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Ulhas

Ulhas Joshi  | Answer  |Ask -

Mutual Fund Expert - Answered on May 25, 2023

With over 16 years of experience in the mutual fund industry, Ulhas Joshi has helped numerous clients choose the right funds and create wealth.
Prior to joining RankMF as CEO, he was vice president (sales) at IDBI Asset Management Ltd.
Joshi holds an MBA in marketing from Barkatullah University, Bhopal.... more
Parry Question by Parry on May 24, 2023Hindi
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Dear Sir, I want to start a PMS but friends say, MFs are better because euqity is volatile. I am 15 years away from my retirement and want to retire strong. I want to safely invest about 50 Lakhs, with 8% return on an average per year. Please advise.

Ans: Hello Parry and thanks for writing to me. If you are investing in equity as an asset class whether it is thru Portfolio Management Services or Equity Mutual Funds, you will face volatility. Equity is a long term investment and with your retirement horizon in 15 years, you can reap the benefits of compounding.

The minimum investment ticket size in a PMS is Rs.50 Lakh. If you choose to go with a PMS, you will have invest your entire corpus of Rs.50 lakh with only one portfolio management company. While many PMS companies have given outstanding returns, you will have to be able to select the right PMS for you.

If you choose to go with mutual funds, you can plan to invest in tranches and have flexibility to invest across different schemes and asset types to create a diversified portfolio that can be rebalanced over time to ensure you are on track to achieve your retirement goal.

You should consider taking advise from a certified financial advisor who can help you select the right PMS or mutual funds.
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  |9347 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 03, 2025

Money
I wish to know , is PMS better or equity MF for long term financial growth. Regards T.Sekhar
Ans: This is an important comparison. Choosing between PMS and equity mutual funds requires deep understanding.

Let us look at this from a 360-degree view.

We will explore key aspects like cost, risk, return, structure, transparency, and suitability.

Understanding the Basics
PMS stands for Portfolio Management Services.

PMS is a customised service for investing in equities. It is managed by a professional fund manager.

Equity mutual funds pool money from many investors and invest in diversified equities.

Equity mutual funds are regulated more strictly and have better investor protection norms.

PMS needs higher minimum investment. Usually Rs. 50 lakhs and above.

Equity mutual funds can be started with just Rs. 500 monthly SIP.

Both can be used for long-term wealth creation. But not equally suitable for everyone.

As a Certified Financial Planner, I will now analyse both options from all angles.

Cost and Charges Comparison
PMS charges are high. It includes management fee, profit-sharing fee, custodian charges.

PMS often charges 2% yearly management fee. Plus 20% profit-sharing above a hurdle rate.

These high charges can eat into your returns in the long run.

Equity mutual funds come with lower cost structures.

Regular equity mutual funds have a small trail fee for the distributor.

But the overall expense ratio is much less than PMS.

In equity mutual funds, charges are transparent and capped by SEBI.

In PMS, charges vary widely and may not be disclosed properly.

For long-term compounding, lower cost helps you grow faster.

Hence, mutual funds score higher in cost-efficiency.

Risk and Portfolio Diversification
PMS portfolios usually have 15-20 stocks.

That creates a concentrated exposure. Risk becomes higher.

Equity mutual funds hold 40-70 stocks. That gives better diversification.

PMS may invest only in one theme, sector, or strategy.

Mutual funds use a mix of strategies to reduce volatility.

PMS portfolios can underperform if the theme goes wrong.

Mutual funds offer stability due to diversification and internal risk control.

Risk-adjusted return is often better in mutual funds.

Mutual funds have clear categories and defined mandates.

PMS strategies are not always clearly defined.

Risk is better managed in mutual funds, especially for retail investors.

Transparency and Regulation
Mutual funds are highly regulated by SEBI.

NAV is declared daily. Portfolio is disclosed monthly.

Expense ratio and fund manager performance is transparent.

PMS is regulated, but with lesser disclosure requirements.

PMS reports are not published daily. NAV is not declared.

You may not always know your real-time returns in PMS.

With mutual funds, you have better visibility and tracking.

Regulation ensures discipline and investor protection in mutual funds.

Mutual funds are safer from governance point of view.

For long-term growth, transparency matters a lot.

Minimum Investment and Liquidity
PMS needs minimum Rs. 50 lakhs to start.

Not suitable for most Indian households.

Equity mutual funds allow investments from Rs. 500 per month.

That makes it suitable for salaried and small investors too.

PMS has lock-in period or exit load for 1-3 years.

Liquidity is lower. Redemption can take days.

Equity mutual funds can be sold anytime.

