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Ramalingam

Ramalingam Kalirajan  |4060 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 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
Asked by Anonymous - Feb 22, 2024Hindi
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Pls suggest few mutual fund sectors for investing 10 lakhs in SIP for a investment holding period 20-25 years.

Ans: Your commitment to long-term wealth creation is commendable. Investing for 20-25 years allows for significant growth through compounding and market fluctuations. Let's explore mutual fund types suitable for your goal.

Comparing Sectoral Funds and Diversified Active Funds
Sectoral Funds:

Higher Risk and Reward: Potential for higher returns but with increased risk due to focus on specific sectors.
Targeted Growth: Ideal for investors looking to capitalize on high-growth sectors.
Diversified Active Funds:

Balanced Risk: Spread across multiple sectors, reducing risk and providing stable returns.
Flexible Management: Fund managers actively adjust portfolios based on market conditions.

Benefits of Diversified Active Funds
Diversification Across Sectors:

Risk Mitigation: Diversification reduces risk by spreading investments across various sectors.
Stable Returns: Provides stability through a mix of high-growth and stable sectors.
Active Management:

Expert Decisions: Managed by professionals who make informed decisions based on market conditions.
Flexibility: Fund managers can adjust portfolios to capitalize on emerging opportunities and mitigate risks.
Recommended Mutual Fund Categories for Long-Term SIP Investment
1. Large-Cap Funds:

Stability and Growth: Invest in large, well-established companies.
Less Volatility: Offer relatively stable returns compared to mid-cap and small-cap funds.
2. Mid-Cap Funds:

Growth Potential: Invest in medium-sized companies with higher growth potential.
Balanced Risk: Offer a balance between the stability of large-cap funds and the growth potential of small-cap funds.
3. Small-Cap Funds:

High Growth: Invest in small companies with potential for significant growth.
Higher Risk: More volatile but can offer substantial returns over the long term.
4. Multi-Cap Funds:

Diversification: Invest across large-cap, mid-cap, and small-cap stocks.
Flexibility: Fund managers can adjust the portfolio mix based on market conditions.
5. Balanced/Hybrid Funds:

Risk Mitigation: Invest in a mix of equities and debt.
Stability and Growth: Offer a balance of growth potential and income stability.
SIP Allocation Strategy
Balanced Portfolio:

Large-Cap Funds: Allocate 30% of your SIP here for stability and consistent growth.
Mid-Cap Funds: Allocate 25% for higher growth potential with moderate risk.
Small-Cap Funds: Allocate 15% for high growth opportunities.
Multi-Cap Funds: Allocate 20% for diversification and flexibility.
Balanced/Hybrid Funds: Allocate 10% for a mix of growth and stability.
Disadvantages of Direct Equity Investing
Higher Risk:

Volatility: Direct equity investments can be highly volatile, especially for individual investors.
Lack of Diversification: Investing in individual stocks can lead to lack of diversification, increasing risk.
Time and Knowledge:

Research Required: Direct equity investing requires extensive research and continuous monitoring.
Expertise Needed: It demands a higher level of expertise to make informed investment decisions.
Benefits of Regular Funds Over Direct Funds
Professional Management:

Expertise: Regular funds are managed by professionals who actively monitor and adjust the portfolio.
Personalized Strategy: Fund managers make informed decisions based on market trends and economic indicators.
Convenience and Support:

Guidance: Regular funds offer guidance and support from fund managers and advisors.
Ease of Access: These funds provide easy access to information and resources for investors.
Recommendations for Financial Security
Start Systematic Investment Plans (SIP):

Discipline: SIPs ensure disciplined and regular investing.
Rupee Cost Averaging: This approach helps mitigate market volatility over time.
Continue Provident Fund Contributions:

Retirement Corpus: Ensure continuous contributions to your provident fund for a substantial retirement corpus.
Set Up an Emergency Fund:

Safety Net: Set aside 6-12 months’ worth of expenses in a liquid fund for emergencies.
Conclusion
Investing Rs. 10 lakhs in SIPs across diversified mutual fund categories can lead to substantial wealth creation over 20-25 years. Opt for a mix of large-cap, mid-cap, small-cap, multi-cap, and balanced/hybrid funds to balance risk and return. Regular funds, managed by professionals, offer better guidance and stability compared to direct equity investing. Ensure disciplined investing through SIPs, maintain your provident fund contributions, and set up an emergency fund for financial security.

