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Ulhas

Ulhas Joshi  |266 Answers  |Ask -

Mutual Fund Expert - Answered on Jan 17, 2024

With over 16 years of experience in the mutual fund industry, Ulhas Joshi has helped numerous clients choose the right funds and create wealth.
Prior to joining RankMF as CEO, he was vice president (sales) at IDBI Asset Management Ltd.
Joshi holds an MBA in marketing from Barkatullah University, Bhopal.... more
Sumit Question by Sumit on Jan 17, 2024Hindi
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At present which mutual fund is best for Lumpsum for next 10 yrs? Also suggest for best ELSS fund for next 5-10 yrs?

Ans: Hello Sumit & thanks for writing to me. It is difficult to predict the best mutual fund but as your horizon is long, I would recommend you look at pure equity funds.

Similarly, it is difficult to predict the best ELSS fund. As you wish to invest in ELSS funds, you can consider investing equally in a basket of ELSS funds like the Parag Parikh ELSS Tax Saver Fund, Franklin India ELSS Tax Saver Fund & ICICI Prudential Tax Saver Fund.
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  |5193 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

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What are the long term Mutual funds for 10 -12 years plan,where i have to invest 6Lack lumpsum ,please advise.
Ans: When considering long-term investments like a 10-12 year plan with a lump sum of 6 lakhs, it's essential to focus on mutual funds that have a track record of consistent performance and align with your risk tolerance and financial goals. Here are some key points to consider:

Equity Mutual Funds:

For a long-term investment horizon of 10-12 years, equity mutual funds can be an excellent option as they have the potential to deliver higher returns compared to other asset classes. Consider diversified equity funds that invest across large-cap, mid-cap, and small-cap stocks to spread risk effectively.

Balanced Funds:

Balanced funds, also known as hybrid funds, invest in a mix of equity and debt instruments. They offer a balance between growth potential and capital preservation, making them suitable for investors with moderate risk tolerance. Look for funds with a proven track record of delivering steady returns over the long term.

Large Cap Funds:

Large-cap funds invest in well-established companies with a track record of stable performance. They tend to be less volatile compared to mid-cap and small-cap funds, making them suitable for conservative investors or those looking for stability in their portfolio. Choose funds with a focus on quality stocks and consistent long-term returns.

Mid and Small Cap Funds:

Mid-cap and small-cap funds invest in companies with smaller market capitalizations, offering the potential for higher growth but also higher volatility. These funds are suitable for investors with a higher risk tolerance and a long-term investment horizon. Look for funds managed by experienced fund managers with a proven track record of navigating market cycles.

Sectoral Funds:

Sectoral funds invest in specific sectors or industries such as banking, IT, healthcare, etc. While they offer the potential for higher returns during sectoral bull runs, they also carry higher risk due to their concentrated exposure. Consider allocating a small portion of your portfolio to sectoral funds for diversification, but avoid overexposure to any single sector.

Consult with a Certified Financial Planner:

As a Certified Financial Planner, I highly recommend consulting with a professional to assess your individual financial situation and investment objectives. They can provide personalized advice and help you select mutual funds that align with your goals, risk tolerance, and investment horizon.

By carefully selecting mutual funds that suit your investment objectives and staying disciplined with your investment strategy, you can work towards achieving your long-term financial goals. Remember to review your portfolio periodically and make adjustments as needed to ensure it remains aligned with your objectives.

..Read more

Ramalingam

Ramalingam Kalirajan  |5193 Answers  |Ask -

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

Asked by Anonymous - May 31, 2024Hindi
Money
I have 2 lakh and wanted to invest in lumpsum mutual fund for 10+ years. I am ready to take 100% risk. Please suggest me some funds
Ans: Long-Term Investment Strategies for High-Risk Appetite
Congratulations on your decision to invest Rs 2 lakh in mutual funds for the long term! Your readiness to take 100% risk suggests you are looking for high-growth opportunities. Let's explore various mutual fund options that align with your risk appetite and investment horizon.

Understanding High-Risk Investments
High-risk investments are typically equity-based. They offer the potential for high returns but come with significant volatility. For a 10+ year horizon, equity mutual funds are ideal. Let's dive into different types of equity funds that can suit your profile.

Equity Mutual Funds
Equity mutual funds invest primarily in stocks. They are categorized based on the market capitalization of the companies they invest in, the sectors they focus on, and their investment strategies.

Large-Cap Funds
Large-cap funds invest in well-established companies with large market capitalizations. These companies have a track record of stability and consistent growth.

Benefits:

Stability: Less volatile compared to mid-cap and small-cap funds.

Reliable Growth: Offer steady returns over the long term.

