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

Should I Invest in These Mutual Funds for 5-10 Years?

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 29, 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
Asked by Anonymous - Oct 29, 2024Hindi
Money

Dear team, Hi I’m 46 years would like to start my investment in MF for 5 to 10 years . Till now I have not invested in any share market or MF. I have selected the following funds: 1. Nippon India large cap funds-Rs 10000. 2. Nippon India Small cap fund- Rs 10000. 3. Nippon India Multi cap fund -Rs 7500. 4. Motilal oswal Mid cap fund- Rs 10000. 5. Quant small cap fund- Rs 5000. 6. HDFC Focused 30 fund- Rs. 7500 Also I am NRI I working in Gulf there the above mentioned plan are regular plan thru ICICI direct as I am unable to update my KYC online. Please suggest me that the above mentioned funds are good to invest for 5 to 10 years

Ans: Firstly, your selection to start investing in mutual funds is commendable. As you’re new to mutual funds and looking for a 5 to 10-year investment horizon, a balanced approach across different fund types is a sound choice. This portfolio aligns well with a diversified strategy, as it includes large-cap, mid-cap, small-cap, multi-cap, and focused funds. Now, let’s look at each aspect in detail for better clarity.

Diversification: A Strategic Mix of Funds

Large-Cap Funds: Large-cap funds typically invest in established, stable companies. They bring stability to a portfolio and help balance the potential risk associated with mid-cap and small-cap funds. Large-cap funds are especially beneficial if you want consistent growth with lower risk than small- and mid-cap segments. They are known for their ability to protect capital during market downturns, offering smoother returns over the long term.

Small-Cap Funds: Small-cap funds tend to offer high growth potential but with a higher risk factor. They invest in emerging companies, which may experience considerable price fluctuations. However, for a 5- to 10-year horizon, small-cap funds can yield substantial returns as these smaller companies mature and grow in market valuation. Your allocation to small-cap funds can be a growth driver but requires monitoring.

Multi-Cap Funds: Multi-cap funds provide exposure to large-, mid-, and small-cap companies in a single fund. This gives them the flexibility to adapt to market conditions. Multi-cap funds are beneficial because they can shift their asset allocation to match market dynamics, offering growth potential with moderate risk.

Mid-Cap Funds: Mid-cap funds invest in companies that are in the growth phase and have the potential to become large-cap companies over time. They offer a blend of stability and growth. Including a mid-cap fund in your portfolio is advantageous as it balances the risk and return profile between large-cap and small-cap funds.

Focused Funds: These funds concentrate on a limited number of stocks. This focused approach can yield higher returns if the fund manager's choices perform well. However, it carries higher risk due to limited diversification. For a 5 to 10-year horizon, a focused fund can add significant value to your portfolio but should remain only a part of it.

Evaluation of Regular vs Direct Plans

Since you are investing through ICICI Direct and using regular plans, let’s examine the benefits of regular funds, especially for NRIs. Regular funds offer access to certified financial planners (CFPs) who can provide guidance on market trends, rebalancing strategies, and portfolio reviews. This is advantageous as managing a portfolio from abroad can be challenging. With a regular plan, the extra expense ratio cost is justified by the value-added services provided by ICICI Direct and their advisory services.

Benefits of Actively Managed Funds Over Index Funds

Actively managed funds aim to outperform the market through expert stock selection, which is valuable for short- to medium-term horizons like 5 to 10 years. Actively managed funds can react to market changes, unlike index funds, which simply track an index without considering market fluctuations. Moreover, index funds might not offer the same level of diversification in emerging markets, potentially limiting returns.

Tax Considerations for NRIs

Mutual fund investments for NRIs in India are subject to tax implications that can affect your returns. The new capital gains tax rules specify that:

Long-Term Capital Gains (LTCG): For equity mutual funds, gains above Rs 1.25 lakh are taxed at 12.5%. Holding funds longer than one year generally qualifies as long-term for equity investments.

Short-Term Capital Gains (STCG): Gains realized within a year are taxed at 20%.

Having a clear tax strategy is important to manage the impact of these taxes on your returns. You may consult your financial planner or tax advisor to structure withdrawals efficiently and keep tax liabilities manageable.

Investment Horizon and Risk Management

With a 5- to 10-year investment horizon, a balanced risk profile is critical. Here’s a recommended strategy to ensure a well-rounded portfolio:

Allocate according to time frame: Given your timeframe, it may be wise to invest more in large-cap and multi-cap funds initially for stability, then gradually increase exposure to mid-cap and small-cap funds if your risk tolerance grows.

Systematic Withdrawals: Nearing the 5-year mark, consider a systematic withdrawal plan (SWP) to start securing profits. SWPs allow you to take out funds in a structured way, protecting gains while minimizing tax impacts and potential market volatility.

Market Timing and Rebalancing

Market volatility can affect returns, especially in mid- and small-cap funds. Regularly reviewing and rebalancing your portfolio can help you adjust exposure to each category as needed. Your ICICI Direct advisory service can help assess when market conditions favor reallocating funds, ensuring you stay aligned with your goals.

