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

Sanjeev Govila  | Answer  |Ask -

Financial Planner - Answered on Feb 05, 2024

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
Sanjoy Question by Sanjoy on Jan 29, 2024Hindi
Listen
Money

Is mutual fund doubling the amount within 3.5 years tenure?

Ans: Mutual funds can never guarantee to double your money within a specific period, they are subject to market fluctuations, their returns can vary depending on the type of fund, the underlying investments, and market conditions.
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  |9777 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 02, 2024

Listen
Money
How the mutual funds given more interest rate
Ans: Mutual funds do not offer interest rates like traditional fixed deposits. Instead, mutual funds generate returns through capital appreciation and/or income distribution. Here's how mutual funds can potentially provide higher returns:

Capital Appreciation: Mutual funds invest in a diversified portfolio of securities such as stocks, bonds, and other financial instruments. When the value of these underlying assets increases over time, the mutual fund's net asset value (NAV) also rises, leading to capital appreciation for investors.
Dividend Income: Some mutual funds, particularly equity funds, may distribute dividends to investors from the profits earned by the underlying investments. Similarly, debt funds may generate income through interest payments received from the bonds or fixed-income securities held in the portfolio.
Compounding: Mutual funds offer the benefit of compounding, where returns earned on investments are reinvested to generate additional returns over time. Compounding can significantly boost the growth of investments, especially over long investment horizons.
Professional Management: Mutual funds are managed by experienced fund managers who make investment decisions based on thorough research and analysis. Their expertise and active management can potentially generate higher returns compared to individual investors managing their portfolios.
Diversification: Mutual funds pool investments from multiple investors and diversify across various asset classes, sectors, and securities. Diversification helps spread risk and reduce the impact of volatility on investment returns, potentially enhancing overall returns.
It's important to note that mutual fund returns are subject to market risks, and there are no guarantees of returns or capital protection. Investors should carefully consider their investment objectives, risk tolerance, and investment horizon before investing in mutual funds. Consulting with a Certified Financial Planner can provide personalized advice and help investors make informed decisions aligned with their financial goals.

..Read more

Ramalingam

Ramalingam Kalirajan  |9777 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 17, 2024

Listen
Money
Dear Sir, I am investing 10000 per month in Quanta mid cap & small cap direct plan mutual funds. My goal is to double the money in 5 years that I have invested. Am I in the right direction please suggest.
Ans: Investing in Quant Mid Cap & Small Cap Direct Plan mutual funds can be a good option for potentially achieving high growth, but there are some things to consider regarding doubling your money in 5 years:

Historical Performance: While Quant Mid Cap Fund has a 5-year XIRR of around 29.42% (as of August 2023), past performance doesn't guarantee future results.
Market Volatility: Mid and small cap stocks are generally more volatile than large cap stocks, meaning their prices can fluctuate significantly.
Risk and Time Horizon: Doubling your money in 5 years is an aggressive goal. Typically, higher potential returns come with higher risk.
Here's a breakdown to consider:

Positive: You've chosen direct plans, which have lower expense ratios compared to regular plans.
Risk-Return: Mid and small cap stocks have the potential for high growth but also carry a higher risk of loss.
Here are some suggestions:

Time Horizon: 5 years might be a short timeframe for doubling your money, especially considering market volatility. Consider a longer investment horizon to ride out market fluctuations.
Diversification: While Quant Funds can be a good choice, consider diversifying your portfolio across different asset classes (equity large cap, debt, etc.) to manage risk.
Financial Advisor: A financial advisor can assess your risk tolerance and create a personalized investment plan aligned with your goals.
Overall, investing in Quant Mid Cap & Small Cap Direct Plan mutual funds can be a good way to grow your wealth, but it's essential to be realistic about your expectations and manage risk. Doubling your money in 5 years is an aggressive target, and there's no guarantee it will happen. Consider a longer timeframe and potentially diversify your portfolio for a more balanced approach.