Redemption money usually credited in 2-3 working days.

If you may need money anytime, mutual funds are more flexible.

For financial goals like child education or retirement, flexibility matters.

Performance and Return Potential
PMS may sometimes beat mutual funds.

But it comes with higher risk and higher cost.

In mutual funds, performance is consistent over long-term.

Top mutual funds have beaten PMS even after fees.

Fund manager experience is crucial in both.

But mutual funds have stricter risk management teams.

Mutual fund performance can be tracked in public domain.

PMS does not disclose detailed performance publicly.

You will depend only on quarterly reports in PMS.

Past return is not a guarantee. But transparency helps you decide.

Taxation Angle
In PMS, capital gains tax is paid by investor directly.

You will get a detailed capital gains statement from PMS.

But tax calculation and filing is your responsibility.

In mutual funds, tax is simpler.

Mutual fund houses deduct and report your gains clearly.

Tax filing becomes easy with consolidated CAS report.

From April 2024, equity mutual funds attract 12.5% tax on LTCG above Rs. 1.25 lakhs.

STCG is taxed at 20%. Debt funds taxed as per your slab.

PMS taxation follows same capital gain rules.

But tax filing burden is higher in PMS.

Operational Ease and Monitoring
Mutual funds can be tracked on mobile app or website.

You can invest via SIPs, STP, SWP easily.

Portfolio review, rebalancing is easier with mutual funds.

PMS needs offline documentation and relationship manager follow-up.

Portfolio monitoring needs more involvement from you.

Mutual funds give automated alerts and monthly statements.

You can set up goal-based investing and automatic SIPs.

PMS is less friendly for working professionals.

Mutual funds support digital convenience and automation.

This helps you stay disciplined.

Behavioural Factors and Investor Discipline
Most investors struggle with market timing and emotional decisions.

Mutual funds use SIPs to build long-term habits.

SIPs reduce timing risk and promote discipline.

PMS does not allow SIP.

You need to invest lumpsum. That increases timing risk.

During market fall, PMS investors panic more.

Mutual fund investors who stay invested get better results.

Regular investing and asset allocation is easier in mutual funds.

Behavioural discipline is key for long-term growth.

Mutual funds support this better than PMS.

Index Funds vs Actively Managed Funds
Some people compare PMS with index funds too.

Index funds are passive. They copy the index.

They do not react to market changes.

In India, market is still inefficient.

Active funds can use research and beat the index.

Index funds are slow to adjust to new sectors or trends.

Actively managed funds aim for better alpha.

PMS and mutual funds both can be active.

Among these, equity mutual funds offer active strategies with lower cost.

Hence, actively managed mutual funds suit long-term growth better.

Direct Mutual Funds vs Regular Mutual Funds
Some investors choose direct funds to save cost.

But direct funds come with no advisor support.

You will miss guidance, monitoring, rebalancing and goal planning.

Many investors pick wrong funds in direct option.

Wrong asset allocation can harm your returns.

Regular plans through a Certified Financial Planner give better results.

The small trail fee in regular plan is worth the service.

A CFP helps you review and realign funds to goals.

Long-term growth depends more on right guidance.

Not just low cost.

Final Insights
PMS suits HNIs who understand equity markets well.

PMS needs higher risk appetite and lumpsum funds.

For most investors, equity mutual funds are better.

Mutual funds offer cost-efficiency, transparency, liquidity and goal alignment.

Mutual funds also help with automation, monitoring and behavioural discipline.

PMS may be tempting with past returns. But not suitable for all.

With the help of a Certified Financial Planner, mutual funds deliver long-term growth.

They also suit retirement, children’s education, wealth creation and tax-efficiency.

Keep your investments goal-based and diversified.

Review yearly and stay invested patiently.

That is the best way to create long-term financial freedom.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Nayagam P

Nayagam P P  |7766 Answers  |Ask -

Career Counsellor - Answered on Jul 03, 2025

Career
ECE iit kharagpur,Maths and computing iit guwahati which is best for my daughter
Ans: Venugopal Sir, IIT Kharagpur’s ECE department, ranked #6 overall by NIRF 2024, records ~87% branch placements over the last three years, facilitated by its Career Development Centre and recruiters like Google, Microsoft, and Amazon. Its curriculum covers core electronics, VLSI, communications, and signal processing, supported by PhD?qualified faculty and advanced labs in microelectronics, wireless, and smart grids, plus cross?disciplinary research via the Central Research Facility. IIT Guwahati’s B.Tech in Mathematics & Computing (NIRF #9 overall, #7 engineering) achieves ~87% placements, with top firms such as Oracle, Microsoft, and Goldman Sachs. The program blends rigorous mathematics, algorithms, and computing courses, delivered by research?active PhD faculty, and provides an HPC cluster, clusters, and high?performance workstations in its computational labs. Both institutes boast NBA/NAAC accreditation, strong industry tie?ups, and consistent three?year placement records in the 85–90% range.

