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Should I Stop My SIP in Groww Nifty EV and New Age Aytomotive ETF?

Milind

Milind Vadjikar  |865 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Jan 09, 2025

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
ANIL Question by ANIL on Jan 09, 2025Hindi
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Money

I have a SIP with groww nifty ev and new age aytomative etf since its inception . Its showing negative returns oflate . Should i stop SIP or continue .

Ans: Hello;

If your investment horizon is long-term then you shouldn't be concerned about such short term volatility.

Also as far as possible keep exposure to sectoral and thematic funds/ETFs to the minimum.

Happy Investing;
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  |7545 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 22, 2024

Asked by Anonymous - Sep 08, 2024Hindi
Money
I have invested 10k in Invesco psu equity fund which is giving me negative returns should I stop investing in psu funds at this time or reduce sip amount to 5k
Ans: Public Sector Undertaking (PSU) funds can sometimes show volatility, especially in the short term. Since you’ve noticed negative returns from your Rs. 10,000 investment, it’s understandable to feel concerned. Let’s break down the situation to help you decide whether to stop or reduce your Systematic Investment Plan (SIP) in PSU funds.

Long-Term Nature of PSU Investments
First, it’s important to appreciate that PSU funds are typically more volatile because they are heavily influenced by government policies, economic cycles, and sector-specific challenges. These funds are not known for consistent short-term returns but are better suited for long-term investors who are patient.

If your investment horizon is more than five years, you might still see recovery and positive returns as PSUs tend to perform well in certain market phases. If you reduce or stop your investment now, you may miss out on potential future gains. So, patience can be rewarding here.

Negative Returns: Short-Term Market Fluctuations or a Deeper Concern?
It is quite common to see negative returns during volatile periods. However, negative returns do not always indicate poor fund performance. The market as a whole might be going through a down phase, and PSUs tend to react more dramatically. It’s critical to evaluate the following factors before making any decisions:

Fund’s Track Record: How has the fund performed in the past, particularly over 3, 5, or 7 years? If its long-term performance is strong, then short-term negative returns are not necessarily a red flag.

Sector Outlook: Are there any changes in the sector or government policies that could impact PSU stocks? A sectoral slowdown or specific challenges for PSUs may result in underperformance for the time being.

Your Investment Horizon: If your financial goals are far off, it may make sense to continue your SIP and ride out the market fluctuations. However, if you need the money sooner, reducing your exposure could be worth considering.

Consider Diversification Over Complete Exit
If the volatility in PSU funds is a concern, you don’t need to stop investing entirely. Instead, reducing your SIP amount from Rs. 10,000 to Rs. 5,000 can be a more balanced approach. This strategy allows you to keep some exposure to PSU funds, which could benefit from sectoral rebounds in the future, while freeing up money for other more stable investments.

Reducing the SIP amount can give you peace of mind while maintaining long-term potential in your portfolio.

Benefits of Actively Managed Funds
Rather than focusing solely on PSU funds, you may want to allocate part of your investment to actively managed funds. Unlike index funds or ETFs, actively managed funds have professionals making informed decisions about which stocks to buy and sell. This gives you the benefit of market insights and adjustments based on performance. It can help stabilize your returns, as these funds are often more diversified across various sectors.

This diversification lowers the risk of overexposure to a single sector, such as PSUs. By spreading your investment across multiple sectors through actively managed funds, you can improve your portfolio’s balance.

Avoiding Index Funds and Direct Mutual Funds
It is important to understand that index funds, though cheaper, are not always the best option. They simply mimic the index and lack the flexibility to shift when market conditions change. This can expose you to more risk, especially when sectors like PSUs face challenges.

Direct mutual funds might seem like a good choice to save on commissions, but they often require extensive market knowledge. For most investors, it is better to work with a Mutual Fund Distributor (MFD) who has a Certified Financial Planner (CFP) credential. They can help you select funds that align with your financial goals and risk profile.

Alternatives for More Stability
If PSU funds are causing too much concern, you could consider reallocating part of your investment to funds with more stable returns. For example:

Balanced Advantage Funds: These funds automatically shift between equity and debt based on market conditions. They can offer a more balanced risk-return profile, making them less volatile compared to PSU-focused funds.

Debt Funds: For those who want to focus on stability, debt funds offer consistent returns with lower risk. They are a good way to generate steady income while reducing exposure to volatile sectors.

By reallocating some of your SIP into more balanced or debt-oriented funds, you can manage your risk more effectively without exiting the market altogether.

