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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Sep 15, 2022

Mutual Fund Expert... more
Gaurav Question by Gaurav on Sep 15, 2022Hindi
Money

I read about this service called Ask MF Guru in an article online. I wanted you to please review my existing portfolio & help me design it better to achieve my goals listed below. 

I do realise that my portfolio is not diversified amongst asset classes. I want to start investing in Gold (SGB) on a regular basis. I am 38year old & my risk profile is High for another 10 years. 

Please suggest what amendments I should make & how much more I should invest to achieve my targets. 

Goals :-    
Expenses Time yrs Amount
Higher Education for Daughter (she is 2) 15 75,00,000
Marriage of Daughter 23 1,00,00,000
Retirement (Myself) 22 25,00,00,000

My current investments & savings:

Current Investments Monthly Current Value Remarks
Axis Long Term Equity Fund (ELSS) (R.) 5,000 1,53,000 SIP ongoing
Mirae Assets Tax Saver Fund (ELSS) (R.) 7,500 3,22,000 SIP ongoing
Quant Active Fund (Flexi Cap) (D.) 5,000 35,000 SIP ongoing
Axis Small Cap Fund Direct-Growth (D.) 5,000 25,000 SIP ongoing
Parag Parikh Flexi Cap Fund (D.) 5,000 20,000 SIP ongoing
PGIM India Flexi Cap Fund (D.) 5,000 24,000 SIP ongoing
Quant Active Fund (Small Cap) (D.) 5,000 23,000 SIP ongoing
Axis Flexi Cap Fund (R.) 2,500 88,000 SIP ongoing
Quant Tax Fund (ELSS) (D.) 3,000 8,000 SIP ongoing
ICICI Prudential Long Term Equity Fund (ELSS) (R.) 4,000 1,87,000 SIP ongoing
Franklin India Focused Equity (R.)  - 2,75,000 SIP Closed
NPS 5,000 75,000 SIP on going
EPF (Employee Contribution) 8,000 13,00,000 On going
FD - 2,50,000 On going
Stocks 20,000 15,00,000 On going
Cashflow for Emergency - 5,00,000 On going
Total 80,000 47,85,000  

I appreciate your support, thank you. 

Ans: The portfolio and the asset allocation for your profile seems fine. Presently 10 SIPs of Rs 57,000 are ongoing, lets attach the SIPs to respective goals:

  1. Daughters' Higher Education: SIP worth Rs 12500 will create a corpus of Rs 75,00,000 in 15 years
  2. Daughter's Marriage : SIP worth Rs 5000 will create the required corpus of Rs 1 cr in 23 years
  3. Retirement : In 22 years Remaining SIP of Rs 39,500 will create a corpus of Rs 7 crore, plus through NPS the corpus that can be accumulated is @10% Rs 50 lakh ,plus through EPF @8.5% Rs 75 lakh, Through Stocks Rs 3.65 crore, therefore appx 12 crore can be created, for 25 crore the investment in MFs and Stocks needs to be doubled.
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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I read about this service called Ask MF Guru in an article online. I wanted you to please review my existing portfolio & help me design it better to achieve my goals listed below. I do realise that my portfolio is not diversified amongst asset classes. I want to start investing in Gold (SGB) on a regular basis. I am 38year old & my risk profile is High for another 10 years. Please suggest what amendments I should make & how much more I should invest to achieve my targets. Goals:- Expenses Time yrs Amount Higher Education for Daughter (she is 2) 15 75,00,000 Marriage of Daughter 23 1,00,00,000 Retirement (Myself) 22 25,00,00,000 My current investments & savings:   Current Investments Monthly Current Value Remarks 1 Axis Long Term Equity Fund (ELSS) (R.) 5,000 1,53,000 SIP ongoing Mirae Assets Tax Saver Fund (ELSS) (R.) 7,500 3,22,000 SIP ongoing Quant Active Fund (Flexi Cap) (D.) 5,000 35,000 SIP ongoing Axis Small Cap Fund Direct-Growth (D.) 5,000 25,000 SIP ongoing Parag Parikh Flexi Cap Fund (D.) 5,000 20,000 SIP ongoing PGIM India Flexi Cap Fund (D.) 5,000 24,000 SIP ongoing Quant Active Fund (Small Cap) (D.) 5,000 23,000 SIP ongoing Axis Flexi Cap Fund (R.) 2,500 88,000 SIP ongoing Quant Tax Fund (ELSS) (D.) 3,000 8,000 SIP ongoing ICICI Prudential Long Term Equity Fund (ELSS) (R.) 4,000 1,87,000 SIP ongoing Franklin India Focused Equity (R.) - 2,75,000 SIP Closed 2 NPS 5,000 75,000 SIP on going 3 EPF (Employee Contribution) 8,000 13,00,000 On going 4 FD - 2,50,000 On going 5 Stocks 20,000 15,00,000 On going 6 Cash flow for Emergency - 5,00,000 On going   Total 80,000 47,85,000   I appreciate your support, thank you.
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Goal 1: Rs. 75 lakh in 15 years would require monthly investment of Rs. 12500 /-

Goal 2: Rs. 1 cr in 23 years would require a monthly investment of Rs. 5000 /-

Goal 3: Rs. 25 crs in 22 years would require a monthly investment of Rs. 1,40,000 /-

