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

Should I modify my SIP strategy for a 10-year investment?

Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 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
Ambarish Question by Ambarish on Jul 10, 2024Hindi
Money

Dear sir, I have started SIP of following categories 1. Parag parikh flexi cap regular growth - 2500 2. Motilal oswal mid cap regular growth 2000 3.SBI contra fund growth - 1000 4.quant mid cap fund growth -1000 5.hdfc large and mid cap regular growth -2500 6.ICIC prudential eguity and debt fund growth - 1000 7. Nippon India large cap growth -5000 8.quant small cap growth - 5000 Is it right for 10 yrs what will be amount. Ambarish singh Uttar pradesh kushinagar

Ans: Dear Ambarish Singh,

Thank you for sharing your investment portfolio. It’s commendable that you are planning your financial future through systematic investment plans (SIPs). Here, I will provide an in-depth analysis of your SIP portfolio and offer some insights to help you make informed decisions. Your goal of investing for ten years is excellent, as long-term investments often yield better returns. Let’s delve into the evaluation of each fund and provide a comprehensive outlook on your investment strategy.

Portfolio Composition and Analysis
Flexi Cap Funds
Flexi cap funds invest in companies of various sizes. They offer flexibility to the fund manager to switch investments based on market conditions.

Your investment in Parag Parikh Flexi Cap is well-placed. This fund has a reputation for delivering consistent returns due to its diversified portfolio. It's crucial for you to continue monitoring its performance regularly.

Mid Cap Funds
Mid cap funds invest in medium-sized companies. These funds typically offer higher growth potential but come with increased volatility.

You have chosen Motilal Oswal Mid Cap and Quant Mid Cap Fund. Both these funds have shown good performance historically. However, mid cap funds can be more volatile than large caps. It is essential to stay invested for the long term to mitigate short-term market fluctuations.

Contra Funds
Contra funds invest in undervalued stocks. These funds operate on the principle of buying stocks that are currently out of favor.

SBI Contra Fund is an interesting choice. It can potentially deliver high returns if the chosen stocks perform well. However, this approach can be risky, and the performance depends heavily on the fund manager’s ability to pick the right undervalued stocks.

Large and Mid Cap Funds
Large and mid cap funds offer a blend of stability and growth by investing in both large and medium-sized companies.

HDFC Large and Mid Cap Fund provides a balanced exposure. It helps in diversifying risk while aiming for decent returns. Keeping a portion of your portfolio in such funds is a prudent strategy.

Hybrid Funds
Hybrid funds invest in both equity and debt instruments. They provide a balanced approach to risk and return.

Your investment in ICICI Prudential Equity and Debt Fund adds stability to your portfolio. It offers a cushion against market volatility due to its debt component.

Large Cap Funds
Large cap funds invest in large, well-established companies. These funds are generally less volatile and provide steady returns.

Nippon India Large Cap Fund is a good choice for stable returns. Large caps are less likely to experience drastic drops, making them suitable for risk-averse investors.

Small Cap Funds
Small cap funds invest in smaller companies with high growth potential. These funds can be very volatile but can also offer high returns.

Quant Small Cap Fund is part of your portfolio. While small cap funds can yield substantial returns, they also come with high risk. Ensure you are comfortable with this volatility.

Diversification and Overlapping
Your portfolio appears diversified across various fund categories. This diversification helps spread risk and enhances the potential for returns. However, it is also important to check for overlapping investments, where different funds hold similar stocks. Overlapping can reduce the benefits of diversification.

Regular Funds vs. Direct Funds
You have chosen regular funds over direct funds. Regular funds include a commission for the intermediary, while direct funds do not. The main disadvantage of direct funds is the lack of professional guidance. Investing through a Certified Financial Planner (CFP) helps you benefit from professional advice, which can significantly enhance your investment strategy. The slight extra cost in regular funds can be justified by the value added through expert guidance.

