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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on May 19, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Asked by Anonymous - May 16, 2023Hindi
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what is the future of digital fund, like tata digital fund in nearby future

Ans: A digital fund is a sectoral fund and the part of industry that it invests in is the Information Technology (IT) sector in India ie, Software, ITeS and Hardware, which is just a small part of overall industrial landscape in the country. IT industry has its ups and downs which are dependent on a lot of factors including a lot of reliance on the IT demand from rest of the world. Consequently, the industry’s fortunes could vary wildly which might be difficult to predict for a common investor.

Most people would be much better off investing in a broad-based well-diversified fund where the fund manager and his/her research team takes a call on which sector’s stocks are good to buy, sell or hold at the current times. So, my suggestion is to avoid all sectoral and thematic funds in your portfolio unless you have a very special knowledge of any sector or theme and can very confidently visualise where that sector theme is headed in future.
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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Any digital India related mutual funds are there to invest
Ans: Investing in thematic funds, like those focused on Digital India, can be intriguing due to the potential growth in technology and digital infrastructure. However, it’s essential to understand both the opportunities and risks involved. Let’s explore Digital India-related mutual funds, assess their potential, and also discuss the benefits of diversified funds.

Understanding Digital India Funds
Digital India Initiative

Digital India aims to transform India into a digitally empowered society. Investments in technology, infrastructure, and digital services are increasing rapidly.

Thematic Mutual Funds

Thematic mutual funds invest in a particular theme, sector, or industry. Digital India funds focus on companies driving digital transformation, such as IT, telecom, and fintech firms.

Potential Benefits of Digital India Funds
High Growth Potential

The digital sector in India is growing swiftly. Companies involved in this space can offer substantial growth opportunities due to increasing internet penetration and digital adoption.

Government Support

The Indian government actively supports the digital sector through policies, incentives, and investments, which can positively impact companies in this theme.

Technological Advancements

Rapid advancements in technology, such as AI, IoT, and blockchain, can drive growth in digital companies, providing strong returns for investors.

Assessing the Risks
Concentration Risk

Thematic funds concentrate on a specific sector. This can lead to higher risk compared to diversified funds, as poor performance in the sector can significantly impact the fund.

Market Volatility

Technology and digital sectors can be more volatile. Market fluctuations can lead to sudden changes in the value of investments.

Regulatory Risks

Changes in government policies or regulations can impact the performance of companies in the digital sector, affecting thematic funds.

Evaluating Alternatives: Diversified Funds
What Are Diversified Funds?

Diversified funds invest across various sectors and industries, reducing the concentration risk and providing more stable returns.

Advantages of Diversified Funds

Risk Management: By spreading investments across different sectors, diversified funds mitigate risks associated with any single industry.

Professional Management: Fund managers actively select and manage investments, adjusting the portfolio based on market conditions and opportunities.

Steady Performance: Diversified funds tend to offer more consistent returns over the long term, as they are not heavily reliant on one sector’s performance.

Why Diversified Funds May Be a Better Choice
Flexibility for Fund Managers

In diversified funds, fund managers have the flexibility to invest in multiple themes and sectors, including digital, healthcare, finance, and more. They can adjust the allocation based on market trends and economic conditions.

Balanced Portfolio

A diversified fund provides a balanced portfolio, reducing the impact of poor performance in any single sector. This balance helps in achieving steady growth and mitigating risks.

Long-term Stability

Diversified funds are more stable in the long term. They help in weathering market volatility better than thematic funds, making them a more reliable choice for long-term investors.

Investment Strategy for Digital India Exposure
Incorporating Digital India in Diversified Funds

Even within diversified funds, you can have exposure to the digital sector. Fund managers often allocate a portion of the portfolio to high-growth sectors, including technology and digital services.

Balanced Approach

By investing in diversified funds, you can still benefit from the growth of the digital sector while maintaining a balanced and risk-mitigated portfolio.

