Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |7026 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 22, 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
Kabir Question by Kabir on Oct 11, 2024Hindi
Money

Please review my MF Portfolio....Bandhan Small Cap Fund - 11000, Parag Parikh Flexi Cap Fund -15500, Kotak emerging equity Fund - 7000, Tata digital Fund - 7000, Motilal Oswal Midcap Fund - 12000, HDFC Balanced Advantage Fund - 12500, With setp up of 10% every year. is this portfolio Good ?? should I change something ?? Also, I want to start another 5000 SIP, which fund should I go for ?. My age is 28 yrs My goal is wealth creation, i can invest for long term. As of now I don't have any urgency.

Ans: Your current portfolio includes a good mix of equity funds across different categories. You've included small-cap, mid-cap, flexi-cap, and sectoral funds, with a balanced advantage fund for stability. Your approach shows focus on long-term wealth creation, and the 10% annual increment in SIPs reflects your commitment to growing your investments steadily.

Your fund allocation also suggests an aggressive investment style, which is ideal considering your age of 28 and long-term horizon.

Let’s break down each category and review its contribution to your wealth creation goal.

Small Cap and Mid Cap Exposure
Small-cap and mid-cap funds offer high growth potential but come with higher volatility. You've allocated Rs. 11,000 to small caps and Rs. 19,000 to mid-caps, which indicates a significant focus on high-growth opportunities.

While this aggressive approach is suitable for long-term growth, it may experience high volatility in the short term. Ensure you remain patient and stay invested through market cycles to realize potential gains.

Your focus on growth through small and mid-cap funds is excellent for wealth creation in the long term.

Balanced Advantage Fund
The Balanced Advantage Fund adds stability to your portfolio by balancing between equity and debt based on market conditions. It is a solid inclusion for cushioning against market volatility while providing steady growth.
Including a balanced fund shows a smart strategy for risk management while aiming for growth.

Sectoral Exposure
Tata Digital Fund focuses on a specific sector, which increases your risk exposure to that sector. Sectoral funds can be very rewarding when the sector performs well, but they also come with higher risk.

Consider reducing the weightage to sectoral funds to balance the overall risk. Sectoral funds should typically be a small part of the portfolio unless you have specific insights into that sector.

Sectoral funds can be a bit unpredictable; ensure your portfolio remains diversified to mitigate sector-specific risks.

Flexi Cap Funds
The Flexi Cap Fund is an excellent choice as it offers flexibility in investing across different market caps. This ensures you benefit from opportunities across large, mid, and small-cap segments.
Parag Parikh Flexi Cap Fund provides a balanced exposure and helps in diversifying your market cap risk.

Overall Allocation
Your portfolio is predominantly focused on equity, which is good for long-term wealth creation. However, it is essential to regularly review the performance and allocation to maintain an optimal balance between risk and reward.
Recommendations for Improvement
Reduce Sectoral Exposure
Consider reducing your exposure to the Tata Digital Fund. Sectoral funds can be highly volatile and may not perform consistently over time. Reallocating part of this investment to a diversified equity fund could provide better risk-adjusted returns.
Rebalance Equity Exposure
You have a high allocation to small and mid-cap funds. While this is great for growth, balancing it with large-cap funds can provide stability. Large-cap funds tend to perform better during market downturns and can help reduce volatility.
Start a New SIP
Given your long-term goal of wealth creation, I recommend the following approach for your new Rs. 5,000 SIP:

Add a large-cap equity fund: You currently lack sufficient exposure to large-cap funds. Large-cap funds provide stability and consistent returns over time, making them a good addition to your portfolio. Look for a well-performing large-cap fund with a good track record.

Increase investment in balanced advantage or multi-cap funds: These funds can offer a good mix of growth and stability. You could allocate this Rs. 5,000 to further diversify your portfolio.

Growth Potential and Wealth Creation Strategy
Long-Term Commitment
Your portfolio is structured for long-term growth, which is ideal for wealth creation. Equity investments typically outperform other asset classes in the long run. Stay invested, continue SIPs, and focus on your long-term goals.