..Read more

Ramalingam

Ramalingam Kalirajan  |9777 Answers  |Ask -

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

Money
Dear Sir, I am investing in Mutual Fund since 1 Year & current Value is around 4.50 Lakh. through a MF advisor in Several Canara Roveco Flexi Cao Fund - Growth, Nippon India Large cap Fund - Growth. Earlier i dont have any knowledge of MFs now i try to collect information , now i came to know return after 10 Years in Growth is very less as compare to Direct, it it wise that i took i surrinder all my MF and re invest by own in Direct MF.
Ans: It's great that you’ve started your journey into mutual funds and have accumulated Rs. 4.5 lakh in just one year. Your initiative to gather more knowledge about mutual funds is admirable. It’s crucial to make informed decisions about your investments to achieve your long-term financial goals. You’ve raised an important concern about the difference between growth in regular and direct mutual funds. Let’s explore this issue and see if switching to direct funds is the best option for you.

Understanding the Difference Between Regular and Direct Funds
Expense Ratio: Regular funds have a slightly higher expense ratio compared to direct funds because they include a commission paid to the distributor or mutual fund advisor. In contrast, direct funds do not have this additional cost, which might make them seem more attractive.

Returns Comparison: The lower expense ratio of direct funds typically results in slightly higher returns over the long term. However, the difference may not be as significant as you might think, especially when you consider the benefits of professional advice.

Role of the Certified Financial Planner (CFP): Investing in regular funds through a Certified Financial Planner or a capable mutual fund distributor offers more than just fund selection. You receive tailored advice, portfolio management, and continuous monitoring, which can add significant value to your investment journey.

Importance of Professional Guidance
Expertise and Experience: A Certified Financial Planner (CFP) has the expertise to choose the right mix of funds that align with your financial goals, risk tolerance, and investment horizon. They can help you avoid common mistakes that many investors make when trying to manage their own investments.

Behavioral Guidance: Investing can be an emotional process. Market volatility may tempt you to make impulsive decisions. A CFP provides the necessary guidance to stay on track and make rational decisions, ensuring your investments grow steadily.

Portfolio Rebalancing: A CFP actively monitors your portfolio and makes necessary adjustments to keep it aligned with your goals. This includes rebalancing your portfolio when certain investments perform better or worse than expected.

Tax Planning: A CFP can help you make tax-efficient investment decisions. They provide advice on how to minimize your tax liability, which could outweigh the slight cost savings from choosing direct funds.

Disadvantages of Switching to Direct Funds
Time and Effort: Managing your own investments requires significant time and effort. You’ll need to research funds, monitor performance, and make adjustments regularly. This can be overwhelming, especially if you’re not a full-time investor.

Potential for Mistakes: Without professional guidance, the risk of making costly mistakes increases. You might choose funds that don’t align with your risk tolerance or financial goals, leading to suboptimal returns.

Lack of Personalized Advice: Direct funds do not come with the personalized advice that a CFP offers. You may miss out on strategic insights that could enhance your portfolio’s performance.

Evaluating Your Current Portfolio
Growth Potential: The funds you’ve invested in have a growth focus, which is ideal for wealth creation over the long term. It’s important to assess if they align with your risk tolerance and financial goals.

Performance Analysis: Review the performance of your funds regularly. Even with a lower expense ratio, direct funds might not always outperform regular funds if not chosen wisely. Your CFP should help you assess whether your current funds are performing well.

Long-Term Perspective: It’s important to keep a long-term perspective. The difference in returns between regular and direct funds may not be significant enough to justify the switch, especially when you factor in the benefits of professional guidance.

The Value of Staying Invested with a CFP
Holistic Financial Planning: A CFP offers a 360-degree approach to your financial planning, beyond just selecting mutual funds. They consider your overall financial situation, including insurance, retirement planning, and tax strategies.