Personalized Investment Planning
Assessing Financial Goals

Before investing, assess your financial goals, risk tolerance, and investment horizon. A Certified Financial Planner (CFP) can help tailor a strategy that aligns with your objectives.

Long-term Investment Horizon

For themes like Digital India, a long-term investment horizon is crucial. This allows time to ride out market volatility and benefit from the sector’s growth potential.

Regular Review and Rebalancing

Regularly review your investment portfolio and rebalance it to ensure it aligns with your financial goals and risk tolerance. Adjust allocations based on market conditions and performance.

I appreciate your interest in the Digital India theme and your proactive approach to investing. It’s crucial to stay informed and make well-considered decisions.

Understanding the opportunities and risks involved in thematic funds shows your dedication to making informed investment choices.

Conclusion
Investing in Digital India-related mutual funds can offer substantial growth opportunities. However, it’s essential to be aware of the risks, including concentration and market volatility.

Diversified funds provide a balanced approach, mitigating risks while offering exposure to various high-growth sectors, including digital.

Incorporate Digital India exposure within diversified funds for a balanced and stable portfolio. Regularly review and adjust your investments to stay aligned with your financial goals.

For personalized advice, consider working with a Certified Financial Planner (CFP) to create a tailored investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Janak Patel  |18 Answers  |Ask -

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I am currently investing 28000/- in following mf . Kindly suggest me whether i am investing in right MF or not. Suggest if to be switched in to which MF HDFC LARGE AND MID CAP FUND - REGULAR PLAN - GROWTH SIP Amount 5000 HDFC NIPPON INDIA SMALL CAP FUND - GROWTH PLAN - GROWTH OPTION SIP Amount 5000 HDFC LARGE CAP FUND - REGULAR PLAN - GROWTH SIP Amount 3000 HDFC FOCUSED 30 FUND - REGULAR PLAN - GROWTH SIP Amount 3000 NIPPON INDIA POWER AND INFRA FUND- GROWTH PLAN-GROWTH OPTION SIP Amount 3000 HDFC MID-CAP OPPORTUNITIES FUND - GROWTH OPTION SIP Amount 3000 ICICI PRUDENTIAL INFRASTRUCTURE FUND - GROWTH SIP Amount 3000 INVESCO INDIA INFRASTRUCTURE FUND - GROWTH SIP Amount 3000
Ans: Hi Sandeep,

You have mentioned a total of 8 MF schemes for your investment of 28000 per month.
As details regarding your goal and requirement is not available, it is difficult to judge the overall portfolio from that point of view.
The schemes mentioned though are different names but will have a lot of overlap especially when you consider large cap stocks in their portfolio - HDFC Large & Mid / HDFC Large / HFDC Focused 30 and even the 3 Infra funds.

I believe the idea was to diversify your portfolio thru multiple schemes and if so, that is not really achieved.

Assuming you want to invest for over 10 year period, I suggest you keep your portfolio relatively simple with 4-5 schemes - 1 large cap (6000 in HDFC Large is ok), 1 Mid cap (6000 in HDFC Mid-cap or Motilal Oswal Midcap), 1 Small Cap (6000 in Nippon Small cap is ok) and 1 Infra (as you have shown inclination to Infra, 4000 in ICICI Pru Infra is ok) and add 1 Flexicap (6000 in Parag Parikh Flexicap which also has some overseas exposure). This will provide good diversification and less overlap.

This will provide good diversification and asset allocation across market caps.

Thanks & Regards
Janak Patel
Certified Financial Planner.

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Asked by Anonymous - Mar 06, 2025Hindi
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Greetings, I am 46 yrs and have 50 lacs. My monthly expenses is about 50k.Unemployed due to health reasons. I want to invest in mutual fund wherein the capital can grow and also use SWP. Looking at the current markets what would be the best funds to invest in over long time about 10 yrs. Thanks
Ans: You want to grow your capital while using a Systematic Withdrawal Plan (SWP). Since you are unemployed due to health reasons, this plan must balance returns and stability.

A well-structured investment strategy can help sustain your monthly expenses while allowing capital appreciation over 10 years.

