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Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 06, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Sourav Question by Sourav on Jun 01, 2024Hindi
Money

Sir, Plesase suggest some good Index funds as I would like to invest on tye same through SIP & also continue the same for atleast coming 15 years.

Ans: Investing wisely is crucial for securing your financial future. As you consider your investment options, it’s important to evaluate the advantages and disadvantages of different types of funds. While index funds are popular, they may not be the best choice for everyone. Let’s explore the reasons why actively managed funds could be a more suitable investment for you, particularly for a 15-year systematic investment plan (SIP).

Understanding Index Funds
Index funds are mutual funds designed to replicate the performance of a specific index, such as the Nifty 50. They offer several benefits, including lower expense ratios and simplicity. However, they also come with significant drawbacks that can impact your long-term investment goals.

Disadvantages of Index Funds
Limited Performance Potential:

Index funds aim to match the performance of their benchmark index, but they rarely outperform it. This limitation can hinder your returns, especially over a long investment horizon like 15 years.

Market Dependency:

Index funds are highly dependent on the overall market performance. During market downturns, index funds can suffer significant losses because they mirror the index’s movements without any strategic adjustments.

Lack of Flexibility:

Index funds follow a passive investment strategy, meaning they don’t respond to market changes or economic shifts. This inflexibility can lead to missed opportunities and suboptimal performance.

Benefits of Actively Managed Funds
Potential for Higher Returns:

Actively managed funds are managed by professional fund managers who aim to outperform the market. By selecting high-potential stocks and adjusting the portfolio based on market conditions, these funds can deliver superior returns.

Strategic Adjustments:

Active fund managers continuously monitor the market and economic trends. They make strategic adjustments to the portfolio, reducing exposure to underperforming assets and increasing investments in promising sectors.

Risk Management:

Active management involves careful risk assessment. Fund managers diversify the portfolio to minimize risk and protect your investments during market volatility. This proactive approach can lead to more stable returns.

The Role of a Certified Financial Planner
Engaging with a Certified Financial Planner (CFP) can enhance your investment strategy. A CFP can provide personalized advice based on your financial goals, risk tolerance, and investment horizon. They can help you select the right actively managed funds and monitor their performance.

Importance of Diversification
Diversification is a key principle in investing. It involves spreading your investments across various asset classes to reduce risk. Actively managed funds often provide better diversification compared to index funds, which are confined to the stocks in the index.

Evaluating Fund Performance
When selecting actively managed funds, it’s important to evaluate their historical performance. Look for funds with a consistent track record of outperforming their benchmark index. Consider the fund manager’s experience and investment style.

Expense Ratios and Costs
While actively managed funds typically have higher expense ratios than index funds, the potential for higher returns can justify the additional cost. It’s crucial to understand the fee structure and assess whether the potential benefits outweigh the costs.

Benefits of Regular Funds Over Direct Funds
Expert Guidance:

Investing through a Mutual Fund Distributor (MFD) with CFP credentials provides access to expert advice. MFDs can help you navigate complex investment decisions and optimize your portfolio.

Convenience and Support:

Regular funds offer ongoing support and administrative assistance. This can be especially beneficial for long-term investors who prefer a hands-off approach.

Risk Management:

MFDs actively manage your investments, ensuring that your portfolio remains aligned with your financial goals. They can make necessary adjustments based on market conditions, reducing your investment risk.

Investing Through SIP
Systematic Investment Plans (SIPs) allow you to invest a fixed amount regularly, promoting disciplined investing. SIPs in actively managed funds can leverage the benefits of rupee cost averaging, which reduces the impact of market volatility on your investments.

Long-Term Investment Strategy
For a 15-year investment horizon, actively managed funds can provide better growth potential and risk management. The active approach ensures that your investments are continually optimized for maximum returns.

The Importance of Regular Monitoring
Regularly monitoring your investments is crucial. Engage with your CFP to review your portfolio’s performance and make necessary adjustments. This proactive approach ensures that your investments remain aligned with your financial goals.

