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

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Sep 19, 2022

Mutual Fund Expert... more
Ankit Question by Ankit on Sep 19, 2022Hindi
Listen
Money

I'm 38 years old and have been investing since 7 years. I have accumulated 35 lakh in my MF portfolio. Presently I'm investing in following funds/ govt schemes monthly:

1. Nippon small cap- 25000

2. SBI small cap- 10000

3. Parag parekh flexi cap- 15000

4. Mirae asset emerging bluechip- 14000

5. Quant Absolute fund- 14000

6. Sukanya samridhi- 4000 

7. PPF- 40000( present corpus 60 lakh)

I intend retiring after 7 years at the age of 45. I am expecting to achieve a corpus of Rs 3 crore including both MF and PPF.

Kindly advice sir if my investments are in line or do I need to do something else.

Ans: PPF: corpus will be Rs 1 crore

SS: Corpus Rs 4 lakh

MF: Corpus will be Rs 1.45 crore

Total in next 7 years will be nearly Rs 2.5 crore.

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  |5281 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 12, 2024

Asked by Anonymous - Apr 03, 2024Hindi
Listen
Money
I am 50 working professional. Below is my MF portfolio . 1. Parag Parikh Flexi Cap Fund 2.6 lakhs + 10K SIP 2. PGIM India Midcap Opportunities Fund 1.85 L Value + 5K SIP 3. Quant ELSS Tax Saver Fund 80K 4. Axis Small Cap Fund 1.85 Lakhs Value + 5K SIP 5. Axis Gold Fund 75K Value + 5K SIP 6. Canara Robeco Bluechip Equity Fund 70K 7. Quant Multi Asset Fund 50K 8. SBI Magnum Income Fund 50K 9. ICICI Prudential Equity & Debt Fund 50K 10. Quant Active Fund 50K 11. ICICI Prudential Bluechip Fund 25K I want to build a retirement corpus of 2 crore in 10 years. I am planning to invest around 50K every month. Plus i have. surplus of 4Lakks which i want to invest in few of the MFs above. Planning to exit Canara Robeco bluechip and Axis Small cap soon. Please suggest if any changes you want me to do.
Ans: Given your goal of building a retirement corpus of 2 crores in 10 years and your current portfolio, here are some suggestions:

Increase SIP Contributions: Consider increasing your SIP amounts in high-performing funds like Parag Parikh Flexi Cap and PGIM India Midcap Opportunities Fund, which have shown good potential for long-term growth.

Review and Consolidate: Evaluate the performance of all your funds and consider consolidating your portfolio to fewer, well-performing funds to simplify management and potentially enhance returns.

Focus on Quality: Prioritize funds with strong track records, consistent performance, and experienced fund management teams. Consider adding large-cap and diversified equity funds for stability and balanced growth.

Asset Allocation: Ensure a balanced asset allocation across equity, debt, and gold funds based on your risk tolerance and investment horizon. Reallocate surplus funds strategically to maintain a diversified portfolio.

Regular Review: Monitor your portfolio regularly and make adjustments as needed based on changes in market conditions, fund performance, and your financial goals.

Consider consulting with a financial advisor for personalized advice tailored to your specific circumstances and goals.

..Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 05, 2024

Asked by Anonymous - May 04, 2024Hindi
Listen
Money
Hi, I am a 35 Year old Single Male with a net monthly salary of 1.75 lakhs per month. My accommodation is provided by the company. So my expenses are not much. I invest 90k per month in MFs. I also have additional investments of 1.5 Lakh in PPF, 50k in NPS, 1.5 Lakh in SGB. My goal is to have a Corpus of 25 Crore and retire at 50. Can you suggest anything else that I should do or am I doing alright? MY MFs are a mix of Small cap, Mid Cap and Large Cap with about 50% weight in Small Caps.
Ans: It sounds like you're on a solid financial path with your current investments and savings habits. Here are a few additional suggestions to consider as you work towards your goal of retiring with a corpus of 25 crores:

Review and Adjust Asset Allocation: Given your goal of retiring at 50, ensure your asset allocation aligns with your risk tolerance and time horizon. Consider rebalancing your portfolio periodically to maintain the desired mix of small, mid, and large-cap funds.
Emergency Fund: While your expenses are low, it's still essential to have an emergency fund to cover unexpected expenses or job loss. Aim for 6-12 months' worth of living expenses in a liquid savings account.
Explore Tax-Efficient Investments: Since you're already investing in tax-saving instruments like PPF and NPS, consider exploring other tax-efficient investment options such as ELSS (Equity Linked Savings Scheme) mutual funds or tax-free bonds to optimize your tax savings.
Regular Financial Check-ups: Schedule regular financial check-ups with a Certified Financial Planner to review your progress towards your retirement goal, adjust your investment strategy as needed, and ensure you're on track to meet your objectives.
Consider Real Estate: Real estate can be a valuable addition to your investment portfolio, providing both rental income and potential capital appreciation. However, carefully evaluate the property market and ensure it aligns with your overall investment strategy and risk tolerance.
Overall, continue with your disciplined savings and investment approach, and regularly reassess your financial plan to ensure it remains aligned with your goals and aspirations. With careful planning and prudent decision-making, you're well-positioned to achieve financial independence and retire comfortably at 50.

..Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 11, 2024

Listen
Money
I am 42 years salaried person investing in MF through SIP from 2014 current corpus is 37 Lakhs in MF. My Current SIP's amount is rs 22000 PM as follows- 1. Nippon Small cap - 2000, 2. Mahindra manulife midcap fund - 7000, Mahindra Manulife Small cap - 4000, PGIM Midcap opportunities Fund - 3000, Quant Flexicap fund - 6000. SIP increasing every year by 5% to 10% No Home loan, term insurance 55 lakhs, medi-claim 10 lakhs, PF & VPF accumulation Rs 16 lakhs. I want to create a good corpus of Rs 6 - 7crore for retirement at 58 years of age. Please suggest if any change required in investment amount or funds.
Ans: It's commendable that you've been consistently investing in mutual funds through SIPs for several years, laying a strong foundation for your retirement. Let's evaluate your current investment strategy and make adjustments to align with your retirement goal.

Your portfolio reflects a diversified mix of small-cap, mid-cap, and flexi-cap funds, which offer growth potential over the long term. However, given your goal of building a substantial corpus for retirement, we may need to reassess your asset allocation and make some adjustments.

Firstly, let's review your SIP amounts and consider increasing them gradually to accelerate wealth accumulation. Since your SIPs increase by 5% to 10% annually, this incremental growth can boost your investment corpus significantly over time.

Consider reallocating some of your SIP amounts to funds with a proven track record of consistent performance and lower volatility. While small-cap and mid-cap funds can offer higher returns, they also come with increased risk. Diversifying across large-cap funds or balanced funds can provide stability to your portfolio.

Moreover, review your overall asset allocation to ensure it remains aligned with your risk tolerance and investment objectives. While equity investments offer growth potential, it's essential to balance them with fixed-income securities like debt funds or PPF to mitigate risk.

Given your age and retirement horizon, periodically reassess your investment strategy and make necessary adjustments to stay on track towards your goal. Consider consulting with a Certified Financial Planner to develop a personalized retirement plan tailored to your needs and aspirations.

In conclusion, by fine-tuning your investment strategy, increasing your SIP amounts, and maintaining a disciplined approach, you can work towards achieving your retirement goal of building a corpus of Rs 6 - 7 crores by the age of 58.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2024

Asked by Anonymous - Jun 28, 2024Hindi
Money
Dear Sir, I am 55 years old working in private company. I am investing in following MF monthly, Nippon Small Cap - 10000, Axis Small cap - 10000, HSBC Mid Cap - 10000, ICICI Equity & Debt - 15000, Franklin India Prima fund - 15000, HDFC Balanaced Advantage - 20000. My current MF value is Rs. 1.34 Crores. Apart from this i have invested in Stocks - 36 Lac, PF - 45 Lac, NPS - 22 Lac, FD - 35 Lac. I have taken Health Insurance. I require around 40 Lac for my daughter marriage. 1. I want to know whether my MF portfolio is good to continue or any changes to be made for better return. 2. I will be retiring in 3 years. How i need manage my funds / invest further to achieve 5 Crores retirement fund.
Ans: You've done a commendable job with your investments. Balancing between mutual funds, stocks, PF, NPS, and FDs is impressive. Your dedication to securing your daughter's marriage fund and planning for retirement shows foresight and responsibility. Let's analyze and optimize your portfolio for the best possible returns.