Understanding Your Investment Needs
You have Rs 50 lakh as your corpus.

Your monthly expenses are Rs 50,000.

You need a plan that gives regular income and long-term growth.

The portfolio should be stable and not highly volatile.

Why a Systematic Withdrawal Plan (SWP)?
An SWP allows you to withdraw a fixed amount every month.

Unlike fixed deposits, it gives better returns and tax efficiency.

It helps maintain financial discipline while keeping the corpus invested.

Returns from mutual funds can beat inflation over time.

Investment Strategy for 10 Years
Your corpus should be divided into different asset classes.

Equity Mutual Funds: These funds help in long-term capital growth.

Debt Mutual Funds: These provide stability and reduce risk.

Liquid Funds: These act as an emergency buffer.

Portfolio Allocation for Stability and Growth
60% in Equity Mutual Funds for long-term appreciation.

30% in Debt Mutual Funds to provide stability and steady returns.

10% in Liquid Funds to cover immediate expenses.

This allocation balances risk and return. Equity grows wealth, debt protects capital, and liquid funds handle short-term needs.

Choosing the Right Mutual Funds
Equity Mutual Funds (60%)
Select a mix of large-cap, mid-cap, and flexi-cap funds.

Large-cap funds give stability.

Mid-cap and flexi-cap funds provide higher growth potential.

Debt Mutual Funds (30%)
Choose funds with a good balance of safety and returns.

Short-duration and dynamic bond funds work well.

Liquid Funds (10%)
These funds should have high liquidity for emergency needs.

Avoid keeping too much in savings accounts or fixed deposits.

How to Implement the SWP?
Start withdrawing from the debt portion first.

Let equity investments grow without withdrawals for the first 3-5 years.

Gradually shift funds from equity to debt as you approach 10 years.

Keep reviewing the plan every year.

Tax Implications on SWP
Withdrawals from equity funds after one year are taxed at 12.5% if gains exceed Rs 1.25 lakh.

Debt mutual fund withdrawals are taxed as per your income slab.

Spreading withdrawals across years helps reduce tax burden.

Best Practices for a Sustainable Plan
Keep an emergency fund to avoid withdrawing from investments in a market downturn.

Rebalance the portfolio based on market conditions.

Avoid withdrawing too much in the early years to keep the corpus growing.

Review your financial plan every year with a certified financial planner.

Finally
A mix of equity, debt, and liquid funds ensures growth and stability.

SWP gives tax-efficient monthly income.

Avoid withdrawing from equity in the early years.

Regular review and rebalancing are essential.

A certified financial planner can help fine-tune the plan based on market changes.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

...Read more

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Asked by Anonymous - Mar 06, 2025Hindi
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Hello Sir, Greetings I am 46 yrs young, unemployed due to health reasons. Formerly a business analyst in an MNC. My question is, since I am unemployed i cannot produce regular income/salary slip required for term insurance, what options do I have inorder to take a life insurance? Are ULIP an option or any other opportunities available? Rgds,
Ans: Your concern about getting life insurance without a regular income is valid. Insurance companies assess income to ensure you can pay premiums. However, there are alternative ways to secure life insurance.

Understanding Term Insurance Eligibility Without Regular Income
Term insurance is pure life cover. Insurers check income to prevent over-insurance.

Without a salary slip, other documents can help prove financial stability.

If you have assets, investments, or past earnings, some insurers may consider these.

Alternative Ways to Get Term Insurance
Income Proof from Past Earnings: If you have previous salary slips, tax returns, or bank statements, they can support your application.

Fixed Deposits and Investments: Large holdings in mutual funds or fixed deposits show financial capability. Some insurers may accept these.

Rental or Passive Income: If you earn from rent, dividends, or other sources, these can be used as proof.

Spouse’s Income: Some insurers allow a policy based on your spouse’s income if they are earning.

Lower Coverage: A lower sum assured may have relaxed income proof requirements.

Group Term Insurance: Some banks and organizations offer group term plans without strict income proof.