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Ans: It's excellent to see your commitment towards investing for both short-term goals like buying a house and long-term goals like retirement. Let's review your portfolio and suggest any adjustments:
1. Motilal Oswal Nasdaq 100 Fund Direct Growth: This fund provides exposure to the top 100 companies listed on the Nasdaq stock exchange, offering diversification and growth potential in the global tech sector. It can be a suitable addition for long-term wealth accumulation.
2. UTI Nifty 50 Index Fund: Investing in an index fund like UTI Nifty 50 offers exposure to the top 50 companies in the Indian equity market. It provides stability and diversification, complementing your other equity investments.
3. ICICI Prudential Bluechip Fund Direct Growth: Bluechip funds focus on large-cap stocks with strong fundamentals, making them relatively less volatile. It's a prudent choice for stability and capital preservation.
4. HDFC Balanced Advantage Fund Direct Growth: This fund dynamically manages its equity exposure based on market conditions, offering a blend of growth and downside protection. It can be suitable for investors seeking a balanced approach.
5. HDFC Midcap Opportunities Fund Direct Plan Growth and AXIS Small Cap Fund Direct Growth: These funds provide exposure to mid-cap and small-cap segments, respectively, offering growth potential but with higher volatility. Ensure you're comfortable with the risk associated with these segments.
6. JM Value Fund Direct Growth and Parag Parikh Flexi Cap Direct: Both these funds follow value investing principles and focus on investing in fundamentally sound companies at reasonable valuations. They can be suitable for long-term wealth creation.
7. Nippon India Corporate Bond Fund Direct Growth: Investing in a corporate bond fund provides stability and income generation through fixed-income securities. It's a prudent choice for diversification and managing risk.
8. P2P Investment: Peer-to-peer lending can offer attractive returns but comes with higher risk compared to traditional investments. Ensure you've assessed the risk-reward profile and have a diversified portfolio to mitigate risks.
Index Funds:
• Index funds offer broad market exposure by tracking a specific index, such as the Nifty 50 or the Nasdaq 100. They provide diversification and low-cost access to the market, making them suitable for long-term investors.
• However, index funds are passively managed, meaning they aim to replicate the performance of the underlying index rather than outperforming it. While this reduces management fees and turnover costs, it also limits the potential for alpha generation.
• As a result, index funds may not capture opportunities for outperformance during market upswings or provide downside protection during downturns. Investors seeking higher returns may prefer actively managed funds that aim to outperform the market through strategic stock selection and portfolio management.
Direct Funds:
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Hi, sir I am a an 30 year old (single) engineer working with a MNC in Chennai, unfortunately till this day i haven't had any savings at all for my future (retirement, other short term or long term goals). Currently my take home salary after EPF and parental insurance is 53k ( EPF is about 4900/month - employee+employer) i haven't opted for Corporate NPS but is provided by the company without any additional contribution from company. I have company health insurance policy and have planned to take my own health insurance and term insurance plan. Adding to above I have zero emergency fund with me. How should I proceed with my investments?
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Your current take-home salary is Rs 53,000, and your EPF contribution is Rs 4,900. However, you lack savings, investments, and an emergency fund. Here's a step-by-step strategy:

Build an Emergency Fund
Set aside funds to cover at least six months' expenses.

Start by saving 10-15% of your salary monthly into a high-interest savings account.

Use Recurring Deposits or Liquid Mutual Funds to maintain this fund for emergencies.

Secure Yourself with Insurance
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Term insurance: Buy a term plan covering 10-15 times your annual income. Keep the policy simple and avoid investment-linked insurance.

Budget Your Income
Allocate your income carefully for expenses, savings, and investments.

Use the 50-30-20 rule: 50% for needs, 30% for wants, and 20% for savings and investments.

Avoid unnecessary expenses to increase your saving capacity.

Start Investing Gradually
Short-term goals (1-5 years): Invest in debt funds or recurring deposits. Debt mutual funds are good for stable returns.

Long-term goals (5+ years): Invest in equity mutual funds for higher returns. Choose actively managed funds with consistent performance.

Avoid index funds. Actively managed funds have a better potential for higher returns through professional fund management.

Retirement Planning
Utilise the EPF for retirement. Your current contribution will grow over time with compounding.

Consider investing in diversified equity mutual funds for additional retirement savings.

Corporate NPS: You can explore NPS for its tax-saving benefits. However, don’t rely solely on it for retirement.

Tax-Saving Investments
Use Section 80C to save taxes up to Rs 1.5 lakh.

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Opt for ELSS funds for tax saving and wealth creation.

Review Existing Expenses
Evaluate and minimise unnecessary expenditures.

Avoid loans for discretionary spending like vacations or gadgets.

Advantages of Using a Certified Financial Planner
A CFP can help you plan holistically and ensure you stick to your goals.

They provide tailored strategies, ensuring proper fund allocation and monitoring.

Invest through a Mutual Fund Distributor with CFP credentials to access professional advice.

Key Steps for Discipline
Automate investments through SIPs in mutual funds.

Track your monthly budget and investment progress regularly.

Avoid direct funds. Regular funds offer professional guidance and fund distributor support.

Tax Implications
For equity mutual funds, LTCG above Rs 1.25 lakh attracts 12.5% tax.

STCG on equity funds is taxed at 20%.

Debt fund gains are taxed as per your income slab. Consider these while investing.

Final Insights
You are in the right direction by seeking advice now. Build a solid foundation with savings, insurance, and investments. Take small steps toward financial independence.

Remain consistent with your investments, and review your financial plan annually.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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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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