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'Right To Break FDs To Invest In MFs?'

Last updated on: June 04, 2024 10:28 IST
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Do you have income tax and personal finance queries?
Please ask your questions here and
rediffGURU Vivek Lala, who is a partner at S L Wealth, will answer them.

Mutual Funds

Illustration: Dominic Xavier/

CHANDRASHEKHAR: Which Mutual Fund can give me good monthly income to meet home needs?

Hello, depending on your age, corpus, active income and duration of the investment the above question can be answered

If you have active income then you don't need any cash flows from mutual funds, but if you don't have any active income then the thumb rule for SWP can be 4-6 per cent of the corpus.

If you maintain this with a balanced portfolio, your portfolio will give you good results over a period of 10-15-20 years.

Bhogu: In the present days of the volatile market please let me know whether opting for growth or dividend pay is advantageous while applying for MFs.

Never go for dividend options, if you need monthly cash flow from mutual funds then please go with the option of SWP -- Systematic Withdrawal Plan under growth option as its better in terms of taxation.

Swapnil: Requirement -- 2 crore Time -- 30 years Risk -- Moderate

Sir, based on above requirements please suggest:

1. How much amount of SIP do I need to do?

2. In which fund I need to invest to get the required amount?

In order to get to Rs 2 crore your SIP amount has to be Rs 5,800 for the next 30 years.

Risk in equity markets is the volatility that you see in the short term, but due to the longer duration of your investment that risk gets mitigated.

The funds that you can select are as follows:

  • Small cap 30 per cent
  • Mid cap 30
  • Multi cap 20 per cent
  • Large and mid-cap 10 per cent
  • Thematic funds 10 per cent (can be changed as per requirement )

Generally, the investment amount should be 30 per cent of your gross salary to get to your goals faster, so if you can do a higher investment per month, you should aim for that

Anonymous: I am 27 year old not married earning 30 k per month in tier 2 city. I just started investing 5k per month in MF and have a loan of about Rs 1.5 lakh. I can save more money where can I invest it for long term. Should I first close my loan or invest?

Hello, the decision of loan vs investment depends on the ROI of your loan.

If your loan is at 12 per cent or above, please close the loan first and then start investing.

To finish or pay off your loan faster, start saving as much as you can in a liquid / debt fund and pay it off using that savings done.

Anonymous: I am 45 year old. Invested in mutual funds from last 5 years and my corpus is Rs 88 lakh and a FD of Rs 20 lakh. I am investing regularly Rs 1 lakh every month in MF. Want to make the corpus of Rs 5 crore at the age of 50. I am invested in mid-cap and small-cap fund. Please suggest: I want to break the FD and invest in MFs lump sum. Is it right?

Hello, good to hear that you have been investing in the equity markets via mutual funds for the last 5 years and made consistent returns of about 15 per cent XIRR.

You can get to Rs 5 crore at the current pace by the age of 55 years, if you want to get to Rs 5 crore in the next 5 years then you can make the following additions to your portfolio:

1) Move Rs 10L from your FDs to mutual funds

2) Your SIP amount has to be a total of Rs 3.9L instead of Rs 1L

3) You can make a little aggressive portfolio compared to the current one by talking to an advisor

  • You can ask rediffGURU Vivek Lala 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.

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