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27 Year Old Investing 1 Lac Per Month in Mutual Funds: How to Diversify Risks for Long Term?

Ramalingam

Ramalingam Kalirajan  |9731 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 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 - Jul 14, 2024Hindi
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Hello Gurus, I'm a 27-year-old. Currently, I'm investing 1 lac pm in MFs. The allocation is as follows - Nippon India LC - 20k, Aditya Birla PSU - 10k, Quant SC - 1k (Reduced post SEBI notice), Nippon India SC - 10k, ICICI Pru Bharat 22 FOF - 15k, Motilal Oswal midcap - 25k, HDFC multicap - 10k, Motilal Oswal Nifty Defence (NFO) - 9k. I'm investing aggressively right now since I've limited liabilities and save most of what I earn. It's been around a year since I started this plan and I know at some point in time, I'll have to reduce the pace. I occasionally invest in stocks as well. Keeping in mind a longer horizon, say 20 years. How should I diversify my risks? I already have a life insurance that I'm paying premiums for, and I don't invest in Gold/SGB right now. Also, is it the right time to invest in a property/land in Bangalore, or is it better to continue renting a place and building a decent lump sum first? I stay in North Bangalore and hence the rent is relatively low here. Thanks

Ans: Assessing Your Current Financial Position
You are 27 years old and investing Rs. 1 lakh per month in mutual funds. Your current allocation is:

Nippon India Large Cap: Rs. 20,000
Aditya Birla PSU: Rs. 10,000
Quant Small Cap: Rs. 1,000 (Reduced post SEBI notice)
Nippon India Small Cap: Rs. 10,000
ICICI Pru Bharat 22 FOF: Rs. 15,000
Motilal Oswal Midcap: Rs. 25,000
HDFC Multicap: Rs. 10,000
Motilal Oswal Nifty Defence (NFO): Rs. 9,000
You have limited liabilities and save most of what you earn. You also invest occasionally in stocks and have life insurance. Let's explore how to diversify your risks and secure your financial future.

Diversifying Your Investments
Reduce Over-Exposure to Small Caps
Small-cap funds can be volatile. While they offer high returns, they also come with high risk. You are already reducing exposure to Quant Small Cap. Consider reallocating some funds from small caps to more stable large-cap or multi-cap funds.

Increase Exposure to Mid and Large Caps
Increase your investments in mid and large-cap funds. These funds provide more stability and can balance the risk in your portfolio. Your allocation to Motilal Oswal Midcap and Nippon India Large Cap is good. Consider adding more to these or similar funds.

Explore Debt Funds
Debt funds can add stability to your portfolio. They provide regular returns with lower risk. Allocate a portion of your investment to debt funds. This diversification can protect your portfolio during market downturns.

International Funds
Consider investing in international funds. These funds give exposure to global markets and reduce the risk of being solely dependent on the Indian market. They also provide a hedge against currency fluctuations.

Balanced Funds
Balanced or hybrid funds invest in both equities and debt. They offer a balanced risk-reward ratio. Including these in your portfolio can provide steady growth with reduced risk.

Real Estate Considerations
Renting vs. Buying Property
Currently, you are renting in North Bangalore. Renting offers flexibility and lower financial commitment. Buying property involves significant investment and long-term commitment. Here are some considerations:

Renting: Continue renting if the rent is low and you can invest more in high-return assets. This strategy helps build a significant corpus faster.

Buying: Buy property if you are looking for long-term stability and a place to call your own. Ensure you have a significant down payment to reduce loan burden.

Current Market Conditions
Real estate prices in Bangalore can be high. Analyze the market trends and future growth potential before investing. If property prices are expected to rise, buying could be beneficial. Otherwise, focus on building a strong investment portfolio first.

Tax Planning and Insurance
Tax-Saving Investments
Utilize tax-saving instruments under Section 80C. This helps reduce your taxable income. Ensure your mutual fund investments also include tax-saving funds like ELSS.