The 10% annual SIP increment is a commendable strategy. This approach ensures your investments keep pace with inflation and increases your wealth-building potential.

Tax Considerations
Keep in mind the mutual fund capital gains taxation rules. Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%. Ensure you plan your redemptions to optimize tax efficiency.

The balanced advantage fund can offer some tax efficiency as it balances equity and debt exposure.

Benefits of Actively Managed Funds
Why Actively Managed Funds Are Better
Actively managed funds, such as the ones in your portfolio, have the advantage of flexibility. Fund managers actively select stocks, and this helps in outperforming the market over time.

Index funds, on the other hand, follow a passive strategy and simply replicate the index. This means you miss out on potential outperformance during bullish market conditions.

Regular plans with Certified Financial Planner (CFP) support provide you with access to professional advice and portfolio reviews. Direct plans may seem to have lower expense ratios but lack this personalized advice, which is crucial for long-term success.

Adjusting for Inflation
By consistently increasing your SIP contributions by 10% annually, you're not just growing your investment but also ensuring that your corpus grows in line with inflation. This is a good strategy to ensure your wealth retains its value over time.
Emergency Fund Consideration
While your portfolio is well-structured for wealth creation, it's important to have an emergency fund in liquid instruments like a short-term debt fund or savings account. This will ensure you're not forced to redeem your equity investments during market downturns.
Finally
Your current portfolio is well-structured for long-term wealth creation. It reflects your risk appetite and financial goals. With a few adjustments—reducing sectoral exposure, adding large-cap funds, and possibly increasing your investment in balanced funds—you can further optimize your portfolio.

The 10% annual SIP increment is a smart strategy for maintaining and growing your wealth. Starting a new SIP in a large-cap or balanced advantage fund will add stability and diversity to your portfolio.

Stay disciplined, keep reviewing your portfolio periodically, and adjust based on market conditions and your evolving goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment
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.
Money

You may like to see similar questions and answers below

Milind

Milind Vadjikar  |618 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 11, 2024

Ramalingam

Ramalingam Kalirajan  |7026 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 18, 2024

Money
Please review my MF Portfolio Sir....Bandhan Small Cap Fund - 11000, Parag Parikh Flexi Cap Fund -15500, Kotak emerging equity Fund - 7000, Tata digital Fund - 7000, Motilal Oswal Midcap Fund - 12000, HDFC Balanced Advantage Fund - 12500, With setp up of 10% every year. is this portfolio Good ?? should I change something ?? Also, I want to start another 5000 SIP, which fund should I go for ?. My age is 28 yrs My goal is wealth creation, i can invest for long term. As of now I don't have any urgency
Ans: I’m glad to see you’ve taken active steps towards wealth creation. At 28, with a long-term investment horizon and no immediate need for liquidity, you’re well-positioned to build substantial wealth through disciplined investments.

Let’s evaluate your portfolio and offer insights for further improvements, including recommendations for your new SIP.

Assessing Your Current Portfolio
Your portfolio reflects a diverse range of funds, which is essential for reducing risks and optimizing growth. Here's a detailed evaluation of each component:

1. Bandhan Small Cap Fund – Rs 11,000
Small-cap funds have high growth potential but are also highly volatile. It’s great for wealth creation over the long term, but ensure you're prepared for volatility in the short term.

You’ve allocated 16% of your current SIP to small caps. That’s reasonable given your age and long investment horizon.

2. Parag Parikh Flexi Cap Fund – Rs 15,500
This is a flexi-cap fund, which means it can invest in large, mid, and small caps based on market conditions. These funds offer a good balance of risk and reward.

With about 22% of your SIP allocated here, it adds diversification to your portfolio. This fund provides the flexibility to adjust to market conditions, which can be a key strength.

3. Kotak Emerging Equity Fund – Rs 7,000
Mid-cap funds like this have the potential to offer high returns with moderate risk. Mid-caps often strike a balance between the stability of large caps and the growth potential of small caps.

Your allocation of 10% to mid-cap is fine for your long-term goal, as these funds can generate wealth if held for 7-10 years.

