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Nikunj

Nikunj Saraf  | Answer  |Ask -

Mutual Funds Expert - Answered on Oct 21, 2022

Nikunj Saraf has more than five years of experience in financial markets and offers advice about mutual funds. He is vice president at Choice Wealth, a financial institution that offers broking, insurance, loans and government advisory services. Saraf, who is a member of the Institute Of Chartered Accountants of India, has a strong base in financial markets and wealth management.... more
Rohan Question by Rohan on Oct 21, 2022Hindi
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Myself Male/ Married (3yr old son) / Age 34

I have no liabilities or loans. My Monthly in hand salary is INR 90k. I am investing a monthly sip of 17k & can add another 3K Sip in the Midcap Category (Kindly suggest I have Axis Mid cap in mind).

Can invest for another 15 years (as son turns 18 years); Target of 1.5 Cr to 2.0 Cr. Yearly increment of SIP 20%.

I am an moderate risk taker in nature & my MF portfolio:

Total Value: ₹5,53,146

Invested: ₹4,35,985

Current Return: ₹ 1,17,161 13.91% (XIRR)

Mirae Asset Emerging Bluechip: (Large & Midcap) /SIP / 5000

Mirae Asset Hybrid Equity Fund: (Aggressive Hybrid) /SIP / 4000

Axis Bluechip:  (LARGECAP) /SIP / 3000

UTI Flexi Cap Fund: (FLEXICAP) /SIP / 5000

Ans: Hi Rohan Das. Considering your requirements and risk appetite, your portfolio is well-positioned. Since you have already invested in Axis Bluechip and AMC diversification is also essential, I recommend investing in schemes other than Axis Mid Cap Fund.

The amount of your SIP can be increased up to 25k based on your child's educational goals.

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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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Aug 11, 2021

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Below is my portfolio. Would highly appreciate if you can suggest if it is good or any changes required? Total current investment in SIP is Rs 12,000 (Which now I want to make it Rs 15K) kindly advise a good additional SIP for investing 3K monthly. Also let me know if the MF in lump sum are good? Or any changes required. I am now 45 years of age and my total savings as of date is Rs 13 Lacs only. Kindly advise how much more investment would I have to make to collect a good amount for my son's education and retirement - I have 2 son's aged 12 and 8. My current salary is Rs 1.5 Lacs and wife is also working with a salary of 30 K. Also I keep breaking SIP and lumpsum in between for emergency use. Let me know if that will affect my long terms plans of collecting funds SIPs: NAME OF MUTUAL FUND AMT INVESTED PER MONTH - (LONG TERM) Axis Focused 25 - Growth - RS - 2,OOO /- ICICI Prudential Focused Equity - Growth RS - 2,OOO /- HDFC Top 100 - Growth RS - 2,OOO /- Kotak Standard Multicap Fund - Growth RS - 2,OOO /- L&T Midcap - Growth RS - 2,OOO /- Motilal Oswal Multicap 35 - Growth RS - 2,OOO /- LUMPSUM NAME OF MUTUAL FUND AMT INVESTED LUMPSUM - (LONG TERM) DSP Focus - Growth RS - 1 LAC (INVESTED IN APRIL 2016) ICICI Pru Long Term Eq Fund ( Tax Sav) - Growth RS - 1 LAC (INVESTED IN APRIL 2016) Kotak Bluechip Fund - Growth RS - 1 LAC (INVESTED IN APRIL 2016) Nippon India DYNAMIC BOND FUND - Growth Plan RS - 1 LAC (INVESTED IN APRIL 2016) Mirae Asset Focused Fund - Growth RS - 50K (INVESTED IN AUG 2019) Mirae Asset Midcap Fund - Growth RS - 25K (INVESTED IN AUG 2019)
Ans: Prudent approach is to have the family covered for medical and life with pure insurance product.

Post that, create a corpus for emergency fund that should be 6 month of monthly expenses.

Only post that investment is recommended.

Depending upon your cash flows, mode of investment can be SIPs or lumpsums; however, SIPs are recommended.