Adequate Insurance Coverage
Ensure you have adequate life and health insurance. This protects your savings in case of emergencies. Review your insurance policies regularly to ensure they meet your needs.

Regular Portfolio Review
Periodic Assessment
Review your investment portfolio periodically. Assess the performance and adjust based on market conditions and personal financial goals. A Certified Financial Planner can provide professional guidance.

Final Insights
You are on a good path with aggressive investments and limited liabilities. Diversify your portfolio to include more mid and large caps, debt funds, and international funds. Consider balanced funds for steady growth. Renting might be a better option currently to build a significant corpus. Regularly review and adjust your portfolio to stay aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |9731 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

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Hello Gurus, I am 41 years old and currently working in IT industries. My take home salary is more or less 1.8L/Month (After (income-tax, pf, etc.) all deductions). My monthly expenses (including everything + investments) are around 1.3L/Monthly. Family of four, kids are not started their major studies, still in primary school, dependant parents and relatives. My current investments. 1) LIC – 1.6L/Annum – approx. return would be 50+ Lakhs by 2038 2) HDFC Sanchya + - annually 4L return after 2038 3) PPF – annually 1.5L/Annum and expecting 40+Lakhs by 2034 4) PF – Right now around 20+Lakhs 5) One land – 25L 6) One Flat under construction – 25L invested/paid and total payment will be 1.15 Cr by 2028 7) One MF – Current value 8L, total investment 3.5L(Lumpsum in year of 2017) 8) Cash in hand – 70L(FD) 9) Emergency fund – 20L(FD) 10) Equity 1.6L Invested and current value 2.7L No Loans as of now. Apart from this I have 50L worth of term insurance, 20L health insurance cover for my Family. I am targeting to retire by another 14 years with a corpus of 15cr or more. Please guide me how I can achieve it. If I need to invest in MF then which all MFs I can invest in. (Risk taking appetite is moderate)
Ans: You have a well-diversified portfolio and a clear goal of retiring with a corpus of Rs 15 crores in 14 years. Let's break down a strategy to achieve this goal.

Current Financial Position
Age: 41 years
Monthly take-home salary: Rs 1.8 lakhs
Monthly expenses: Rs 1.3 lakhs
Family: Four members, with kids in primary school, dependent parents and relatives
Investments and Assets
LIC: Rs 1.6 lakhs/annum, expected return of 50+ lakhs by 2038
HDFC Sanchaya+: Rs 4 lakhs/annum, expected annual return after 2038
PPF: Rs 1.5 lakhs/annum, expected return of 40+ lakhs by 2034
PF: Current value around 20+ lakhs
Land: Worth Rs 25 lakhs
Flat under construction: Rs 25 lakhs invested, total payment will be Rs 1.15 crores by 2028
Mutual Funds: Current value Rs 8 lakhs, total investment Rs 3.5 lakhs (lumpsum in 2017)
Cash in hand (FD): Rs 70 lakhs
Emergency fund (FD): Rs 20 lakhs
Equity: Rs 1.6 lakhs invested, current value Rs 2.7 lakhs
Term insurance: Rs 50 lakhs
Health insurance: Rs 20 lakhs
Retirement Goal
Target corpus: Rs 15 crores
Time horizon: 14 years
Risk appetite: Moderate
Investment Strategy
1. Increase SIPs in Mutual Funds:

Considering your moderate risk appetite, invest in a mix of large-cap, mid-cap, and hybrid mutual funds. Actively managed funds can offer better returns compared to index funds.

2. Maximise Tax Savings:

Continue maximising your PPF and PF contributions for tax savings and secure returns.

3. Diversify Further:

Consider diversifying into debt funds for stability and fixed returns. This will balance your equity investments.

4. Real Estate Investments:

Be cautious with the flat under construction. Ensure timely completion and clear legal title to avoid future issues.