Assessment:

Large-cap funds are suitable for investors seeking moderate risk with reliable growth. They are less risky than mid-cap and small-cap funds but offer lower potential returns.

Mid-Cap Funds
Mid-cap funds invest in medium-sized companies. These companies have the potential for higher growth compared to large-cap companies but are also more volatile.

Benefits:

Growth Potential: Higher potential for capital appreciation than large-cap funds.

Balanced Risk: Moderate risk, balancing stability and growth.

Assessment:

Mid-cap funds are ideal for investors willing to take on moderate risk for higher returns. They offer a good balance between stability and growth potential.

Small-Cap Funds
Small-cap funds invest in smaller companies with high growth potential. These funds are the most volatile but can offer the highest returns over the long term.

Benefits:

High Returns: Potential for significant capital appreciation.

Growth Opportunities: Invest in emerging companies with high growth prospects.

Assessment:

Small-cap funds are best suited for aggressive investors ready to embrace high volatility for substantial returns. They require patience and a long-term outlook.

Multi-Cap Funds
Multi-cap funds invest in companies across various market capitalizations. They provide diversification by investing in large-cap, mid-cap, and small-cap companies.

Benefits:

Diversification: Spread risk across different market capitalizations.

Flexibility: Fund managers can shift investments based on market conditions.

Assessment:

Multi-cap funds are ideal for investors seeking diversification and flexibility. They balance risk and reward by investing across the market spectrum.

Sectoral/Thematic Funds
Sectoral and thematic funds focus on specific sectors or investment themes. These funds can offer high returns if the chosen sector or theme performs well.

Benefits:

Focused Investment: Target high-growth sectors or themes.

High Returns: Potential for significant returns if the sector/theme performs well.

Assessment:

Sectoral/thematic funds are suitable for investors with strong convictions about specific sectors or themes. They carry higher risk due to concentrated exposure.

Active vs. Passive Funds
Active Funds:

Managed by Experts: Fund managers actively select stocks to outperform the market.

Higher Fees: Management fees are higher due to active management.

Passive Funds:

Track Index: Mimic the performance of a market index.

Lower Fees: Management fees are lower due to passive management.

Disadvantages of Index Funds:

Limited Growth: Passive funds can’t outperform the market.

Missed Opportunities: May miss out on high-growth stocks not in the index.

Disadvantages of Direct Funds
Higher Effort Required:

Self-Management: Investors need to manage and monitor investments themselves.
Less Guidance:

No Professional Advice: Lack of professional advice can lead to poor investment choices.
Benefits of Regular Funds:

Expert Management: Professional fund managers make informed decisions.

Convenience: Easier to manage with guidance from a certified financial planner (CFP).

Recommended Investment Approach
Given your high-risk appetite and long-term horizon, an aggressive investment approach is suitable. Here's a detailed plan:

Step 1: Allocate Funds Across Different Categories
Diversification: Spread your investment across different types of equity funds to balance risk and return.

Example Allocation:

Large-Cap Funds: 30% for stability and reliable growth.

Mid-Cap Funds: 30% for balanced risk and higher returns.

Small-Cap Funds: 20% for high growth potential.

Multi-Cap Funds: 20% for diversification and flexibility.

Step 2: Research and Select Funds
Performance Analysis: Choose funds with a strong track record of performance over at least five years.

Consistency: Look for consistency in returns and management expertise.

Fund Manager: Evaluate the experience and strategy of the fund manager.

Step 3: Monitor and Review Regularly
Regular Monitoring: Track the performance of your investments periodically.

Rebalance Portfolio: Adjust your portfolio based on performance and changing market conditions.

Stay Informed: Keep abreast of market trends and economic changes.

The Importance of Long-Term Investment
Compounding Returns: Long-term investments benefit from compounding, leading to significant growth.

Market Cycles: Staying invested through market cycles helps in averaging returns.

Patience Pays: Long-term investments mitigate short-term volatility and provide higher returns.

Tax Implications
Equity Funds: Long-term capital gains (LTCG) on equity funds are taxed at 10% if gains exceed Rs 1 lakh in a financial year.

Tax Planning: Consider tax-saving mutual funds (ELSS) for additional benefits.

Conclusion
Investing Rs 2 lakh in lumpsum mutual funds for a 10+ year horizon with a high-risk appetite is a prudent decision. Diversify across large-cap, mid-cap, small-cap, and multi-cap funds to balance risk and maximize returns. Regularly monitor your portfolio and stay informed about market trends.

Consulting a Certified Financial Planner (CFP) can provide personalized guidance and ensure your investments align with your financial goals. With patience and disciplined investing, you can achieve significant growth over the long term.

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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