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Nayagam P

Nayagam P P  |7766 Answers  |Ask -

Career Counsellor - Answered on Jul 03, 2025

Ramalingam

Ramalingam Kalirajan  |9347 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 2025

Asked by Anonymous - Jun 22, 2025Hindi
Money
Myself: FD-5 lakhs, Stocks-1.5L, MF-3.7L, EPF-1.6L. I do 15K SIP in MF and 5K SIP in stocks every month. Spouse: FD- 10L, MF SIP-10K monthly. We both have an active RD of 10K per month and health insurance of 2L each (in addition to 2L provided for each by my company). We together earn 1.8L monthly. Housing loan EMI of 55K monthly to be paid for next 10 years. We also have life insurance cover. We both are 30 yrs old with no kids as of now. How can we plan our investments? Are our SIPs enough for a target corpus of atleast 3 crore for retirement and child's future?Is the health insurance cover adequate?
Ans: Your financial discipline is already strong at this early stage.

But reaching a Rs 3 crore goal needs structured planning.

Let’s assess your situation from a 360-degree view.

Analysing Your Current Financial Strength
You both earn Rs 1.8 lakh monthly, which gives good saving capacity.

You already have health insurance, life cover, and housing loan under control.

Your current assets: Rs 5 lakh FD, Rs 1.5 lakh stocks, Rs 3.7 lakh MF, Rs 1.6 lakh EPF.

Your spouse holds Rs 10 lakh FD and invests in mutual funds through SIP.

Your total investable corpus is still in the early growth stage.

Your existing SIPs: Rs 15,000 MF + Rs 5,000 stocks (you) and Rs 10,000 MF (spouse).

Both of you are 30 years old, which gives nearly 30 years to retirement.

Reviewing the Adequacy of Current SIPs
A Rs 3 crore goal needs steady and growing SIPs.

Your combined monthly SIP is Rs 25,000 plus RDs of Rs 10,000 monthly.

RD gives low growth. Shifting this amount to equity SIP can boost growth.

SIPs need to grow 10% yearly to beat inflation and reach Rs 3 crore.

With 25–30 years of investing, you are on the right path.

But if you pause SIPs, your goals may be delayed.

Regularly review SIP amounts with your Certified Financial Planner.

Optimising Your Existing Investments
Mutual funds must be actively managed, not index funds.

Index funds lack human intervention during market volatility.

They copy the market but do not protect from market falls.

Active mutual funds provide better growth with sector rotation.

Invest through regular plans with an MFD and Certified Financial Planner.

Direct plans lack review, adjustments, and timely rebalancing.

Regular plans give ongoing market insights and guidance.

Shift stocks SIP into equity mutual funds unless you actively track markets.

Stocks carry single-company risk which mutual funds avoid.

Keep FD for emergency fund, not for long-term growth.

EPF will grow slowly but gives safety. Continue contributing.

Assessing the Adequacy of Health Insurance
You have 2 lakh personal and 2 lakh employer health cover each.

This is low for today’s healthcare costs.

Take an additional Rs 10–15 lakh family floater cover.

Family floater protects both of you and your future child.

Rising medical inflation can wipe your savings without insurance.

Don't rely only on employer insurance, it may stop if you leave the job.

Life Insurance Assessment
You mentioned life insurance but not the sum assured.

Ideally, life cover should be 15–20 times your annual income.

Both of you should have separate term plans.

ULIPs or insurance-cum-investment policies are not recommended.

If you have LIC or ULIPs, surrender and shift the money to mutual funds.

Housing Loan EMI and Its Impact
Rs 55,000 EMI is a large portion of your income.

This limits your saving capacity temporarily.

Once the loan is repaid, channel EMI amount into SIPs.

Prepayment is good but should not stop your equity investments.

Balance loan repayment and wealth creation for best results.

Building a Child’s Future Corpus
Plan for child’s higher education and marriage now.

Start a separate mutual fund SIP for this goal.

Begin with Rs 5,000–7,000 monthly for child’s corpus.

Increase it yearly by 10% to cover education inflation.

Do not rely on RDs or FDs for child’s future. Growth will be low.

Equity mutual funds will give better returns over 15–20 years.

