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How long should I invest in a regular growth mutual fund?

Ramalingam Kalirajan |7290 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 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

Question by Bhogu on Jul 23, 2024Hindi

Money

Sir - In regular growth MFs what could be the ideal period ( in years ) for parking the investment?

Ans: An ideal investment period for regular growth mutual funds is crucial. It ensures optimal returns. It also aligns with your financial goals.

Short-Term Investment Period
A short-term period is less than 3 years. This is not ideal for regular growth mutual funds. The market is volatile. Short-term investments might not perform well.

Medium-Term Investment Period
A medium-term period is between 3 to 5 years. This period is better. It allows your investment to grow. It also mitigates some market volatility. However, it might not maximize returns.

Long-Term Investment Period
A long-term period is 5 years or more. This is the best for regular growth mutual funds. The longer you stay invested, the higher the potential returns. Compounding works best over a long period. Market volatility evens out over time.

Benefits of Long-Term Investment
Higher Returns: Long-term investments typically yield higher returns.

Compounding: Compounding benefits increase over time.

Reduced Volatility: Long-term investments are less affected by market volatility.

Tax Efficiency: Long-term investments might be more tax-efficient due to lower capital gains tax rates.

Factors to Consider
Financial Goals: Align your investment period with your financial goals.

Risk Tolerance: Assess your risk tolerance before deciding the investment period.

Market Conditions: Consider current market conditions. Long-term investments can withstand market fluctuations better.

Professional Insight
Investing for the long term in regular growth mutual funds is wise. It aligns with achieving substantial financial goals. Examples include retirement or children's education.

Active vs. Passive Management
Actively Managed Funds: These funds have professional managers. They aim to outperform the market. Regular monitoring and adjustments are made.

Passively Managed Funds (Index Funds): These funds aim to replicate market indices. They are less flexible. They might not outperform the market. They also do not adjust to market changes promptly.

Disadvantages of Index Funds
Limited Growth: Index funds may not achieve high growth.

Lack of Flexibility: They do not adapt to market conditions.

Potential Underperformance: They might underperform actively managed funds.

Advantages of Regular Funds through MFD with CFP Credential
Professional Management: Regular funds managed by professionals.

Expert Guidance: Certified Financial Planners provide expert advice.

Optimal Returns: These funds aim to maximize returns through active management.

Final Insights
For regular growth mutual funds, a long-term investment period of 5 years or more is ideal. It maximizes returns, benefits from compounding, and reduces the impact of market volatility. Align your investment horizon with your financial goals and risk tolerance. Choose actively managed funds for optimal growth and flexibility. Seek guidance from a Certified Financial Planner to make informed decisions.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Asked on - Jul 29, 2024 | Answered on Jul 30, 2024

Dear Sir Ji - Many thanks for your clarification. Warm regards

Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!

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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Question by Amit - Jan 06, 2021Hindi

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I am having funds in the range to 10-15 lakhs, please advise the MFs which i must select to invest in for a period of about 3 years. Further as the market has recovered a lot from Covid period, please advise is it correct time to invest the same.

Ans: You may invest in a basket of hybrid and debt funds if the investment horizon is of 3 years.

EDELWEISS BALANCED ADVANTAGE FUND - GROWTH
Hdfc Short Term Debt Fund - Regular Plan - Growth
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Question by Prince - Dec 27, 2023Hindi

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Hello Sir, I have started MFs investment recently from last year have low budget. I have started with 1. Quant ELSS Tax saver direct growth (Rs500) 2. SBI small cap fund direct growth (Rs600) 3. ICICI Prudential commodities Fund direct growth (Rs500) 4. Nippon india small cap fund direct growth (Rs500) 5. Quant Small cap fund direct plan growth (Rs1000) I would like to know whether its good to invest in these MFs for longer period 15-20 years. I'll add another 3-4K in the future but for now it'll be the same. Please guide me as I have low budget

Ans: It's commendable that you've started investing in MFs with a limited budget. For a longer investment horizon of 15-20 years, it's important to focus on funds with strong potential for growth. While your current selection includes some good choices, consider diversifying across different categories such as large-cap, mid-cap, and multi-cap funds for better risk management. Additionally, prioritize funds with consistent track records and reputable fund management teams. As your budget increases in the future, you can gradually add more funds to further diversify your portfolio. Regularly review your investments and consult with a financial advisor for personalized guidance.

