Large-cap funds provide stability and steady growth, making them suitable for balancing risk in your portfolio.

Explore Balanced or Hybrid Funds
Balanced funds invest in both equity and debt instruments, offering moderate risk with stable returns.

Tax Saving Funds
Equity Linked Savings Schemes (ELSS) provide tax benefits under Section 80C and are a good investment for tax planning and growth.

Conclusion
Your disciplined approach to SIP investments in growth-oriented funds is commendable. By continuing your investments, diversifying your portfolio, and maintaining a long-term perspective, you can achieve your financial goals. Always remember to review your investments periodically and make adjustments as needed.

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.
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Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

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Hello. I have a SIP of Rs 58,000 per month across large, flexi, mid and small caps whose value is now Rs 16.5 lakhs. I intend to continue investing the same amount of Rs 58,000 per month for the next 15 years. Assuming a return of 10% , how much corpus can I expect to build at the end of the 15th year? Thank you
Ans: Embarking on a journey of consistent investing, much like planting a tree, requires patience, commitment, and foresight. Your disciplined approach of investing Rs 58,000 per month across various equity categories is commendable and lays a strong foundation for your financial future.

Assuming an average annual return of 10%, which is a realistic expectation for equity investments over the long term, let's envision the potential growth of your investment. The power of compounding, often likened to a snowball rolling down a hill, gathers momentum over time, amplifying your returns.

Over a 15-year horizon, with a monthly investment of Rs 58,000 and an assumed annual return of 10%, you can expect to build a substantial corpus. While the exact amount can vary due to market fluctuations, approximately, you could potentially accumulate a corpus of around Rs 2.5 crores by the end of the 15th year.

Remember, while these projections offer a glimpse into the future, the journey of investing is filled with twists and turns. Regularly reviewing and adjusting your investment strategy with a Certified Financial Planner can help navigate the path ahead, ensuring you stay on course towards achieving your financial goals. Keep nurturing your investment tree with care and patience, and watch it flourish over time.

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Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

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Dear sir, This is Capt. Samir Kukreja. I have started investing 35k per month from this month in SIP format (monthly) 1) DSP-Global innovation FOF-Reg fund -G -3000 Sip 2)WHITEOAK flexi cap reg fund- 3000 SIP CANARA REBECCO-3000 SIP 3) HDFC Business fund- 200000 LUMPSUM(one time) 4)HDFC top 30 fund - 3000 SIP 5)Aditya Birla frontline equity fund - 3000 SIP 6)DSP small cap fund- 5000 7)HDFC small cap fund- 5000 8)Merai asset large cap fund-5000 9)ICICI prudential Blue chip fund-5000 All of the above are regular growth plans. Kindly advise as to what would be my corpus after 10-12 yrs from now
Ans: Captain Kukreja, your commitment to investing is commendable! Estimating the corpus after 10-12 years requires considering various factors like market performance, fund performance, and consistency of investments. However, with your diversified portfolio and regular investments, you're on the right track towards building a substantial corpus.

To get a more accurate estimate, consider the historical performance of your selected funds, the expected rate of return, and the compounding effect over time. Additionally, review your investment strategy periodically and make adjustments as needed to stay aligned with your financial goals.

Consulting with a Certified Financial Planner can provide personalized projections based on your investment portfolio and risk tolerance. They can help optimize your investment strategy to maximize returns and achieve your long-term financial objectives. Keep up the disciplined investing, and your efforts will likely yield significant results over time.

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Moneywize

Moneywize   |124 Answers  |Ask -

Financial Planner - Answered on Apr 16, 2024

Asked by Anonymous - Apr 14, 2024Hindi
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1. I have a SIP of Rs 75,000 per month across ICICI/ India Opportunities Fund, ICICI/ Value Discovery Fund, ICICI / Transporation & Logistics Fund, Axis Flexi Cap Fund, Canara Robeco Emerging Equities, Aditya Birla SL Focused Equity Fund(G) and HDFC Mid-Cap Opportunities Fund(G). I want to continue investing Rs 75k per month for the next 10 years. Assuming an average return of 8-12%, how much corpus will I be able to build by 2034?
Ans: It is difficult to predict the exact corpus amount you will accumulate by 2034 due to the following reasons:

• Market Fluctuations: Equity mutual funds invest in stocks, and the stock market fluctuates over time. This means that the actual returns you will get can be higher or lower than the estimated range of 8-12%.
• Fund Performance: The performance of each mutual fund you have chosen can vary. Some funds may outperform the average market return, while others may underperform.