Continuous Support: Investing is not a one-time activity. A CFP provides continuous support and advice as your financial situation evolves. This ensures that your investments remain aligned with your changing goals and circumstances.

Trust and Accountability: A trustworthy CFP acts in your best interest, providing peace of mind that your investments are being managed professionally and ethically. This trust is crucial for long-term financial success.

When to Consider Switching to Direct Funds
High Investment Knowledge: If you have significant knowledge and experience in investing, and you’re confident in managing your portfolio independently, you might consider switching to direct funds.

Sufficient Time and Discipline: Managing direct funds requires discipline and a commitment to regular monitoring. If you have the time and dedication to manage your investments, direct funds might be suitable.

Cost Sensitivity: If you’re highly cost-sensitive and believe the slight difference in expense ratio will significantly impact your returns, switching to direct funds could be considered. However, ensure that the benefits of professional advice are not overlooked.

Final Insights
Stay the Course with Professional Guidance: For most investors, the benefits of staying invested through regular funds with the support of a Certified Financial Planner outweigh the slightly higher costs. The value of expert advice, strategic planning, and behavioral guidance cannot be overstated.

Regular Monitoring and Reviews: Continue to monitor your portfolio’s performance regularly with your CFP. Ensure that your investments align with your financial goals and risk tolerance.

Focus on Long-Term Goals: Keep your focus on long-term wealth creation. The slight difference in returns between regular and direct funds is often negligible in the grand scheme of things, especially when professional advice is factored in.

Avoid Impulsive Decisions: Switching funds should not be done impulsively. Carefully consider the long-term implications and seek advice from your CFP before making any changes.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9777 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 05, 2025

Asked by Anonymous - May 31, 2025
Money
In mutual Fund to tops up every year What is your advice for that Top up in same mutual fund which is performing good or to start new fund?
Ans: You are already thinking like a long-term wealth creator.

Topping up your mutual fund investment yearly is a very smart habit.

Let us understand how to do it properly from a 360-degree view.

Why Top-Ups Matter in Long-Term Wealth Creation
Top-ups mean increasing your investments every year.

This helps beat inflation and grow your wealth faster.

Even Rs. 1,000 extra per year makes a big difference in the long run.

You can top up through SIP step-up or fresh lumpsum.

Most investors miss this small trick and lose compounding power.

Two Choices: Top-Up Existing or Start New Fund?
You mainly have two options:

Add top-up to your existing mutual fund scheme

Start investment in a new scheme

Let’s assess both carefully, with pros and cons.

When to Top-Up the Existing Mutual Fund
This works best if your current fund is doing well.

Fund is consistent across 3 to 5 years performance?

Fund follows same investment strategy as before?

Fund manager and portfolio quality remains steady?

You are investing in regular plan with Certified Financial Planner?

If yes, you can confidently top-up the same fund.

Benefits of Same Fund Top-Up:

Easy to manage and track fewer funds

Portfolio remains focused and less cluttered

Simple for reviewing performance and rebalancing

No overlapping in stocks or sectors

But this strategy fails if fund starts underperforming later.

When to Start a New Mutual Fund
Sometimes adding a new fund is better than topping existing one.

If existing fund’s size becomes too large compared to total portfolio

If you want to add a different style (growth, value, momentum)

If fund manager changes or fund is no longer consistent

If your Certified Financial Planner suggests portfolio diversification

In such cases, new fund with a distinct strategy is better.

Benefits of Starting a New Fund:

Brings in fresh style and new stock selections

Diversifies your risk if one fund underperforms

Gives you exposure to different market caps or sectors

More flexibility during rebalancing at retirement phase

Keep Fund Count Limited and Purposeful
Too many funds create confusion.

Ideally 4 to 6 funds are enough for most investors

Avoid adding new fund every year without purpose

Review fund performance annually with your Certified Financial Planner

Replace or add only when portfolio gap is seen

Role of Your Financial Goals in Top-Up Decision
You should top-up based on your financial goals, not just fund performance.

