'Right Time To SIP Mid-Caps, Small-Caps?'

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.

Anonymous: Sir, I am 60 and retired with a corpus around 2 cr. I want to invest in MFs. Suggest me please how much in which portfolios are better for after retirement secured investments?

With your corpus of Rs 2 Crore with which you do not want to undue risks, you can consider investing in a mix of arbitrage funds & debt funds which can offer you stability and returns.

If you are apportioning your investments with one part kept aside for income generation & another for capital appreciation, you can set aside Rs 1.5 Crore in safer funds like arbitrage & gilt funds, with the other Rs 50 Lakh in a combination of a balanced advantage fund or a multi asset fund and an equity fund.

Note that my recommendations are assuming that you will use the Rs 2 Crore corpus for your day to day expenses.

Shom: Hello Sir! I want to start investing in mid cap and small cap mutual funds through SIP route. Is it advisable in the current scenario when these categories are oversubscribed as per some reports which also suggest that their returns may fall in the near future?
What is your take on the matter? As an expert will you advise investors to start investing in mid cap and small cap immediately or wait for the market to correct?

If you are looking to invest through the SIP route for the long term (over a period of 7 to 10 years), you can consider investing thru SIPs.

While mid & small cap companies may seem overvalued, as you are investing through the SIP route, you can begin your investments.

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 per cent 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. Assuming that you are able to generate an XIRR of 12 per cent, 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/DAAFs, 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. I am assuming you are looking for a consistent source of cash flows for monthly expenses etc.

Withdrawing 1 per cent a month/12 per cent 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 per cent 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 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. 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. 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.

• You can ask rediffGURU Ulhas Joshi your questions HERE.

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.