Current Mutual Fund Portfolio

Your current mutual fund investments are diversified across various categories. This includes small cap, mid cap, equity & debt, and balanced advantage funds. Each type serves a unique purpose, balancing risk and return.

Small Cap Funds

Small cap funds have high growth potential but come with significant risk. Your investments in Nippon Small Cap and Axis Small Cap Funds are great for high returns over the long term. Given your proximity to retirement, it might be wise to reduce exposure to mitigate risk.

Mid Cap Funds

Mid cap funds like HSBC Mid Cap offer a balance between risk and return. They can provide substantial growth but are less volatile than small cap funds. Keeping a portion in mid cap is sensible, but consider reducing the allocation as you near retirement.

Equity & Debt Funds

ICICI Equity & Debt Fund provides a balanced approach, combining equity growth and debt stability. This fund type aligns well with your nearing retirement, offering moderate risk and steady returns.

Balanced Advantage Funds

HDFC Balanced Advantage Fund adjusts its allocation between equity and debt based on market conditions. This adaptability is beneficial for reducing risk while aiming for reasonable growth, making it suitable for pre-retirement phase.

Evaluation of the Portfolio

Diversification and Risk Management

Your portfolio is well-diversified across different fund types. However, considering your retirement in 3 years, a higher allocation towards stable, low-risk investments would be prudent. Shifting from high-risk small and mid cap funds to more stable options can protect your corpus.

Performance and Returns

Active funds have the potential to outperform the market. Your selection of actively managed funds is excellent. Regular monitoring and occasional rebalancing can enhance performance. Consult your Certified Financial Planner (CFP) for personalized advice.

Strategies for Future Investments
Risk Reduction

As retirement approaches, prioritize capital preservation. Gradually move funds from high-risk to low-risk investments. Consider increasing allocation in debt funds and balanced advantage funds. These provide stability and consistent returns.

Systematic Withdrawal Plan (SWP)

Implementing an SWP post-retirement ensures a steady income while keeping your investments growing. Plan withdrawals from your corpus strategically to balance between immediate needs and long-term growth.

Power of Compounding

Continue leveraging the power of compounding. Even conservative investments can grow significantly over time. Start transitioning funds early to maximize compound interest benefits while minimizing risks.

Managing Your Other Investments
Stocks

Your Rs 36 lakh in stocks should be evaluated for risk and return. Diversify across stable, high-dividend stocks to generate regular income. Consider reducing exposure to volatile stocks.

Provident Fund (PF)

Your PF of Rs 45 lakh is a substantial and safe retirement corpus. Continue contributions and leverage tax benefits. This fund provides a secure foundation for your retirement.

National Pension System (NPS)

With Rs 22 lakh in NPS, you have a tax-efficient retirement tool. Continue maximizing contributions. NPS offers a mix of equity and debt, providing growth with stability. Consider shifting allocation towards safer options as you near retirement.

Fixed Deposits (FD)

Your Rs 35 lakh in FDs ensures liquidity and safety. Continue using FDs for emergency funds and short-term needs. They offer guaranteed returns, aligning well with your low-risk strategy.

Planning for Your Daughter's Marriage
Marriage Fund Allocation

You need Rs 40 lakh for your daughter’s marriage. Keep this fund in low-risk, highly liquid investments. Short-term debt funds, FDs, or high-interest savings accounts are ideal. Avoid equity exposure for this goal due to market volatility.

Systematic Investment Plan (SIP)

If you haven't already, consider SIPs for a targeted marriage fund. SIPs in debt funds or balanced funds can help accumulate the required amount steadily. Regular contributions will build a substantial corpus by the time needed.

Achieving Your Rs 5 Crore Retirement Goal
Rebalancing Your Portfolio

Shift focus from high-risk to low-risk investments. Increase allocation in debt funds, balanced advantage funds, and other stable options. This transition should start now to align with your retirement timeline.

Increasing Contributions

Maximize your contributions to PF and NPS. Both offer tax benefits and long-term growth. Utilize any available tax-saving schemes to boost your retirement corpus.

