Do you have mutual fund queries?
Please ask your questions here and rediffGURU Ulhas Joshi, Head -- Sales, Rank MF (external link), a mutual fund investment platform, will answer them.
Prateek: Hello Sir, I am 34 years old and with 10 years in mind for investment to reach 1CR, I have planned to invest 30K monthly in SIP with stepping up by 10-12% every year. I am already investing the below amounts in MF schemes 5K - Parag Parikh Flexi Cap, 5K - Motilal Oswal Mid Cap, 5K - Nippon India Small Cap, 5K - HDFC Balance Advantage Fund.
I am a bit confused for the remaining 10K i.e., where to invest. Shall I increase the already invest amount in MF or shall take 1-2 more MFs scheme like Multi-Cap/Large Cap/another Flexi Cap OR any hybrid MF schemes.
Would taking 1-2 more MF scheme will over-diversify the portfolio? Can you please suggest some pointers on this.
Hello Prateek & thanks for writing to me. Assuming that you are able to generate an XIRR of 12%, you will be able to create a corpus of Rs.1 Crore in around 10 years.
As your time horizon is 10 years, I recommend you invest only in equity schemes which can potentially generate higher returns than hybrid schemes like a balanced advantage fund or dynamic asset allocation fund.
You can consider investing equally in:
1. Small Cap Scheme
2. Mid Cap Scheme
3. Flexi Cap Scheme
4. Multi Cap Scheme
Your 5th scheme can be a thematic scheme like a momentum fund or a special opportunities fund or a broader category like a special opportunities fund.
You can consider investing solely in equity schemes for the first 7 to 8 years and then change the asset allocation to have a mix of hybrid schemes like BAF/DAAF's, Multi Asset Funds and aggressive hybrid funds in the last 2-3 years of your 10 year horizon.
Vikas: Hi, I have a corpus of 1 cr. Can I do SWP that gives me 1 lakh per month? If not what is realistic withdrawal I can make and which scheme to opt for? Thanks
Hello Vikas & thanks for writing to me. I am assuming you are looking for a consistent source of cash flows for monthly expenses etc.
Withdrawing 1% a month/12% a year seems aggressive, and such aggressive withdrawals may stunt the growth of your corpus, causing you to withdraw more from your principal amount instead of any accrued gains, causing you to deplete your corpus earlier than planned.
Half a percent or quarter of a percent of your corpus that is Rs 50,000 or Rs 25,000 is a much better figure to withdraw, as it leaves potential for your corpus to grow faster than withdrawals.
You can consider investing in hybrid funds like balanced advantage/dynamic asset allocation funds, multi asset funds, aggressive hybrid or conservative hybrid funds or a mix of debt, equity & hybrid funds, based on your specific needs.
Sarmishtha: I am 35 year old divorced female. My monthly income is 50k. My monthly expenses are 16k. My monthly savings is rd: 14k. I have have a savings of 20k. I need advice on how to use the money to get a medical insurance and to invest in mutual funds.
Hello Sarmishtha & thanks for writing to me. I am assuming you are planning to invest for long term wealth creation.
You can consider starting SIPs in a mix of equity multi cap & flexi cap funds through SIPs. Such funds are broad based & invest across stocks in different industries & market capitalisations.
I only discuss mutual funds in this column & recommend you talk to financial planner who can help you plan your investments with your own needs in mind.
Anonymous: Hi Sir, I am 26 years old and currently having salary of around 1 lakh per month having term plan of self, health insurance of self and parents and ppf and nps savings. I am planning investment in mutual funds with an amount of 25,000 every month in each of small mid and large.
Please suggest me a better approach to distribute between them and kindly suggest me funds as well sir I'm a beginner with less experience in this MFs.
Hello & thanks for writing to me. As you want to invest in a mix of small, large & mid cap funds, you can consider starting SIPs in Multi Cap Funds, which by mandate have to invest in large, mid & small cap companies.
Investing in such funds will ensure that you have adequate exposure across market capitalisations.
Ravi: Hello sir... This is Ravi kumar. Age 34. Now i have 1 lakh Rupees. Now i want invest in mutual funds for my retirement. The question is where to invest? Only one index fund or 50% in index fund, 25% in mid cap and remaining 25% in Small cap? Or, in your view diversification? So please give me good suggestion?
Hello Ravi & thanks for writing to me. As your time horizon is long & goal is retirement, equity is suitable for you.
You can consider investing the 20% of your corpus in a large & mid cap scheme (these are different from large schemes), with 40% in a small cap and 40% in a mid cap fund.
With your age & time horizon, having a large exposure to mid & small cap funds has the potential to generate higher returns.
General disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
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