'Bad Idea To Buy In Overheated Market?'

Do you have mutual fund and personal finance-related queries?
Please ask your questions HERE and rediffGURU Nitin Narkhede, founder Prosperity Lifestyle Hub, and Association Of Mutual Funds in India (AMFI)-registered financial planning advisor, will answer them.

Shubham: Sir, Age 26 Equity Portfolio = 2 Cr Sectoral distribution of wealth in portfolio: 40% IT and Tech, 15% Infra Developers and Operators, 15% Banks, 5% Pharma, 10% Metals, 10% Utilities 5% Other.
Kindly Scrutinise my Portfolio and suggest some changes. Also please advise on how to identify buy zone or buy range for a stock. How to incorporate a margin of safety, kindly suggest a methodology of research or thought process.
Also, how to hold or deploy the encashed stocks in bull market? I sell fundamentally weak stocks in bull market time, but I don't know what to do with the cash, because buying in an overheated market seems like a bad idea, but the cash lies unused. Need to put it to work somehow.

Dear Shubham, Your portfolio is heavily skewed towards IT and Tech (40%), making it highly vulnerable to sector-specific downturns. Reducing IT to 25-30% and reallocating to defensive sectors like FMCG, Pharma, or diversified financials can improve stability.

Also, Infra (15%) and Metals (10%) are cyclical -- consider trimming them slightly in favor of consumption-driven sectors.

For deploying cash in a bull market, park it in liquid funds, arbitrage funds, or debt instruments while waiting for corrections.

Alternatively, use a SIP approach in quality stocks or ETFs to avoid bad timing risks.

Anonymous: Sir, for A Proprietor To Purchase Car In His Name And Bring It In His Books Giving Credit To Capital Account. This Has To Be Used In The Profession Use Only.

Yes, as a proprietor, you can purchase a car in your personal name and bring it into your business books by crediting it to your capital account. Since the business and proprietor are not separate legal entities, this is allowed. Following can be used to save your taxes

1. Record the Car as an Asset

2. Depreciation Claim

3. Fuel and Maintenance Expenses

4. GST Input Tax Credit (ITC)

Srinivas: Sir I am a central govt pensioner drawing pension of @68000 monthly. My investment is follows Mutual fund @72 lakhs current value, senior citizen saving scheme 30 lakhs.
I have a two bed room flat in hyderabad getting a rent of 15 k and leaving in a rented flat in a gated community by paying a rent of 40 k. Now I have sum of rs 50 lakhs in saving bank amount.
Where should I have to invest this for future needs after 10 years? My present age is 63 years and my spouse is 58 years and both have government sponsored contributory health service scheme so no need any other health insurance.

Dear Srinivas, You may consider allocating Rs 20L into balanced hybrid mutual funds for moderate growth, Rs 15L into RBI Floating Rate Bonds (7.35% interest, sovereign guarantee), and Rs 10L into debt mutual funds or corporate deposits for better liquidity.

Keeping Rs 5L in a high-interest bank FD or liquid fund ensures emergency access. If you prefer reducing rental expenses, investing in a property for self-use could be an option. This plan balances steady returns, inflation protection, and liquidity for future needs.

Your most spending requirements for funds will be for next 7 to 10 years, that is up to age of 70. Later it does not matter much for material expenses. So enjoy Life.

Health insurance is the area you should consider by evaluating limitations of the government sponsored contributory health service scheme so that it covers medical expenses. 

• You can ask rediffGURU Nitin Narkhede your questions HERE.

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.