Final Insights

Your portfolio selection indicates a thoughtful approach, diversified across market segments. With regular plans through ICICI Direct, you’re well-positioned to receive professional support, critical for managing your investments as an NRI. Staying focused on your financial goals, rebalancing as needed, and maintaining a tax-efficient strategy will help you make the most of your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

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

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 21, 2024

Money
Hello sir, I am 48 yrs old, salaried, just stared to invest in MF. I selected the following funds for monthly SIP of rs 10000 each... 1. Nippon India large cap fund direct growth 2. Motilal Oswal midcap fund direct growth 3. Quant large & Mid cap fund direct growth Please advice all these choices are ok? Also pl advice two more funds to invest sip of rs 10000 each and likely to invest lumpsum of 2 lakhs every 6 months....expecting carpus of 3cr during my retirement age of 60yrs old. Advance thanks
Ans: You are 48 years old and have started investing in mutual funds. You plan to invest Rs 10,000 per month in three selected funds. Additionally, you are looking to invest Rs 10,000 per month in two more funds and a lump sum of Rs 2 lakhs every six months. Your goal is to accumulate a corpus of Rs 3 crore by the time you retire at age 60.

This is a critical time in your financial journey, and it's essential to make informed decisions. Your choices will significantly impact your retirement corpus.

Evaluating Your Current Fund Selections
Nippon India Large Cap Fund (Direct Growth): Large-cap funds offer stability and are generally less volatile. However, direct plans require you to manage the investments yourself. This might be challenging without regular market insights. It’s advisable to invest in regular plans through a Certified Financial Planner (CFP) who can provide ongoing guidance and support.

Motilal Oswal Midcap Fund (Direct Growth): Midcap funds can offer higher growth but come with increased risk. Again, managing direct funds on your own can be complex. A CFP can help you navigate market changes and ensure your investments align with your goals.

Quant Large & Mid Cap Fund (Direct Growth): This fund provides a balance between stability and growth. However, the same concerns apply here regarding the direct plan. A CFP can help you maximize returns while managing risk.

Disadvantages of Direct Funds
Direct funds have lower expense ratios, but they lack the professional advice and management that comes with regular funds. This can lead to missed opportunities or increased risks, especially if you lack the time or expertise to monitor your investments closely.

Investing through a CFP in regular funds ensures that your investments are regularly reviewed and rebalanced. This approach aligns your portfolio with your financial goals and risk tolerance.

Recommendations for Additional Funds
To complement your existing investments and achieve your retirement goal, consider the following:

Diversification: It's crucial to diversify your portfolio across different asset classes and fund categories. This strategy helps in managing risk and improving potential returns.

Balanced or Hybrid Funds: Consider adding a balanced or hybrid fund to your portfolio. These funds invest in both equity and debt instruments, offering a mix of growth and stability. They can be an excellent addition, especially as you approach retirement.

Flexi-Cap Funds: Flexi-cap funds invest across large, mid, and small-cap stocks. This flexibility allows the fund manager to shift investments based on market conditions, potentially enhancing returns while managing risk.

Regular Plans with CFP Guidance: As mentioned earlier, it's advisable to invest in regular plans with the guidance of a CFP. This will ensure that your investments are well-managed and aligned with your retirement goal.

Investing Lump Sum Every Six Months
Lump sum investments can be a great way to boost your corpus. However, investing the entire amount at once can expose you to market volatility. Here’s how to approach it:

Systematic Transfer Plan (STP): Instead of investing the lump sum directly into equity funds, consider using a Systematic Transfer Plan (STP). Start by investing the lump sum in a debt fund, and then gradually transfer it to your equity funds. This strategy helps in averaging the purchase cost and reduces the impact of market volatility.

Diversification Across Funds: Spread your lump sum investments across different funds rather than concentrating it in one. This approach reduces risk and increases the potential for growth.

Achieving Your Rs 3 Crore Retirement Goal
Your goal of accumulating Rs 3 crore by the time you turn 60 is achievable with disciplined investing and proper planning. Here’s how to ensure you stay on track:

Consistent SIPs: Continue with your SIPs diligently. The power of compounding will significantly enhance your corpus over time.

Regular Reviews: Schedule regular reviews of your portfolio with your CFP. This will help in making necessary adjustments based on market conditions and your evolving financial goals.

Adjusting Contributions: As your income grows, consider increasing your SIP amounts. Even a small increase can have a significant impact over the long term.

Focus on Long-Term Growth: Avoid the temptation to withdraw from your investments for short-term needs. Keep your focus on the long-term goal of building a substantial retirement corpus.

Final Insights
You have made a good start by choosing to invest in mutual funds. However, moving forward, it’s crucial to seek guidance from a Certified Financial Planner. This will ensure that your investments are aligned with your goals and are managed effectively.

By diversifying your portfolio, utilizing STPs for lump sum investments, and regularly reviewing your investments, you can achieve your goal of Rs 3 crore by the time you retire. Your commitment to consistent investing will pay off, securing a comfortable retirement for you.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 01, 2024

Asked by Anonymous - Oct 31, 2024Hindi
Money
Dear team, Hi I’m 46 years would like to start my investment in MF for 5 to 10 years . Till now I have not invested in any share market or MF. I have selected the following funds: 1. ICICI Pru blue chip fund -Rs 10000. 2. Nippon India Small cap fund- Rs 10000. 3. Nippon India Multi cap fund -Rs 7500. 4. Motilal oswal Mid cap fund- Rs 10000. 5. Quant small cap fund- Rs 5000. 6. HDFC Focused 30 fund- Rs. 7500 Also I am NRI I working in Gulf there the above mentioned plan are regular plan thru ICICI direct as I am unable to update my KYC online. Please suggest me that the above mentioned funds are good to invest for 5 to 10 years
Ans: You’ve taken an excellent step by beginning your journey into mutual funds and stock markets. Diversifying and rebalancing your portfolio is indeed important, and your current enthusiasm for learning and improving your financial health is admirable. I’ll help you answer your questions and outline an optimal approach to maximise returns while managing risk.

