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Vivek

Vivek Lala  |251 Answers  |Ask -

Tax, MF Expert - Answered on Jun 04, 2023

Vivek Lala has been working as a tax planner since 2018. His expertise lies in making personalised tax budgets and tax forecasts for individuals. As a tax advisor, he takes pride in simplifying tax complications for his clients using simple, easy-to-understand language.
Lala cleared his chartered accountancy exam in 2018 and completed his articleship with Chaturvedi and Shah. ... more
Yogeshwar Question by Yogeshwar on Jun 04, 2023Hindi
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Hi, Pls review my long term portfolio. Currently am holding kotak smal cap ,canara rebaco ELSS funds and holding tata power in stocks. Kindly suggest if any corrections required

Ans: Hello, the info is incomplete, but basis on the funds mention, both the funds are good from a long term point of view
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  |4632 Answers  |Ask -

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

Asked by Anonymous - May 30, 2024Hindi
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Hi Sir, I am investing since 8 yrs. I want to get review on my below portfolio. Please guide me. 1- Kotak Flexi Cap/10000Rs- Planning to exit and start in Parag Parikh Flexi Cap 2- Mirae Emerging Bluechip Fund 25000 3- Kotak Emerging Equity Fund 31000 4- Nippon India Small Cap 25000 5- Canara Rob Small Cap 10000- Just 1 yr before started but thinking to choose different strategy investing fund like Quant Small Cap Should I make these changes or continue same portfolio only or will you recommend some other fund. These all are for long term says 20-25 yrs. 6- HDFC Balanced Advantage Fund 5000 As Long term RD for 5 yrs only Please guide me
Ans: I appreciate your dedication to building a strong investment portfolio over the years. It is clear you have put considerable thought into your financial planning. Let’s assess your portfolio and the proposed changes. I’ll ensure the analysis is straightforward and tailored to your long-term goals.

Portfolio Evaluation
Your current portfolio includes a mix of large-cap, mid-cap, and small-cap funds. This diversified approach can be beneficial for long-term growth. Here's a detailed evaluation:

Flexi Cap Funds
You have Kotak Flexi Cap and plan to switch to Parag Parikh Flexi Cap. Flexi cap funds provide flexibility by investing across market capitalizations. This strategy helps in adapting to market changes. Parag Parikh Flexi Cap has a strong track record. However, before switching, consider if the new fund aligns with your risk tolerance and investment objectives.

Mid-Cap and Small-Cap Funds
Mid-cap and small-cap funds are more volatile but offer higher growth potential. Mirae Emerging Bluechip and Kotak Emerging Equity are robust mid-cap funds with good historical performance. Small-cap funds like Nippon India Small Cap and Canara Rob Small Cap are also included. It's wise to monitor their performance periodically and ensure they fit your risk profile.

Balanced Advantage Fund
The HDFC Balanced Advantage Fund provides a balanced exposure to equity and debt, reducing overall risk. This fund is suitable for moderate risk-takers seeking stability and growth.

Proposed Changes
Exiting Kotak Flexi Cap
Switching from Kotak Flexi Cap to Parag Parikh Flexi Cap is a strategic move. Parag Parikh Flexi Cap has shown consistent performance and a unique investment strategy. Ensure this fund complements your overall portfolio and aligns with your risk tolerance.

Small Cap Funds
You have two small-cap funds: Nippon India Small Cap and Canara Rob Small Cap. Small-cap funds are highly volatile and risky. Consolidating into one robust small-cap fund can reduce complexity and manage risk better. Quant Small Cap is known for its performance, so replacing Canara Rob with Quant could be a good decision.

Recommendations
Maintain a Diversified Portfolio
Diversification helps manage risk and enhance returns. Your current mix of flexi cap, mid-cap, and small-cap funds is well-diversified. Regularly review and rebalance your portfolio to stay aligned with your goals.

Regular Monitoring
Regular monitoring of your funds' performance is crucial. Assess the performance of each fund against its benchmark and peers. This ensures your investments continue to meet your expectations.

Risk Tolerance
Ensure your portfolio aligns with your risk tolerance. Mid-cap and small-cap funds are more volatile, so be prepared for market fluctuations. Balanced advantage funds can provide stability and reduce overall portfolio risk.

Long-Term Strategy
Consistent Investing
Your long-term horizon of 20-25 years is ideal for equity investments. Continue your systematic investment plans (SIPs) to benefit from rupee cost averaging and compounding.

Review Annually
Annual portfolio reviews with a Certified Financial Planner can ensure your investments are on track. Adjustments based on life changes, market conditions, and financial goals can optimize your portfolio.

Conclusion
Your portfolio is well-structured with a mix of funds. The proposed changes can enhance performance and align with your long-term goals. Regular monitoring, diversification, and alignment with risk tolerance are key to successful investing.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ramalingam

Ramalingam Kalirajan  |4632 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 13, 2024

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My age is 36 and I am investing currently 60000 per month in 7 funds.. and will increase my investment by 10% each year till 46..My goal is to reach 7cr.. in next 12 years.. and I have been invested since last 6 years.. I have a current corpus of 29 lacs.. from 14 lakh investment.. Please suggest.. Funds - Quant small cap PGIM midcap Nippon India small cap HSBC value fund Kotak flexi cap Mirae asset large and midcap HDFC small and midcap
Ans: You have been investing diligently for the past six years. Investing Rs. 60,000 monthly in seven different funds is commendable. You have a current corpus of Rs. 29 lakhs, built from an investment of Rs. 14 lakhs. This is a good achievement. Your goal is to reach Rs. 7 crores in the next 12 years.

Increasing your investment by 10% each year till age 46 is a smart move. It shows a commitment to growing your wealth. Let's delve into the specifics of your portfolio and goals.