Professional Guidance

Regularly consult your CFP. Their expertise will help you navigate market changes, optimize your portfolio, and ensure you stay on track towards your Rs 5 crore goal.

Regular Review

Conduct annual reviews of your portfolio. Adjust based on performance, market conditions, and your changing needs. Stay informed about economic trends and investment opportunities.

Final Insights
You've built a robust and diversified portfolio. Transitioning from high-risk to low-risk investments as you near retirement is crucial. Protecting your capital while ensuring steady growth will help achieve your Rs 5 crore retirement fund.

Stay disciplined with your investment strategy. Regularly consult your CFP for personalized advice. With careful planning and smart adjustments, you can secure a comfortable and financially stable retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

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

Listen
Money
Hi... I am 48 years of age. Currently in hand salary income is 140000. My total monthly savings is 56000. ie post office RD 25k which is going to mature in Jan 2025, bank RD 30k which is going to mature in Dec 2024, sip in MF 6k (started 6 months back). My total expenses is bank EMI 24k per month, other monthly expenses including children's tuition fee 55k. My investment - 2 flats worth rs. 75k, ppf 2L, insurance 10L, Equity 40k Other income - flat rent 8k monthly. Request for proper planning for investment next 12 yrs to achieve 2cr goal. Regards.. RHP
Ans: Current Financial Overview

You are 48 years old with an in-hand salary of Rs. 1,40,000 per month. Your savings and investments are as follows:

Monthly Savings: Rs. 56,000
Post Office RD: Rs. 25,000 (maturing Jan 2025)
Bank RD: Rs. 30,000 (maturing Dec 2024)
SIP in Mutual Funds: Rs. 6,000 (started 6 months back)
Your expenses include:

Bank EMI: Rs. 24,000 per month
Other Monthly Expenses: Rs. 55,000 (including children's tuition fees)
Your current investments are:

Two Flats: Worth Rs. 75 lakhs
PPF: Rs. 2 lakhs
Insurance: Rs. 10 lakhs
Equity: Rs. 40,000
You also have a rental income of Rs. 8,000 per month from one of your flats.

You aim to achieve a goal of Rs. 2 crores in the next 12 years.

Assessment of Current Investments

You have a mix of real estate, recurring deposits, insurance, and a small amount in mutual funds and equity. While real estate and RDs are safe, they may not provide the high growth needed to achieve your goal. Diversifying into other investment options is crucial.

Diversification Strategy

Mutual Funds for Growth

Increase your SIP contributions in mutual funds. Diversify across large cap, mid cap, and multi cap funds for balanced growth.
Actively managed funds can provide better returns than direct or index funds. They offer professional management and diversification.
Public Provident Fund (PPF)

Continue investing in PPF for tax-free returns. It provides long-term stability and security.
National Pension System (NPS)

Consider increasing your contributions to the NPS. It offers tax benefits and a regular pension post-retirement.
Equity Investments

Gradually increase your equity investments. Equities can provide high returns over the long term, helping you achieve your financial goals.
Debt Funds

Invest in debt funds for stability and regular income. They are less volatile than equities and provide a steady return.
Optimizing Current Savings

Post Office RD and Bank RD Maturity

Once your RDs mature, reinvest the amount in a mix of mutual funds and debt funds. This will provide higher returns and diversification.
Reviewing Real Estate Investments

While real estate can be a good investment, consider its liquidity and return potential. Diversify into more liquid and high-growth options like mutual funds and equities.
Planning for Children's Education

Education Fund

Start a separate education fund for your children. Invest in mutual funds and PPF to accumulate the required corpus.
Insurance and Risk Management

Adequate Insurance

Ensure you have adequate life and health insurance. This protects your family and investments.
Steps to Achieve Your Goal

Increase Monthly SIPs

After your RDs mature, redirect those amounts to mutual funds. Increase your SIP contributions to Rs. 30,000-40,000 per month.
Rebalance Portfolio

Regularly review and rebalance your portfolio with a Certified Financial Planner. This ensures alignment with your financial goals and market conditions.
Emergency Fund

Maintain an emergency fund of 6-12 months of expenses. This provides a safety net for unexpected situations.
Final Insights