Assessing Your Current Mutual Fund Portfolio
Your existing portfolio of nine direct mutual funds reflects your willingness to diversify. However, managing too many funds can lead to overlap and complexities in tracking performance. Here’s a more streamlined approach that ensures you achieve effective diversification without unnecessary fund overlap.

Limit to Essential Fund Categories: Aim to retain only 4-5 core categories. These include a mix of large-cap, mid-cap, and flexi-cap funds, along with a smaller allocation to contra or sectoral funds for tactical growth.

Avoid Index Funds in This Case: Index funds replicate the market and lack active management, which may limit gains, especially during volatile market phases. Actively managed funds allow skilled fund managers to optimise performance based on market trends.

Reconsider Direct Funds: Investing through regular funds with a Certified Financial Planner (CFP) helps you benefit from professional guidance. While direct funds save on distributor fees, they require significant knowledge and time to monitor effectively. An MFD with CFP credentials will help you align your investments with both market trends and personal goals.

Investment Strategy for Your Lump-Sum Amount
With Rs 3.5 lakhs to invest as a lump sum, your next steps are crucial for maximising returns.

1. Choosing the Right Number of Funds
Limit Fund Selection: For the Rs 3.5 lakh investment, focus on a manageable selection of 4-5 funds. Over-diversification may dilute returns without proportionate risk reduction.

Strategic Allocation: Allocate funds in a way that balances growth with stability. For example, allocate portions to large-cap, mid-cap, and flexi-cap funds, with a smaller allocation to a contra fund if you’re open to moderate risk.

Prioritise Active Funds over Passive Index Options: Actively managed funds allow professional adjustments in line with changing market conditions, aiming for higher returns over time.

2. Timing of Lump-Sum Investment
Market Timing vs. Systematic Approach: As markets can fluctuate unpredictably, consider a phased approach, such as a Systematic Transfer Plan (STP). This way, you can gradually move the lump sum from a low-risk fund to equity funds over a few months, reducing the risk of investing all at once during a downturn.

Assessing Current Market Levels: The market downtime you mentioned may appear tempting, but markets may take time to stabilise. By investing in phases, you mitigate risk while capitalising on potential market rebounds.

Suggested Mutual Fund Categories for Long-Term Growth
Since you’re aiming for a 5 to 10-year period, a well-structured portfolio with actively managed funds is crucial. I’ll avoid suggesting specific schemes and instead outline fund categories that align with your goals.

1. Large-Cap Funds for Stability
Why Large-Cap Funds? These funds invest in established companies, offering stability and consistent growth. Over time, they help anchor the portfolio, especially during market volatility.

Ideal Allocation: Allocate about 30-40% of your lump-sum investment to large-cap funds to ensure stability in your portfolio.

2. Mid-Cap Funds for Growth Potential
Mid-Cap Funds’ Role: Mid-cap funds balance stability with higher growth prospects. While they’re slightly more volatile than large-cap funds, they offer strong potential returns.

Ideal Allocation: Consider allocating 20-25% of your lump-sum investment to mid-cap funds to capture this growth.

3. Flexi-Cap Funds for Market Flexibility
Flexi-Cap Benefits: These funds provide flexibility by investing across large, mid, and small-cap stocks based on market conditions. This helps maximise growth potential while managing risk.

Ideal Allocation: Allocate around 25% of your lump-sum investment here. Flexi-cap funds give fund managers room to adapt the fund based on market trends.

4. Contra or Value Funds for Tactical Growth
Tactical Role of Contra Funds: Contra or value funds invest in undervalued stocks, aiming to capitalise when these stocks eventually rise. They add a contrarian growth element to the portfolio.

Ideal Allocation: Allocate a smaller portion, around 10-15%, to a contra fund to enhance returns while maintaining manageable risk.

Tax Implications to Keep in Mind
Understanding tax implications helps optimise net returns. Here’s a snapshot of the applicable taxes:

Equity Mutual Funds: Gains above Rs 1.25 lakh per annum are taxed at 12.5% for long-term capital gains (LTCG). Short-term gains are taxed at 20%.

Debt Mutual Funds: Both LTCG and short-term capital gains (STCG) are taxed as per your income tax slab. If you include debt funds for a part of your portfolio, consider this in your tax planning.

Additional Recommendations to Strengthen Your Financial Position
1. Build an Emergency Fund
Maintain a separate emergency fund covering at least six months’ expenses. This fund acts as a safety net, ensuring you don’t need to dip into your investments for unforeseen expenses.
2. Term Insurance for Financial Security
Ensure adequate term insurance coverage, providing financial stability to your dependents in your absence. This policy type offers high coverage at low costs, making it an ideal safety net.
3. Health Insurance for Your Family
Having comprehensive health insurance prevents your investment corpus from being impacted by medical expenses. Check for policies that cover critical illnesses for robust coverage.
4. Review Portfolio Regularly with a CFP
A Certified Financial Planner can help assess and adjust your portfolio as needed. Regular reviews allow you to stay aligned with your financial goals and market conditions.
5. Consider Goal-Based SIPs for Future Objectives
While your lump-sum investment supports wealth creation, consider setting up goal-based SIPs to address specific future goals, such as a child’s education or retirement.
Final Insights
Your commitment to long-term investment is commendable. With a structured approach and regular reviews, your portfolio can be geared for strong growth over the next 5-10 years. By focusing on actively managed funds, phased investments, and strategic fund selection, you’re well-positioned to achieve both security and growth.

