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Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 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
Sandip Question by Sandip on May 07, 2024Hindi
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Thank you, Sir. I'll keep revisiting my MF portfolio and make adjustments when needed. Should I increase my PPF amount?

Ans: Yes. You can increase PPF contribution.
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  |7014 Answers  |Ask -

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

Asked by Anonymous - Apr 10, 2024Hindi
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Below is my MF Portfolio(with Profit/Loss). Investing for the past 1.5 Years (SIP : 2000rs each) HDFC Focused 30 Fund - Regular Plan - Growth --> 15.04% HDFC MID-CAP OPPORTUNITIES FUND - GROWTH OPTION --> 14.46% HDFC LARGE AND MID CAP FUND - REGULAR PLAN - GROWT --> 13.15% HDFC Top 100 Fund - Regular Plan - Growth --> 12.9% HDFC Balance Advantage Fund - Regular Plan - Growth --> 12.36% NIPPON INDIA SMALL CAP FUND - GROWTH PLAN - GROWTH --> 10.78% HDFC SMALL CAP FUND - REGULAR PLAN - GROWTH --> 9.2% SBI Large & Midcap Fund Regular Growth --> 7.19% ICICI Prudential Savings Fund - Growth --> 4.47% SBI MAGNUM GLOBAL FUND - REGULAR PLAN - GROWTH --> -0.73% Should I continue or make any changes ? Please do suggest My Objective is to invest for Long Term. Returns should exceed the inflation(anything above that is bonus).
Ans: Your MF portfolio demonstrates a diversified mix of funds, reflecting your intention to invest for the long term. It's commendable that you've been consistently investing through SIPs, as this strategy promotes disciplined investing and helps navigate market volatility.

Considering your objective of investing for the long term and aiming for returns that exceed inflation, here are a few suggestions:

Review Fund Performance: Evaluate the performance of each fund relative to its benchmark and peers. Funds that consistently underperform may warrant reconsideration.
Asset Allocation: Ensure your portfolio maintains a balanced allocation across different asset classes, including large-cap, mid-cap, and small-cap funds. This diversification helps manage risk and capture growth opportunities across market segments.
Rebalance if Necessary: If any fund significantly deviates from its intended allocation or fails to meet performance expectations, consider reallocating your investments accordingly.
Stay Informed: Keep abreast of market developments, economic trends, and fund manager changes that may impact your investments. Regularly review your portfolio to ensure it remains aligned with your financial goals.
Consult with a Certified Financial Planner: Seeking professional advice can provide valuable insights and help you make informed decisions about your investments. A financial planner can assess your risk tolerance, investment horizon, and financial objectives to provide personalized recommendations.
Remember, investing for the long term requires patience and discipline. While short-term fluctuations are inevitable, staying focused on your financial goals will help you navigate market volatility and achieve long-term success.