Understanding Market Trends
Staying informed about market trends can help you make better investment decisions. Actively managed funds benefit from fund managers’ expertise in identifying and capitalizing on emerging trends.

Rebalancing Your Portfolio
Periodic rebalancing is essential to maintain your desired asset allocation. Actively managed funds often undergo regular rebalancing to ensure optimal performance and risk management.

Benefits of Professional Fund Management
Professional fund managers have the expertise and resources to conduct in-depth research and analysis. Their insights can lead to better investment decisions and superior returns compared to passive index funds.

Conclusion
While index funds offer simplicity and lower costs, their limited performance potential and lack of flexibility can hinder your long-term investment goals. Actively managed funds, on the other hand, provide the potential for higher returns, strategic adjustments, and effective risk management. By working with a Certified Financial Planner and investing through regular funds, you can leverage expert guidance and optimize your investment strategy.

Investing through SIP in actively managed funds can ensure disciplined investing and better growth potential over a 15-year horizon. Regular monitoring, understanding market trends, and periodic rebalancing are essential to achieving your financial goals.


Your decision to invest for the long term shows foresight and commitment to your financial future. It’s commendable that you’re considering all options and seeking professional advice to make informed decisions.

Understanding the complexities of investing can be challenging. By exploring different investment avenues and seeking guidance, you’re taking the right steps toward securing a stable and prosperous future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2024

Asked by Anonymous - Apr 12, 2024Hindi
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Hello sir, I want to invest between 10-15 k per month in sip for 15 years. Can you please suggest me what funds will be best for me. I selected quant small mid and flexi adity birla sun life PSU , Nippon large cap , Nippon India night small cap 250 index fund Nippon India nifty midcap 150 index .. please suggest
Ans: It's great to hear that you're interested in investing through SIPs for the next 15 years. Here are some recommendations for mutual funds based on your investment preferences:

1. Small & Mid Cap Funds: These funds offer exposure to both small and mid-cap stocks, potentially providing higher returns over the long term. Look for funds that have a consistent track record and are managed by experienced fund managers.
2. Large Cap Funds: Large-cap funds invest in well-established companies with a track record of stable performance. They offer stability and are suitable for conservative investors seeking steady returns over time.
3. PSU Funds: PSU funds focus on investing in Public Sector Undertaking companies. These companies are backed by the government and can offer stability and growth potential. Look for funds with a strong portfolio of PSU stocks.
4. Index Funds: Consider investing in index funds that track specific indices like Nifty Smallcap 250 Index or Nifty Midcap 150 Index. These funds offer diversification and typically have lower expense ratios compared to actively managed funds.
When selecting mutual funds for your SIP investment, it's important to consider factors such as fund performance, expense ratio, fund manager experience, and investment strategy. Conduct thorough research or consult with a financial advisor to make informed decisions based on your risk tolerance and investment goals.

..Read more

Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 06, 2024

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Sir Please suggest best Mutual fund as i want to Do SIP for long term.
Ans: While I can't provide specific fund names, I can offer some general guidance:

Consider investing in diversified equity mutual funds for long-term wealth creation. These funds invest in a mix of large-cap, mid-cap, and small-cap stocks, offering growth potential while spreading out risk.
Look for funds with a proven track record of consistent performance over several market cycles. Past performance is not indicative of future results, but it can provide insights into a fund's management strategy and risk management practices.
Pay attention to factors like fund manager experience, expense ratio, and portfolio turnover. A seasoned fund manager with a solid investment approach can navigate market volatility more effectively.
Evaluate the fund's investment philosophy and strategy to ensure it aligns with your risk tolerance and investment goals. Some funds may focus on growth-oriented stocks, while others may prioritize value or dividend-paying stocks.
Consider your investment horizon and risk appetite. If you have a long-term investment horizon (e.g., 5 years or more) and are comfortable with market fluctuations, you may opt for equity-oriented funds. For shorter investment horizons or lower risk tolerance, consider balanced funds or debt funds.
Lastly, seek professional advice from a Certified Financial Planner (CFP) or a trusted financial advisor. They can assess your financial situation, risk profile, and investment goals to recommend suitable mutual funds that align with your needs.
Remember, investing in mutual funds involves risk, and it's essential to conduct thorough research and seek professional advice before making any investment decisions.