Your current investments are a good start, but diversification is key. Increase your SIP contributions, invest in PPF and NPS, and consider more equity and debt funds. Regularly review your portfolio with a Certified Financial Planner. This balanced approach will help you achieve your goal of Rs. 2 crores in 12 years.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

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

Asked by Anonymous - Jul 17, 2024Hindi
Listen
Money
Thankyou for the indepth analysis and encouragement.. im planning to do my sip's in a manner of increasing investment by 15 percent every year .. is it better to do a sip on a mutual fund or begin a tailor-made education policy for an amount of 1 crore for my childs education, within the next 15 years sir? If yes, plz do mention the name of funds, i will do more research
Ans: You have a noble goal to secure your child's education. Increasing SIP investments by 15% annually is a wise approach.

Systematic Investment Plan (SIP)
SIPs in mutual funds can offer substantial growth over time.

Benefits of SIPs
Compounding: Regular investments compound over time. This leads to exponential growth.

Rupee Cost Averaging: Investing a fixed amount regularly reduces the impact of market volatility.

Flexibility: You can start with a small amount and increase it. This matches your plan to increase investments by 15% yearly.

Liquidity: Mutual funds offer easy liquidity. You can withdraw funds when needed for your child's education.

Professional Management: Actively managed funds have professional fund managers. They aim to outperform the market.

Disadvantages of SIPs
Market Risk: SIPs are subject to market risks. However, long-term investments typically smooth out these risks.
Education Policy
Education policies are often insurance products combined with investment.

Benefits of Education Policy
Guaranteed Returns: They offer guaranteed returns. This provides a sense of security.

Insurance Coverage: They often include insurance. This can be beneficial in case of unforeseen circumstances.

Disadvantages of Education Policy
Lower Returns: Returns are usually lower compared to mutual funds. This affects the overall growth of your investment.

Less Flexibility: These policies are less flexible. Early withdrawal may incur penalties.

High Costs: They come with higher costs and charges. This reduces the net returns.

Why SIPs are Better
Higher Returns: Mutual funds, especially equity funds, offer higher returns. This helps in achieving the 1 crore goal faster.

Flexibility and Liquidity: SIPs provide flexibility in investments. They also offer easy liquidity when needed.

Professional Management: Actively managed funds can outperform market indices. This leads to better growth.

Investing Through a Certified Financial Planner
Professional Guidance: A CFP can guide you to choose the best mutual funds. They provide valuable insights and manage your investments.

Regular Funds: Investing through a CFP offers advisory services. Direct funds lack this professional guidance.

Disadvantages of Direct Funds
Lack of Advice: Direct funds do not offer advisory services. This can lead to mismanagement of funds.

Higher Effort: Managing direct funds requires more effort and knowledge. It may not be suitable for everyone.

Avoid Index Funds
Disadvantages: Index funds simply mimic the market. They lack professional management.

Lower Returns: Actively managed funds often outperform index funds. Fund managers adjust for market conditions.

Final Insights
Increasing SIP investments by 15% annually is a wise decision. SIPs in mutual funds offer higher returns, flexibility, and professional management. Education policies, while secure, provide lower returns and less flexibility. Consult a Certified Financial Planner for personalized advice. They can help create a tailored plan to achieve your goal of 1 crore for your child's education.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

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

Asked by Anonymous - Jul 18, 2024Hindi
Listen
Money
Hello Gurus, I need one investment strategy. I am 31 years old. Having 1 kid and home maker wife. I am continuously investing 1.5LPA in PPF. In EPF I put 1.44LPA . I have SIPs 17k per month in blue chip, debt fund, equity one. 12.5k RD is also there. I also invested regularly in SGB. I am having 50 unit SGB. I am not having any loan right now. Planning to take a term plan shortly for securing future of my family and kid. Having 2 inherited flat. Having good mediclaim of my whole family and parents. Kindly let me know if i am in right way! Having wish of investing in real estate soon. Pls let me know.
Ans: Let's assess your current investments and provide a strategy to ensure you are on the right track.