For any further queries or detailed discussions, please feel free to reach out.

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 02, 2024

Asked by Anonymous - Oct 31, 2024Hindi
Money
Dear team, Hi I’m 46 years would like to start my investment in MF for 5 to 10 years . Till now I have not invested in any share market or MF. I have selected the following funds: 1. ICICI pru Blue chip fund-Rs 5000 2. Nippon India Small cap fund- Rs 10000. 3. Nippon India Multi cap fund -Rs 7500. 4. Motilal oswal Mid cap fund- Rs 10000. 5. Quant small cap fund- Rs 5000. 6. HDFC Focused 30 fund- Rs. 7500. 7 . ICICI Pru Infrastructure fund Rs 5000. Also I am NRI I working in Gulf and the above mentioned plan are regular plan thru ICICI direct as I am unable to update my KYC online. Please suggest me that the above mentioned funds are good to invest for 5 to 10 years . Thanks & regards
Ans: Your choice of mutual funds is well-diversified across various categories. However, to optimise returns and balance risk, consider a few refinements to your strategy.

1. Equity Exposure Through Blue Chip and Focused Funds

Blue Chip Fund: Investing in large-cap funds like a blue chip fund offers stability. These funds invest in established companies, making them suitable for wealth preservation. A large-cap allocation is vital for your portfolio’s foundation.

Focused Fund: Focused funds concentrate investments in fewer stocks. While they may offer higher returns, they also carry higher risk. A focused fund with limited holdings can be beneficial, but it’s wise to limit its percentage within your overall portfolio.

2. Small Cap and Mid Cap Investments for High Growth Potential

Small Cap Funds: Small-cap funds can deliver high returns, especially over longer periods. However, they are more volatile and may underperform during market downturns. Since you are considering a 5-10 year horizon, you may benefit from a balanced allocation to small-cap funds. This can capture growth while managing volatility.

Mid Cap Fund: Mid-cap funds offer a balance between large-cap stability and small-cap growth. This category can provide significant growth in a growing economy. It’s prudent to invest, but avoid a heavy allocation to maintain portfolio stability.

3. Multi Cap and Sector-Specific Exposure

Multi Cap Fund: Multi-cap funds invest across large, mid, and small-cap stocks, providing diversification. This type of fund can act as a stabiliser, balancing growth and stability. Including a multi-cap fund is ideal for capturing broad market growth.

Sector Fund (Infrastructure): Sector funds like an infrastructure fund are concentrated in specific industries. While they may perform well during industry growth phases, sector funds can underperform when the sector faces challenges. Limit your allocation to sector-specific funds to about 5-10% of your total investment.

Key Considerations as an NRI Investor
1. Regular Plans Through a Certified Financial Planner (CFP)

Direct mutual funds may not offer personalised support, and tracking investments can become difficult without guidance. Opting for regular funds through a Certified Financial Planner (CFP) can provide tailored insights, regular reviews, and potential risk management, which are crucial when you are overseas. Regular funds, through a reliable CFP, can help you maximise returns without compromising your convenience.
2. Limitations of Online KYC and Documentation for NRIs

Completing KYC updates online can be challenging for NRIs. However, working with a trusted platform like ICICI Direct can simplify this process, as you’re already aware. Ensure all documentation, including FATCA and KYC, is accurate to avoid compliance issues.
3. Taxation Implications for NRIs on Mutual Funds

As an NRI, you are liable for taxes on your mutual fund gains. For equity funds, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%, while short-term gains are taxed at 20%. For debt funds, both LTCG and STCG are taxed as per your income slab. Staying aware of these tax implications can help in post-tax return calculations.
Suggested Adjustments to Enhance Returns and Minimise Risk
Reduce Sector Fund Allocation: Limit your investment in sector funds like infrastructure to around 5-10% of your portfolio. Overweighting in sector funds may lead to high volatility, especially if the sector experiences a downturn.

Balanced Allocation to Mid and Small Cap Funds: While small-cap funds can drive returns, they can also be unpredictable. Consider capping your combined allocation to small and mid-cap funds at 30-35% of the total investment. This can enhance growth potential while maintaining balance.

Consider Increasing Large Cap Allocation: Adding a second large-cap or flexi-cap fund can bring stability. Large-cap funds perform well in uncertain market conditions, adding a buffer to your portfolio.

Limit Focused Fund Exposure: As focused funds carry a concentrated risk, consider keeping this allocation below 10% of your portfolio.

Final Insights
A mix of stability from large-cap funds and growth from mid and small-cap funds is ideal. This can help achieve both capital appreciation and protection.

Regular reviews with a Certified Financial Planner are advisable. This will ensure that your portfolio remains aligned with market conditions and your financial goals.

Focus on a balance between growth and stability, especially considering your medium-term investment horizon of 5-10 years.