..Read more

Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

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

Asked by Anonymous - May 11, 2024Hindi
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Money
I wish to invest 30K per month via SIP IN MUTUAL Funds Can you kindly suggest some funds. My horizon is apund 5-8 yrs
Ans: Thank you for entrusting me with the responsibility of guiding your investment journey. Investing through a systematic investment plan (SIP) in mutual funds is an excellent way to achieve your financial goals. Let's explore suitable funds for your investment horizon of 5-8 years.

Understanding Your Investment Horizon
With a horizon of 5-8 years, you have the advantage of pursuing a balanced investment strategy that combines growth potential with risk mitigation. This timeframe allows for exposure to equity-oriented funds while maintaining a prudent approach to risk management.

Assessing Fund Categories
Given your investment horizon, a blend of equity and debt funds is advisable to strike the right balance between growth and stability. Equity funds offer the potential for higher returns over the long term, while debt funds provide stability and income generation.

Selecting Equity Funds
When selecting equity funds, consider diversified equity mutual funds that invest across various sectors and market capitalizations. These funds offer exposure to a wide range of stocks, reducing concentration risk and enhancing diversification. Additionally, thematic or sectoral funds may be considered for tactical allocation but should be approached with caution due to their higher risk profile.

Evaluating Debt Funds
Incorporating debt funds into your portfolio can help mitigate volatility and provide stability during market downturns. Opt for high-quality debt funds with a focus on safety and liquidity. Short to medium-term debt funds, such as liquid funds or short-term bond funds, can be suitable for your investment horizon.

Emphasizing Consistency and Performance
When evaluating mutual funds, prioritize consistency and long-term performance over short-term fluctuations. Look for funds with a track record of delivering competitive returns relative to their benchmark indices and peers. Additionally, consider factors such as fund manager expertise, investment philosophy, and risk management practices.

Monitoring and Reviewing Your Portfolio
Regular monitoring and review of your mutual fund portfolio are essential to ensure alignment with your financial goals and risk tolerance. As your circumstances evolve, adjustments may be necessary to optimize your portfolio's performance and mitigate potential risks.

Conclusion
In conclusion, investing through SIPs in mutual funds offers a disciplined and systematic approach to wealth creation over the long term. By diversifying across equity and debt funds and focusing on consistency and performance, you can build a resilient portfolio that is well-positioned to achieve your financial objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Milind

Milind Vadjikar  |1199 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Apr 29, 2025

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I am 41 years old male working in a private firm and investing from 2017 in MFs and accumulated around 20 lakhs. My target is to achieve 3 crores in 15 years ( from 2025 ) . My portfolio is given below , Apart from MF investing NPS & PPF and some times in Direct equity. Question : 1) Is my fund selection ok , With this current Portfolio along with 10 % Stepup can i achieve my goal. 2) Is SBI blue chip & HSBC small cap funds ok or do I switch to other funds ? 3) Want to invest 5000 more, in which fund should I allocate ? 4) Shall I stop PPF and that money I divert to a mutual fund? 5) Some other funds are also there in my portfolio which I stopped SIP but did not withdraw the amount. What is the best strategy in this case? Mutual Funds S/no Fund name Amount (RS) /month 1 SBI Blue Chip fund 5000 2 Parag Parikh Flexi Cap fund 10000 3 Kotak Multicap Fund 5000 4 Motilal Oswal Mid Cap fund 10000 5 HDFC Mid Cap opportunities 5000 7 HSBC Small Cap fund 5000 8 Nippon India Small Cap fund 5000 Total 45000 S/no NPS Amount (RS) /month 1 Tier -1 7000 2 Tier -2 3000 PPF Amount (RS) / year 1 ICICI PPF 60000
Ans: Hello;

Please find pointwise reply to your queries:

1. You already have allocation to small and mid caps through Flexi cap and multicap funds. Despite that you may have additional allocation to One dedicated mid and small cap fund but not two!