Current Financial Overview
Age: 31 years

Family: Homemaker wife and one child

PPF Contribution: Rs 1.5 lakh per annum

EPF Contribution: Rs 1.44 lakh per annum

SIPs: Rs 17,000 per month (blue chip, debt fund, equity fund)

Recurring Deposit (RD): Rs 12,500 per month

SGB Investment: 50 units

Loans: None

Insurance: Planning to take a term plan

Mediclaim: Good coverage for family and parents

Real Estate: Two inherited flats

Assessment of Current Investments
1. PPF and EPF:

These provide stable, long-term, tax-free returns.

Continue maxing out contributions to these accounts.

2. SIPs in Mutual Funds:

Diversified across blue chip, debt, and equity funds.

Ensures balanced risk and potential for growth.

3. Recurring Deposit:

Provides stable and guaranteed returns.

Good for short to medium-term goals.

4. Sovereign Gold Bonds (SGB):

Provides safety and steady returns.

Acts as a hedge against inflation.

Recommendations
1. Continue Current Investments:

Maintain contributions to PPF and EPF.

Keep SIPs in mutual funds for diversified growth.

Continue investing in RD and SGB for stability and security.

2. Term Plan:

A term plan is essential for securing your family's future.

Ensure coverage is adequate to meet future financial needs.

3. Increase SIP Amounts:

As income grows, increase SIP contributions.

This enhances the growth potential of your investments.

4. Avoid Real Estate:

Real estate involves high costs and liquidity issues.

Focus on liquid and high-growth investments instead.

Additional Investment Strategies
1. Emergency Fund:

Maintain an emergency fund equal to 6 months of expenses.

This provides a financial cushion against unforeseen events.

2. Child's Education and Marriage:

Start an SIP in a diversified equity mutual fund.

This will cater to long-term goals like education and marriage.

3. Retirement Planning:

Consider starting an NPS account.

It offers additional tax benefits and supports retirement goals.

4. Health Insurance:

Ensure your mediclaim policy covers all critical health needs.

Review the policy regularly for adequate coverage.

Risk Management
1. Diversification:

Ensure your portfolio is diversified across asset classes.

This reduces risk and improves potential returns.

2. Regular Review:

Review your investment portfolio every 6 months.

Adjust based on performance and changing financial goals.

Tax Planning
1. Tax-Saving Investments:

Utilize Section 80C to its fullest with PPF, EPF, and ELSS.

Explore other tax-saving instruments like NPS and health insurance.

2. Efficient Withdrawal Strategy:

Plan withdrawals from investments to minimize tax liability.
Final Insights
You are on the right track with diversified investments and no debt. Focus on increasing SIP contributions, maintaining emergency funds, and securing adequate insurance. Avoid real estate and continue with your current strategy for steady growth and financial security.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

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

Asked by Anonymous - Jul 17, 2024Hindi
Listen
Money
Hi Mam, I'm 43+, Monthly take home is around 3.20 Lacs, Currently i have invested in Shares (Current Portfolio is around 1.75 Crs). EMI is around 1.1 lacs P/m (Home loan 1 - 50K per month till 2037, 30K car loan till 2027 (Planning to close this year by paying 13 lacs, please suggest if this option of preclosure is good or EMI is good, will be paying this amount by selling some shares), 30k per month of home 2 till 2040., Recently i have started investing in SIP 1 lacs P/M, and balance 1.20 lacs goes in house, kids education expense. Have EPF balance of 40 lacs as on date. As mentioned above recently i have started investing in SIP (From Oct 2023 onwards), which is at the tune of 1 lacs per month. SIP are Franklin India Prima Fund regular Plan - Growth - 25K, ICICI Prudential Small cap fund retail plan G - 25K, Kotak Multicap fund regular plan growth - 15K, DSP Blackrock mid cap fund regular plan growth - 10 K, and Parag Parikh Flexi Cap fund - Regular plan growth - 25 K. Will increase the SIP investment by 10% every year going forward. Sir, My question is with current SIP investment will i be able to generate 10~12 Cr corpus fund by retirement (Assuming that i will be in Job and working for next 15 years). Current Share portfolio is for long term investment only (assuming i get 12~15% of return every year). Please note : will be spending around 1~1.5 cr for my Son education in engineering from 2027 to 2031, 50% will be spend from savings and balance 50% from education loan.
Ans: Financial Snapshot
Age: 43+
Monthly Take Home Salary: Rs 3.20 lakhs
Current Investment in Shares: Rs 1.75 crores
EMI Payments: Rs 1.1 lakhs per month
Home Loan 1: Rs 50,000 till 2037
Car Loan: Rs 30,000 till 2027 (planning to close this year)
Home Loan 2: Rs 30,000 till 2040
Monthly SIP Investment: Rs 1 lakh (started Oct 2023)
Monthly Household and Education Expenses: Rs 1.20 lakhs
EPF Balance: Rs 40 lakhs
Expected Expenses for Son's Education: Rs 1-1.5 crores (2027-2031)
Assessing Current Investments
Share Portfolio:

Value: Rs 1.75 crores
Assumed Annual Return: 12-15%
Long-term growth potential is strong. Continue holding for compounding benefits.
SIP Investments:

Started in Oct 2023
Current SIP of Rs 1 lakh per month in a diversified mix of funds
Analyzing Loan Preclosure Option
Car Loan Preclosure:

Current EMI: Rs 30,000 per month till 2027
Preclosure Amount: Rs 13 lakhs (consider selling some shares)
Pros of Preclosure:

Reduces monthly EMI burden
Saves interest costs
Cons of Preclosure:

Selling shares might impact portfolio growth
Evaluate if share sale aligns with long-term goals
Recommendation:

If interest rate on car loan is high, preclosure can be beneficial.
Ensure share sale does not significantly affect long-term portfolio growth.
Evaluating SIP Investments
Current SIP Allocation:

Franklin India Prima Fund: Rs 25,000
ICICI Prudential Small Cap Fund: Rs 25,000
Kotak Multicap Fund: Rs 15,000
DSP Blackrock Mid Cap Fund: Rs 10,000
Parag Parikh Flexi Cap Fund: Rs 25,000
Plan to Increase SIP by 10% Annually:

This is a good strategy. It helps to combat inflation and increase your corpus over time.
Active vs. Index Funds:

Advantages of Actively Managed Funds:
Potential to outperform market
Professional management
Disadvantages of Index Funds:
Passive tracking of the market
No chance to outperform during market rallies
Projected Retirement Corpus
Assumptions:

Monthly SIP: Rs 1 lakh (increasing by 10% annually)
Investment Horizon: 15 years
Average Annual Return: 12-15%
Projection:

Estimated Corpus at Retirement:
With a 12% annual return: Approximately Rs 10-12 crores
With a 15% annual return: Potentially higher than Rs 12 crores
Financial Planning for Son's Education
Expected Expenses:

Rs 1-1.5 crores over 4 years (2027-2031)
Plan to use 50% savings and 50% education loan
Recommendation:

Start a dedicated education fund
Consider balanced or hybrid funds for stability and growth
Ensure this fund aligns with the investment horizon and risk tolerance
Final Insights
Your current investment strategy is strong.
Increasing SIP contributions annually is a prudent move.
Evaluate the car loan preclosure option based on interest rates and long-term goals.
Maintain a diversified portfolio to balance risk and growth.
Regularly review your investments with a Certified Financial Planner to stay on track.
By following these steps, you should be well-positioned to achieve a corpus of Rs 10-12 crores by retirement. Additionally, planning for your son's education expenses with a dedicated fund will ensure financial stability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

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

Listen
Money
How to invest money in mutual fund and stock market
Ans: Investing in mutual funds and the stock market can be rewarding. Here’s a step-by-step guide to help you get started.

Understanding Mutual Funds
Mutual funds pool money from many investors. Professional managers invest this money in stocks, bonds, or other assets.

Benefits of Mutual Funds
Diversification: Reduces risk by spreading investments.

Professional Management: Experts manage your money.

Flexibility: Various types to suit different goals.

Steps to Invest in Mutual Funds
Define Your Goals: Know your financial goals and time frame.

Assess Risk Tolerance: Understand your risk capacity.

Choose the Right Fund: Based on your goals and risk tolerance.

KYC Compliance: Complete Know Your Customer (KYC) process.

Open an Account: With a mutual fund company or a certified financial planner.

Start SIP: Set up a Systematic Investment Plan (SIP) for regular investments.

Monitor and Review: Regularly check and adjust your portfolio.

Types of Mutual Funds
Equity Funds: Invest in stocks. Suitable for long-term goals.