Regular Review of Your Portfolio
It’s essential to periodically review your portfolio and see how different funds are performing. While PSU funds might not be delivering now, regular assessment with the help of a Certified Financial Planner can provide you with insights on whether to hold, switch, or reduce your investments.

If the overall performance of your portfolio is aligned with your long-term goals, a short-term dip in PSU fund performance might not be a reason to panic. Staying invested through market cycles is often the best way to grow wealth over time.

Final Insights
In summary, your investment in PSU funds might be showing negative returns now, but that doesn’t necessarily mean it’s time to exit entirely. Here’s a quick action plan:

Evaluate the Fund’s Long-Term Performance: Don’t make decisions based on short-term dips. Look at the track record and sector outlook.

Consider Reducing, Not Stopping: Reduce your SIP to Rs. 5,000 rather than stopping entirely. This keeps you invested while freeing up money for other options.

Diversify Into Actively Managed Funds: Use part of your investment in actively managed funds for more stability and potential growth. Avoid direct mutual funds and index funds due to their limitations.

Reallocate to More Stable Funds: Consider adding balanced advantage or debt funds to reduce volatility.

Review Regularly: Keep assessing your portfolio’s performance with a CFP to stay on track.

By following these steps, you can make a more informed decision about whether to continue, reduce, or stop your SIP in PSU funds.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Instagram: https://www.instagram.com/holistic_investment_planners/

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Dating, Relationships Expert - Answered on Jan 16, 2025

Asked by Anonymous - Jan 16, 2025Hindi
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I am 31 years old and have been married for 6 years. My relatives keep pressuring me and scaring me, saying that I haven’t had a child yet and that I should have one now. However, we are not financially prepared at the moment. We have just bought a house, and the loans have recently started, which exhausted all our savings for the down payment. My husband’s family had a very weak financial background. They had nothing, and he struggled a lot, even living in someone else’s house to complete his education. Only he knows how hard it was. Now, his salary has improved, and I am also employed. Additionally, we are entirely responsible for my in-laws, as my husband’s elder brother neither got married nor provides any support for the parents. We are under a lot of pressure right now, but everyone just keeps asking us when we are going to have a child. I’ve seen how my husband struggled with limited finances when the family was financially weak, and I don’t want to show such hardships to our children. On top of that, I am overweight and focused on losing weight to ensure I can be healthy. I feel very stressed and confused, but my husband is fully supportive of me.
Ans: Dear Anonymous,
First of all, I am really glad that you are being so responsible and practical, rather than making such life-changing decisions based on emotions alone. Second, don't worry about other's opinions; they might have your best interest at heart, but this should be solely your decision. You should have a child only when you are ready to have one- both mentally, physically, and financially. And no hard and fast rule says you should have a child within a certain year of your marriage. Two people in a marriage is a whole family too; a child can add to the joy if that is what you want. But if not, your family is still complete. Please remember that.

Take care of your health and your mind. If you are worried about your age, you can always go see a doctor and see how many years you can delay this. Rushing is never a good idea.

Best Wishes.

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Radheshyam

Radheshyam Zanwar  |1144 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jan 16, 2025

Asked by Anonymous - Jan 16, 2025Hindi
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Career
I'm a bsc botany graduate and now got admission and doing msc. I'm in first year and just gave my 1st semester exam but somehow now i feel i can't do botany at all its not just in my interest. I can't continue further with it as i dont think there's much scope too. I have interest in fields like geography or law related subjects. I'll be attempting for upsc too this year and also had a second thought to go for Law. Should i drop the msc? ....I've cried a lot thinking about that and its affecting my mental health too.
Ans: Hello dear.
First I would like to suggest that, in any way, you first complete your M.Sc. (Botnay) either with interest or without interest. Who told you that there is less scope in Botany? There are a lot of career options after M.Sc. (Botany).It is good that you are interested in geography and are attempting UPSC this year. Dear, along with your M.Sc. you can easily appear for UPSC and do the study of Geography, after completing your M.Sc. you can take the admission to Law course. Many people do the law even after their retirement or in due course of their service. There is no need to cry about the things which happened to you.
Suggestions: (1) Completer M.Sc. (Botany) by any means (2) Space-time to read Geography and UPSC Syllabus (3) Develop your overall personality and try to engage in some extracurricular activities of your interest.
Best of luck for your upcoming bright future.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
Thanks.

Radheshyam

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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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