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  |4060 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 27, 2024

Asked by Anonymous - Feb 22, 2024Hindi
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Hi. Pls suggest a few mutual fund sectors for investing 10 lakhs in SIP for a investment holding period 20-25 years.
Ans: let's focus on other mutual fund sectors excluding index funds and sectoral funds:

Large Cap Funds: These funds invest in established, large-cap companies known for their stability and consistent performance. They offer a blend of growth potential and stability, making them suitable for investors with a moderate risk appetite and a long-term investment horizon.
Multi-Cap Funds: Multi-cap funds provide flexibility by investing across companies of various market capitalizations, including large, mid, and small-cap. This diversification allows investors to capitalize on opportunities across different segments of the market, potentially maximizing returns over the long term.
Mid Cap Funds: Mid-cap funds focus on companies with medium market capitalization, offering higher growth potential compared to large caps. While they come with higher volatility, mid-cap funds can generate significant returns over the long term for investors willing to tolerate market fluctuations.
Small Cap Funds: Small-cap funds invest in companies with small market capitalization, known for their high growth potential. They are more volatile compared to large and mid-cap funds but can offer substantial returns over the long term for investors with a higher risk appetite.
Balanced Advantage Funds: These funds dynamically allocate assets between equity and debt based on market conditions. They offer downside protection during market downturns while participating in equity market upswings, providing a balanced approach to long-term investing.
By focusing on large-cap, multi-cap, mid-cap, small-cap, and balanced advantage funds, you can build a diversified mutual fund portfolio tailored to your long-term investment goals. Remember to regularly review your portfolio's performance and make adjustments as needed to stay on track towards achieving your financial objective

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Patrick

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CAT, XAT, CMAT, CET Expert - Answered on Jun 26, 2024

Asked by Anonymous - Jun 22, 2024Hindi
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I graduated with a B.Com (General) with 73.52%, and I obtained 54.71% in 10th grade and 51.17% in 12th grade. I belong to the General category and am eligible for an EWS certificate. My academic profile is summarized as 5|5|7. Since graduation, I have been a fresher with no practical work experience or internships, and I do not have any notable co-curricular or extra-curricular achievements. I took the CAT 2022 exam shortly after graduation for experience. Following that, I started preparing for CAT 2023, XAT 2024, and MHT CET 2024 but was unsuccessful due to a lack of consistency, discipline, and dedication. This year, I am preparing for CAT, NMAT, SNAP, XAT, MHT CET, and CMAT with the goal of getting into a top B-school in India. My preparation is going well this time. Although I realize I may not get into the top IIMs (BLACKIS), I am targeting and working hard for the new and baby IIMs, XLRI, FMS, SPJIMR, NMIMS, SIBM, and other reputable non-IIMs. Many people have advised me to pursue an MBA from local colleges or to try for government or banking jobs. While I respect their suggestions, I am determined to pursue an MBA from a top college in India. I cannot change my past academic record, but I am focused on improving my overall profile. I seek your valuable guidance on how to justify my gap years, improve my profile, and get advice for GDPI, securing a SIP, and placement. Currently, I am only able to get job of BPS in MNCs with only 11k p.m. for night shift. It may affect my schedule my preparation and work culture will be hectic and will only get 1.5 to 2hrs on weekdays for preparation. If I able to get a sales/Marketing related to my career interest then i can max 14k with more hectic work and more travel which may results inconsistency in preparation in weekdays. Even if I start working now, I can only add about 2 months of work experience before CAT and other MBA entrance test registrations, and less than 10 months of work experience before GDPI next year. I am committed to achieving a 99+ percentile this time. Alongside my preparation, I have acquired two beginner-level certifications in digital marketing and plan to add up to five more certifications in pre-MBA relevant skills. I am highly grateful for your feedback and suggestions.
Ans: It may be a little difficult to get into top colleges based on your academics - though it is possible if you do well in the written test and interview. It will help if you look at more colleges for admission. IF you are ready to wait then can take up a job and try to get experience along with preparation for CAT. By next year you would have 1 year experience which would give you some additional marks that could help you get a call.

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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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