Debt Funds: Invest in bonds. Suitable for short-term goals.

Hybrid Funds: Combine stocks and bonds. Balanced approach.

ELSS Funds: Equity Linked Savings Scheme. Offers tax benefits.

Understanding Stock Market Investments
Investing in stocks means buying shares of companies. You become a partial owner of the company.

Benefits of Stock Market Investments
High Returns: Potential for significant gains.

Ownership: You own a part of the company.

Liquidity: Easy to buy and sell shares.

Steps to Invest in the Stock Market
Educate Yourself: Learn about the stock market and how it works.

Open a Demat and Trading Account: With a brokerage firm.

Research Stocks: Study companies, their performance, and future prospects.

Start Small: Begin with a small investment to understand the process.

Diversify: Don’t put all your money in one stock.

Regular Monitoring: Keep track of your investments.

Stay Informed: Follow market news and trends.

Disadvantages of Direct Stocks Over Mutual Funds
High Risk: Individual stocks are more volatile and can lead to significant losses.

Time-Consuming: Requires constant research and monitoring.

Lack of Diversification: Investing in a few stocks doesn’t spread risk effectively.

Emotional Decisions: Investors may make impulsive decisions based on market swings.

Requires Expertise: Understanding the market and picking the right stocks needs knowledge.

Tips for Successful Investing
Long-Term Focus: Avoid short-term market fluctuations.

Consistent Investing: Regular investments yield better results.

Avoid Herd Mentality: Don’t follow the crowd blindly.

Stay Informed: Keep learning and adapting to market changes.

Seek Professional Advice: A certified financial planner can provide valuable guidance.

Final Insights
Investing in mutual funds and the stock market requires knowledge, discipline, and regular monitoring. By following these steps and staying informed, you can make sound investment decisions and achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5281 Answers  |Ask -

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

Listen
Money
Im 32 year old working with a companty. I ve started two sips ( 5000 each from May 2024) both in Small Cap ( Nippon Small Cap and Tata Ethical Fund . Is this correct way to do inveor i need diversification.
Ans: Current Investment Overview

You are 32 years old and working with a company. You have started two SIPs of Rs. 5,000 each, both in small cap funds: Nippon Small Cap and Tata Ethical Fund, since May 2024. It's great that you have taken the initiative to invest regularly through SIPs.

Need for Diversification

Investing in small cap funds can offer high returns but also comes with higher risk. It's important to diversify your investments to reduce risk and achieve more balanced growth. Here's why and how you can diversify:

1. Diversification Benefits

Risk Reduction: Diversification helps spread risk across different asset classes.

Balanced Growth: Different types of funds perform well at different times. Diversification ensures you benefit from various market conditions.

Stability: A diversified portfolio provides more stability and consistent returns over the long term.

2. Suggested Diversification Strategy

To achieve diversification, consider adding funds from different categories:

Large Cap Funds

Why: Large cap funds invest in well-established companies. They offer more stability and lower risk compared to small cap funds.

Suggested Allocation: Allocate around 30-40% of your monthly investment to large cap funds.

Mid Cap Funds

Why: Mid cap funds invest in medium-sized companies. They provide a balance between the high growth potential of small caps and the stability of large caps.

Suggested Allocation: Allocate around 20-30% of your monthly investment to mid cap funds.

Multi Cap or Flexi Cap Funds

Why: These funds invest across large, mid, and small cap stocks, providing diversification within the equity segment.

Suggested Allocation: Allocate around 20-30% of your monthly investment to multi cap or flexi cap funds.

Debt Funds

Why: Debt funds offer stability and regular income. They reduce the overall risk of your portfolio.

Suggested Allocation: Allocate around 10-20% of your monthly investment to debt funds.

3. Reviewing Your Portfolio

Regularly review and rebalance your portfolio to ensure it aligns with your financial goals and market conditions. Consulting a Certified Financial Planner (CFP) can help you optimize your investment strategy.

Final Insights

Your current investment in small cap funds shows a willingness to take on higher risk for potential high returns. However, it's important to diversify your portfolio to achieve balanced growth and reduce risk. Add large cap, mid cap, multi cap, and debt funds to your investment mix. This will provide stability and help you achieve your financial goals more effectively.

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.

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