5. Emergency Fund:

You already have a substantial emergency fund. Maintain this for liquidity during unforeseen events.

6. Equity Investments:

Continue investing in equities. Direct stocks can offer high returns but require careful selection and monitoring.

7. Review Insurance Cover:

Ensure your term insurance cover is adequate. Consider increasing it to match your financial responsibilities and future goals.

Regular Monitoring and Review
Annual Review:

Regularly review your portfolio performance. Adjust investments based on market conditions and financial goals.

Financial Planner Consultation:

Seek advice from a Certified Financial Planner periodically. They can provide tailored advice and keep your investments on track.

Final Insights
You are on a good financial path with a diversified portfolio. Focus on increasing your SIPs in mutual funds and diversifying further into debt funds. Ensure your real estate investments are secure and maintain your emergency fund. Regularly review your portfolio and seek professional advice to stay on track for a comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |9731 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2025

Asked by Anonymous - Jul 15, 2025Hindi
Money
Im 43 with 1 lac in hand investing 15k in sip from last 5monts monthly expenses are 70K excluding SIP. Plan to buy a house which will cost 2cr. How do i go about and how much should i have by retirement and how do i make that money with the house buying plan etc
Ans: ? Current Financial Snapshot

– You are 43 years old. That gives around 15–17 years to build wealth.
– You have Rs.1 lakh in hand as lump sum.
– You are investing Rs.15,000 monthly through SIPs for 5 months.
– Your household expenses are Rs.70,000 monthly. SIP is not included in this amount.
– You plan to buy a house worth Rs.2 crore.
– You also want to plan for your retirement.

This is a good step. You are already disciplined with SIPs. Keep it up.

Let us now look at each goal deeply.

? House Purchase Plan of Rs.2 Crore

– Buying a Rs.2 crore house is a big decision.
– It will need a careful and strategic financial preparation.
– A typical home loan can go up to 75% to 80% of the house value.
– That means, minimum Rs.40 lakh as down payment is required.
– You will also need Rs.10–15 lakh for registration and interiors.
– So your total own fund requirement is around Rs.50–55 lakh.

Now let’s look at how you can reach that amount.

– You are already doing SIP of Rs.15,000 per month.
– If you increase it slowly over time, the corpus will grow faster.
– But SIP alone may not be enough for such a big goal in short time.
– You may need to consider a combination of savings, bonuses, and planned borrowings.
– Avoid using retirement funds for house purchase. Keep goals separate.
– Also, don’t delay too much, as property prices and costs may rise.

A Certified Financial Planner can help you do a home-buying readiness check.

? Loan Readiness and EMI Impact

– A Rs.1.5 crore loan for 20 years can have EMI near Rs.1.3 lakh.
– But your current monthly surplus is not enough to support that EMI.
– Your current monthly expense is Rs.70,000. SIP is Rs.15,000.
– So, total outgoing is Rs.85,000.
– Unless your income increases significantly, EMI pressure will be high.

Here's what you can do:

– Delay home purchase by few years and save aggressively till then.
– Build Rs.50–60 lakh for down payment and reduce loan amount.
– This will make EMI manageable and reduce interest burden.
– Keep EMIs within 40–45% of your income for comfort.
– Factor in property tax, maintenance, and insurance.

Be cautious. Don’t compromise on long-term wealth for short-term ownership.

? Retirement Planning Assessment

– You have about 17 years left for retirement.
– Monthly expense now is Rs.70,000. At 6% inflation, it may be Rs.2 lakh+ at retirement.
– So, you must create a good-sized retirement corpus.
– It must support you for 25–30 years post-retirement.
– Even without medical emergencies, retirement life needs a big corpus.

Here’s what you can do:

– Continue SIP of Rs.15,000. Increase it by 10% every year.
– Make retirement your primary goal. Home can wait a few years.
– Use mutual funds for long-term wealth creation.
– Choose diversified, actively managed funds for long-term growth.