By making these small adjustments and following a consistent review approach, you can create a portfolio that is balanced, growth-oriented, and suited for the medium term.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Money
I have invested Rs 50000 in Aditya Birla Sun life Psu equity fund direct growth in August 2024 .It gone down and am at a loss of around 7000 now ..should I continue and keep a watch or withdraw the amount .Kindly advice
Ans: You’ve invested Rs. 50,000 in a PSU-focused equity mutual fund (direct growth) in August 2024. You are currently facing a notional loss of around Rs. 7,000.

Let’s evaluate your concern with a 360-degree analysis. We’ll consider fund nature, risk, tenure, emotional behaviour, tax impact, and expert support.

We truly appreciate your initiative in seeking proper guidance. It shows a responsible investment mindset.

Let’s assess this decision from all angles.

 

Nature of Investment Chosen
You invested in a sector-specific equity fund.

 

Sector funds are very high-risk and concentrated.

 

PSU theme is based on government-owned businesses.

 

These funds follow a very narrow investment style.

 

When sector underperforms, your entire fund gets affected.

 

Even good companies may fall if the sector is weak.

 

Sector and Volatility
PSU stocks are affected by government policy decisions.

 

Market may react to budget, reforms, or geopolitical news.

 

In short term, PSU funds can show deep falls.

 

This is part of the risk-reward structure in such funds.

 

Volatility is not a mistake; it is expected.

 

If you knew this before investing, you need not worry now.

 

Investment Duration
You invested just 8 months ago.

 

Equity mutual funds need more time.

 

Especially sector funds may take 3 to 5 years minimum.

 

Judging performance in 8 months is not meaningful.

 

Markets have up and down cycles.

 

Short-term dips are not real losses unless you redeem.

 

Long holding gives your investment time to recover.

 

Notional Loss vs. Actual Loss
Rs. 7,000 loss is not permanent unless you withdraw.

 

Current value is only a temporary figure.

 

If you sell now, you book this loss forever.

 

If you hold, there’s chance to recover and grow.

 

Investors often panic and redeem at wrong time.

 

That’s a behavioural mistake, not a market mistake.

 

Direct Funds and Investor Decisions
You chose a direct plan.

 

Direct plans lack expert guidance.

 

You are making decisions alone.

 

Without a Certified Financial Planner, mistakes can happen.

 

Many direct investors redeem early due to fear.

 

Regular plans offer support from CFP-certified professionals.

 

A CFP helps in review, correction, and long-term strategy.

 

That small extra cost brings big long-term value.

 

Emotional Bias in Investing
Losses create fear in most investors.

 

Fear may lead to bad decisions.

 

With equity, this emotional control is critical.

 

Long-term wealth is only possible with patience.

 

You must separate emotions from money choices.

 

Take help of a CFP who brings calmness and objectivity.

 

Tax Implication (As Per New Rules)
You invested in August 2024.

 

If you redeem before August 2025, gains (or losses) are short-term.

 

Short-term capital gains tax is 20%.

 

If there’s a loss, it can be carried forward for future tax benefit.

 

But we don’t advise redeeming now just to record this loss.

 

Let the investment complete its full cycle.

 

Investment Goal and Purpose
Was there a clear goal for this investment?

 

If yes, when is the goal coming up?

 

PSU funds are not suitable for short-term needs.

 

If you need money within 1 year, it’s not ideal.

 

If it’s a long-term goal, then hold tight.

 

Invest according to your time horizon, not just fund return.

 

Diversification Matters
PSU equity funds are too narrow.

 

You should avoid putting large sums in one sector.

 

Diversify across multiple sectors and styles.

 

Multi-cap, flexi-cap or large-cap funds give better balance.

 

Keep PSU exposure limited, not core holding.

 

A well-diversified portfolio reduces mental stress too.

 

Review and Restructure
Sit with a Certified Financial Planner.

 

Review your full portfolio, not just one fund.

 

Restructure based on goals and risk tolerance.

 

Build a mix of funds with different styles and caps.

 

Avoid repeating mistakes like overexposure to sectors.

 

Common Investor Mistakes to Avoid
Don’t react to short-term loss.

 

Don’t check NAVs every day or week.

 

Don’t follow social media fund tips.

 

Don’t chase highest return or lowest NAV.

 

Don’t switch between funds too often.

 

Stay steady and follow your plan.

 

What Should You Do Now?
Do not redeem now.

 

Let the investment complete minimum 3–5 years.

 

Meanwhile, avoid adding more in this one sector.

 

Start investing gradually in diversified equity funds.

 

Take help from a CFP to guide and monitor.

 

Do a portfolio review every year.

 

Continue investing with patience and discipline.

 

Key Takeaways from Your Situation
Loss in 8 months is not unusual.

 

Sector funds are volatile by nature.

 

Your decision should be based on goals, not returns.

 

Avoid emotional reactions like panic redemption.

 

You must work with a qualified CFP for guidance.

 

Shift from direct funds to regular plan with MFD-CFP support.

 

Always diversify and follow asset allocation.

 

Stick to your long-term strategy for real wealth creation.

 

Finally
Your concern is valid and understandable.

 

But early redemption will lock the loss permanently.

 

Sector fund performance takes time to show up.

 

Stay invested and consult a CFP for next steps.

 

Your journey to wealth is not a sprint, it’s a marathon.

 

Continue with patience, proper planning, and expert guidance.