Active Management vs. Index Funds
You have invested in actively managed funds rather than index funds. Active management aims to outperform the market through strategic stock selection. This can potentially offer higher returns compared to index funds, which simply track a market index. However, active funds also come with higher fees. The key is to choose funds with strong management teams and proven track records.

Performance Monitoring
It’s important to regularly monitor the performance of your funds. While long-term investments generally yield better returns, keeping an eye on your portfolio allows you to make adjustments as needed. Reviewing the performance quarterly or biannually can help you stay aligned with your financial goals.

Risk Management
Each fund type in your portfolio carries different levels of risk. It's essential to ensure that the overall risk matches your risk tolerance and investment horizon. For instance, while mid and small cap funds offer high growth potential, they also come with higher volatility. Balancing these with large cap and hybrid funds helps mitigate overall risk.

Investment Horizon
Your ten-year investment horizon is appropriate for the selected funds. Equity investments tend to perform well over the long term, mitigating short-term market fluctuations. This duration allows your investments to benefit from compounding, leading to potentially higher returns.

Potential Returns
While specific returns cannot be predicted, historical performance can provide some guidance. Equity mutual funds have generally delivered annual returns of around 10-15% over long periods. However, past performance is not indicative of future results. It's important to have realistic expectations and be prepared for market fluctuations.

Adjustments and Rebalancing
Periodically rebalancing your portfolio ensures it stays aligned with your risk tolerance and investment goals. Rebalancing involves adjusting the weightage of different funds based on their performance. This helps in maintaining the desired risk-return profile.

Professional Advice
Seeking advice from a Certified Financial Planner (CFP) can add significant value to your investment strategy. A CFP can help tailor your portfolio to match your financial goals, risk tolerance, and investment horizon. They can also provide insights on market trends and potential adjustments needed in your portfolio.

Final Insights
Your current portfolio shows a good mix of various fund types, offering a balance of growth and stability. The choice of regular funds ensures you benefit from professional advice, which is crucial for long-term success. It’s important to regularly monitor and rebalance your portfolio to stay aligned with your financial goals.

Remember, investing is a marathon, not a sprint. Stay patient, stay informed, and stay invested.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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

Latest Questions
Prof Suvasish

Prof Suvasish Mukhopadhyay  |19 Answers  |Ask -

Career Counsellor - Answered on Nov 08, 2024

Prof Suvasish

Prof Suvasish Mukhopadhyay  |19 Answers  |Ask -

Career Counsellor - Answered on Nov 08, 2024

Listen
Career
I am engineer with 16 years of IT experience and now a break of 11 yrs. But in 11 yrs I had been taking Quantitative aptitude lectures as a visiting faculty in various engineering and MBA colleges and also done Mutual fund certification. I haven't been siting but doing many things professionally in last 11 yrs(In my subject of interest as Maths, Teaching, Finance, Accounting, Wealth Management). I was thinking of doing ESG certification. What kind of role I would get if i am CFA ESG certified.I am looking for Professionally and intellectually engaging role where I can contribute to Society. Not a very NGO type( I have tried working with few NGO's)
Ans: I won't recommend you to go for ESG certification unless you are having a background of Env. Engg and Environmental Impact Assessment. The certificate course of ESG is costly also. I would request you to open your own academy ( if off line not possible then online) and go for only one subject. Let me know your age.Focus only on one subject. You have explored many areas and now you are perplexed. Here the questions are assigned to me through rediffmail. So second time whether your question will come to me or not is not known to anyone of us. Due to the policy I can’t share my email ID and Phone Number. But I would request you to follow me in LINKEDIN and send request so that I can accept you, then through LINKEDIN I can counsel you in the future multiple times. Through LINKEDIN I will be readily and easily accessible. I have counselled and changed thousands of lives. As long as I am there I won’t allow you to be defeated. Mind that always I am there with you like an invisible shadow to show you the right career path.

...Read more

Ravi

Ravi Mittal  |403 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 08, 2024

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