Existing funds are okay; for further investment Axis ESG Equity Fund – Growth or UTI Flexi Cap fund – Growth can be considered

..Read more

Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

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

Asked by Anonymous - Jun 18, 2024Hindi
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Hello Sir!! I am a 38 yrs old govt servant. My monthly in hand income is 1.2 lakhs. My MF investments (all direct growth option) through SIPs are as follows: 1. ?10000/- in SBI multi asset allocation fund (for short term goals) 2. ?5000/- in ICICI prudential fund (long term goal) 3. ?5000/- in HDFC index fund (long term goal) 4. ?3000/- in HDFC hybrid equity fund (long term goal) Kindly advise me if I can continue with the current allocation or if I need to make some changes in my SIP portfolio. Also, I want to add ?20000/- in my monthly SIPs for long term goals bringing my total monthly investment to ?45000/- in MFs. Please suggest some equity mutual funds where I can invest. I have a moderate risk appetite.
Ans: It's wonderful to see you investing systematically and planning for the future. Your current SIP portfolio looks good, but let's analyze it in detail and suggest some changes and additions for your long-term goals.

Evaluating Your Current SIP Portfolio
You have a diversified SIP portfolio with a monthly investment of Rs. 23,000:

SBI Multi Asset Allocation Fund: Rs. 10,000 for short-term goals.
ICICI Prudential Fund: Rs. 5,000 for long-term goals.
HDFC Index Fund: Rs. 5,000 for long-term goals.
HDFC Hybrid Equity Fund: Rs. 3,000 for long-term goals.
Each fund type has its own strengths and weaknesses. Let’s dive deeper.

Multi Asset Allocation Fund
SBI Multi Asset Allocation Fund: Multi asset funds invest in a mix of equities, debt, and other asset classes like gold. They provide diversification and reduce risk.
For short-term goals, this fund is suitable due to its balanced approach.

Long-Term Goals Funds
ICICI Prudential Fund: This is a good choice for long-term investment due to its diversified equity portfolio.
HDFC Index Fund: Index funds track market indices and have lower management costs. They can be good, but actively managed funds may outperform them.
HDFC Hybrid Equity Fund: Hybrid funds invest in both equity and debt, offering a balanced risk-return profile. Suitable for moderate risk appetite.
Adding Rs. 20,000 to SIPs for Long-Term Goals
Since you plan to add Rs. 20,000 monthly to your SIPs, here are some suggestions for equity mutual funds:

Large Cap Fund: Invest Rs. 7,000 in a large-cap fund for stability and steady returns. Large-cap funds invest in well-established companies.

Mid Cap Fund: Invest Rs. 5,000 in a mid-cap fund for higher growth potential. Mid-cap funds can offer better returns with moderate risk.

Small Cap Fund: Invest Rs. 4,000 in a small-cap fund for high growth potential. Small-cap funds are riskier but can deliver substantial returns over the long term.

Multi Cap Fund: Invest Rs. 4,000 in a multi-cap fund to diversify across large, mid, and small-cap stocks. Multi-cap funds provide a good mix of stability and growth.

Diversification and Risk Management
Diversification is key to managing risk and maximizing returns. Your current portfolio is diversified, but adding more equity funds will enhance it further.

Equity Allocation
Large Cap: Focus on stability with consistent performers.
Mid Cap: Target higher returns with moderate risk.
Small Cap: Aim for substantial growth with higher risk.
Multi Cap: Achieve a balanced risk-return profile with diversified investments.
Sector Diversification
Investing across different sectors can reduce sector-specific risks. Ensure your funds cover a variety of sectors like technology, finance, healthcare, and consumer goods.

Avoiding Index Funds
You have an index fund, but let’s discuss its limitations.

Disadvantages of Index Funds
Passive Management: Index funds simply replicate the market index, missing out on active opportunities.
Market Limitations: They can’t outperform the market, only match it.
Limited Flexibility: They can’t adjust quickly to market changes.
Benefits of Actively Managed Funds
Active Strategy: Fund managers actively select stocks to outperform the market.
Research Driven: Decisions are based on in-depth research and analysis.
Flexibility: Managers can adjust portfolios based on market conditions.
Consider replacing your HDFC Index Fund with an actively managed fund to potentially achieve better returns.