Ramalingam Kalirajan |7290 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 05, 2024

Question by Bhogu - Jun 09, 2024Hindi

Money

Dear Sir Ji - Please advise the maximum age at which one can invest in regular- growth-related MFs.

Ans: There is no maximum age limit for investing in regular-growth mutual funds in India. Investors of any age can invest in these funds. However, here are a few considerations based on different age groups:

Young Investors (20s and 30s)
Advantages
Long Investment Horizon: They can invest for a longer period, allowing more time to benefit from the power of compounding.
Higher Risk Appetite: They can afford to take more risks and invest more in equity funds for higher returns.
Strategy
Focus on equity mutual funds for aggressive growth.
Diversify with a small percentage in debt funds for stability.
Middle-Aged Investors (40s and 50s)
Advantages
Stable Income: They usually have a stable income, allowing for consistent investments.
Balanced Approach: They can balance growth and safety in their portfolio.
Strategy
A balanced portfolio of equity and debt funds.
Consider hybrid funds for a mix of growth and stability.
Senior Investors (60s and Above)
Advantages
Experience: They have more experience and understanding of market dynamics.
Wealth Preservation: They focus more on preserving wealth and generating income.
Strategy
Higher allocation to debt funds for safety.
A smaller portion in equity funds for moderate growth.
Key Considerations
Risk Tolerance: As you age, your risk tolerance generally decreases. Adjust your portfolio to reflect this change.
Investment Horizon: Shorter investment horizons require safer, less volatile investments.
Income Needs: Seniors may prioritize income-generating funds over growth-oriented ones.
Final Thoughts
Age should not deter you from investing in mutual funds. The key is to align your investment strategy with your financial goals, risk tolerance, and investment horizon. A Certified Financial Planner can help tailor a portfolio to suit your needs, regardless of age.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ramalingam Kalirajan |7290 Answers |Ask -Follow

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

Question by Bhogu - Jun 15, 2024Hindi

Money

Sir - what would be the ideal duration for parking money in regular growth MFs. Is it 5, 10 years or more?

Ans: Investing in regular growth mutual funds can be a great way to build wealth over time. The ideal duration depends on various factors including your financial goals, risk tolerance, and market conditions. Let's explore these aspects in detail.

Understanding Investment Horizons

Short-Term (1-3 Years): Mutual funds are generally not ideal for short-term goals due to market volatility. For short-term needs, consider safer options like liquid or ultra-short duration funds.

Medium-Term (3-5 Years): For medium-term goals, you can consider debt mutual funds or balanced hybrid funds. These provide a mix of safety and growth potential.

Long-Term (5+ Years): For long-term goals, equity mutual funds are highly recommended. They have the potential to provide higher returns and benefit from the power of compounding.

Benefits of Long-Term Investment in Mutual Funds

Compounding Effect: Long-term investments benefit from compounding. The longer your money stays invested, the more it grows.

Market Cycles: Long-term investments can ride out market volatility. They are less affected by short-term market fluctuations.

Tax Efficiency: Long-term capital gains on equity mutual funds are taxed at a lower rate. This can result in better post-tax returns.

Assessing Your Financial Goals

Retirement Planning: If you are planning for retirement, a horizon of 10 years or more is ideal. This allows you to build a substantial corpus.

Children’s Education: For children's higher education, start investing when they are young. This gives you a horizon of 10-15 years.

Wealth Creation: For general wealth creation, a minimum of 5 years is recommended. This gives your investments time to grow.

Actively Managed Funds vs. Index Funds

Disadvantages of Index Funds

No Flexibility: Index funds simply track a market index. They can't adapt to changing market conditions.

Lower Return Potential: They aim to match the market, not outperform it. This limits their return potential.

Benefits of Actively Managed Funds

Expert Management: Actively managed funds are handled by professional fund managers. They make informed decisions based on market analysis.

Higher Return Potential: Skilled managers can identify opportunities and avoid underperforming sectors.

Risk Management: Active funds can adjust their portfolios to manage risk effectively.