Are ULIPs an Option?
ULIPs combine insurance with investment. However, they have high charges and lower returns.

Compared to mutual funds, ULIPs offer less flexibility and lower transparency.

If insurance is your goal, term insurance is better. If investment is your goal, mutual funds are better.

ULIPs are not the best option due to their cost structure.

Other Life Insurance Alternatives
Endowment Plans: These offer savings with insurance, but returns are low.

Money-Back Policies: These provide periodic payouts but have high premiums.

Guaranteed Return Plans: These offer fixed returns but are not inflation-proof.

Whole Life Insurance: These cover the entire lifetime but are expensive.

Child Insurance Plans: If you have children, such plans can offer benefits.

Best Strategy for Your Situation
Prioritise Term Insurance: Try proving financial stability through tax returns, investments, or passive income.

Avoid Costly Insurance Plans: Traditional plans like ULIPs, endowments, and money-back policies give low returns.

Use Existing Assets: Show fixed deposits, mutual funds, or other holdings as proof of financial capability.

Explore Group Term Insurance: Some banks and professional groups offer such policies.

Ensure Emergency Fund & Health Insurance: Focus on securing a health cover and emergency corpus before life insurance.

Final Insights
Even without a salary, options exist to secure life insurance.

Term insurance remains the best choice for pure risk cover.

Investment-linked insurance plans like ULIPs are not ideal.

Using past earnings, investments, or spouse’s income can help in getting a term plan.

A certified financial planner can guide you based on your specific financial situation.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |8083 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 06, 2025

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I am currently investing 28000/- in following mf . Kindly suggest me whether i am investing in right MF or not. Suggest if to be switched in to which MF HDFC LARGE AND MID CAP FUND - REGULAR PLAN - GROWTH SIP Amount 5000 HDFC NIPPON INDIA SMALL CAP FUND - GROWTH PLAN - GROWTH OPTION SIP Amount 5000 HDFC LARGE CAP FUND - REGULAR PLAN - GROWTH SIP Amount 3000 HDFC FOCUSED 30 FUND - REGULAR PLAN - GROWTH SIP Amount 3000 NIPPON INDIA POWER AND INFRA FUND- GROWTH PLAN-GROWTH OPTION SIP Amount 3000 HDFC MID-CAP OPPORTUNITIES FUND - GROWTH OPTION SIP Amount 3000 ICICI PRUDENTIAL INFRASTRUCTURE FUND - GROWTH SIP Amount 3000 INVESCO INDIA INFRASTRUCTURE FUND - GROWTH SIP Amount 3000
Ans: Your portfolio consists of multiple actively managed funds across different categories. While it has a good mix of large-cap, mid-cap, and small-cap funds, there are areas where adjustments can improve diversification and risk management.

Strengths of Your Portfolio
Your long-term investment horizon of 10 years allows for compounding and wealth creation.

You have exposure to different market caps, which provides a balance of stability and growth.

Actively managed funds can generate higher returns compared to passive funds.

Concerns in Your Portfolio
You are holding too many funds, leading to unnecessary duplication. More funds do not always mean better diversification.

Your portfolio has excessive allocation to sectoral funds, which increases concentration risk. If the sector underperforms, your returns will be affected.

Some funds have overlapping holdings, reducing the overall diversification benefit.

You have multiple funds from the same asset management company, limiting exposure to different investment styles.

Recommended Portfolio Adjustments
Retain a well-performing large & mid-cap fund instead of holding multiple funds in this category.

Maintain exposure to small-cap or mid-cap funds but avoid holding multiple funds with similar strategies.

A single focused fund is sufficient. Too many concentrated portfolios increase risk without adding significant benefits.

Reduce exposure to sector-specific funds. While sectoral funds can deliver high returns, they carry higher volatility and depend heavily on the sector’s performance. A more diversified approach is recommended.

Instead of multiple funds in the same category, consolidate into a few high-quality diversified equity funds that provide stable long-term growth.