Are you investing for retirement? Education? Buying car?

Allocate top-ups to goal-based buckets, not just one fund

This ensures each goal grows with planned contribution

Never mix short-term and long-term funds in same top-up decision

Why You Must Avoid Direct Plans for Top-Up
Many investors are attracted to direct plans to save cost.

But it’s not worth it. Here’s why:

No professional guidance

No regular review of performance

Emotional decisions during market corrections

You may chase recent performers and increase risk unknowingly

No support for rebalancing or tax planning later

Instead, invest in regular plans through a Certified Financial Planner.

You get advice, accountability, and personalised rebalancing support.

Why Index Funds are Not Suitable for Top-Ups
You may wonder if top-up in index fund is safer.

The truth is — it is not better.

Index funds blindly follow market, without strategy

They include both good and bad companies automatically

Index funds fall equally with the market — no risk control

There is no human intervention to shift allocation during market stress

In bear markets, index funds recover slowly compared to active funds

For a long-term investor doing top-ups, active funds are better.

They provide risk-managed returns with intelligent decisions.

Your Top-Up Strategy Must Include Annual Review
Don’t top-up blindly every year

Once a year, sit with your Certified Financial Planner

Review fund performance, expense ratio, portfolio overlap

Check if asset allocation is aligned to your risk level

Rebalance if needed and then apply top-up accordingly

If any fund underperforms, switch future top-ups to better option

SIP Step-Up vs Lumpsum Top-Up
You can top-up in two ways.

SIP Step-Up:

You increase your SIP amount by fixed percentage yearly

Simple and automatic

Works well with salaried income

Lumpsum Top-Up:

When you get bonus or gift or extra income

Add to existing fund only if fund is still performing

Use Systematic Transfer Plan (STP) if market is volatile

Both options are good. Use whichever suits your cash flow.

Avoid Emotional Decisions in Top-Up Timing
Don’t top-up only when markets are rising

Don’t stop top-up when markets fall

These are emotional mistakes that reduce long-term gains

Instead, follow fixed top-up schedule yearly

Trust your Certified Financial Planner for ongoing guidance

Consistency matters more than timing

Tax Implications for Top-Up Redemptions
You may wonder how future redemptions are taxed.

New tax rules are clear:

Equity mutual funds:
LTCG above Rs. 1.25 lakh taxed at 12.5%
STCG taxed at 20%

Debt mutual funds:
Both LTCG and STCG taxed as per income slab

Keep top-up records clear for tax filing

Your Certified Financial Planner will guide SWP and withdrawal plan later

Example Scenarios of Smart Top-Up Choices
Scenario 1:
You have a good flexi cap fund running 4 years, consistently top-ranked.

You want to increase SIP by Rs. 2,000 yearly.

You can add to the same fund if all fundamentals are intact.

Scenario 2:
Your mid cap fund shows sudden high risk and ranking drop.

Instead of topping up same, start new aggressive hybrid or another mid cap fund.

Certified Financial Planner can help with proper replacement.

Scenario 3:
You already have three equity funds and one hybrid fund.

Don’t keep adding new funds every year.

Top-up best among the existing, or reallocate from weak fund.

What Not to Do While Topping Up
Don’t look only at past 1-year return

Don’t chase new fund offers or themes every year

Don’t take suggestions from friends or YouTube channels

Don’t mix retirement fund with any short-term needs

Don’t use direct funds even for top-ups

Don’t use index funds for goal-based investing

Finally
Top-up is a powerful tool if used with planning and discipline.

Adding blindly to the same fund may not always work.

New funds help only when there is a portfolio gap or risk imbalance.

Your goal, fund strategy, and performance should guide the top-up.

Stay away from index and direct funds. Stick to regular plans via CFP.

Review your portfolio every year before topping up.

Top-ups done smartly will help you reach your goals faster and safer.

Your investments should not just grow — they should grow wisely.

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

..Read more

Latest Questions
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