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Nikunj

Nikunj Saraf  |308 Answers  |Ask -

Mutual Funds Expert - Answered on Feb 04, 2023

Nikunj Saraf has more than five years of experience in financial markets and offers advice about mutual funds. He is vice president at Choice Wealth, a financial institution that offers broking, insurance, loans and government advisory services. Saraf, who is a member of the Institute Of Chartered Accountants of India, has a strong base in financial markets and wealth management.... more
Ravi Question by Ravi on Feb 01, 2023Hindi
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hi sir I am 27 years old and currently planing to mf/SIP invest , Kindly guide me in which way and in which I should invest

Ans: hello Ravi

It's great that you're thinking about investing in mutual funds at a young age. Here are some general guidelines to help you get started:

Determine your investment goals: Start by figuring out what you want to achieve with your investment. Do you want to save for a down payment on a house, build an emergency fund, or create a retirement nest egg? Having clear goals will help you choose the right investment vehicle.

Assess your risk tolerance: Consider how much risk you're comfortable taking with your investment. Younger investors generally have a longer time horizon for their investments to grow, so they can afford to take on more risk.

Consider your asset allocation: Diversification is important to help manage risk. Consider dividing your investment among different asset classes, such as stocks, bonds, and cash.

Consider the mutual fund's investment style and past performance: Look at the fund's investment objectives, the types of securities it holds, and its past performance.

Remember that investing in mutual funds is a long-term strategy, and it's important to be patient and stick to your investment plan. It's also a good idea to periodically review your portfolio to make sure it's aligned with your goals and risk tolerance.

Consulting a financial advisor can be helpful in creating a personalized investment plan that takes into account your specific goals, risk tolerance, and financial situation
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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Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Apr 11, 2024Hindi
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Madam/sir, One person is earning 10-11 Lakhs per annum. He is investing in PPF and bank deposits. What are the other options to invest to get better returns in coming year?
Ans: With an annual income of 10-11 Lakhs and investments in PPF and bank deposits, there are various other investment options that can potentially offer better returns. Here are some alternatives to consider:

Equity Mutual Funds:
Large Cap Funds: These funds invest predominantly in large-cap companies, offering stability and moderate returns.
Mid & Small Cap Funds: These funds invest in mid and small-cap companies, providing potential for higher returns albeit with higher volatility.
Multi-Cap Funds: These funds offer diversification across market caps, allowing investors to capitalize on market opportunities.
Debt Mutual Funds:
Short-term Debt Funds: These funds invest in fixed-income securities with shorter maturity periods, offering better returns than bank deposits with relatively lower risk.
Corporate Bond Funds: These funds invest in corporate bonds which can offer higher returns than government securities or bank deposits.
Public Provident Fund (PPF) Alternatives:
National Pension System (NPS): It offers tax benefits similar to PPF and allows investment in equities, debt, and government securities, potentially offering better returns over the long term.
Sukanya Samriddhi Yojana (SSY): If the person has a daughter below 10 years of age, SSY offers tax-free returns and is a good alternative to PPF.
Direct Equity:
Stock Market: Investing directly in stocks can offer potentially higher returns than mutual funds but comes with higher risks. It requires a good understanding of the market and companies.
Real Estate:
Real Estate Investment Trusts (REITs): Investing in REITs can provide exposure to the real estate sector with potentially good returns and regular income in the form of dividends.
Gold and Precious Metals:
Gold ETFs or Sovereign Gold Bonds (SGBs): Investing in gold can act as a hedge against inflation and provide diversification to the portfolio.
General Tips:

Diversify: Spread investments across different asset classes to reduce risk.
Risk Tolerance: Assess and understand your risk tolerance before investing in higher-risk options like equities or real estate.
Tax Planning: Consider tax implications while investing. Some investments offer tax benefits which can enhance returns.
It's advisable to consult with a Certified Financial Planner to create a personalized investment plan considering the individual's financial goals, risk tolerance, and investment horizon. They can provide guidance tailored to the individual's specific situation and help navigate the investment landscape effectively.
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Iam 38 and have 20 lakhs as my savings which I want to invest for 1,3,5 and 7 years. Please suggest appropriate as I'm willing to take risk but want good returns.
Ans: Investing with specific time horizons in mind is a smart approach. Here's a suggested investment strategy considering your willingness to take risks and aiming for good returns:

1-Year Investment (Short-term):
Liquid Funds: These funds offer stability and liquidity. They invest in short-term money market instruments. Given your short time horizon, liquid funds would be suitable as they offer better returns than savings accounts and are low-risk.
3-Year Investment (Medium-term):
Short-term Debt Funds or Ultra Short-term Funds: These funds invest in fixed-income securities with a maturity period of 1-3 years. They offer relatively higher returns than liquid funds and are less volatile than equity funds, making them a suitable choice for a 3-year horizon.
5-Year Investment (Medium to Long-term):
Balanced Funds or Hybrid Funds: These funds invest in a mix of equity and debt instruments. They offer potential for higher returns compared to debt funds while providing some cushion against market volatility. This combination could be ideal for a 5-year horizon.
7-Year Investment (Long-term):
Equity Mutual Funds: Given your willingness to take risks and the longer time horizon, equity funds would be appropriate.
Large Cap Funds: These funds invest predominantly in large-cap companies which are relatively stable and offer moderate returns.
Mid & Small Cap Funds: These funds invest in mid and small-cap companies which have the potential to offer higher returns but come with higher volatility.
Multi-Cap Funds: These funds provide diversification across market caps and offer flexibility to capitalize on market opportunities.
General Tips:

Diversification: Spread your investments across different asset classes and fund categories to reduce risk.
Regular Review: Periodically review your investments to ensure they align with your financial goals and adjust as necessary.
Risk Tolerance: While you're willing to take risks, ensure your investments align with your risk tolerance. Remember, higher returns come with higher volatility.
Lastly, it's advisable to consult with a Certified Financial Planner to tailor this strategy according to your specific financial situation, goals, and risk tolerance. They can provide personalized advice and help you navigate the complexities of investing.
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Ramalingam

Ramalingam Kalirajan  |821 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Apr 20, 2024Hindi
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Hello sir, I am 33yr old. I have a salary of 50k/month. I m living in rented house 8k/month. And SIP of 5k/month. Other expenses of 5-8k/month. Please suggest financial planning. And wanted to buy house.
Ans: It's great that you're thinking about financial planning at 33. Let's craft a strategy tailored to your needs and goals.

Emergency Fund:
Goal: Build an emergency fund equal to 6-12 months of living expenses.
Action: Allocate a portion of your savings monthly until you reach this target. Aim to have this fund in a liquid and easily accessible account.
SIPs & Investments:
Current SIP: 5k/month
Action: Consider increasing your SIP amount as your income grows. Diversify investments across equity, debt, and other asset classes to manage risk and achieve growth.
Home Purchase:
Goal: Buy a house.
Action: Start saving for a down payment. Consider your current expenses and see where you can cut back or increase savings. Also, explore home loan options to understand the amount you'd need to borrow and the EMI you'd be comfortable with.
Retirement Planning:
Goal: Secure your retirement.
Action: Start an SIP specifically for retirement. The earlier you start, the better. Consider allocating a portion of your monthly savings to this SIP.
Insurance:
Goal: Protect yourself and your loved ones.
Action: Ensure you have health insurance, life insurance, and if possible, disability insurance. Review and update coverage as your circumstances change.
Additional Income:
Goal: Increase income streams.
Action: Explore opportunities for side hustles, freelancing, or upskilling to boost your income.
Budgeting:
Goal: Manage expenses effectively.
Action: Create a monthly budget to track income and expenses. This will help you identify areas where you can save more.
Remember, financial planning is not a one-time activity. It's an ongoing process that requires regular review and adjustments as your life circumstances change. It's also essential to consult with a Certified Financial Planner to ensure your plan aligns with your goals, risk tolerance, and financial situation.
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Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Jan 25, 2024Hindi
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I want to invest 50k for next 5 years... Please suggest a diversified portfolio to get average 15% returns
Ans: ! Investing with a target return of 15% over a 5-year horizon is ambitious but achievable with a well-diversified portfolio. Here's a suggested allocation across different asset classes and funds to potentially achieve this target:

Equity Funds (60%):
Large Cap Funds (20%): These funds invest in large, well-established companies that tend to be less volatile.
Mid Cap Funds (20%): Mid-cap funds invest in medium-sized companies with higher growth potential but also come with higher volatility.
Small Cap Funds (20%): These funds invest in smaller companies with the highest growth potential but are the most volatile.
Debt Funds (30%):
Short-Term Debt Funds (15%): These funds invest in short-term debt instruments and are relatively less volatile.
Long-Term Debt Funds (15%): These funds invest in long-term debt instruments and can offer higher returns than short-term debt funds but come with higher interest rate risk.
Hybrid Funds (10%):
Balanced Advantage Funds or Aggressive Hybrid Funds (10%): These funds invest in both equities and debt, providing a balanced approach and reducing volatility.
Here's a simplified portfolio with approximate allocation:

Large Cap Fund: 10%
Mid Cap Fund: 10%
Small Cap Fund: 10%
Short-Term Debt Fund: 7.5%
Long-Term Debt Fund: 7.5%
Balanced Advantage Fund: 5%
Please note that this is just a suggested allocation, and you should adjust it according to your risk tolerance and financial goals. Also, past performance doesn't guarantee future results, so it's essential to monitor and review your portfolio regularly.

Lastly, considering the goal of 15% returns, it's crucial to stay invested for the entire period and not get swayed by short-term market fluctuations. Remember, investing is a long-term game, and patience and discipline are key to achieving your financial goals. Always consult with a Certified Financial Planner to ensure your investment strategy aligns with your financial objectives and risk tolerance.
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Asked by Anonymous - Jan 25, 2024Hindi
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I hv recently started investing in following mutual funds for Rs 1Cr in three years. 1 Parag parikh flexicap fund - Rs 20000/month 2.HDFC Balance advantage fund -Rs 20000/month 3.SBI contra fund -Rs 20000/month 4.ICICI Pru innovation fund—Rs 10000/month 5.ICICI Pru India opportunity Fund - Rs 10000/month Pl advise whether these funds and amounts are Ok.
Ans: Your investment approach appears to be diversified, covering different fund categories like flexicap, balance advantage, contra, and thematic funds. However, let's analyze it considering some broader perspectives.

Firstly, your allocation to each fund should align with your investment goals, risk tolerance, and time horizon. With an investment horizon of three years and aiming for a corpus of Rs 1 Cr, it's essential to strike a balance between growth-oriented and less volatile assets.

The funds you've chosen are known for their strong performance and management track record. Still, it's crucial to ensure that the allocation reflects your risk appetite and goals. For instance, thematic or innovation funds can be volatile due to their concentrated exposure.

Also, the monthly investment of Rs 20,000 in each of the first three funds might lead to an over-allocation to those funds, given the smaller allocation to the last two funds. Consider revisiting the allocation to ensure diversification across all chosen funds.

Moreover, with a three-year horizon, it's important to be prepared for market volatility. While equity investments can provide higher returns over the long term, they can be volatile in the short term. Therefore, having a balanced approach with some allocation to debt or balanced funds might help mitigate risks.

Lastly, always review and adjust your portfolio periodically, considering market conditions and changes in your financial situation. Consulting a Certified Financial Planner can provide personalized advice tailored to your needs and goals, ensuring you're on the right track to achieve your financial objectives.
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Ramalingam Kalirajan  |821 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Jan 23, 2024Hindi
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Sir,I am going to retire from psu service in next 5.5 yrs.How much sip is required to generate a corpus of 15 lakh in 5 years from now.Pl suggest some best options available
Ans: To achieve a corpus of 15 lakhs in 5 years, the required SIP amount will depend on the expected rate of return from your investments. Let's break it down.

Firstly, consider the rate of return you expect from your investments. Assuming a moderate rate of return of around 10% per annum, you can use the future value formula to calculate the SIP amount needed.

Given the time frame of 5 years, the power of compounding plays a vital role. With a return of 10% per annum, the SIP amount required would be around 22,000 rupees per month.

However, it's essential to remember that returns can vary based on market conditions and the performance of the chosen funds. Therefore, it might be wise to consider investing in a diversified portfolio of equity and debt funds to balance the risk and potentially enhance returns.

As for the best options, considering your time horizon and risk profile, you might look into balanced funds, multi-cap funds, or even hybrid equity-oriented funds. It's crucial to select funds with a track record of consistent performance and align with your risk tolerance and investment goals.

