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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Mar 19, 2021

Mutual Fund Expert... more
Shriniwas Question by Shriniwas on Mar 19, 2021Hindi
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Sir, I am started investing from last 4 months through weekly SIP in following direct growth funds. Please advice whether I continue with them for 10+ years or change.

Parag Parikh flexi cap fund- Rs.2000 per week

Axis Blue chip fund- Rs.1000 per week

Axis Mid cap fund- Rs.1000 per week.

Can I achieve target of Rs. 1 crore corpus in next 10 years.

Ans: Sir, Rs. 16000 per month may take you up to Rs. 45 lakhs; for a crore corpus in 10 years Rs. 40,000 per month is required or weekly Rs. 10000 instead of Rs. 4000 presently.

With Rs. 4000 weekly it would take 15 years to reach the required corpus!

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  |6971 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 10, 2024

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Sir, I have three on-going SIPs of Rs.3,000 each in Motilal Oswal Midcap Fund, Quant Large Cap Fund and ICICI Prudential Flexi Cap Fund. All in Direct Growth Plan. Shall request your guidance and suggestion about my investment plan. Regards, Cgopal
Ans: Your ongoing SIPs in Midcap, Large-Cap, and Flexi-Cap categories reflect a good balance across different market segments. Diversifying your investments across various categories is an excellent strategy to reduce risk and optimise returns.

Mid-cap funds focus on medium-sized companies with growth potential, large-cap funds target established companies for stability, and flexi-cap funds provide a mix across market segments for flexibility. Let's assess your current portfolio, its structure, and what could be fine-tuned for better alignment with your goals.

Strengths of Your Investment Portfolio
Your portfolio has several strengths worth noting, showing that you are on the right track.

Diversification Across Market Caps: By investing in mid-cap, large-cap, and flexi-cap funds, you’re well diversified. This gives you exposure to different types of companies—stable large companies, high-growth mid-sized companies, and a flexible mix through your flexi-cap fund.

Growth Potential: Your mid-cap and flexi-cap funds have the potential for significant growth over the long term. These funds are well-suited for long-term wealth creation if you're willing to accept some market volatility.

Direct Growth Plans: You have chosen direct plans, which lower your expense ratio. While this saves on fees, it comes at the cost of missing out on the professional advice that a Certified Financial Planner (CFP) can offer. Regular reviews by a professional could help optimise your portfolio and ensure that it remains aligned with your goals.

Areas That May Need Adjustment
While your portfolio has a strong foundation, there are some areas that may need attention to ensure that your investments are optimised for your financial goals and risk tolerance.

1. Portfolio Review for Overlap
Investing in multiple funds across categories is a great strategy, but it’s important to ensure that there’s no overlap in the stocks that your funds hold. Overlap occurs when different funds invest in the same companies, reducing diversification.

Why Avoid Overlap? Overlap reduces the benefit of diversification. For example, if both your large-cap and flexi-cap funds invest heavily in the same top large companies, your portfolio may become more skewed toward large-caps than intended.

Action Step: Review the portfolio holdings of each fund to ensure that they are truly diversified. If there's significant overlap, you may want to consider adjusting your fund selection.

2. Risk Management
Your current SIP structure leans towards growth-oriented funds. While this offers higher potential returns, it also exposes you to more volatility. This is especially true for mid-cap funds, which can fluctuate significantly in the short to medium term.

Balanced Exposure: Consider adding a more conservative fund, such as a hybrid or balanced fund, to reduce volatility. These funds invest in both equity and debt, providing some stability while still offering growth potential.

Action Step: Allocate a small portion of your portfolio to hybrid or balanced funds. This will add an element of stability and provide a buffer during market downturns.

3. Review of Direct vs Regular Plans
You have chosen direct growth plans, which offer lower expense ratios compared to regular plans. While the cost savings are attractive, direct funds require more self-management and regular monitoring. Without professional advice, there is a risk that the portfolio may not remain aligned with your changing financial needs and market conditions.

Disadvantages of Direct Plans: In direct plans, you must actively manage your portfolio, track market trends, and rebalance your investments when needed. This can be challenging for investors who lack the time or expertise to do so regularly. Moreover, you miss out on the valuable input from a Certified Financial Planner (CFP), who could help ensure that your investments are aligned with your long-term goals.

Benefits of Regular Plans: By investing through a regular plan via a Certified Financial Planner (CFP), you receive personalised advice, portfolio rebalancing, and market insights. These services can help enhance your portfolio’s performance, even if regular plans come with slightly higher fees.