Regular Funds vs. Direct Funds

Disadvantages of Direct Funds

Lack of Professional Guidance: Investing directly means you miss out on expert advice.

Time-Consuming: You need to research and manage your investments yourself.

Benefits of Regular Funds with a Certified Financial Planner

Tailored Advice: A Certified Financial Planner (CFP) provides advice tailored to your financial goals.

Peace of Mind: Professional guidance ensures your investments are on track.

Optimal Returns: CFPs help you choose funds that align with your risk tolerance and goals.

Recommended Investment Duration

For Equities: A minimum of 5-10 years is recommended. This allows you to benefit from market growth and compounding.

For Debt Funds: 3-5 years is suitable. These funds are less volatile and provide steady returns.

Final Insights

The ideal duration for parking money in regular growth mutual funds depends on your financial goals and risk tolerance. For long-term wealth creation, a horizon of 5-10 years or more is ideal. Consider actively managed funds and seek guidance from a Certified Financial Planner for optimal results.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Dr Nagarajan Jsk |183 Answers |Ask -Follow

NEET, Medical, Pharmacy Careers - Answered on Dec 21, 2024

Asked by Anonymous - Nov 19, 2024Hindi

Career

Hello sir I am mbbs graduated from russia in 2020,n passed with my fmge exam in india in 2021, I want to ask if i want to practice medicine or work as doctor in uk ? Is it necessary for me to pass plab exam exam? Or if i get sponsorship from any uk i will be able to work there and simultaneously i will give plab exam?? Please guide me i m so confused?

Ans: Hi, I understand that you pursued a medicine course in Russia (a non-European country) and, since you are from India, you have completed the FMGE. Now you want to practice or work in the UK as a doctor?

Based on your question, you are eligible to practice in India after completing your internship (which you haven't mentioned, but I assume you have completed it). The FMGE is essentially a licensure exam for Indian students who have completed their medical studies abroad, so you are eligible to practice in India only.

If you want to practice medicine in the UK, you need to complete the PLAB test, as you are from outside the UK/Switzerland/European countries (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland).

You also inquired about sponsorship. Here is the information related to sponsorship for practicing medicine in the UK.
(Extracted from general medical council, uk org. )Applying for registration using sponsorship
If you apply through sponsorship, you will have to satisfy the sponsor that you possess the knowledge, skills and experience required for practising as a fully registered medical practitioner in the UK. Each sponsor has their own scheme which we have pre-approved. If you can satisfy the requirements of their scheme, they will issue you with a Sponsorship Registration Certificate (SRC) which you will need for your application with us. Please ensure this is a Sponsorship Registration Certificate for GMC registration, as we can’t accept UK visa sponsorship certificates for your application for registration.
Please note that a core part of all sponsors' criteria is that a doctor applying for an offer of sponsorship must have been engaged in medical practice for three out of the last five years including the most recent 12 months. If you cannot meet these minimum criteria, it is unlikely that you'll be able to supply sufficient evidence to support your application for sponsorship.
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NEET, Medical, Pharmacy Careers - Answered on Dec 21, 2024

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What is your nationality? (Based on your nationality, I can check the relevant requirements from the health department regarding courses and internships).

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NEET, Medical, Pharmacy Careers - Answered on Dec 21, 2024

Asked by Anonymous - Dec 20, 2024Hindi

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Sir my son has 92 percentile in cat 2024..what are his scopes of admission.

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Mutual Funds, Financial Planning Expert - Answered on Dec 21, 2024

Asked by Anonymous - Dec 21, 2024Hindi

Money

Hi Sir, I follow your articles regularly and your detailed assessment is really awesome.I am 47yrs Male with wife, 20&18 years kids, elder one is in B.Tech and younger one is 12th. My wife is a home maker. Coming to financials. I have 4 houses including the one residing worth 10cr(total) and getting rental income of 70k per month, invested in stocks and MFs worth 60L, have foreign stocks of worth 1.7cr, accumulated pf around 1.3cr. I have farm lands worth 5cr. Have 1.2cr loan and salary of ~4L (net). current sips in equity 70k/month, have 5Cr term plan, health insurance for family 50L. How do I plan my retirement at 52-53years assuming 80 years life expectancy. Don't want to depend on kids and need regular income ~3-4L per month.