The monthly sip's into second small cap and midcap fund may instead be moved to an aggressive hybrid type mutual fund and multi asset allocation type mutual fund.

You may achieve your target with the proposed step up(10%) planned even considering 10% modest returns from MF investments.

2. Funds are okay however you need to review risk-adjusted performance every year with reference to the benchmark and category average and then decide suitably.

3. You may invest additional 5 K in gold mutual fund.

4. Keep contributing to PPF. It's a social security scheme and goes towards sovereign debt in your overall asset allocation.

5. Review past MF holding in line with your overall asset allocation, portfolio overlap, risk adjusted performance and decide as appropriate.

You may select and avoid funds from suggested categories based on risk adjusted performance criteria.

This being a neutral forum we are prohibited to recommend xyz fund.

Happy Investing;

...Read more

Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 29, 2025

Money
Hi Madam, I purchased 200gm of RBI Sovereign gold bond in August 2020. Should i go for early redemption or wait for 8 years .Regards Puneet Dave
Ans: You have invested in RBI Sovereign Gold Bonds (SGBs) in August 2020. You hold 200 grams, which is a sizeable investment. You are now considering whether to redeem early or hold till maturity. Let’s assess from all angles.

 
 
Understanding Your SGB Investment

 
 

You bought it in August 2020. The 8-year maturity will be in August 2028.

 
 

So, 3.5+ years are over. Around 4.5 years are still left.

 
 

You earn 2.5% annual interest on the issue price. That is paid half-yearly.

 
 

At maturity, you get full market value of gold (as per RBI price on maturity date).

 
 

Gains at maturity are fully tax-free if held till 8 years. This is the biggest advantage.

 
 
Early Redemption – What You Should Know

 
 

RBI allows early exit only after 5 years, and that too only on interest payout dates.

 
 

If you redeem before 8 years, capital gains are taxable.

 
 

Gains will be taxed at 20% after indexation if held more than 3 years.

 
 

That reduces the post-tax returns. You lose the full tax-free benefit.

 
 

Also, if you sell in the secondary market, prices may be lower than actual value.

 
 
Why It’s Better to Hold Till Maturity

 
 

The biggest reason to hold is zero tax on capital gains after 8 years.

 
 

You also continue to earn 2.5% annual interest, which is over and above gold price return.

 
 

The longer you stay, the more you benefit from compounding on gold price growth.

 
 

Your total return = Gold appreciation + 2.5% interest + Zero tax. This is unmatched.

 
 

Selling now will only give you part of this benefit. You will lose long-term compounding.

 
 
When Early Exit Can Be Considered

 
 

If you are in urgent need of money, then only consider early redemption.

 
 

If you are switching to another asset for a defined financial goal, then it's acceptable.

 
 

But even then, use the RBI redemption window (after 5 years), not the market.

 
 

Don’t sell SGBs on stock exchange. It gives lower price and liquidity is poor.

 
 
Suggested Action Plan for You

 
 

You have waited for 3.5 years. Just wait for the remaining 4.5 years.

 
 

You will get full value with 0% tax, which no other gold investment gives.

 
 

Keep the 2.5% interest going to your bank account. Use it or reinvest it.

 
 

Review again after August 2025 (5 years). But likely, maturity will be best option.

 
 

Holding till August 2028 will give you the maximum financial benefit.

 
 
Final Insights

 
 

Your SGB investment is in the right direction. It gives safe, tax-efficient, and stable returns.

 
 

Holding it till maturity is almost always the best choice unless there is urgent need.