 

Right investment decisions are not based on past returns.

 

They are based on goals, risk capacity, and time.

 

You have already taken the first right step—asking the right questions.

 

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Asked by Anonymous - Apr 18, 2025Hindi
Money
Dear Sir, IAM planning to Axis bank Bajaj Allianz pure stock fund, annual investment 1lac till 5 years, what are benefit out it Plz advise this a wise decision to invest. Thanks & Regards Mysore
Ans: You are planning to invest Rs. 1 lakh annually for 5 years in a pure equity mutual fund from a reputed AMC.

Let us assess your decision with a 360-degree view.

We will evaluate the benefits, risks, and alignment with your goals.

We will also check if this is a wise and suitable decision for you.

We appreciate your discipline in thinking long-term.

Let’s now explore this in detail.

 

Investment Approach
You are choosing an actively managed mutual fund.

 

This is better than passive index investing.

 

Actively managed funds aim to beat the market returns.

 

Professional fund managers analyse and pick quality stocks.

 

This is better than index funds, which just copy the market.

 

Index funds cannot avoid poor performing stocks.

 

Active funds adjust to changing market trends faster.

 

You also get risk management strategies in active funds.

 

Investment Tenure
You plan to invest for 5 years.

 

This is a decent time frame for equity mutual funds.

 

Equity funds can be volatile in the short term.

 

But over 5 years, chances of earning better returns improve.

 

Staying invested during ups and downs is key.

 

Compounding also works better when you stay longer.

 

Please try to extend beyond 5 years if possible.

 

Longer holding brings more tax efficiency and better growth.

 

Investment Amount
You are planning Rs. 1 lakh per year.

 

That’s Rs. 5 lakhs in 5 years.

 

Investing in lump sum or SIP both are fine.

 

SIP helps reduce the average cost per unit.

 

It also builds investment habit and removes timing worries.

 

If investing lump sum, divide into 4–5 tranches over months.

 

Risk Factors
Pure equity funds are linked to stock market performance.

 

They are affected by domestic and global events.

 

Short term can have negative or low returns.

 

But long term investors usually benefit more.

 

You should be mentally prepared for short-term losses.

 

Never panic or redeem early due to volatility.

 

Equity is not for those needing fixed or assured returns.

 

Patience is the most important quality here.

 

Taxation of Mutual Funds (As per New Rules)
If you sell before 1 year, gains are called short-term capital gains.

 

These are taxed at 20% as per new rule.

 

If you sell after 1 year, and gain above Rs. 1.25 lakh, tax is 12.5%.

 

Gains below Rs. 1.25 lakh are tax-free.

 

You can use the Rs. 1.25 lakh limit each financial year.

 

This makes mutual funds more efficient than many other options.

 

Insurance-cum-Investment Policies
If you also hold ULIP or LIC investment-linked plans, do review them.

 

Such policies often give low returns and high costs.

 

They mix insurance and investment in one product.

 

This is not suitable for long-term wealth creation.

 

You may consider surrendering those and switch to pure mutual funds.

 

Invest separately for protection (term plan) and wealth (mutual fund).

 

Role of a Mutual Fund Distributor with CFP
You mentioned a fund from a reputed AMC.

 

You may choose a Regular plan through a CFP-certified MFD.

 

A Certified Financial Planner gives goal-based planning.

 

They help you choose right asset allocation for your goals.

 

They guide during market cycles and emotional investing errors.

 

Regular funds include cost for their services.

 

Direct plans lack this support and guidance.

 

Many investors in direct plans take wrong decisions alone.

 

Regular plan with CFP gives personalised advice and reviews.

 

Asset Allocation & Diversification
Do not invest 100% in a single equity fund.

 

Diversify across 2–3 equity funds with different styles.

 

You can include large cap, flexi cap, or mid cap category.

 

This reduces risk from underperformance of any one fund.

 

Also keep part of your portfolio in short-term debt funds.

 

Debt funds help in emergencies or short-term needs.

 

They also reduce overall portfolio volatility.

 

Goal Alignment
What is the purpose of this investment?

 

Is it for retirement, child education, house down payment?

 

If you define the goal, planning becomes stronger.

 

You can choose fund types based on goal duration.

 

You will also know how much to invest each year.

 

This creates clarity and motivates regular investing.

 

Benefits of Your Decision
You are investing regularly for 5 years.

 

This is better than keeping money in savings or FD.

 

Mutual funds give higher growth potential than bank products.

 

Your money gets managed by professionals.

 

It helps you beat inflation in long term.

 

You don’t need to track stock market daily.

 

Low minimum investment and high liquidity are extra benefits.

 

You can withdraw anytime if needed.

 

Few Points to Remember
Review your investment once a year with a CFP.

 

Rebalance the portfolio based on goal changes.

 

Avoid timing the market or chasing top funds.

 

Stay away from hot tips or media hype.

 

Focus on consistent investing and patience.

 

Track fund performance with right benchmarks, not just NAV growth.

 

Final Insights
Your plan shows good financial discipline.

 

You have chosen a strong long-term wealth creation path.

 

Mutual funds can offer superior growth compared to many traditional tools.

 

Choosing actively managed funds is wise for better returns.

 

Take support of a CFP to make your journey smoother.

 

Diversify well and invest with clear purpose.

 

Stay consistent and avoid emotional decisions.