Ans: Asset Evaluation
Real Estate:
You own four houses worth Rs 10 crore, generating Rs 70,000 monthly rental income. This is a solid base for passive income. However, real estate can have fluctuating maintenance costs, tenant issues, and varying rental yields over time.

Stocks and Mutual Funds:
Your Rs 60 lakh investment in stocks and mutual funds is a commendable step. Active mutual funds offer professional fund management and can outperform index funds over time.

Foreign Stocks:
Your Rs 1.7 crore portfolio in foreign stocks adds geographical diversification. Monitor currency exchange fluctuations and global market trends.

Provident Fund (PF):
With Rs 1.3 crore in PF, this is a reliable retirement corpus. The fund provides fixed returns and tax benefits, adding stability.

Farm Lands:
Farm lands worth Rs 5 crore are an illiquid but valuable asset. They might not generate consistent income unless leased or developed.

Loans:
A loan liability of Rs 1.2 crore needs prioritised repayment. Focus on loans with higher interest rates first.

Insurance Coverage:
A Rs 5 crore term plan is robust. Your Rs 50 lakh health insurance is sufficient for unexpected medical emergencies.

Retirement Goals
You need Rs 3–4 lakh monthly for 27–28 years post-retirement.
The portfolio must generate steady, inflation-adjusted returns.
Action Plan for Retirement
Debt Management
Prepay High-Interest Loans:
Use a portion of your surplus income to prepay loans. This reduces interest outflow and increases your cash flow.

Avoid New Loans:
Focus on reducing existing liabilities instead of taking on new ones.

Portfolio Restructuring
Real Estate:
Retain essential properties. Sell underperforming or non-essential properties to reduce concentration in real estate. Invest proceeds in mutual funds or debt instruments for diversification.

Mutual Funds (MFs):
Increase SIPs in actively managed funds. They outperform direct funds due to guidance from Certified Financial Planners and MFDs. Regular funds offer better tracking and professional assistance.

Stocks:
Monitor direct equity investments closely. Consider reallocating underperforming stocks to mutual funds for better management.

Debt Instruments:
Invest in high-quality debt funds or fixed-income securities for stability. These instruments balance equity volatility and ensure steady returns.

SIP Strategy
Increase SIPs from Rs 70,000 to Rs 1 lakh/month.
Allocate 70% to equity funds for long-term growth.
Invest 30% in debt funds for stability and liquidity.
Emergency Fund
Maintain a 12-month expense reserve in liquid funds or fixed deposits.
This covers unexpected expenses without disturbing investments.
Income During Retirement
Systematic Withdrawal Plan (SWP)
Use SWPs in mutual funds to generate regular income.
Withdraw 6–8% annually from your mutual fund portfolio for a steady income stream.
Rental Income Optimisation
Review property rents regularly.
Invest part of rental income in equity or debt mutual funds for compounding.
Dividend Stocks
Retain high-dividend-yield stocks for regular income.
Reinvest surplus dividends for long-term growth.
Tax Efficiency
Equity Funds Taxation:
Long-term gains above Rs 1.25 lakh are taxed at 12.5%. Short-term gains are taxed at 20%.

Debt Funds Taxation:
Both short- and long-term gains are taxed per your income slab.

Real Estate Capital Gains:
Use exemptions under Sections 54 or 54F to save tax on property sales.

Inflation Protection
Allocate 60–70% of your portfolio to equity investments.

Equity provides inflation-adjusted returns over time.

Debt funds and fixed instruments safeguard against equity market volatility.