However, I can provide you with an estimated range of corpus amounts based on your SIP amount, investment period, and expected return rate. Here's how you can calculate it:

SIP Calculator: You can use an SIP calculator available online or provided by your mutual fund provider. These calculators take into account your monthly investment amount, investment tenure, and expected return rate to estimate the maturity amount.

Manual Calculation (Simplified):

• Total Investment: Multiply your monthly SIP amount (Rs 75,000) by the number of months you will invest (10 years * 12 months/year) = Rs 9,000,000
• CAGR (Compound Annual Growth Rate): This is the average annual return you expect on your investment. Since you expect a range of 8-12%, consider different CAGRs within this range (e.g., 8%, 10%, 12%)
• Future Value Formula: Use the Future Value (FV) formula to calculate the estimated corpus amount for each CAGR. You can find the FV formula online or in finance textbooks.

Example:

Let's say you calculate the future value for a CAGR of 10% using the FV formula:

FV = P * [(1 + r)^n - 1 ] / r

Where:

• FV = Future Value
• P = Monthly Investment (Rs 75,000) * Investment Tenure (120 months) = Rs 9,000,000
• r = Expected Return Rate (as a decimal) = 10% / 100 = 0.1
• n = Number of compounding periods (monthly in this case) = 120 months

Estimated Corpus with 10% CAGR:

FV = Rs 9,000,000 * [(1 + 0.1)^120 - 1 ] / 0.1 ≈ Rs 69,531,106

Repeat the FV calculation for other CAGR values (8% and 12%) to get a range of possible corpus amounts.

Important Note: These are just estimates, and the actual corpus amount you will get may be different.

Here are some additional points to consider:

• Diversification: You have chosen a good mix of funds across different categories (large-cap, mid-cap, flexi-cap, and sectoral). This helps diversify your investment and potentially reduce risk.
• Review your SIPs: Periodically review the performance of your mutual funds and adjust your SIP allocation if necessary.

I hope this helps!

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Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

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

Asked by Anonymous - May 20, 2024Hindi
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Hello sir, I'm investing in quant small cap fund(5000 pm) and Aditya Birla Sun life PSU equity(10000pm), how much corpus should I expect after 2 or 3 years.
Ans: Assessing Potential Corpus Growth in 2-3 Years
Understanding Your Investment Strategy
It's great to see your commitment to investing and building wealth for your future. Let's analyze the potential corpus growth based on your current investments.

Compliments on Your Investment Initiative
Your proactive approach to investing is commendable. With careful planning and disciplined execution, you can achieve your financial goals effectively.

Analyzing Investment Horizon and Portfolio
Investment Horizon:

You're targeting a corpus growth within 2-3 years, indicating a short to medium-term investment horizon.
Short-term goals typically require a more conservative investment approach to mitigate risk.
Investment Allocation:

Currently, you're investing in two funds: Quant Small Cap Fund and Aditya Birla Sun Life PSU Equity.
These funds cater to different segments of the market, providing diversification.
Evaluating Potential Corpus Growth
Quant Small Cap Fund:

Small-cap funds are known for their potential for high returns but also carry higher risk.
Given the short investment horizon, anticipate moderate to high fluctuations in returns.
Aditya Birla Sun Life PSU Equity:

PSU equity funds primarily invest in stocks of public sector enterprises, offering stability but moderate growth potential.
Expect relatively lower volatility compared to small-cap funds.
Factors Influencing Corpus Growth
Market Performance:

Equity markets' performance significantly impacts the growth of your investment.
Economic conditions, corporate earnings, and geopolitical factors influence market movements.
Fund Performance:

Past performance of the selected funds provides insight but doesn't guarantee future returns.
Monitor fund performance regularly to assess its alignment with your goals.
Expected Corpus Growth Range
Quant Small Cap Fund:

Considering the high-risk nature of small-cap funds, anticipate a potential growth range of 10-15% annually.
Over 2-3 years, this could translate to a cumulative growth of 20-45%.
Aditya Birla Sun Life PSU Equity:

PSU equity funds typically offer more stability with potential growth in the range of 8-12% annually.
Over 2-3 years, expect a cumulative growth of approximately 16-36%.
Conclusion and Recommendation
Given the investment horizon of 2-3 years, it's crucial to balance risk and return expectations. While small-cap funds offer higher growth potential, they also come with increased volatility. PSU equity funds, on the other hand, provide stability but moderate growth.

Considering your risk tolerance and investment objectives, a combination of both funds can provide a balanced approach to corpus growth. Regularly review your portfolio's performance and adjust your investment strategy as needed to stay on track towards your financial goals.

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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