Keep the investment flexible, goal-based, and monitored.

Emergency Fund Readiness
Your combined FDs of Rs 15 lakh seem sufficient.

This equals around 7–8 months of household expenses.

Keep Rs 6–9 lakh in liquid or ultra short-term funds.

Use the balance FD amounts towards better-returning investments.

Don’t withdraw the emergency fund for vacations or luxury expenses.

Optimising Your RD Investments
RDs have low post-tax returns, barely beating inflation.

Shift RD amounts to equity mutual fund SIPs.

This will improve wealth creation over the next 20–30 years.

Keep RDs only if you need a lump sum in 2–3 years.

Otherwise, long-term goals should be in equity mutual funds.

Recommended Monthly Investment Allocation
Rs 15,000 equity mutual fund SIP (continue).

Rs 10,000 spouse mutual fund SIP (continue).

Shift Rs 10,000 RD to equity SIP gradually.

Stocks SIP of Rs 5,000 – shift slowly to equity mutual funds.

Add Rs 5,000 child-focused SIP for future education.

This totals Rs 40,000–45,000 monthly in equity mutual funds.

Increase SIPs by 10% every year with income growth.

After home loan closure, direct Rs 55,000 EMI to SIPs.

Practical Retirement Planning Insights
Start planning retirement corpus today.

Do not postpone it till your 40s.

Keep separate SIPs for retirement and child’s future.

Aim for Rs 2 crore–2.5 crore for retirement alone.

Child’s education and marriage corpus of Rs 50 lakh–1 crore needed.

Retirement funds should grow through equity mutual funds.

Avoid mixing retirement and short-term goals.

NPS can be an optional tool but keep primary focus on mutual funds.

Taxation Insights on Mutual Funds
Equity mutual funds attract 12.5% LTCG beyond Rs 1.25 lakh yearly gains.

STCG within one year is taxed at 20%.

Debt mutual funds are taxed as per your slab.

Plan your redemptions carefully to save taxes.

Certified Financial Planners help with tax optimisation.

Recommended Portfolio Composition
Equity mutual funds: 60%–65%.

Debt funds (short-term, liquid): 10%–15%.

Gold mutual funds: 10%.

Emergency fund: 10%–15%.

Stocks: limit to 5% or shift into mutual funds.

No real estate investment for now. Housing loan is enough.

No annuities recommended, as they lock your money.

Regular Portfolio Monitoring is Critical
Review your investments every 6 months.

Adjust your SIPs and goals regularly.

Do not stop SIPs during market corrections.

A Certified Financial Planner will guide you during tough markets.

They help with goal tracking, tax planning, and rebalancing.

Regular plans through an MFD with CFP credential give you this support.

Lifestyle Planning with Child in Mind
Child expenses will rise significantly after birth.

Your current surplus will reduce for 5–7 years.

Plan now to lock in higher SIPs before your child arrives.

Avoid luxury spends that delay wealth creation.

Focus on core goals like child’s education and retirement.

How to Strengthen Your Health Insurance Further
Increase to Rs 10–15 lakh family floater health cover.

Add a Rs 25 lakh critical illness plan for both.

Reassess insurance every 3 years.

Health inflation is rising faster than income growth.

Protect your wealth from hospitalisation risks.

Steps for Future Financial Stability
Increase SIPs every year as your salary rises.

Use bonuses to repay the loan or boost SIPs.

Avoid personal loans and credit card debt.

Stay invested for 20–30 years in equity mutual funds.

Let compounding work in your favour over decades.

Use regular plans with MFD and CFP to review and optimise.

Final Insights
You and your spouse are taking smart financial steps at 30.

Your SIPs are a great start but need yearly upgrades.

Shift RDs and stocks SIPs to mutual funds for better long-term growth.

Increase health insurance cover to protect your family’s future.

Focus on equity mutual funds through regular plans, not index or direct funds.

Certified Financial Planners give personalised advice and regular review.

Avoid real estate and annuities as they block your liquidity.

Your Rs 3 crore goal is realistic with steady, disciplined investing.

Stay consistent with SIPs, review every 6 months, and protect your wealth.

Your family’s future will be secure with these clear, simple steps.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9347 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 2025

Money
Good morning sir, Your advices are very helpful i am reading it since so much time. I am a owner of petrol pump i have channel finance (eDFS) of amount 60lakh from icici,ICICI has a rule that on the day the money is transferred to HPCL, after one month ICICI gets the time to credit the money in the account, that is, the rotation time is 30 days. Due to sudden vehicle accident case i have overdue the rotation amount by 19 days.i can able to repay the amount by 15 days can i get some extra time from bank.my account is undergoes debit freeze, amount 33lakh is overdue bank official is telling to deposit this amount and you can withdraw it but i can deposit it partially and want to withdraw partial payment. What is the rule of edfs account will bank allow this and give me extra time.
Ans: Understanding Your Business and the eDFS Structure
You own a petrol pump. It is linked with HPCL.