4. Tata Digital Fund – Rs 7,000
A sectoral fund like this focuses on the digital or technology sector, which can be lucrative. However, such funds tend to be highly volatile and depend on the sector's performance.

While sectoral funds can provide high returns, their risks are high due to concentrated exposure. It's a good idea to limit your exposure here, and you’ve done well by keeping it at around 10%.

5. Motilal Oswal Midcap Fund – Rs 12,000
Another mid-cap fund in your portfolio, this allocation increases your exposure to mid-caps. While mid-caps have good growth potential, too much concentration in this category can amplify risk.

You’ve allocated 17% to mid-caps overall, which is slightly on the higher side. You may want to reduce this exposure slightly to balance your risk.

6. HDFC Balanced Advantage Fund – Rs 12,500
Balanced Advantage Funds (BAFs) dynamically manage the portfolio between equity and debt. This ensures lower volatility while giving reasonable returns.

Having 18% of your portfolio in a BAF adds stability and cushions against market fluctuations. This is an excellent choice for long-term wealth creation with moderate risk.

Diversification and Risk Management
Your portfolio is diversified across different types of equity funds—small-cap, mid-cap, flexi-cap, and sectoral funds. However, there’s a concentration of mid-cap and small-cap exposure, which could increase risk during market downturns. Since you are aiming for long-term wealth creation, I recommend a more balanced allocation.

Steps to Improve Diversification:

Reduce Sectoral Exposure: The Tata Digital Fund's high concentration in one sector can increase risk. You may want to limit sectoral funds to 5-7% of your overall portfolio.

Balance Mid-Cap Exposure: You’ve invested in two mid-cap funds. Consider reducing one to moderate your overall risk exposure.

Adding Another SIP of Rs 5,000
You mentioned starting a new Rs 5,000 SIP. Given your long-term horizon and focus on wealth creation, here’s what I suggest for further diversification:

1. Large-Cap Fund
Adding a large-cap fund will bring more stability to your portfolio. Large-cap funds tend to be less volatile and provide consistent returns, especially during market downturns.

This can act as a safety net, balancing the volatility of your small and mid-cap funds.

2. Hybrid or Dynamic Allocation Fund
If you're looking for more stability, you might consider adding a balanced or hybrid fund to your portfolio. These funds invest in both equity and debt instruments, which can stabilize your portfolio during market fluctuations.

A hybrid fund would complement your existing BAF and reduce overall portfolio risk.

3. International Equity Fund
You can also consider diversifying internationally by adding an international equity fund. These funds provide exposure to global markets and help diversify country-specific risks.

This can help balance the portfolio if Indian markets face periods of stagnation.

Disadvantages of Index and Direct Funds
Since you've opted for actively managed funds, I want to reinforce that you're on the right track. Index funds, although lower in cost, are passive and do not have the potential for outperformance in dynamic markets. In contrast, actively managed funds offer better opportunities as professional fund managers constantly analyze the market to maximize returns.

Also, it's wise to invest through a Certified Financial Planner (CFP) who can guide you based on your financial goals and risk profile. While direct funds may save on expense ratios, they often lack personalized advice, which can cost you in the long term.

Final Insights
Your current portfolio has a solid foundation for long-term wealth creation, with a strong emphasis on small and mid-cap funds for growth. However, it would benefit from some adjustments to balance risk and improve diversification.

Consider reducing your sectoral and mid-cap exposure slightly to manage volatility.

Adding a large-cap or hybrid fund to your new SIP will provide more stability.

Investing for the long term with periodic reviews will ensure you stay aligned with your goals.