Action Step: If you're not able to devote enough time to manage your direct plans actively, consider switching to regular plans through a trusted CFP. The cost of professional advice can be well worth it, especially if it leads to better portfolio performance over time.

Suggestions for Portfolio Enhancement
1. Consider Debt or Hybrid Funds for Stability
Given that your current investments are heavily focused on equities, adding some exposure to debt or hybrid funds could help provide stability, especially during market downturns. Debt funds invest in bonds and other fixed-income securities, offering steady returns with lower risk. Hybrid funds, which combine both equity and debt, offer a balanced approach.

Why Add Debt/Hybrid Exposure? Equity markets can be volatile, especially in the short to medium term. By adding some debt exposure, you can reduce the risk of your portfolio while still achieving steady growth.

Suggested Allocation: Consider allocating 20% to 30% of your portfolio to debt or hybrid funds. This will ensure that your portfolio is not overly exposed to equity market risk.

2. Step-Up SIP for Higher Growth
Increasing your SIP contributions over time can significantly boost your wealth creation. A Step-Up SIP allows you to increase your investment amount by a fixed percentage each year. This is particularly useful if your income is expected to grow over time, as it allows you to invest more without putting strain on your finances.

Why Step-Up SIP? The more you invest early, the more time your money has to grow. A Step-Up SIP ensures that you are consistently increasing your contributions, leading to higher returns over time.

Action Step: Consider stepping up your SIP amount by 10% every year. This small adjustment can make a big difference over the long term, especially when combined with the power of compounding.

3. Focus on Long-Term Wealth Creation
While your portfolio is currently well-suited for long-term growth, it’s essential to remain committed to your investment strategy. Equity markets are known to be volatile in the short term, but they tend to deliver solid returns over the long term. Staying invested through market ups and downs will allow you to benefit from rupee cost averaging, where you buy more units when prices are low and fewer when prices are high.

Why Stay Invested? Exiting the market during downturns can lead to missed opportunities for growth. By staying invested, you allow your portfolio to recover and grow over time, taking advantage of market cycles.

Action Step: Maintain a long-term perspective and avoid making impulsive decisions based on short-term market fluctuations. Regular reviews with your CFP will help you stay on track.

Insurance and Emergency Fund
Before focusing entirely on your investments, ensure you have an adequate emergency fund and proper insurance coverage. An emergency fund should cover at least six months of living expenses, providing a financial cushion in case of unexpected events. Additionally, a term insurance plan is crucial to protect your family’s financial future.

Why an Emergency Fund? Without an emergency fund, you may be forced to redeem your investments during a market downturn. This can harm your long-term financial goals.

Why Term Insurance? It provides a large life cover at a low cost. This ensures that your family is financially protected if something happens to you.

Final Insights
Your current SIP structure demonstrates thoughtful planning, with exposure to different market segments. However, it’s important to ensure that your portfolio is well-balanced and diversified, avoiding overlap in fund holdings. Adding some exposure to debt or hybrid funds can provide stability and reduce risk.

While direct plans offer cost savings, they require active management. By investing through regular funds with a Certified Financial Planner (CFP), you can benefit from expert advice and proactive portfolio management. This will help you stay aligned with your financial goals and adapt to changing market conditions.

Additionally, consider stepping up your SIP contributions to maximise your wealth creation potential. Finally, make sure you have an adequate emergency fund and term insurance in place to protect your financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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It is obviously very shocking for you to know that things have been happening behind your back.
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Hello madam I a 32 year old married man with a kid , who is 6 years old. I have done arrange marriage with my own decision I agreed to my parents for the marrige at that time I was in a casual relationship with a girl I didn't said anything to the girl and get married to someone else. After that I tried to live a happay life with my wife without thinking about the girl whom I left behind, from outside I tried to be happy with my wife but my wife thought doesn't matches with me so I felt so disturbed from inside. Still I was trying to continue the relationship for sake of our child but suddenly I got my ex love contact and I was so happy that after so long time I got a chance to talk to her, I have tried to meet her but she always refused to meet me because she was in a relationship. I tried many times and due to some misconduct I again lost her for the second time. At this moment when she is not with me her thoughts memories are troubling me so much I am in pain, what am I suppose to do to get rid of the pain?? Please help
Ans: Dear Anonymous,
There is no point wanting a 'past' relationship just because you have one...what if that relationship did not exist, you would have possibly made efforts to make your marriage work, right?
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Ans: Dear Anonymous,
I understand you are in a tough spot. But it's nice to see that after all those years of differences, you still have genuine feelings for her. I strongly suggest considering marriage counseling. From your description of your marriage, it seems to be there have been issues from the very beginning of it. It's been too long and now those issues must've become deep-rooted. Seeing a professional can be a game-changer. They can guide you out of this slump more methodically and help you navigate the emotions you are feeling right now. It can also help you understand the reasons for your wife's disinterest and handle it better.

