Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on May 26, 2021

Mutual Fund Expert... more
HrushikeshPatnaik Question by HrushikeshPatnaik on May 26, 2021Hindi
Listen
Money

I have been investing in MF since last 5 years with a diversified portfolio.

For faster growth, I am interested in topping-up SIPs in good performing funds, but understood that I can't top-up SIPs in already running funds. This has to be by cancelling current SIPs and starting a fresh with top-up instruction. I am not comfortable with this idea as I want to create a long term portfolio and starting afresh will impact growth.

Alternate way is to invest lump sums every month through Additional purchase request which I am OK with. 

Wondering if this is ok if I keep adding additional sum every month through Lump sums along with SIPs in the same funds and in the same folio? Please advice.

Ans: There are options available for top up with AMCs, and it happens automatically without any need to cancel existing schemes and start afresh.

However most of the digital platforms don’t have this option, therefore, if you are comfortable, you may do additional purchases per month in the SIP schemes as lumpsum.

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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7887 Answers  |Ask -

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

Asked by Anonymous - Sep 24, 2024Hindi
Money
Hello, Greetings of the day!. My MF Portfolio include the following funds for monthly SIP. Axis Midcap Fund Rs 2500, HDFC Flexi cap Fund Rs 2500, Kotak Emerging Equity Fund Rs 3500, Mirae Asset Large and Midcap Fund Rs 2500, Nippon India Small Cap Fund Rs 4000, Parag Parikh Flexi Cap Fund Rs 3500. I would like to add another Rs 4000 to my monthly SIP. Should I consider adding another Small Cap Fund or increase my SIP in existing funds. I started SIPs 4 years ago and I plan to continue investing for another 5-6 years. Please advise as my goal is to have a corpus target of 50 lacs.
Ans: You have a well-diversified portfolio with exposure across various market segments – large-cap, mid-cap, flexi-cap, and small-cap funds. It's great that you started 4 years ago and are continuing your SIPs with a clear investment horizon of 5-6 more years.

Your current portfolio includes:

Axis Midcap Fund: Rs 2500 (mid-cap exposure)

HDFC Flexi Cap Fund: Rs 2500 (flexible across market capitalisations)

Kotak Emerging Equity Fund: Rs 3500 (mid-cap exposure)

Mirae Asset Large and Midcap Fund: Rs 2500 (blend of large and mid-cap stocks)

Nippon India Small Cap Fund: Rs 4000 (small-cap exposure)

Parag Parikh Flexi Cap Fund: Rs 3500 (flexi-cap exposure, some international exposure)

With your goal of accumulating Rs 50 lakhs in the next 5-6 years, it's important to optimise your investment strategy to balance both risk and return.

Evaluating Your Portfolio and Future Steps

Let’s break down your portfolio and assess whether you need to add another small-cap fund or increase your SIPs in existing funds.

1. Exposure to Small Cap and Mid Cap Funds
You already have a good chunk of your portfolio allocated to small and mid-cap funds:

Nippon India Small Cap Fund: Rs 4000
Axis Midcap Fund: Rs 2500
Kotak Emerging Equity Fund: Rs 3500
Small-cap and mid-cap funds offer the potential for higher growth, but they also come with greater volatility. Adding another small-cap fund might increase your risk level. Since you are already contributing Rs 4000 per month to a small-cap fund, it's better to avoid overloading this category.

Instead of adding another small-cap fund, you can consolidate and strengthen your position by increasing the SIP in existing funds that have a proven track record.

2. Increase SIP in Existing Funds
Your portfolio already has a diversified mix, and rather than complicating your investments with more funds, consider increasing your SIP in the existing funds. Since you have a mix of mid-cap, large-cap, and flexi-cap funds, this could balance your risk and returns more effectively.

Here's how you could increase your SIP amounts:

HDFC Flexi Cap Fund: Rs 2500 → You can consider increasing this. Flexi-cap funds offer flexibility to the fund manager to switch between large, mid, and small caps based on market conditions, which helps in reducing risk while ensuring growth.

Mirae Asset Large and Midcap Fund: Rs 2500 → This fund gives you exposure to both large-cap stability and mid-cap growth. Increasing your SIP here can give you a balanced mix of returns and reduce volatility.

Parag Parikh Flexi Cap Fund: Rs 3500 → Known for its value-based investing approach, this fund also includes some international exposure. You can increase your SIP in this fund for geographical diversification.

3. Risk Management and Portfolio Stability
With a time horizon of 5-6 years, it’s crucial to strike the right balance between risk and return. Mid-cap and small-cap funds can be volatile, especially over shorter periods. Flexi-cap and large-cap funds tend to be more stable, especially during market downturns.