 
 

Don’t be influenced by short-term gold price movements. Let it grow tax-free.

 
 

You have made a smart decision in 2020. Just give it the full 8 years to reward you.

 
 

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 29, 2025

Asked by Anonymous - Apr 29, 2025
Money
I am 43 years old and an aggressive investor and I started investing 1 lac per month in SIP in 2019. These are my current funds of 20k each per month : 1. CANARA ROBECO EMERGING EQUITIES 2. HDFC MID-CAP OPPORTUNITIES FUND 3. SBI FLEXICAP FUND 4. ICICI PRUDENTIAL BLUECHIP FUND 5. NIPPON INDIA SMALL CAP FUND In 2024, i started to invest another 1.8 lacs per month split in the following funds : 6. Quant Small Cap Fund 7. Motilal Oswal Midcap Fund 8. Canara Robeco Infrastructure 9. Quant Large and Mid Cap Fund 10. Bandhan Small cap Fund 11. Quant Commodities Fund 12. LIC MF Manufacturing Fund 13. Quant Dynamic Asset Allocation Fund 14. INVESCO INDIA LARGE AND MID CAP FUND 15. SBI Automotive Opportunities Fund 16. Motilal Oswal Large and Midcap Fund Could you share your views on my overall portfolio please, and if I should change any of them ? I am a long term investor and not in any hurry to sell. Thanks
Ans: You have shown strong commitment. Investing Rs. 1 lakh monthly since 2019 is highly disciplined. Adding Rs. 1.8 lakh more monthly in 2024 further shows your aggressive mindset and future planning.

Let me assess your portfolio thoroughly, from all angles. I will explain every layer of your mutual fund selection and offer insights for improvements. Your portfolio has both strengths and gaps. Let’s examine it part by part.

 
 
Your Risk Profile and Time Horizon

 
 

You are 43. Retirement may still be 15+ years away. Time is on your side.

 
 

You have clearly defined yourself as an aggressive investor. That’s good.

 
 

You are not looking for short-term exits. That’s ideal for equity investments.

 
 

You are mentally strong for market ups and downs. Patience is your strength.

 
 
Your Monthly Commitment and Fund Spread

 
 

You invest Rs. 2.8 lakh per month. That’s a huge amount. Very few do this.

 
 

You are split across 16 funds. That’s on the higher side. Needs review.

 
 

Too many funds reduce focus. You don’t get full advantage from each fund.

 
 

There’s fund overlap. You’re holding multiple funds in similar categories.

 
 
Fund Category Allocation Overview

 
 

Let’s look at your fund categories. We will see where you are strong and where things are scattered.

 
 

Small Cap Funds – You hold 4 small cap funds. That’s too many.

 
 

Mid Cap Funds – You hold 3 mid cap funds. That’s slightly high.

 
 

Flexicap / Large & Mid Cap – You have 4 funds here. Needs cleanup.

 
 

Bluechip / Large Cap – Only 1 fund here. Slightly under-represented.

 
 

Thematic / Sectoral Funds – You have 4 funds here. That is risky.

 
 

Dynamic Asset Allocation – You have 1 fund here. That adds balance.

 
 
Your Portfolio Strengths

 
 

Let’s appreciate what’s working well in your portfolio.

 
 

You have shown long-term vision. Most investors can’t hold on patiently.

 
 

You have a good mix of mid, small and flexicap funds. Growth-oriented.

 
 

You have started SIP early and maintained consistency. That builds wealth.

 
 

Your fund choices include a few high-quality performers. That’s commendable.

 
 

You have added new funds in 2024. That shows adaptability and planning.

 
 
Areas That Need Immediate Attention

 
 

Now let’s look at areas which need a clean-up or some correction.

 
 

Too Many Funds: 16 is too many. Even 8 to 10 is enough. Reduce clutter.

 
 

Too Many Small Cap Funds: 4 small caps can add high risk and volatility.

