Do you have financial planning queries?
Please ask your questions HERE and rediffGURU Anil Rego, founder and CEO, Right Horizons (external link), will answer them.
Bela: I have less than Rs 1 lakh in my EPFO and I have served around two years, last job being in 2020.
I want to take out the money. Do not intend to work in private organisation and my age being around 52.
How should I withdraw so that the amount does not attract tax?
PF withdrawals in cases where contribution is not made for a continuous period of five years is subject to tax.
If there was a previous organisation you worked for, you can consolidate the same and, if the period crosses five years, it will be tax free.
Anonymous: How many funds should be active in one’s portfolio?
I am 42 and want to invest till 60 to accumulate wealth of Rs 4 crores.
Currently, I have invested around Rs 20 lakh in last four years.
Typically, you can have about 6-8 active funds.
Too many funds do not help in diversification as each fund is already diversified.
Anonymous: I am 41 & my monthly SIP are as below.
I have no loans and asset investment are all completed.
To have a final value of Rs 7 cr in 14 years, will below be enough with a XIRR of minimum 12%?
Axis Growth Opp — Rs 20,000
Canara Robeco Equity Hybrid – Rs 20,000
Kotak Small Cap — Rs 20,000
PGIM India Midcap Opp — Rs 20,000
SBI focused equity fund — Rs 20,000
SBI Contra fund — Rs 15,000
Quant Small Cap — Rs 15,000
Nippon India Multi Cap — Rs 15,000
Kotak Emerging Equity — 15,000
First, of all it is good to know that capital intensive goals like fixed assets and loans are completed. You have planned your finances well.
My responses are below:
• The funds listed by you have performed reasonably well.
• Currently, most of your portfolio is equity oriented and are high risk. This is okay but it is good to have some money on debt options. This has not been provided by you, so cannot comment.
• An assumption of 12% annualised returns over a period of 14 years looks a little overstretched if one considers having a good mix of equity, debt and gold in the portfolio.
Your current SIPs fall a little short of achieving Rs 7 crores over 14 years with 12% annualised returns.
You could increase this on a yearly basis as your income goes up and you should be fine.
Over the years, you can also increase the mix of debt and gold.
• Another question one needs to ask is whether the corpus of Rs 7 crores is enough, assuming that one is planning for retirement.
Our retirement models show that this kind of corpus might be sufficient to cover monthly expenses of approximately Rs 1.5-1.6 lakhs in today’s scenario.
The standard of living varies from person to person, so you can assess based on these inputs.
Anonymous: I redeem MF units corresponding to the profit margin amount gained ranging 15-18%. Would like to know whether its right practice or not?
Markets do provide a good compounding in the long term. Redeeming your profits would mean you would miss out on the compounding.
However, profit booking to manage risk can be a good strategy but but may not be easy for most investors to be able to identify such points.
Profit booking linked to valuations (like the P/E ratio) can be more effective.
Anonymous: Which is the best systematic investment plan for long term?
It is very difficult to generalise without understanding your risk profile. You can use a combination of large, mid and small cap funds.
Large cap funds like Nippon India Large Cap/HDFC Top 100, Midcap funds like HDFC Midcap and SBI Magnum Midcap and small cap funds like Sundaram Small Cap can be looked at.
- You can ask rediffGURU Anil Rego your personal finance questions HERE.
Disclaimer: This advisory is meant for information purposes only. This advisory and the information in it does not constitute 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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