Estate Planning
Draft a will to allocate assets transparently among family members.
Use nomination and joint ownership to avoid legal complications.
Consider a family trust for farm lands to avoid disputes.
Periodic Review
Review your financial plan every six months.
Adjust investments based on market conditions, goals, and needs.
Consult a Certified Financial Planner regularly for updates.
Finally
A well-diversified portfolio ensures financial independence post-retirement. Focus on debt repayment, portfolio balance, and tax-efficient withdrawals. Your assets can comfortably generate Rs 3–4 lakh monthly income, adjusted for inflation.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Kanchan Rai |444 Answers |Ask -Follow

Relationships Expert, Mind Coach - Answered on Dec 21, 2024

Question by Kevin - Dec 19, 2024Hindi

Relationship

I am the eldest sibling in our families and aged 51. Normally, whenever anyone in the family has a problem - financial, mental, psychological, issue with people or anything else, they come up to discuss with me and share. Well, many would say I am lucky as people look up to me when they are in any kind of a problem. But that is not the case. Sadly no one is around with whom I can discuss or even think to share my issues, my problems. I do not have any friends. Sadly, yes, that is a fact and at my age, I dont expect that here we have a culture where we can get to making friends, at least the kind of friends with whom you can confide, share your feelings, problems. I tried and failed. Maybe because I am introvert or maybe I am too cautious. To make it more complicated, I dont work in the regular kind of job. I am a lone person who works as a freelance from home. This limits my outreach when it comes to interacting with real people. I have clients, business contacts, but I cannot get personal with them. It will never be a good choice. My wife is busy with her job + we do not have any relation beyond the daily matters related to household and it has been more than 10 years now that we live this way. Tried to sort out things with her but she just does not have time and interest (after all who wants to add on to tensions, stress). My daughter is after all my daughter - I cannot share these with her, and definitely at 10 she is too young to be one to discuss such stuff. I am not sure how far this issue can be fixed but I am hopeful to find some path here.

Ans: Dear Kevin,
Starting small can be helpful. Consider connecting with people through shared interests or hobbies, either online or in person, where the pressure to immediately open up is minimal. Online communities, local meetups, or volunteer activities can create low-stakes opportunities to connect with like-minded individuals. The goal isn’t to instantly find someone to confide in but to slowly build a sense of belonging and companionship.

Your relationship with your wife appears to be another significant source of emotional distance. While her lack of interest in deep conversations may seem like a barrier, it’s worth exploring other ways to reconnect—perhaps by spending time together in shared activities or revisiting moments that once brought you closer. Sometimes, relationships stuck in routines benefit from new experiences or even professional counseling to navigate the underlying dynamics.

Regarding your daughter, while it’s clear she cannot shoulder your emotional burdens, she can still be a source of joy and connection. Investing time in activities with her can provide a sense of fulfillment and grounding that counters loneliness.

Above all, remember that reaching out for professional support, such as therapy, is not a sign of weakness but an act of self-care. A therapist can provide a safe space to express your feelings and help you develop strategies to foster deeper connections and manage emotional isolation.

You deserve to feel supported and connected, and even if the journey to finding that seems long, every step you take toward opening up or seeking out others is a move toward a more fulfilling and less lonely existence.

T S Khurana |260 Answers |Ask -Follow

Tax Expert - Answered on Dec 21, 2024

Asked by Anonymous - Nov 22, 2024Hindi

Money

My Question is for New Tax Regime for Financial Year 2024 – 25. Total gross Income is Rs.9 lakhs and along with that income from share / stock trading i.e short term gains of Rs. 1 lakh. Could you please help me advise if what would be the tax liability?

Ans: 01. Considering your Income of Rs.9.00 lakhs as business income & Rs.1.00 lakh as STCG on securities, without any tax savings, your tax liability would be around Rs.62,400.00 in New tax regime. If we opt for the old tax regime, your tax liability would be much more than this.
Most welcome for any further clarifications. Thanks.

T S Khurana |260 Answers |Ask -Follow

Tax Expert - Answered on Dec 21, 2024

Question by SA - Nov 11, 2024Hindi

Money

I got a residential property through will from my mother,,property is 30 years old and i am planning to sell it, in that case i am going to get Rs 165lacks,, what will be the tax implication and how to avoid the same kindly advise i am 55 years old married man with a daughter

Ans: 01. In this case, you would be subjected to LTCG (Long Term Capital Gain) tax.
02. To work out LTCG, you should reduce its Cost from the Sale proceeds (Rs.165.00 lakhs).
of property, which was costed to your mother.
03. However, following details may help you to assess your tax liability.
Under present provisions of Income Tax Act, you may opt any of the options (Long Term
Capital Gains), as under :
(a). Tax Rate 12.50% without indexation or
(b). Tax Rate of 20% with Indexation.
04. You may calculate your tax liability under both options & may opt for the tax regime, where tax liability is minimum.
05. To avoid tax, you may invest in purchase of some house property. Exemption available would be minimum of Cost of new house property or the LTCG, which ever is less.
06. You have the option to purchase Capital Gain Bonds of NHAI etc., for tax saving.
07. Most welcome for any further clarifications. Thanks.