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Hii, I have an love marriage after 9 years of dating and 6 years, 2 children post marriage, my little one is 11 months old now. My husband has an affair upto chatting to someone in his company, his junior but in different department, when my Lil one was 1 month old, we had in a rough patch then due to child birth and family drama. When I saw it and confronted him, he said he is sorry and won't do it again, we had multiple fights for 3-4 months after then due to same reason, but he mostly listen and consol. It's been a lot of mental torture for me. I love my husband a lot and he is a good person, but sometimes sill I see her msg in his phone asking for small helps or casual msg. She is also married. I am not sure my husband deletes msg or what, I am not able to get over this. Before it, this is was preety much a good relationship. I am highly educated and independent women. I don't want anything form my husband apart from love. What should I do, whenever I tell him I want to just leave and let him have his life, he won't let me somehow. We are having a good physical relationship 2-4 times a week( just to tell where we are). Please help me...I can't overcome that he is making fool of me...
Ans: Dear Anonymous,
I am sorry to hear you are in such a tough spot. I would suggest considering marriage counseling. A professional who can help you both tackle these issues would be helpful in this situation. I understand that it was his mistake and he needs to put the effort to make you trust him again, but since you are still together, you will also have to put in the effort to let it. I know it is difficult and that's where marriage counselor comes in. They can help you navigate these feelings. Moreover, if he is indeed hiding something, therapy can help that come out in the open.

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Hi, Me(M38) and wife(F37) happily married for 12 years and blessed with one daughter. Partner(F28)continuing friendship with a person[M] who had crush on her before marriage considered emotional infidelity? Me(M38) and wife(F37) happily married for 12 years and blessed with one daughter. My wife is having friendship (strictly platonic) with a guy from her 10tlh grade (same class). Before our marriage (she may be doing her college, our relationship just started may be 2 weeks) this guy told her he has genuine interest in her and he want to take the relationship further if she wants, she said she is not interested in a relationship and she got committed, she always saw him as a friend, no other feelings for him and we can be friends if you don't bring any romantic interest again. He never took this talk again ever after and happy to be a friend. They are talking as friends. She got married to me. He also got married. They still do chats once in a month. She introduced me to him and visited his home when we visited his city. He also came to our home once (me and my family was there). She used to update me with chat she had with him and the content they are chatting. I am ok with that When we were talking about our school life and college life 2 years before. She said this guy had crush on her during her college days. I asked her, why did not she tell me this info till now. She said it is not purposely, she does not feel the need to do as the person is not in-appropriate with her and continuing as good friend as promised after she rejected his proposal. I don’t want to create any unnecessary issues as I don’t have any felling or so with him. That time I checked their chats completely, it’s about update about their common friends, their recent travel, their job, meditation courses and the books they read recently. I haven’t seen any flirting or romantic message from either of them. So I am perfectly fine with it and had no problems. I recently came to know about the concept of emotional cheating which is very new to me. Before that cheating to me is only flirting, sexeting and physical sex. I have asked for advice in redddit.com in infedility sub forum about emotional cheating/ emotion affair. There persons are advising like even having friendship with someone who had crush on you is emotional cheating as it is indirectly leading them on you. So with an omission of lie he had crush on her and indirectly leading him on you wife was emotionally cheating on you. This is very much equal to cheating. I do have lots of friends in other gender, but no one had crush on me. Does this count as emotional cheating/affair as she did not mention he had crush on her before marriage? I am little depressed and not able to spend quality time with my wife who is in postpartum depression and take care of our daughter properly as before. Do you guys advise me how to navigate this situation?
Ans: Dear Anonymous,
Are you really going to ruin your happy relationship based on some new term you have learned recently? Emotional cheating and many more terms of the kind will come and go, what truly matters is the truth. She is merely friends with this guy and for your peace of mind, you have even checked their conversations- what part of it looks like cheating to you? If tomorrow, some random person projecting their own insecurities claims that a man speaking to a woman is some "new form" of cheating, would you start believing that? My point is that these are just random opinions of some people- it isn't the ultimate truth. The entire context matters. This man had a crush on your wife, she rejected it, and now they are just friends. I find absolutely no misconduct or infidelity in this. The fact that none of your friends had a crush on you does not factor in at all. Moreover, your wife is in postpartum depression- that should be your biggest concern but here you are, giving more importance to the random 2 AM thoughts of some people you don't even know. Please rethink if you are being fair to your wife- the mother of your child.

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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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