 
 

Overlapping Categories: Some midcap and flexicap funds behave similarly.

 
 

Too Much Sector Exposure: Infrastructure, Commodities, Auto, Manufacturing – that’s high sector risk.

 
 

Unstable Funds: Some thematic funds do well in cycles. Not suitable for SIP always.

 
 

Missing Debt Allocation: Even aggressive investors need some debt buffer. None seen.

 
 
Suggested Adjustments to Your Portfolio

 
 

Let’s work on a 360-degree improvement plan. Keep it practical and action-oriented.

 
 

Reduce Fund Count: Bring it down to around 8-10 funds. Better tracking and performance.

 
 

Limit Small Cap Funds: Keep only 2 small cap funds. Choose based on past 5-year track.

 
 

Mid Cap Funds: Keep only 2 best-performing midcap funds. Avoid redundancy.

 
 

Flexicap or Large & Mid Cap: Keep 2 funds from this group. Review performance, not names.

 
 

Sector Funds: Choose only 1 or max 2. Prefer long-term stable sectors.

 
 

Add a Balanced Fund: Include 1 balanced advantage or dynamic allocation fund. That helps in market correction phases.

 
 

Review Every 6 Months: Don’t hold laggards. Evaluate every 6 months with your MFD with CFP credential.

 
 

Avoid Direct Plans: Stick to regular plans. You get advisory, service, and emotional coaching.

 
 

Direct funds seem cheaper, but long-term mistakes cost more. Regular funds through a qualified CFP help in discipline.

 
 
Understanding Sector and Thematic Funds

 
 

You hold infrastructure, commodities, auto, and manufacturing funds. These sectors are cyclical.

 
 

These can give sudden highs, but also long flat phases. SIP in sector funds may not suit everyone.

 
 

Keep exposure limited to 10-15% of portfolio. Don’t exceed this.

 
 

Sectoral funds need regular review. If the cycle turns, exit and shift to diversified funds.

 
 

Infrastructure and auto can be held longer term. But commodities and manufacturing are highly volatile.

 
 
Importance of Professional Guidance

 
 

You are handling Rs. 2.8 lakh monthly. That’s a large portfolio in the making.

 
 

A certified financial planner helps in making fund selection efficient.

 
 

They offer risk alignment, taxation insights, rebalancing strategy and emotional handholding.

 
 

Avoid trial and error. Stick with a long-term plan. Don’t get influenced by social media noise.

 
 

Emotional investing hurts performance. A CFP brings clarity and structure.

 
 
Asset Allocation for 43-Year-Old Aggressive Investor

 
 

Let’s look at a suggested structure for you.

 
 

Large Cap + Flexicap + Large & Mid Cap Funds: Around 40-45%

 
 

Mid Cap Funds: Around 25-30%

 
 

Small Cap Funds: Not more than 15%

 
 

Sectoral + Thematic Funds: Around 10%

 
 

Balanced / Hybrid Fund: 5-10% for cushioning market corrections

 
 

This brings balance, growth and flexibility.

 
 
Avoiding Common Pitfalls

 
 

You are already advanced in your investing. Still, let’s watch out for some key mistakes.

 
 

Don't Chase Past Returns: Every year’s winner won’t repeat. Look at long-term consistency.

 
 

Avoid Frequent Switching: Let SIPs run for 5-7 years to show full potential.

 
 

Don’t React to Market News: Volatility is natural. Stay calm. Don’t stop SIPs in correction.

 
 

Monitor Fund Manager Changes: If a top-performing fund loses its manager, review it closely.

 
 

Track Portfolio, Not Just Individual Funds: Overall performance matters, not one or two funds.

 
 
MF Taxation Update as per 2024 Rules

 
 

New tax rules are important. Let’s simplify them for you.

 
 

Equity MF LTCG: Above Rs. 1.25 lakh gain per year taxed at 12.5%

 
 

Equity MF STCG: Short-term capital gains taxed at 20%

 
 

Debt MFs: All gains taxed as per your income tax slab. No LTCG benefit now.