 

Wealth creation is a slow and steady process.

 

With right strategy, your goal will be achieved peacefully.

 

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Dr Upneet

Dr Upneet Kaur  |35 Answers  |Ask -

Marriage counsellor - Answered on Apr 19, 2025

Asked by Anonymous - Mar 18, 2025Hindi
Listen
Relationship
My relationship started Four years ago and everything was fine My parents accepted him but his mother started creating problems over small things He is Jain and I understand that it is difficult for them to accept someone from a non-vegetarian family However his mother told my father that my entire family should stop eating nonveg and said many hurtful things She also said that I should only wear suits and follow their rules I have always lived a comfortable life where I never had to do any household chores but his mother told my parents that I need to learn everything I come from a wealthy family while his family is average, and I am not sure if I can adjust to that lifestyle His mother created a lot of drama for two years and now suddenly she is ready to accept me But I am afraid she might go back to her old ways after marriage I have never had to worry about financial issues but I know things might change if I marry him He has also lied to me a few times and when my parents visited his home and business his father avoided showing anything and made excuses which made my family suspicious
Ans: Hello mam.
I understand that it feels strange when someone changes suddenly so much like you said the boy's mother's attitude changed and now she is ready to accept you. Marriage is a big decision and it does not work only with love. It needs many other practical things to work. Like many compromises from both side, finances, acceptance, trust and respect. Think as much as you want before marriage a d take a good decision but after marriage you cannot change the things so easily.
Take some more time and get information on their business, thier family reputation, their relatives and neighbours. Only then take a decision. And leave the things upto your parents. They are much more experienced and have a much more willingness to see you happy.
Take care !
Follow me :
https://www.instagram.com/dr_upneet

...Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Money
I m 40 yrs old father of 10 yrs daughter till date my investment is all in fixed assets and gold i m planning to do the job for till 55 my till date investment is around 1.5 crore i have liability of 45 lac need your advice on future investment i can invest upto 30k monthly looking forward for your advice???
Ans: You’re already doing very well. Rs. 1.5 crore saved is a great milestone. Also, planning investments till 55 is a very thoughtful step. Let us now see how you can create a future-proof financial plan.

I will look at it from all angles—your current investments, liabilities, risk, and future needs.

Let’s begin.

 

Current Financial Position: A Quick View

You have Rs. 1.5 crore in fixed assets and gold. That’s excellent.

 

You have liabilities of Rs. 45 lakh. It needs attention.

 

Your age is 40. You have 15 years to work more. Good time to plan.

 

You can invest Rs. 30,000 every month. That gives you strength.

 

You have a 10-year-old daughter. Education and marriage will need planning.

 

Where You Stand Today

Your savings are not diversified. All in fixed assets and gold.

 

Fixed assets don’t give monthly income. They are not liquid.

 

Gold does not beat inflation over long term. Return is moderate.

 

You do not seem to have any investment in equity mutual funds.

 

Your liability of Rs. 45 lakh is big. We need to handle it smartly.

 

Why Future Investments Must Be Balanced

Equity gives good long-term returns. It helps beat inflation.

 

Debt investments give stability. They are lower on risk.

 

Gold and fixed assets are slow to grow. Not great for wealth creation.

 

Mixing equity and debt works better. It balances growth and safety.

 

Mutual funds are ideal for this mix. Easy to manage. Fully regulated.

 

Your Monthly Investment Strategy – Rs. 30,000 SIP

Allocate Rs. 18,000 in diversified equity mutual funds.

 

Allocate Rs. 6,000 in hybrid mutual funds (mix of equity + debt).

 

Allocate Rs. 6,000 in short-term debt mutual funds.

 

This will give you growth, safety, and liquidity in the right balance.

 

Avoid direct stock picking. It needs time and skills.

 

Always invest through a Certified Financial Planner.

 

Why Actively Managed Funds Are Better Than Index Funds

Index funds blindly copy the market. No professional decision-making.

 

They don’t protect during market falls. No human judgment.

 

Active funds are managed by experts. They take smart calls.

 

Active funds have outperformed index funds over longer periods.

 

A Certified Financial Planner chooses right active funds based on your goals.

 

Why Regular Plans Are Better Than Direct Plans

Direct plans don’t give expert help. You are on your own.

 

One wrong choice can cost you years of returns.

 

Regular plans come with a qualified MFD backed by a Certified Financial Planner.

 

You get portfolio review, rebalancing, and tax planning support.

 

The guidance is worth much more than the small difference in cost.

 

Handling Your Liabilities – Rs. 45 Lakh

Check if this is home loan, personal loan or other type.

 

Home loans have tax benefit. No rush to close if interest rate is low.

 

Personal or business loans are expensive. Try to pre-pay slowly.

 

Use any lump sum inflow (bonus or maturity) to reduce such loans.

 

Do not stop SIPs to pre-pay loan. Balance both wisely.

 

Plan for Your Daughter’s Education and Marriage

She is 10 now. College after 7–8 years.

 

Education will need Rs. 20–30 lakh minimum. Start a goal-based SIP.

 

Invest Rs. 10,000 out of your monthly SIP for this goal.

 

Use equity mutual funds with long-term vision for this.

 

Marriage is a longer goal. Can be planned after education goal is on track.

 

Retirement at 55 – Let’s Plan Today

You will stop earning at 55. Your savings must last till 85–90.