Given the allocation you already have towards small-cap and mid-cap funds, adding another small-cap fund could increase the overall volatility of your portfolio. Since your goal is to build a Rs 50 lakh corpus, it's important to focus on stability as you approach the latter part of your investment horizon.

4. Consider the Option of Hybrid Funds or Balanced Advantage Funds
If you are open to adding a new category, you might want to consider hybrid or balanced advantage funds instead of another small-cap fund. These funds offer a balance of equity and debt, which can provide stability, especially when markets become volatile.

Hybrid funds automatically adjust the equity and debt exposure based on market conditions. This could act as a buffer and reduce the risk of sharp losses, particularly if market corrections happen during your investment tenure.

5. Setting Realistic Expectations for Corpus Target
Accumulating Rs 50 lakhs in 5-6 years is a good target, but keep in mind that the returns from equity-based funds are market-dependent. Based on your investment horizon and risk appetite, your current SIPs and potential increases should bring you closer to your goal.

However, market performance can fluctuate, and there is no guaranteed return. It's advisable to regularly review your portfolio, at least once a year, and make adjustments if needed.

6. Review Asset Allocation as You Approach Retirement
Since you have 5-6 more years of investment, consider gradually shifting a portion of your portfolio to lower-risk instruments as you get closer to your target date. This will protect your corpus from sudden market crashes or corrections as you approach your withdrawal phase.

Final Insights

Here’s a recommended strategy:

Avoid adding another small-cap fund as you already have enough exposure to this category.

Increase your SIPs in the HDFC Flexi Cap Fund, Mirae Asset Large and Midcap Fund, and Parag Parikh Flexi Cap Fund. These funds provide balanced growth opportunities with moderate risk.

If you want to add a new fund, consider hybrid or balanced advantage funds to introduce some stability and reduce portfolio risk.

Review your portfolio annually and adjust the allocation to ensure you stay on track towards your Rs 50 lakh goal.

Closer to the end of your investment horizon, consider shifting some funds to debt or safer options to lock in the gains and avoid any market downturn risks.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Ramalingam

Ramalingam Kalirajan  |7887 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 15, 2024

Listen
Money
Dear Sir, Thank you for your detailed analysis on the mutual fund portfolio and your support is highly appreciated. As per your suggestion I have attempted to move for a SIP top up plan but most of the mutual fund companies do not permit the top up for the existing mutual funds. Usually the SIP top up plan is available while registering a new SIP. Either you need to invest in lumpsum or start a new SIP in the same mutual fund folio. Can you please suggest on how to move forward in such a scenario for SIP top up plan for the existing mutual funds? Additionally, please let me know if I intent to invest in lumpsum or start a new SIP in the same mutual fund folio (say after 3 years with the planning of having a top up plan) would it have any impact on the existing NAV units?
Ans: Thank you for your kind words.

In your case, you're right that many mutual fund companies only allow the SIP top-up option during the initial registration. To move forward, you can:

Start a new SIP: You can begin a fresh SIP in the same fund with the top-up option for future investments. This will not impact your existing investments.

Invest lumpsum: You can always invest lumpsum in the same folio. It won’t affect the NAV of your existing units, as the new units will be purchased at the current NAV.

I recommend reaching out to your Mutual Fund Distributor (MFD) for personalized guidance. They can help set this up seamlessly and advise on any future changes.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |7887 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 07, 2025

Money
I am 47 years old and currently working in software, while my wife is employed with BSNL. Together, we have accumulated around ₹3 crore and are considering retirement. My wife is willing to continue working for another five years, but due to the pressure from my job, I am thinking of retiring now. We have a 14-year-old son, and I am happy to say that we have no outstanding loans. Additionally, we have health insurance coverage of ₹15 lakh, as well as personal and term insurance ₹1 crore. Below are the details of our savings: PPF: ₹32,65,920 FD: ₹20,60,820 Stocks, Mutual Funds & Company Stocks: ₹72,73,750 EPF: ₹69,98,400 Gold: ₹10,60,900 ICICI Pru: ₹15,14,240 Real Estate: ₹31,21,200 LIC: ₹21,63,200 HDFC ERGO: ₹3,30,750 Cash: ₹5,20,200 My Gratuity: ₹7,28,280 Wife Gratuity : ₹4,16,160 Given these savings, could you please advise if our corpus will be sufficient for retirement? Or would you recommend that I continue working for a few more years? I feel like I am ready to retire, but I need your guidance.
Ans: Your financial planning is already strong. You have a well-diversified portfolio, no liabilities, and a supportive spouse who is willing to work for five more years. This puts you in a comfortable position to consider early retirement. However, we need to assess whether your current corpus can sustain your retirement needs for the next several decades.