Your fuel purchase is financed using ICICI eDFS.

You have a credit line of Rs. 60 lakh.

ICICI Bank gives 30-day credit from date of HPCL invoice.

This is called rotation time or payment cycle.

After 30 days, repayment must be made in full.

eDFS works like a working capital loan for fuel dealers.

What Happened in Your Case
Due to an emergency (vehicle accident), you delayed repayment.

The delay is now 19 days past due.

Rs. 33 lakh is overdue. That is more than 50% of your limit.

Your account is now under debit freeze by ICICI.

The bank has asked you to deposit full Rs. 33 lakh.

They said after full payment, they will lift freeze.

But you want to deposit partially and withdraw some funds.

Let’s now understand what options you may have.

How eDFS Works During Overdue and Debit Freeze
ICICI Bank has auto debit agreements with oil companies.

On overdue, bank marks account as irregular.

As per ICICI eDFS terms, no fresh disbursement happens after default.

After 15 to 30 days delay, account gets frozen.

Once under debit freeze, withdrawals are not allowed.

Partial deposit does not immediately lift restrictions.

Entire overdue must be cleared to unlock eDFS facility.

Until then, your fuel orders may also get blocked.

This is standard across private banks for channel finance.

What You Can Try Immediately
Go to the ICICI Relationship Manager directly.

Request for a one-time partial withdrawal.

Explain your emergency and give a written undertaking.

Request for 10 to 15 more days to pay full.

Offer post-dated cheque or fixed deposit as assurance.

Sometimes, senior-level approval is required.

If business is regular and past record is good, they may help.

Banks prefer genuine customers to recover fully than take legal route.

What You Must Keep in Mind
eDFS is a fully secured facility backed by stock and sales.

Banks take delayed payments very seriously.

If overdue crosses 30–45 days, account becomes NPA.

Credit score also gets affected.

Oil company gets notified, which may impact supply.

That is why they freeze account quickly.

But banks are also flexible if you show repayment intent.

What Can Happen If Partial Payment Is Accepted
You deposit Rs. 10–15 lakh now.

Bank may allow fuel purchase up to that amount.

But eDFS limit will not be fully restored.

Partial lifting of freeze is at bank’s discretion.

Written approval is needed from their credit team.

Until full overdue is paid, risk rating remains high.

Still, partial deposit shows seriousness and helps your case.

What You Should Do in the Next 15 Days
Prioritise repayment of Rs. 33 lakh in parts.

Keep depositing funds daily or weekly.

Request for restructure of balance overdue.

Ask for conversion of Rs. 20 lakh into working capital loan.

Keep fuel rotation on new terms till account is cleaned.

Once cleared, apply for higher limit with 45-day rotation.

This way, you avoid future freeze and late charges.

Keep These Documents Ready When Meeting the Bank
Written explanation for delay.

Proof of accident or emergency expense.

Cash flow plan for next 30–60 days.

Stock report of fuel and daily sales summary.

Request letter signed on business letterhead.

A clear explanation builds confidence in your repayment plan.

Other Important Points to Note
Try not to exceed 80–85% usage of eDFS limit.

Keep a separate business buffer for emergencies.

Avoid using credit card or personal loans for fuel payments.

Request bank for 35–40 day cycle in future if cash flow allows.

Consider a term loan for any major expense or one-time event.

eDFS should be used only for fuel supply. Not for other costs.

Why You Should Avoid Taking Another Loan Now
Avoid taking new business loans to repay eDFS.

It can become a debt trap.

Instead, ask ICICI for temporary restructure of overdue.

Use cash flows from business to repay gradually.

Avoid real estate or gold loans as short-term solution.

Short-term problem needs a business-based solution, not more borrowing.

Finally
You are a responsible business owner facing a genuine emergency.

Partial delay of 19 days can be resolved with effort.

Visit the bank in person and request for relief.

Submit written commitment and deposit partial amount immediately.

Follow up daily till freeze is lifted or terms are relaxed.

Build 5–7 days cash reserve monthly to avoid future delays.

Once cleared, keep 30% of credit limit as reserve.

Treat eDFS like oxygen for your pump business.

A structured repayment plan and transparent communication can fix this issue.

Best Regards,

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

...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.

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