 

You have 15 years to build retirement corpus.

 

Set aside Rs. 15,000 from your SIP for retirement.

 

Use equity and hybrid mutual funds for this.

 

From age 50 onwards, slowly reduce equity and move to safer assets.

 

Emergency Fund and Insurance Cover

Emergency fund must cover 6 months of expenses.

 

Keep this in liquid mutual funds. Avoid using FDs for this.

 

You must have a term life cover of 10–15 times your annual income.

 

Health insurance should be minimum Rs. 20–30 lakh for the full family.

 

Don’t depend only on company insurance.

 

Review Your Fixed Assets and Gold Holdings

Fixed assets have poor liquidity. Hard to sell in emergencies.

 

Try to reduce overexposure to gold and land.

 

Use part of these assets to repay loans or invest in mutual funds.

 

This way you unlock dead money for better returns.

 

Taxation Angle – Be Smart and Prepared

Long-term equity mutual fund gains above Rs. 1.25 lakh are taxed at 12.5%.

 

Short-term equity gains are taxed at 20%.

 

Debt mutual funds are taxed as per your income tax slab.

 

Don’t worry. With a Certified Financial Planner, taxes can be optimised.

 

Always plan redemptions. Don’t redeem blindly.

 

Rebalancing Your Portfolio Annually

Asset allocation will change with time. Rebalancing keeps it on track.

 

Review once a year. Not more.

 

Avoid switching funds too often. Let them grow.

 

Stay invested with discipline. That’s the only way wealth grows.

 

Behavioural Discipline is the Key

Don’t panic in market falls. Stay invested.

 

Avoid checking returns too often. It creates stress.

 

Let your Certified Financial Planner handle strategy.

 

You focus on earning and living well.

 

Final Insights

Your savings so far are impressive. But too tilted towards fixed assets.

 

Equity mutual funds will give your portfolio much-needed growth.

 

A Rs. 30,000 monthly SIP will change your financial future.

 

Don't wait. Start this SIP immediately.

 

Invest through a Certified Financial Planner. Review yearly.

 

Focus on goals: daughter’s education, marriage, and your retirement.

 

Don’t chase returns. Follow a process.

 

Protect your family with insurance. Keep emergency fund intact.

 

Wealth creation is not about luck. It is about discipline and planning.

 

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Asked by Anonymous - Apr 18, 2025Hindi
Listen
Money
Dear sir, I have taken floating rate a plot loan from LIC HFL. Recently the ROI was increased from 8.75% to 8.85% immediately because of increase in bank rate. However the ROI is not reduced despite multiple repo rate changes recently. When asked the reply is - "We are yet to receive the updates from our CO with regard to changes in ROI. As soon as the ROI is changed automated message will be sent all customers."
Ans: You're absolutely right in expecting fairness when the repo rate goes down. Let me guide you step-by-step on what’s happening and what you can do next.

 

Understanding the Floating Rate Loan from LIC HFL

Your loan is linked to LIC HFL’s internal benchmark, not directly to RBI’s repo rate.

 

When RBI increases the repo rate, lenders are quick to increase your rate.

 

But when RBI reduces it, lenders often delay passing on the benefit.

 

This delay happens because LIC HFL’s Cost of Funds Based Lending Rate (COFBR) is not automatically updated.

 

COFBR is not as transparent or responsive as the external benchmark linked rates used by banks (like RLLR/EBLR).

 

Why LIC HFL May Not Reduce Your Rate Immediately

LIC HFL is an HFC (Housing Finance Company), not a bank.

 

They don’t follow the repo-linked lending rate (RLLR) system.

 

Their interest rates are based on internal policies and board decisions.

 

They may wait for quarterly reviews before passing on repo rate cuts.

 

Why the Communication Seems Delayed or Vague

You are told “waiting for CO update” – this is standard response.

 

In truth, they are buying time and not acting promptly.

 

Customers feel helpless because HFCs are not as strictly regulated as banks in this area.

 

What You Can Do Now: Action Steps

Write a formal email to the customer care, branch, and grievance officer. Request a clear explanation.

 

Ask them to share the latest COFBR and how your ROI is being calculated.

 

Use this format: “As a floating rate loan borrower, I am entitled to revised rate benefit. Kindly update my ROI in line with latest changes and share the effective date.”

 

If no proper response in 15 days, escalate it to NHB (National Housing Bank).

 

NHB is the regulator for HFCs like LIC HFL. You can file a complaint online.

 

Link: https://grids.nhbonline.org.in

 

Consider Switching the Loan to a Bank

If LIC HFL does not reduce rate, think of a loan balance transfer.

 

Switch to a repo-linked loan from a public or private sector bank.

 

These are directly linked to RBI’s repo rate. Very transparent.

 

You may have to pay small processing charges. But savings can be big.

 

Let a Certified Financial Planner help you calculate real benefit.

 

Check These Before Transferring

What’s the remaining tenure of your loan?

 

Is there any prepayment penalty? Usually none for floating loans.

 

Will new bank offer lower rate? Ask for a sanction letter before deciding.

 

Finally

LIC HFL may delay, but they cannot avoid revising your rate forever.

 

You are a responsible borrower. You deserve fair rate benefits too.

 

Keep your communication professional and written.

 

If they still delay, go ahead and move to a better lender.

 

Always have a Certified Financial Planner guide your debt and investments.

 

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.

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