Stay disciplined with your investments, increase your SIPs regularly as planned, and avoid frequent changes. With a long-term vision and the right fund selection, your portfolio can grow significantly over time.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Dr Shyam

Dr Shyam Jamalabad  |78 Answers  |Ask -

Dentist - Answered on Nov 14, 2024

Listen
Health
Dr. Shyam, I had my teeth cleaned 6 months ago and after that was done I saw discoloration on certain teeth that wasn't there before. Years ago I had my teeth cleaned and one particular tooth after the cleaning was sensitive to touch. I had a crown put in from two different dental offices. The first one did the crown right, but was trying to charge me $3,500 more than the agreement they made with Medicare. Medicare corrected that. I other dentist did a crown and it didn't go all the way up to my gums and is sensitive to especially cold things. I'm not having very good experiences with dentist by and large. Can't find an honest one or one that can actually do the job right. I feel being on Medicare your a target to bring in money. Not sure what to do next. Supposed to go back and have them redo the crown that didn't go to my gums, but it also was ttd place to didn't clean my teeth right and discolored some of them. Any suggestions on how to trust there is actually an capable and honest dentist out there who can perform properly?
Ans: Identifying a capable and honest dentist is crucial for your oral health and well-being. Here are some tips to help you find one:

1. Ask for referrals: Ask friends, family, or coworkers for recommendations. They can provide valuable insights into a dentist's work quality and bedside manner.

2. Check credentials: Ensure the dentist has the necessary qualifications, certifications, and licenses. You can verify this information with your state's dental board or professional organizations like the American Dental Association (ADA).

3. Check online reviews: Look up the dentist on review platforms. Pay attention to the overall rating and read the comments to understand the strengths and weaknesses. At the same time, do not rely on reviews alone as these can be manipulated, fake reviews can be easily generated.

4. Evaluate their communication style: A good dentist should listen to your concerns, explain procedures clearly, and answer questions patiently. Ensure you feel comfortable asking questions and discussing your treatment.

5. Assess their facility and equipment: A well-organized and modern dental office with up-to-date equipment is a good sign.

6. Check their approach to preventive care: A capable dentist emphasizes preventive care, including regular cleanings, exams, and education on oral hygiene.

7. Be wary of over-treatment: A honest dentist will not recommend unnecessary procedures. Be cautious if you feel pressured into extensive treatments.

8. Trust your instincts: If something feels off or you don't click with the dentist, it's okay to explore other options.

10. Schedule a consultation: Many dentists offer initial consultations or meet-and-greets. Use this opportunity to assess their approach, ask questions, and gauge your comfort level.

By following these steps, you can increase your chances of finding a capable and honest dentist who prioritizes your oral health and well-being.

...Read more

Ravi

Ravi Mittal  |416 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 14, 2024

Asked by Anonymous - Nov 03, 2024Hindi
Listen
Relationship
Hi, I am 30 years old not married & now my parents are forcing me to get married. I think i am good looking guy. It's not like i have never been with girls. I have had brief flings with multiple girls. And there was one girl whom i was in a platonic relationship with with lot of emotional sharing & have spent a lot of time with her. The same goes with another girl. Both of them have told me that i have been pretty cool & girls would like me to be their bf or husband. But i am not able to accept anyone because of the guilt that of my past that i never had a relationship. Never been able to tell anyone that i had a gf. I know this is wrong to compare my life but i can't stop thinking that way. Can you tell me what to do? Like a contsant regret of not having a very steamy cool fancy relationship from outside. I know relationships have it's own ups & downs. But this guilt is killing me that i missed out lot of things in life & if get married in an arranged marriage i would feel myself to be a looser who couldn't even find a girl on his own. Though i know all of these comparisons are wrong & i should be rational. I am not able to help it. Please help me out
Ans: Dear Anonymous,
Whatever you are feeling, it is very normal. More people than you could imagine go through this same phase. But as you mentioned, these are just thoughts; there is no truth to them. Not having a relationship does not make you uncool. It merely means that you did not meet your perfect match yet. I understand that you feel like you have missed out on something and that feeling is valid. It might not be reasonable, but it's very natural to think this way. I can suggest one thing- why don't you try a dating or matchmaking app to find your own partner? That way, you will be keeping your parents' wishes and won't let yourself down either. It will also give you more control over choosing your life partner.

Hope this helps.