..Read more

Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

Asked by Anonymous - May 07, 2024Hindi
Money
Hi Sir I’m 39 Male. I’m investing in MF from start of this year for buying a house and for retirement. I’m planning to invest long for next 15-20 yrs. Also I have 3-4 loans which will get finished next year 2025 end. So I’m planning to start increase my MF amount considerably. Please review my portfolio and let me know if I have to remove, add or make any changes Motilal Oswal Nasdaq 100 fund direct growth 1500 PM UTI Nifty 50 Index Fund 1000 PM ICICI Prudential Bluechip Fund Direct Growth 1000 PM HDFC Balanced Advantage Fund Direct Growth 1000 PM HDFC Midcap Oppurtunities Fund Direct Plan Growth 1000 PM AXIS Small Cap Fund Direct Growth 1000 PM JM Value Fund Direct Growth 1000 PM Parag Parikh Flexi Cap Direct 1000 PM Nippon India Corporate Bond Fund Direct Growth plan 1000 PM P2P investment 3500 PM for 3 yrs at 15% fixed return
Ans: It's excellent to see your commitment towards investing for both short-term goals like buying a house and long-term goals like retirement. Let's review your portfolio and suggest any adjustments:
1. Motilal Oswal Nasdaq 100 Fund Direct Growth: This fund provides exposure to the top 100 companies listed on the Nasdaq stock exchange, offering diversification and growth potential in the global tech sector. It can be a suitable addition for long-term wealth accumulation.
2. UTI Nifty 50 Index Fund: Investing in an index fund like UTI Nifty 50 offers exposure to the top 50 companies in the Indian equity market. It provides stability and diversification, complementing your other equity investments.
3. ICICI Prudential Bluechip Fund Direct Growth: Bluechip funds focus on large-cap stocks with strong fundamentals, making them relatively less volatile. It's a prudent choice for stability and capital preservation.
4. HDFC Balanced Advantage Fund Direct Growth: This fund dynamically manages its equity exposure based on market conditions, offering a blend of growth and downside protection. It can be suitable for investors seeking a balanced approach.
5. HDFC Midcap Opportunities Fund Direct Plan Growth and AXIS Small Cap Fund Direct Growth: These funds provide exposure to mid-cap and small-cap segments, respectively, offering growth potential but with higher volatility. Ensure you're comfortable with the risk associated with these segments.
6. JM Value Fund Direct Growth and Parag Parikh Flexi Cap Direct: Both these funds follow value investing principles and focus on investing in fundamentally sound companies at reasonable valuations. They can be suitable for long-term wealth creation.
7. Nippon India Corporate Bond Fund Direct Growth: Investing in a corporate bond fund provides stability and income generation through fixed-income securities. It's a prudent choice for diversification and managing risk.
8. P2P Investment: Peer-to-peer lending can offer attractive returns but comes with higher risk compared to traditional investments. Ensure you've assessed the risk-reward profile and have a diversified portfolio to mitigate risks.
Index Funds:
• Index funds offer broad market exposure by tracking a specific index, such as the Nifty 50 or the Nasdaq 100. They provide diversification and low-cost access to the market, making them suitable for long-term investors.
• However, index funds are passively managed, meaning they aim to replicate the performance of the underlying index rather than outperforming it. While this reduces management fees and turnover costs, it also limits the potential for alpha generation.
• As a result, index funds may not capture opportunities for outperformance during market upswings or provide downside protection during downturns. Investors seeking higher returns may prefer actively managed funds that aim to outperform the market through strategic stock selection and portfolio management.
Direct Funds:
• Direct funds allow investors to purchase mutual fund units directly from the asset management company, bypassing intermediaries like distributors or brokers. This can result in lower expense ratios compared to regular funds, as there are no distributor commissions involved.
• However, direct fund investors are responsible for conducting their own research, selecting suitable funds, and monitoring their investments. This requires a certain level of financial literacy and investment expertise to make informed decisions.
• On the other hand, investing through a Certified Financial Planner (CFP) who holds the necessary credentials and expertise can provide valuable guidance and support. A CFP can help investors navigate the complexities of the financial markets, select appropriate investment strategies, and optimize their portfolio allocations based on individual goals and risk tolerance.
Considering your investment portfolio, it's essential to evaluate the role of both index funds and direct funds in achieving your financial objectives. While index funds offer cost-effective market exposure, direct funds provide the potential for active management and outperformance.
As a Certified Financial Planner (CFP), I recommend a balanced approach that incorporates both index funds and direct funds based on your risk profile and investment goals. Periodic reviews of your portfolio and ongoing guidance from a CFP can help ensure that your investment strategy remains aligned with your evolving needs and objectives.
Remember, investing is a journey, and it's essential to stay informed, stay disciplined, and seek professional guidance when needed. With the right approach and support, you can navigate the financial markets with confidence and work towards achieving your long-term financial goals.

..Read more

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Ramalingam

Ramalingam Kalirajan  |7014 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 13, 2024

Asked by Anonymous - Nov 12, 2024Hindi
Money
I am investing 100000 every month as SIP and 50000 annually. My present SIP Corpus is nearly 2Cr. How much is expected to be the total corpus in 2030 if I manage to continue the same investment model.
Ans: I appreciate your consistent commitment to investing. Systematic Investment Plans (SIPs) and annual investments are powerful tools to build substantial wealth over the long term. Your current SIP portfolio is already impressive, and with continued discipline, you are well on your way to achieving significant financial goals by 2030.

Below, I will offer a detailed breakdown of your current investment strategy and provide an in-depth assessment to project where your portfolio could potentially reach by 2030. Additionally, I will share some insights on how you can maximise your investment returns while keeping your tax efficiency in mind.

Let’s explore the factors that will influence your future corpus.

1. Current Investment Strategy: A Strong Foundation
You are currently investing Rs 1,00,000 monthly through SIPs and an additional Rs 50,000 annually.

Your present SIP corpus stands at Rs 2 Crore, which shows your disciplined approach.

Continuing this strategy till 2030 will be highly beneficial, given the power of compounding over time.

The consistent monthly SIP ensures rupee cost averaging, reducing market volatility impact.