Direct Funds vs. Regular Funds
You are investing in direct funds, which means no distributor commissions. However, let’s discuss the benefits of regular funds through a Certified Financial Planner (CFP).

Disadvantages of Direct Funds
Self-Management: Requires continuous monitoring and management.
Lack of Guidance: No professional advice on fund selection and portfolio balancing.
Time-Consuming: Requires time and effort to stay updated with market trends.
Benefits of Regular Funds with CFP
Professional Guidance: CFPs provide expert advice tailored to your financial goals.
Portfolio Management: Regular monitoring and adjustments by professionals.
Comprehensive Planning: CFPs offer holistic financial planning, including insurance, tax planning, and retirement planning.
Consider consulting a CFP to switch to regular funds for better management and guidance.

Financial Planning Beyond Mutual Funds
Apart from mutual funds, ensure a comprehensive financial plan for long-term security.

Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses. This fund provides liquidity during unforeseen circumstances and avoids the need to liquidate investments.

Health Insurance
Health insurance is crucial to cover medical emergencies without affecting your savings. Choose a comprehensive health plan for adequate coverage.

Term Insurance
Term insurance provides financial security to your family in your absence. Opt for a term plan with coverage of at least 10-15 times your annual income.

Regular Monitoring and Review
Regularly review your investment portfolio to ensure it aligns with your financial goals and risk appetite.

Annual Review: Assess fund performance and make necessary adjustments.
Market Conditions: Stay updated with market trends and economic changes.
Additional Investment Strategies
Consider these strategies for better returns and risk management.

Systematic Transfer Plan (STP)
STP helps in gradually moving investments from debt to equity or vice versa.

Benefit: Reduces risk by averaging out the purchase cost.
Implementation: Start with a lump sum in a debt fund and gradually transfer to equity funds.
Systematic Withdrawal Plan (SWP)
SWP provides regular income during retirement.

Benefit: Offers regular cash flow while keeping the corpus invested.
Implementation: Set up SWP from equity or hybrid funds for regular withdrawals.
Final Insights
Your current SIP portfolio is well-diversified and suitable for long-term goals. However, consider adding more equity funds to enhance returns. Replace your index fund with an actively managed fund for better performance. Consult a Certified Financial Planner for professional guidance and portfolio management. Ensure you have an emergency fund, health insurance, and term insurance for comprehensive financial security. Regularly review and adjust your portfolio to stay aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

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

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Dear sir, currently I am investing 5000 in SBI Blue chip, 3500 in ABSL frontline equity, 2000 in mira asset ELSS, 5000 in PPFAS flexi cap , 2500 in Quant active fund 5000 in Motilal Oswal mid cap , 1000 in HSBC midcap , 2500 in HSBC small cap, 3000 in Nippon small cap and 2000 in quant small cap. Apart from this I am doing 1 lakh per year in PPF and 10000 per month in NPS. I have started my investment since 2017 and gathered around 16 lakhs , my target is 1 cr in 2031 , Questions , is my investments are inline to achieve my aim , further I want to start sip exclusively for my kid , he is 8 yrs old I can contribute 5 k , pls suggest a aggressive Equity fund for around 20 yrs horizon. Shall I continue to invest in PPF / NPS OR divert money to MFs pls suggest, waiting for your reply. Thanks and regards.
Ans: Your current investment portfolio includes:

SBI Blue Chip Fund: Rs. 5,000
Aditya Birla Sun Life Frontline Equity Fund: Rs. 3,500
Mirae Asset ELSS: Rs. 2,000
PPFAS Flexi Cap Fund: Rs. 5,000
Quant Active Fund: Rs. 2,500
Motilal Oswal Midcap Fund: Rs. 5,000
HSBC Midcap Fund: Rs. 1,000
HSBC Small Cap Fund: Rs. 2,500
Nippon Small Cap Fund: Rs. 3,000
Quant Small Cap Fund: Rs. 2,000
Public Provident Fund (PPF): Rs. 1 lakh per year
National Pension System (NPS): Rs. 10,000 per month
You've accumulated around Rs. 16 lakhs since 2017. Your goal is to achieve Rs. 1 crore by 2031. Additionally, you're looking to start an aggressive equity SIP for your 8-year-old child, with a 20-year horizon.