 
 

So it’s even more important to hold funds for 3-5 years minimum.

 
 
Finally

 
 

You have done the most important part – start early, invest regularly, and increase investment over time.

 
 

But now the next step is to simplify, consolidate and add structure.

 
 

Cut down fund count. Avoid theme overload. Maintain allocation. Stick to long term.

 
 

Have a goal-based approach with a certified financial planner. Stay calm in market corrections.

 
 

Your portfolio can create real wealth. Just stay disciplined and focused.

 
 

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8314 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 29, 2025

Money
Hello. should i continue investing in Hybrid equity funds or should i shift those funds to midcap and index funds??
Ans: You are currently investing in hybrid equity funds.
Now you're thinking of shifting to midcap or index funds.

Let’s analyse each of these based on your possible goals and situation.

First, Let’s Understand Hybrid Equity Funds
Hybrid equity funds balance equity and debt in one fund.

They offer stability from debt and growth from equity.

They are good if you want moderate returns with lower volatility.

Suitable if your goal is 3 to 5 years away or if you are conservative.

Gives a smoother ride during market ups and downs.

What Happens If You Move to Midcap Funds?
Midcap funds invest in medium-sized companies with high growth potential.

But midcap funds are very volatile in the short term.

Risk is much higher, though potential return is also higher.

If your goal is more than 7 years away, and you can handle ups and downs, only then consider midcap funds.

Don’t shift to midcaps just because of recent past returns.

Midcaps require strong patience and discipline during market corrections.

What About Index Funds?
Index funds are passive funds that copy the market index.

They do not try to beat the market returns. They only match it.

They look attractive due to low cost, but they come with no downside protection.

When market falls, index funds fall fully with the market.

No active manager is there to protect you or take advantage of opportunities.

Returns are limited to index performance. No extra gain possible.

In fact, when markets are sideways or falling, index funds underperform active funds.

Key Disadvantages of Index Funds (You Must Know)
No flexibility during market ups and downs.

Zero risk management by fund manager.

Index funds follow index blindly, even if companies in index are poor.

If market goes down 30%, index fund will also fall 30%.

You are on your own, with no expert adjusting portfolio.

Index funds underperform actively managed funds in India over long term, especially in mid and small caps.

Index investing may look attractive in theory, but in real-world, it is less flexible and more risky.

Why Staying in Hybrid Equity Funds May Be Better
You get a good balance of risk and reward.

Debt portion cushions fall during market crash.

Better suited for income generation, goal planning, and retirement strategy.

Actively managed hybrid funds give better flexibility and better returns in volatile markets.

Hybrid funds have performed better than index funds in falling markets.

If You Want to Grow More Aggressively
You can slowly start investing a small part into actively managed midcap funds.

Start with 10%-15% of your portfolio in midcap.

Keep rest in hybrid funds for stability.

Increase midcap exposure only if you are comfortable with the volatility.

Don’t move entire amount to midcap or index funds at once.

Don’t Invest in Direct Funds (Important Insight)
Direct funds may look like they give more returns.

But in reality, you miss professional guidance and ongoing review.

Investing without a Certified Financial Planner (CFP) and MFD support leads to poor choices.

Many people choose wrong funds or wrong time to exit.

Regular plans with a good CFP and MFD help you stay disciplined and goal-focused.

Advice matters more than saving 0.5% cost in direct plans.

Final Insights
Hybrid funds give balanced growth and peace of mind.

Midcap funds are good, but only for long-term investors with high risk capacity.

Index funds look simple, but have no risk control and no potential to outperform.

Don’t shift completely from hybrid to index or midcap funds.

Stay in hybrid funds, and add midcap gradually under expert guidance.

Always invest through regular plans with support from a CFP-qualified MFD.

Ensure your portfolio is aligned with your goals, risk profile, and timeline.

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.

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