Always consult with a Certified Financial Planner to tailor an investment strategy that suits your needs and goals best. Remember, investing is a journey, and staying disciplined and patient is key to achieving your financial objectives.
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Ramalingam Kalirajan  |821 Answers  |Ask -

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I am 71 years old. I live on dividends earned from Mutual Funds. My funds are HDFC and Edelweiss Balance Advantage funds, HDFC Dividend Yield Fund (Growth), Axis Value fund (Growth) and Franklin Tempelton Build India Fund (Growth). At the moment small amounts are invested in the growth funds. Should I continue with the Growth Funds or go for SIP?
Ans: At 71, it's crucial to strike a balance between growth and stability, especially when your income relies on dividends from Mutual Funds. Your current portfolio includes a mix of balanced advantage, dividend yield, and growth funds, which offers a diversified approach.

Growth funds inherently carry more volatility due to their equity exposure. While they offer potential for higher returns, they also come with higher risk. Given your age and reliance on dividends, it might be prudent to reconsider the growth funds.

Switching to a systematic withdrawal plan (SWP) from your existing funds could be a more suitable strategy. This way, you can enjoy a regular income stream while preserving your capital.

Alternatively, if you wish to continue with growth-oriented investments, consider shifting a smaller portion of your investments to growth funds via SIPs. This approach allows you to dollar-cost average, reducing the impact of market volatility.

Remember, your investment decisions should align with your financial needs, risk tolerance, and goals. Consulting a Certified Financial Planner can provide personalized advice tailored to your situation. Whatever you decide, prioritize preserving your capital and maintaining a steady income stream to support your lifestyle in retirement.
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Hello .. I am 33 years old me and both me and my husband have started saving recently. We stay in mumbai and combined earn 3.2 lacs per month after tax. However due to different financial obligations and family responsibilities we are unable to do any savings. We have to spend about 80k for family and we also have different loans and obligations. Please provide us advise to invest and save better
Ans: It's commendable that despite financial obligations and family responsibilities, you're looking to pave a path towards savings and investment. Balancing present needs with future goals can indeed be a tightrope walk.

Firstly, let's look at your expenses. Allocating 80k for family expenses is a significant chunk of your income. While family comes first, there may be areas where you can optimize spending without compromising on essentials.

Given your combined income of 3.2 lacs post-tax, even a small percentage saved can make a difference over time. Start by creating a budget that outlines all your monthly expenses and identifies areas where you can cut back.

For savings and investments, consider starting small with a systematic investment plan (SIP). It allows you to invest a fixed amount regularly in mutual funds. Even a modest monthly SIP can accumulate into a substantial sum over time, thanks to the power of compounding.

Lastly, review your loans and obligations. Are there opportunities to refinance at lower interest rates or consolidate debts? This could free up some funds for savings.

Remember, financial planning is a journey, not a destination. It's okay to start small. The key is consistency and patience. With time, as your income grows and obligations reduce, you'll find it easier to save and invest more. Best of luck on your financial journey!
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Ramalingam

Ramalingam Kalirajan  |821 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

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I have purchased a land in my village and constructed a house on it from my retirement fund in the year 2021 , which costed me a total of Rs. 35 lakhs, and i am residing in the same house at present . Now if i want to sell the house, what will be the tax implication on the sale of the house (LTCG/STCG), how it will be calculated , since I have constructed the house on labour payment system. I have bills only for some items with me. Regards, G Ramesh
Ans: Navigating the tax implications of selling a property can feel like a maze, especially when the construction was done through the labour payment system. The tax you might owe depends on whether the property qualifies as a long-term or short-term capital asset.

If you sell the house within two years of its completion, it's considered a short-term capital gain. However, if you hold onto it for more than two years, it becomes a long-term capital gain. The difference in these classifications could significantly impact your tax liability.

Now, about those bills. Having proper documentation can be your best friend in establishing the cost of construction. While you may not have bills for everything, any documentation you have can help in reducing your taxable gain.

Remember, taxes are just one part of the equation. It's also worth reflecting on the emotional value of the home you built. It's not just bricks and mortar; it's a place filled with memories and stories. Whatever you decide, I hope it aligns with both your financial needs and heartfelt attachments.
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.
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