Assessing Your Current Portfolio
Your portfolio includes a mix of small, mid, and flexi cap funds, which is a balanced approach. Here’s a breakdown of your funds:

Quant Small Cap
PGIM Midcap
Nippon India Small Cap
HSBC Value Fund
Kotak Flexi Cap
Mirae Asset Large and Midcap
HDFC Small and Midcap
This diverse selection of funds indicates you have a well-spread-out risk. However, there are some aspects to consider for optimizing your investments.

Disadvantages of Index Funds and Benefits of Actively Managed Funds
While index funds are popular for their low cost, they come with drawbacks. Index funds simply track a market index. They do not try to outperform the market. This means they only yield average market returns. Actively managed funds, on the other hand, aim to outperform the market. Skilled fund managers use their expertise to make strategic investment decisions.

Actively managed funds offer the potential for higher returns. They adjust investments based on market conditions and economic trends. This proactive approach can significantly enhance your portfolio's performance.

Disadvantages of Direct Funds and Benefits of Regular Funds through MFD with CFP Credential
Direct funds may seem attractive due to lower expense ratios. But they lack the guidance of a professional. Regular funds, through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential, offer expert advice. They help tailor your investment strategy to your goals and risk tolerance.

A CFP can provide personalized recommendations. They assist in rebalancing your portfolio based on market changes. This professional guidance can enhance your investment outcomes, making regular funds a more advantageous option.

Evaluating Your Goal of Rs. 7 Crores in 12 Years
Your goal of achieving Rs. 7 crores in 12 years is ambitious yet achievable. The key lies in maintaining a disciplined investment approach and making informed adjustments. Increasing your monthly investment by 10% each year will significantly contribute to your goal.

Importance of Asset Allocation
Asset allocation plays a crucial role in achieving long-term financial goals. It involves spreading your investments across different asset classes. This strategy reduces risk and enhances returns. Your current portfolio has a good mix of equity funds. However, consider adding some debt funds to balance risk, especially as you approach your goal timeline.

Reviewing Your Fund Choices
Let's review your current fund choices in detail:

Quant Small Cap: Small cap funds have high growth potential but also high risk. Ensure it aligns with your risk tolerance.

PGIM Midcap: Midcap funds provide a balance between risk and return. They are a good addition to your portfolio.

Nippon India Small Cap: Similar to Quant Small Cap, evaluate its performance and risks.

HSBC Value Fund: Value funds invest in undervalued stocks. They are less risky and can offer good returns.

Kotak Flexi Cap: Flexi cap funds invest across market caps, offering flexibility and diversification.

Mirae Asset Large and Midcap: This fund provides exposure to large and midcap stocks, balancing stability and growth.

HDFC Small and Midcap: A combination of small and midcap stocks can offer good returns but with increased volatility.

Adding Debt Funds for Stability
Consider adding some debt funds to your portfolio. They provide stability and reduce overall risk. Debt funds invest in fixed-income securities, offering steady returns. They are particularly beneficial as you near your goal timeline.

The Role of SIPs in Wealth Creation
Systematic Investment Plans (SIPs) are a powerful tool for wealth creation. They instill financial discipline and allow you to invest regularly. SIPs benefit from rupee cost averaging, reducing the impact of market volatility. Your commitment to increasing SIPs by 10% annually will significantly boost your corpus.

Importance of Periodic Portfolio Review
Regularly reviewing your portfolio is essential. It helps ensure your investments align with your goals and risk tolerance. A Certified Financial Planner can assist in this process. They provide insights and recommendations based on market trends and your financial objectives.

Impact of Market Volatility
Market volatility is inevitable. However, it should not deter your investment journey. Staying invested through market fluctuations is crucial. Over time, markets tend to recover and grow. Maintaining a long-term perspective helps in achieving your financial goals.

Tax Efficiency in Investments
Consider the tax implications of your investments. Long-term capital gains from equity funds are taxed at 10% for gains above Rs. 1 lakh. Debt funds have different tax treatments. Understanding these can help in optimizing your post-tax returns. A CFP can provide guidance on tax-efficient investment strategies.

Emergency Fund: A Safety Net
An emergency fund is essential. It acts as a financial safety net in case of unexpected expenses. Aim to build an emergency fund covering 6-12 months of living expenses. This ensures you can stay invested and not liquidate investments during financial emergencies.

The Power of Compounding
Compounding is a powerful wealth-building tool. Reinvesting returns allows your investment to grow exponentially. Your plan to increase SIPs annually leverages the power of compounding. This strategy can significantly enhance your corpus over time.

Balancing Risk and Reward
Balancing risk and reward is crucial in any investment strategy. While equity funds offer high returns, they come with high risk. Diversifying into debt funds provides stability. Regularly reassess your risk tolerance and adjust your portfolio accordingly.

Benefits of Professional Guidance
Professional guidance can significantly enhance your investment outcomes. A Certified Financial Planner provides personalized advice tailored to your goals. They help navigate market complexities and optimize your investment strategy.

Leveraging Technology for Investment Tracking
Use technology to track your investments. Various apps and tools provide real-time updates on your portfolio's performance. They help in making informed decisions and staying on track with your financial goals.

Setting Realistic Expectations
Setting realistic expectations is crucial. While aiming for Rs. 7 crores is commendable, understand that market conditions can vary. Staying patient and focused on your long-term goals is essential.

Final Insights
Your dedication to investing is commendable. With a disciplined approach, you can achieve your goal of Rs. 7 crores. Regularly review and adjust your portfolio. Consider adding debt funds for stability. Seek guidance from a Certified Financial Planner for personalized advice. Stay focused on your long-term objectives and leverage the power of compounding.

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.

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