Include a flexi-cap fund to enhance diversification and give fund managers the flexibility to invest across market capitalizations.

Final Insights
Your investment approach is well-structured, but simplifying your portfolio will improve returns and make it easier to manage.

Reducing sectoral allocation and consolidating overlapping funds will improve efficiency and stability.

A diversified and well-balanced portfolio with a mix of large-cap, mid-cap, small-cap, and flexi-cap funds will ensure long-term growth with controlled risk.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |8083 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 06, 2025

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i am currently investing 28000 per month in MF. kindly check whether i am investing in right fund or should i change th fund . My vision is to invest for another 10 year. HDFC Large and Mid Cap Fund (G) 5,000 Nippon India Small Cap Fund (G) 5,000 HDFC Large Cap Fund - Regular (G) 3,000 HDFC Focused 30 Fund (G) 3,000 Nippon India Power & Infra Fund (G) 3,000 HDFC Mid-Cap Opportunities Fund (G) 3,000 ICICI Pru Infrastructure Fund - (G) 3,000 Invesco India Infrastructure Fund 3,000
Ans: Your portfolio consists of multiple actively managed funds across different categories. Let's evaluate your current investment choices and suggest any improvements based on diversification, overlap, and risk-return potential.

Strengths of Your Portfolio
Long-Term Investment Vision: You plan to invest for another 10 years, which allows compounding to work in your favor.

Actively Managed Funds: Actively managed funds have the potential to outperform the market over the long term.

Exposure to Different Market Caps: Your portfolio includes large-cap, mid-cap, and small-cap funds, offering balanced exposure.

Sector-Specific Allocation: You have exposure to infrastructure and power sectors, which can generate high returns in the long run.

Concerns in Your Portfolio
Overlapping Fund Selection: Many of your funds have a similar investment strategy, leading to duplication of holdings.

Excessive Sectoral Allocation: Your portfolio has three sectoral funds, which increases risk if the sector underperforms.

Too Many Funds: Investing in too many funds does not always improve diversification. It can reduce the impact of outperforming funds.

Multiple Funds from the Same AMC: Having multiple funds from a single asset management company (AMC) may limit diversification.

Diversification Analysis
1. Large-Cap and Large & Mid-Cap Funds
You have allocated funds to both large-cap and large & mid-cap categories.
Large-cap funds provide stability, while large & mid-cap funds offer a balance of growth and safety.
Instead of multiple funds in this category, a single well-performing large & mid-cap fund is sufficient.
2. Mid-Cap and Small-Cap Funds
Mid-cap and small-cap funds can provide high returns, but they are also highly volatile.
Your portfolio has both mid-cap and small-cap funds, which is good for long-term growth.
However, holding too many funds in this category can lead to portfolio overlap.
3. Focused Fund Allocation
Focused funds invest in a limited number of stocks, which can increase risk.
Holding a single focused fund is better than investing in multiple funds with a similar strategy.
4. Sector-Specific Investments
Investing in sectoral funds can generate high returns if the sector performs well.
However, sectoral funds are highly volatile and risky compared to diversified funds.
Your portfolio has too much exposure to infrastructure and power sectors, increasing concentration risk.
Instead of multiple sectoral funds, a well-diversified flexi-cap fund can provide better risk-adjusted returns.
Recommended Portfolio Adjustments
Reduce Fund Overlap: Keep a single large & mid-cap fund instead of multiple large-cap and mid-cap funds.

Reduce Sectoral Exposure: Limit sector-specific investments to a smaller portion of your portfolio.

Consolidate Similar Funds: Instead of multiple mid-cap and small-cap funds, choose one well-performing fund from each category.

Increase Allocation to Diversified Equity Funds: Flexi-cap and multi-cap funds can provide better long-term stability.

Final Insights
Your long-term investment approach is well planned.
However, excessive sectoral allocation and fund duplication can reduce efficiency.
Consolidating similar funds and increasing exposure to diversified funds will improve portfolio performance.
Reducing the number of funds will also make portfolio tracking easier.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

...Read more

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