Please avoid index funds. Index funds lack active risk control.
They follow the market. They don’t beat it.
They don’t have downside protection in falling markets.
An actively managed fund is handled by a skilled fund manager.
He/she can shift allocations based on market signals.
This brings better growth and lower risk over long term.

Also, don’t pick direct mutual funds on your own.
Direct plans may look cheaper. But they lack expert guidance.
Wrong fund selection can reduce long-term returns.
When you invest through a CFP and MFD in regular plans, you get:
– Right fund choices
– Periodic review
– Rebalancing help
– Goal alignment

That value is bigger than small cost difference.

? Protection and Emergency Fund Planning

– You didn’t mention insurance or emergency fund.
– That’s a major missing block in your financial plan.
– You must have term life cover of at least 15–20 times your income.
– Health insurance for all family members is a must.
– Also create emergency fund of 6–9 months of expenses.

This gives peace of mind and avoids breaking investments in crisis.

Buy pure term insurance. No ULIP or combo plans.
If you have LIC or ULIP plans, consider surrendering them.
Reinvest the surrender value into mutual funds.
Traditional policies give low returns. ULIPs have high charges.
They are not suitable for wealth creation.

? Expense and Budget Optimisation

– Monthly expenses of Rs.70,000 are reasonable if you earn well.
– But try to save at least 25–30% of income regularly.
– Create a smart monthly budget.
– Cut unnecessary spends.
– Avoid EMIs for lifestyle expenses.
– Increase SIPs every year as income grows.
– Avoid withdrawing from mutual funds for small needs.

Use every bonus or windfall to boost your SIP or emergency fund.

? Tax Planning Angle

– You must use tax-saving options smartly.
– ELSS mutual funds can save tax under 80C and grow your wealth.
– Avoid locking money in PPF, NSC, or traditional LIC policies.
– Invest in tax-saving instruments with long-term growth.

Know the latest mutual fund taxation:

– LTCG on equity funds above Rs.1.25 lakh taxed at 12.5%.
– STCG on equity taxed at 20%.
– Debt funds taxed as per your income slab.

Plan your withdrawals wisely to reduce tax.

? Children's Future and Other Goals

– You didn’t mention children. If you have kids, plan for their education too.
– Create separate funds for each goal. Don’t mix.
– A child's higher education cost can be Rs.50–80 lakh in future.
– Start early with SIPs in long-term funds.

That way, your goals won’t collide. And your retirement won’t suffer.

? Asset Allocation Planning

– Right mix of assets is key for wealth creation.
– For your age and goals, equity should be 60–70%.
– Balance in debt and liquid funds for short-term and emergency needs.
– Avoid gold, real estate, or FDs for long-term growth.
– Real estate locks money. Has high entry-exit costs.
– FDs don’t beat inflation after tax.

Your asset mix must change as you near retirement.
Shift gradually from high risk to safety.
A CFP can guide you with regular reviews.

? Monthly Action Plan

– Track income, expense, and surplus monthly.
– Increase SIP by 10% every year.
– Build Rs.5–10 lakh emergency fund in liquid funds.
– Review term and health insurance.
– Avoid new loans till home loan starts.
– Don’t stop SIPs for short-term purchases.
– Invest bonuses in lump sum into mutual funds.
– Use regular plans through an MFD backed by CFP.

This monthly habit creates solid financial discipline.

? What You Should Not Do

– Don’t rush to buy property now with low savings.
– Don’t break mutual fund SIPs to pay EMIs.
– Don’t depend on employer-provided health cover only.
– Don’t invest in index funds. They have no active control or judgement.
– Don’t invest in direct mutual funds without a qualified guide.
– Don’t rely on LIC policies or endowments for wealth building.
– Don’t skip emergency fund or insurance.

These mistakes can hurt long-term financial freedom.