T S Khurana |260 Answers |Ask -Follow

Tax Expert - Answered on Dec 21, 2024

Asked by Anonymous - Dec 19, 2024Hindi

Money

Hello Sir, I worked in a Pvt Ltd company from 2006 to 2011, and they had their own PF trust. The company was later sold off to another firm. I still haven't withdrawn the my PF amount. How will i be able to do that. I have the PF number and ESP number. Since this was before 2011 , my UAN is not linked to this account. How will i be able to retrieve my PF amount that is still stuck here.

Ans: Kindly keep in touch with your previous employer (present owner of the company), in this connection. There should not be any problem in getting your PF amount, except certain formalities/ forms to be submitted.
Most welcome for any further clarifications. Thanks.

T S Khurana |260 Answers |Ask -Follow

Tax Expert - Answered on Dec 21, 2024

Asked by Anonymous - Dec 21, 2024Hindi

Money

Dear Guru. I have inherited a property in Mumbai from my deceased father which was purchased in 1983 by him. If today i sell the property which is worth 2.60 Crs whats my capital gains tax and how will it be calculated

Ans: 01. In absence of exact figures, it is not possible to calculate your Capital Gains Tax. However, following details may help you to assess your tax liability.
02. Under present provisions of Income Tax Act, you may opt any of the options (Long Term
Capital Gains), as under :
(a). Tax Rate 12.50% without indexation or
(b). Tax Rate of 20% with Indexation.
03. You may calculate your tax liability under both options & may opt for the tax regime, where tax liability is minimum.
04. Most welcome for any further clarifications. Thanks.

Ramalingam Kalirajan |7290 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Dec 21, 2024

Question by Anil - Dec 20, 2024Hindi

Money

Top4 sips with 15k amount suggest me

Ans: Here’s an updated strategy for your Rs. 15,000 SIP allocation, replacing the sectoral/thematic fund with a small-cap fund for better long-term growth potential.

Suggested SIP Allocation (Rs. 15,000)
Large-Cap Fund

Allocation: Rs. 4,000/month
Objective: Stability and steady growth by investing in India’s top 100 companies.
Why Choose: Provides consistent returns and low volatility in your portfolio.
Flexi-Cap Fund

Allocation: Rs. 4,000/month
Objective: Diversified exposure across large, mid, and small-cap stocks.
Why Choose: Offers balanced risk and returns with flexibility during market cycles.
Mid-Cap Fund

Allocation: Rs. 3,500/month
Objective: Tap into the growth potential of medium-sized companies.
Why Choose: Higher returns with manageable risk compared to small caps.
Small-Cap Fund

Allocation: Rs. 3,500/month
Objective: Focus on fast-growing small-cap companies.
Why Choose: High-growth potential over the long term, though with higher volatility.
Why Include Small-Cap Funds?
Long-Term Growth: Small-cap companies have immense potential to grow significantly over time.
Diversification: Adds exposure to an underrepresented segment, complementing large and mid-caps.
High Returns: Potential for higher returns compared to other categories, albeit with higher risk.
Key Considerations
Investment Horizon: Stay invested for at least 7-10 years to mitigate short-term volatility.
Active Fund Management: Avoid direct or index funds to leverage professional expertise.
Regular Monitoring: Review fund performance periodically with a Certified Financial Planner.
Tax Implications
Equity Funds:
LTCG above Rs. 1.25 lakh/year taxed at 12.5%.
STCG (held less than 1 year) taxed at 20%.
Final Insights
This updated allocation ensures a mix of stability, moderate risk, and high growth. With consistent SIPs and periodic reviews, you can achieve robust wealth creation over the long term. A Certified Financial Planner can assist in optimising your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

See more questions »

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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