2. Estimated Growth of Your SIP Corpus by 2030
Assuming you continue with Rs 1,00,000 monthly SIP and Rs 50,000 annually, your investments will grow significantly.

The market’s historical average returns for equity mutual funds can range between 10% to 15% per annum. However, actual returns can vary due to market conditions.

Compounding will exponentially boost your returns, especially if you remain invested without withdrawals.

By 2030, your SIP portfolio can potentially cross Rs 6 Crore, given stable market conditions.

This estimate considers a conservative growth rate. However, equity markets have been known to outperform during bullish periods.

3. Active Fund Management: The Better Choice
Many investors lean towards index funds, but actively managed funds often outperform in the Indian context.

Active funds have skilled fund managers who adjust portfolios based on market dynamics.

They can exploit opportunities in specific sectors and stocks to generate alpha over benchmarks.

Index funds, while low-cost, are purely passive. They mirror indices without considering market trends.

Actively managed funds may have higher expense ratios, but the potential for superior returns justifies the cost.

Especially in volatile or uncertain markets, active fund management can make a substantial difference.

4. Investing Through a Mutual Fund Distributor (MFD)
Direct funds may seem cost-effective as they have lower expense ratios. However, they lack professional guidance.

Regular funds, managed through an MFD with a Certified Financial Planner (CFP) credential, offer holistic support.

An MFD can help you align your investments with your financial goals, provide tax planning, and adjust your portfolio as needed.

Regular reviews by an MFD ensure your portfolio is optimised for changing market conditions.

Direct funds require you to track performance, handle documentation, and monitor taxation—all on your own.

Engaging with a Certified Financial Planner through MFDs helps you focus on strategy, not execution.

5. Tax Implications: Managing Your Gains Efficiently
The recent tax changes impact equity mutual funds’ gains. Long-term capital gains (LTCG) over Rs 1.25 lakh are taxed at 12.5%.

Short-term gains (STCG) are taxed at 20%, while debt funds’ gains are taxed as per your income slab.

Efficient tax planning is crucial. Consult with your CFP to time redemptions and optimise tax liabilities.

Regular fund investments offer better tax management compared to direct funds, given the advisory support.

6. Market Volatility and Economic Factors
While investing in equity funds, market volatility is a reality. However, the long-term growth potential outweighs short-term fluctuations.

SIPs protect your investments from timing the market. Rupee cost averaging ensures that you buy more units when prices are low.

Focus on staying invested even during market downturns. History shows markets rebound, and long-term investors benefit the most.

With India's economic growth prospects, equity funds have the potential to deliver strong returns in the coming years.

7. Diversification and Portfolio Rebalancing
Continue diversifying within mutual funds to reduce concentration risk.

Allocate your SIPs across large-cap, mid-cap, and multi-cap funds for a balanced approach.

Rebalance your portfolio annually with your Certified Financial Planner to align with changing market conditions.

Consider thematic or sectoral funds cautiously, as they carry higher risks.

Reinvest dividends and gains to harness compounding benefits further.

8. Emergency Fund and Liquidity Considerations
Maintain a separate emergency fund to cover at least 6 months of expenses. This will prevent premature withdrawals from your SIPs.

Avoid liquidating your investments for short-term needs. Instead, use other sources like fixed deposits or liquid funds.

9. Aligning Investments with Financial Goals
Define clear goals, such as retirement planning, children’s education, or buying a property.

Each goal requires a tailored investment approach. For instance, retirement planning should focus on growth funds.

Engage with your Certified Financial Planner for goal-based investment planning.

Long-term SIPs work best when aligned with specific objectives, ensuring a disciplined approach.

10. Tracking and Monitoring Your Investments
Review your portfolio semi-annually to ensure it’s performing as expected.

Monitor fund performance and exit underperformers if needed, based on your Certified Financial Planner’s advice.

Keep an eye on changes in taxation rules and market regulations that could impact your returns.

Ensure your SIPs continue automatically. If cash flows change, adjust SIP amounts accordingly.

Finally: Staying Committed to Your Financial Journey
The journey to Rs 6 Crore or beyond is achievable with consistency.

Avoid impulsive decisions based on short-term market movements.

Keep your focus on the long-term horizon and stick to your investment plan.

Seek periodic advice from your Certified Financial Planner to stay on track.

The discipline and patience you’ve shown so far are commendable. Continue this momentum.

By following these strategies, your SIP investments can help you achieve significant financial milestones by 2030 and beyond.

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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