? Finally

– You have taken the right steps by starting SIP and planning early.
– Be consistent, and review yearly with a CFP.
– Prioritise retirement. House can be managed with better preparation.
– Keep personal finance simple and goal-driven.
– Long-term discipline brings big rewards.
– Don’t chase short-term returns or risky trends.

Money is a tool, not a goal. Use it wisely. Build peace, not just assets.

Wishing you a safe, smart, and strong financial future.

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

...Read more

Nayagam P

Nayagam P P  |8821 Answers  |Ask -

Career Counsellor - Answered on Jul 15, 2025

Asked by Anonymous - Jul 15, 2025Hindi
Career
I am a student from odisha. I have scored 94.45%ile in jee mains and i am unsure what i can get with this score. I was alloted in NIFTEM Thanjavur through josaa and got CSE in VSSUT BURLA. Should i wait for CSAB round or go with any of these ?
Ans: With a 94.45 percentile in JEE Main representing an all-India rank near 120 000–140 000, your son’s current allotments—B.Tech at NIFTEM Thanjavur and CSE at VSSUT Burla—offer credible pathways. NIFTEM Thanjavur’s B.Tech reports a 66.7% placement rate with a median package of ?3.65 LPA over the past three years, backed by its Institute of National Importance status, specialized food-processing labs, and industry linkages. VSSUT Burla’s CSE achieves a 70–75% placement consistency, average packages between ?4–6 LPA, modern computing infrastructure, and strong core-engineering recruiter engagement. CSAB rounds for CSE at NITs and IIITs typically close by ranks below 40 000 for low-tier NITs and under 55 000 for IIITs, rendering admission through CSAB unlikely given your son’s rank. Alternatives include accepting one of the existing seats or pursuing lateral-entry diploma-to-degree options in premier institutes if CSAB options fail.

Recommendation: Accept the VSSUT Burla CSE seat to leverage its higher placement rate, dedicated computing facilities and Odisha domicile advantage; reserve NIFTEM Thanjavur as a strong fallback in agro-technology; bypass CSAB for CSE given low probability, and explore lateral-entry engineering pathways for greater flexibility. All the BEST for Admission & a Prosperous Future!

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Nayagam P

Nayagam P P  |8821 Answers  |Ask -

Career Counsellor - Answered on Jul 15, 2025

Asked by Anonymous - Jul 15, 2025Hindi
Career
Sir my son with a ranking of 24294 In the 2b category Which engineering colleges are possible and best in cs in the first five preference order Our residence is Bangalore sir Kindly guide
Ans: (I assumed your son appeared for KCET Exam). With a KCET rank of 24 294 in the 2BG category, your son has certain admission to the CSE branch at several reputable Bangalore institutes whose 2024 closing ranks exceeded this mark. All listed colleges are AICTE-approved, NBA/NAAC-accredited, feature modern computing and AI/ML labs, experienced faculty, strong industry tie-ups and placement cells recording 70–85% branch-wise placement consistency over the past three years. Global Academy of Technology, Rajarajeshwari Nagar, Bangalore. East West Institute of Technology, BEL Layout, Bangalore. CMR Institute of Technology, Varthur, Bangalore. RNS Institute of Technology, Bangalore. New Horizon College of Engineering, Marathahalli, Bangalore. Presidency University, Bangalore. Impact College of Engineering & Applied Sciences, Sahakar Nagar, Bangalore. REVA University, Yelahanka, Bangalore. Acharya Institute of Technology, Soladevanahalli, Bangalore. Atria Institute of Technology, Hebbal, Bangalore.

Recommendation: Global Academy of Technology, Rajarajeshwari Nagar, Bangalore offers the most balanced combination of modern AI/ML infrastructure and placement consistency. CMR Institute of Technology, Varthur, Bangalore stands out for its focused CSE curriculum and strong local industry ties. East West Institute of Technology, BEL Layout, Bangalore provides reliable admissions, robust labs and steady recruiter engagement. All the BEST for Admission & a Prosperous Future!

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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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