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51-Year-Old Seeks Low-Risk Investment Diversification: FD, Mutual Funds, Stocks, and SIP

Ramalingam Kalirajan |6995 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 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 - Jul 19, 2024Hindi

"I am 51 years old. I have Fixed Deposits (FDs) worth around INR 50 lakhs and INR 10 lakhs in mutual funds. I am not a risk-taking person and am hesitant to invest money in equities/stocks. I want to start a SIP but am unable to identify the right SIP due to my low risk tolerance. Please advise how I can diversify my investment. Additionally, please suggest how I can invest in stocks and recommend some good stocks. Also, suggest a good SIP to start and the monthly amount for investment."

Ans: Current Financial Overview
Age: 51 years
FDs: Rs 50 lakhs
Mutual Funds: Rs 10 lakhs
Risk Tolerance: Low
Financial Goals
Wealth Preservation
Low-Risk Investments
Exploring SIP Options
Building a Diversified Portfolio
Investment Strategy
Fixed Deposits (FDs)
Current Allocation: Rs 50 lakhs
Purpose: Safe and secure investments with assured returns.
Action: Continue maintaining FDs for risk-free returns.
Mutual Funds
Current Allocation: Rs 10 lakhs
Purpose: Diversification and moderate growth.
Action: Maintain current mutual fund investments.
Systematic Investment Plan (SIP)
SIP for Low-Risk Investors
Purpose: Steady and consistent growth with low risk.
Suggested Funds: Choose balanced or conservative hybrid funds.
Monthly SIP Amount: Rs 10,000 - Rs 20,000
Fund Selection:
Balanced Advantage Fund
Conservative Hybrid Fund
Reason: These funds balance equity and debt exposure, reducing risk.
SIP Allocation Example
Balanced Advantage Fund: Rs 5,000 per month
Conservative Hybrid Fund: Rs 5,000 per month
Building a Sizable Corpus
Focus on Mutual Funds
Objective: Build a sizable corpus through mutual funds before exploring stocks.
Steps:
Increase SIP investments gradually.
Choose funds with a good track record and low volatility.
Review fund performance with the help of a Certified Financial Planner.
Understanding Market Cycles
Education and Guidance
Purpose: Learn about market cycles and investment strategies.
Approach:
Regular consultations with your fund manager.
Attend investment seminars/webinars.
Read investment-related books and articles.
Diversification Strategy
Combining FDs, Mutual Funds, and SIPs
FDs: Rs 50 lakhs (continue as is)
Mutual Funds: Rs 10 lakhs (maintain)
SIPs: Rs 10,000 - Rs 20,000 per month in balanced and conservative hybrid funds
Final Insights
Diversification: Balance between FDs, mutual funds, and SIPs.
Low-Risk Focus: Choose conservative investment options.
Steady Growth: Aim for consistent and steady returns.
Regular Review: Monitor investments periodically and adjust as needed.
Education: Learn about market cycles with the help of your fund manager.
By following this diversified strategy, you can achieve steady growth while maintaining low risk, ensuring financial security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Asked on - Jul 22, 2024 | Answered on Jul 23, 2024

Thank you for the reply. "Please advise me on the following: SBI is now coming up with a new NFO, the Innovative Opportunities Fund. Is it a good investment? Also, are the other mutual funds I am currently holding (SBI Multicap Fund, SBI Nifty50 Equal Weight Index, SBI Automotive Opportunities Fund) good for the long run?"

Ans: SBI Innovative Opportunities Fund
New Fund Offers (NFOs) are often untested.

They lack a performance history.

It's better to invest in funds with proven track records.

Existing Mutual Funds
SBI Multicap Fund:

Multicap funds are diversified.

They invest across market capitalizations.

This can be a good long-term investment.

SBI Nifty50 Equal Weight Index Fund:

Index funds mirror the market.

They lack active management.

Actively managed funds can offer better returns.

SBI Automotive Opportunities Fund:

Sectoral funds are risky.

They focus on specific sectors, increasing risk.

Diversified funds are safer and more stable.

Recommendations
Avoid thematic, sectoral, and index funds.

Choose actively managed diversified funds with a good track record.

They offer better risk management and potential returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Asked on - Jul 23, 2024 | Answered on Jul 24, 2024

Thank you. Please suggest some actively managed diversified funds in SBI for a long term investment. Also, I hope Balance Advantage fund and Multicap Funds are good selections to start two SIP's of 10K each.

Ans: Given market dynamics, consulting a Certified Financial Planner (CFP) will provide tailored advice and ensure your investments align with your long-term goals. Regular reviews and adjustments are essential.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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