...Read more

Ravi

Ravi Mittal  |416 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 14, 2024

Listen
Relationship
Hi, I got married to my ex gf in an arranged setup. I had a 7 year of relationship with her before breakup. My career switch try from private to govt job was the reason. When I failed I returned back to corporate. 3 years after the breakup her father who is a good friend of my father sent proposal which led to our marriage. No one knew that we dated. We never had a word between the acceptance and marriage. None of us initiated the conversation. When she came after marriage her behavior towards me in private is totally strange. We never had an emotional conversation. Neither we discuss romance nor intimacy. In private we hardly have any intellect discussions which was an eternal part before our breakup. But when she is in public she behaves like she cares for me a lot. She is a darling of everyone in the house whether my parents or siblings. Most of the time she remains with my mother and she has good bond. In front of her she cares for me a lot. She had this double faced attitude from the first day. Our intimacy is limited to my ask she could agree or disagree but she never initiated it. She was pretty passionate before our breakup which I never saw after our marriage. I tried everything but nothing has happened she never opened up. She disconnected with almost all our mutual friends after marriage. Whenever I tried through some of her friends she says to them I overthink a lot. Marriages and relationships differs. All useless and weird reasons. Everyone blames my teenage short temper issue. Which I have completely overcame when I started working. After marriage we had a boy. She says no for a next child for which I am fine. But the problem is now my child is growing and she has started understanding her hypocrisy. Now she blames me for teaching him wrong things. We hardly had fights as she walks out or I won't say word usually after she didn't answer for anything. I am unable to see the light in this relationship. She had 3 relationships in between but I never had one which I never discussed. Now I hardly ask for anything. Day by day we are becoming only room partners or fake couples in public. Everyone sees her as an ideal daughter in law or wife due to her public hypocrisy. Please guide.
Ans: Dear Salman,
I understand that marital issues take a huge toll on people. Whatever you are feeling, it is very normal. I strongly suggest you seek professional help- you can either opt for personal counseling sessions to manage the distress caused by your partner's indifference, or the best approach is to convince your wife to go for marriage counseling with you. It would be good to get to the root of the matter; why is she behaving a certain way, where is this coming from, are there unresolved issues from when you dated? These questions will finally get an answer and you can work on them together. If she does not agree to go, tell her to do it for your child. No child should have to see their parents unhappy with each other.

Hope this helps.

...Read more

Dr Nagarajan J S K

Dr Nagarajan J S K   |163 Answers  |Ask -

Health Science and Pharmaceutical Careers Expert - Answered on Nov 14, 2024

Listen
Career
I want to give NEET exam but my 12th in Maharashtra Board marks are less than 150 in PCB (general), so I am not eligible. can I give retest of 12th to get better marks so that I can give NEET.
Ans: Hi, Being a retest candidate is considered a second attempt in +2. I think the medical council will not allow admission to medicine. Instead, you can consider B.Pharm / Pharm D.

To join, the following are the requirements:

For pharm D: Minimum qualification for admission to. – a) Pharm.D. Part-I Course – A pass in any of the following examinations - (1) 10+2 examination with Physics and Chemistry as compulsory subjects along with one of the following subjects: Mathematics or Biology. (2) A pass in D.Pharm course from an institution approved by the Pharmacy Council of India under section 12 of the Pharmacy Act. (3) Any other qualification approved by the Pharmacy Council of India as equivalent to any of the above examinations. Provided that a student should complete the age of 17 years on or before 31st December of the year of admission to the course.

FOR B.PHARM:
Minimum qualification for admission to – A. First year B. Pharm – A pass in any of the following examinations - i. Candidate shall have passed 10+2 examination conducted by the respective state/central government authorities recognized as equivalent to 10+2 examination by the Association of Indian Universities (AIU) with English as one of the subjects and Physics, Chemistry, Mathematics/Biology as optional subjects individually. “However, the students possessing 10+2 qualification from non-formal and non-class rooms based schooling such as National Institute of Open Schooling, open school systems of States etc. shall not be eligible for admission to B.Pharm Course.” ii. Any other qualification approved by the Pharmacy Council of India as equivalent to any of the above examinations. Provided that a student should complete the age of 17 years on or before 31st December of the year of admission to the course. Provided that there shall be reservation of seats for the students belonging to the Scheduled Castes, Scheduled Tribes and other Backward Classes in accordance with the instructions issued by the Central Government/State Government/Union Territory Administration as the case may be from time to time.

...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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x