Assessing Your Current Financial Position
Your Age: 47 years
Wife’s Age: Not mentioned, but assuming similar age
Son’s Age: 14 years
Total Corpus: Around Rs. 3 crore
Health Insurance: Rs. 15 lakh coverage
Life Insurance: Rs. 1 crore term insurance
Wife’s Job Stability: Will continue for five more years
No Outstanding Loans: Financially stress-free situation
Your financial discipline is strong. However, early retirement requires careful planning to ensure long-term financial security.

Breakdown of Your Assets and Their Role in Retirement
1. Liquid and Fixed Income Assets
PPF: Rs. 32.65 lakh
Fixed Deposits: Rs. 20.60 lakh
EPF: Rs. 69.98 lakh
Cash: Rs. 5.20 lakh
These funds provide stability but have limited growth potential. They can help with short-term needs but should not be over-relied upon for long-term wealth creation.

2. Market-Linked Investments
Stocks, Mutual Funds & Company Stocks: Rs. 72.73 lakh
These investments can generate high long-term returns. However, market volatility can impact short-term liquidity. A proper withdrawal strategy is essential.

3. Precious Metals and Insurance Policies
Gold: Rs. 10.60 lakh (Good for diversification but should not be considered for regular income)
ICICI Pru: Rs. 15.14 lakh (If it is a ULIP or endowment plan, consider exiting)
LIC Policy: Rs. 21.63 lakh (Check surrender value and shift to better options if it’s a traditional plan)
HDFC ERGO: Rs. 3.30 lakh (Assuming this is a general insurance policy, it is not an investment asset)
4. Real Estate Holdings
Real Estate: Rs. 31.21 lakh
Real estate is an illiquid asset. It should not be relied upon for regular retirement income unless it is rental property generating passive cash flow.

5. Retirement Benefits
Your Gratuity: Rs. 7.28 lakh
Wife’s Gratuity: Rs. 4.16 lakh
These funds will be received at retirement and can act as a financial cushion.

Retirement Feasibility Analysis
1. Expected Expenses in Retirement
Your current expenses need to be evaluated. Retirement expenses may include:

Household expenses
Medical costs
Child’s education
Lifestyle expenses
Travel and leisure
Inflation will erode purchasing power. A corpus that looks sufficient today may not last 30+ years without proper planning.

Major future expenses:

Son’s higher education: Can range from Rs. 30-80 lakh depending on domestic or international education.
Medical expenses: As you age, medical costs will rise.
2. Income Sources Post-Retirement
Your wife’s salary for five more years provides financial support.
Your investments need to generate passive income.
Health insurance is in place but may need enhancement.
Life insurance (term plan) is for dependents, not for investment.
Key Action Points for a Secure Retirement
1. Decide Whether to Retire Now or Work a Few More Years
If you retire now:

You must rely on investments to cover expenses.
You need a withdrawal strategy to sustain a 30+ year retirement.
You must ensure your portfolio can beat inflation.
If you work for a few more years:

You can build a bigger corpus.
You can cover your son’s higher education expenses comfortably.
You can retire with more financial security.
2. Restructure Investments for Growth and Stability
Exit underperforming insurance policies. LIC, ICICI Pru, and any endowment or ULIP plans should be surrendered, and funds should be reinvested in mutual funds.
Enhance your equity exposure. Keep a mix of large-cap, mid-cap, and hybrid funds for steady growth.
Increase debt exposure selectively. Use short-duration debt funds or bonds to generate stable returns.
Create a systematic withdrawal plan. This ensures a steady cash flow during retirement.
3. Build an Emergency and Health Fund
Keep at least two years’ expenses in a liquid fund. This helps manage any immediate financial needs.
Increase health insurance beyond Rs. 15 lakh. Medical inflation is high. Consider adding a super top-up plan.
4. Plan for Child’s Education
Keep a dedicated fund for your son’s education. A mix of mutual funds and fixed-income assets is ideal.
Ensure adequate coverage. If something happens to you, your son’s future should be secure.
5. Tax-Efficient Withdrawal Planning
Mutual fund capital gains taxation:
LTCG above Rs. 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
Debt fund taxation:
Gains are taxed as per your income slab.
PPF and EPF withdrawals are tax-free. These should be used strategically.
Finally
Retiring now is possible, but you must have a strong withdrawal plan.
If you work for a few more years, your retirement will be financially safer.
Reallocate low-return assets into high-growth investments.
Ensure medical and emergency funds are sufficient.
Plan your withdrawals tax-efficiently.
If you feel mentally ready to retire, you can do so with a clear financial strategy. However, working for a few more years will provide greater long-term stability.

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x