Assessing Your Current Portfolio
Diversification and Fund Allocation:

Your portfolio is diversified across large-cap, mid-cap, small-cap, and flexi-cap funds. This diversification is positive as it balances risk and return potential.
Your exposure to mid-cap and small-cap funds indicates a moderate to high-risk appetite. This is aligned with your long-term goal but requires consistent monitoring due to the inherent volatility in these segments.
The allocation to ELSS (Mirae Asset) provides tax benefits but also contributes to your equity exposure.
PPF and NPS Contributions:

PPF: While PPF is a safe investment with tax benefits, its returns (typically around 7-8%) may not be sufficient to meet your aggressive goal of Rs. 1 crore by 2031. The lock-in period is also a limitation if you require liquidity.
NPS: NPS offers a mix of equity and debt, with some tax benefits. However, its returns are generally lower than pure equity funds, and it comes with restrictions on withdrawal until retirement.
Progress Towards Your Rs. 1 Crore Goal
Current Portfolio Value:

You've accumulated Rs. 16 lakhs since 2017, which is a commendable start. However, to reach Rs. 1 crore by 2031, you'll need to assess whether your current SIPs are adequate.
Expected Growth:

Assuming an average return of 12-14% per annum from your equity mutual funds, your current investments should grow significantly by 2031. However, to reach Rs. 1 crore, you'll need to ensure that your investments are aggressive enough and consistently reviewed.
SIP Analysis:

Your current SIPs total Rs. 30,500 per month. If this continues, and assuming a 12% annual return, you could potentially reach around Rs. 80-90 lakhs by 2031. To bridge the gap to Rs. 1 crore, you may need to increase your SIPs slightly or optimize your portfolio.
Recommendations for Optimizing Your Portfolio
Continue Investing in Equity Mutual Funds:

Considering your goal and risk appetite, it's advisable to continue focusing on equity mutual funds. They have the potential to deliver higher returns over the long term compared to PPF and NPS.
Reallocation from PPF/NPS to Mutual Funds:

You may consider reducing your contributions to PPF and NPS and reallocating those funds into your equity mutual funds. This strategy could enhance your portfolio's growth potential.

For instance, you could reduce your PPF contribution to the minimum required to maintain the account and redirect the surplus to a well-performing equity fund.

Additional SIP for Your Child:

For your child’s education or future needs, with a 20-year horizon, you can opt for an aggressive equity fund. An equity fund with a focus on growth sectors like technology, healthcare, or emerging markets can be suitable.

Since you’re comfortable with risk, you might consider a mid-cap or small-cap fund with a strong track record. Over 20 years, these funds can deliver substantial returns, though they come with higher volatility.

Fund Performance Monitoring:

Regularly review the performance of your mutual funds. If a fund consistently underperforms its benchmark or peers, consider switching to a better-performing option.

While diversification is important, avoid over-diversification, which can dilute returns. A well-chosen set of 5-7 funds can be more effective than spreading your investments too thinly.

Suggested Changes and Future Actions
Consolidate Your Portfolio:

Consider consolidating your investments into fewer, high-performing funds. For instance, you might reduce the number of small-cap funds to focus on those with the best track records.

Simplifying your portfolio makes it easier to manage and track performance.

Increase SIPs Gradually:

To bridge the gap to Rs. 1 crore, consider increasing your SIPs by a small amount each year. Even a Rs. 2,000-3,000 increase annually can make a significant difference over time.
Maintain Emergency Funds:

Ensure you have an adequate emergency fund separate from your investments. This will prevent you from liquidating investments during market downturns or emergencies.
Final Insights
Your current investment strategy is on the right track, but slight adjustments and a focus on equity funds can help you achieve your Rs. 1 crore target by 2031. For your child’s future, an aggressive equity fund with a 20-year horizon is a wise choice. Reducing your exposure to lower-yielding options like PPF and reallocating to mutual funds can further enhance your portfolio's growth potential.

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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