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Chat Transcript

Amit Trivedi

Author & Founder , Karmayog Knowledge

Equity investments simplified


Questions Answered



Amit Trivedi: You have only presented WHAT you intend to do, but there is no mention of your objectives. Why do you want to do this? How can there be any comment about something - whether it is good or bad - without any reference to the objectives?

guest: I\`m 26 years old bank employee presently getting about Rs. 35000 in hand salary. About 3500 already deducted for my NPS. I want to invest Rs. 3000 pm in SIP for my 8 months old daughter\`s education and Rs. 2000 pm in SIP for about 28-32 years for retirement corpus. Pls suggest me some mutual funds for the same.

Amit Trivedi: Considering that you need money after long time periods, you can afford to park larger sums of money in equity. In fact, you should consider the same. You may divide your SIP between debt funds and equity funds (with larger allocation going to equity funds) in the beginning. As the goal approaches closer, keep reducing your fresh allocation to equity funds.

guest: I have deposited R s 4931000/ in mutual funds in last few years present value of the fund is Rs 6273000. I have also deposited Rs 7.5 lakhs in PPF account for following goals . (1) I need Rs 4 lakhs (present value) annually wef from 2022-2023 for 9 years. and R s 35 lakhs (presnt value) for her marriage after 14 years from now.The details of my funds are as below- S.No. Fund Name PRESENT VALUE 1 Aditya BSL Frontline Eq Rs 520000 2 FRANKLIN INDIA PRIMA PLUS rs 1185000 3 HDFC MID CAP Rs 1566000 4 ICICI PRU FOCUSSED BLUE CHIP75 Rs 750000 5 ICICI PRU VALUE DISCOVERY FUND Rs 918000 6 MIRAE ASSET IND OPP FUND Rs 515000 7 QUANTUM LONG TERM EQ Rs 669000 8 SBI BLUE CHIP Rs 150000 INVESTED AMOUNT --4931000 PRESNT FUND VALUE --6273000.. Please guide me is the amount invested is sufficient to achieve my goals or I need to invest more.

Amit Trivedi: You have not mentioned two things (1) the future value of the money required - amounts required then should be adjusted for the expected inflation, and (2) if you are going to invest any further towards these goals. In the absence of other details, I assume that all the other requirements are provided for. In such a case, your portfolio needs to keep pace with inflation and does not need to earn much more than that. In that sense, you do not need to keep your investments in equity - a risky asset class with potential to deliver high returns, since you do not need high returns. You may simply consider shifting your money to some low-risk investments.

MFFWP CFP COACH: Pls share your expert view on Paradox of Equity Investing: Today, Retail Investors want 15 to 25 pa return on Stock Investment. But, If as a Large Investor, One buys Company...Average Return between 1 to 5 Pa. How it is calculated Eg Return Net Profit / Market Capitalization) 100 1 Page industries 0.975 below 1 pa) 266cr / 27302 cr 0.975 pa 2. Pidilite Net Profit (750 cr) / Market Capitalization (35000 cr) 2.14 pa 3. KOTAK BANK 3500 / 192000 1.92 pa 4. Ceat : 4.5 pa 5. Mrf: 4.6 pa 6. Hdfc Bank : 3 pa 7. Rushil decor : 1.75 pa 8. Bosch : 2.81 pa The Biggest Problem is that 80 companies pays less than 20 of net profit as a dividend so net profit may be window dressed. Keyur Shah CFP Coach

Amit Trivedi: Keyurbhai, you are a CFP coach. I assume you are coaching either investors to invest or students pursuing CFP. In that case, I guess you would know the answer to your question.

guest: Me (age 33, annual income Rs 800000) and my wife (age 30, annual income Rs 600000) both are working in Govt. organization with NPS benefits. We collectively wants to invest Rs 30,000 per month in mutual funds. We can afford to have aggressive portfolio. We are already investing SIP of Rs 2000 in Reliance Small Cap Fund (G) and three ELSS of Rs 2000 each in IDFC Tax Advantage, Mirae Asset Tax Saver Fund and Tata India Tax Saving Fund. Please suggest a fruitful portfolio for us with allocation in different category and suggest some funds. We are investing basically for child education, marriage and our vacations. We can invest for long term maybe 15-20 years.

Amit Trivedi: You got to be specific about your goals. When you have highlighted goals like education and marriage of your children as well as a family vacation with a time horizon of 15-20 years, one would assume that all these goals are likely to happen after 15 to 20 years. There would be no vacation till then - at least funded out of these investments.Secondly, when you say you can afford to have an aggressive portfolio, it also implies that you are ready to see huge drops in the value of your investments. Please think about these points.

guest: please advice me if I invest in sbi life elite balance fund for 5 years is it wise decisionor should i go for other

Amit Trivedi: The important question is why and not which scheme.

guest: I have to invest rs 5 lac one time in equity mutual funds for the shorter period of 1 to 2 years. In which fund do i invest

Amit Trivedi: Putting money in equity for such short time period is not investing, but speculating. Why would you want to do this?

guest: sir, i want to say about my folio.i give you my folio please tell my folio is ok or not.if any change is required please tell me. my target is after 15 years i need 50 lac and after 20 years need 1 cr. 1.dsp balck opportunity fund (3000 p/m) 2.dsp black balance fund (2 lakh) 3.hdfc equity fund growth (3000 p/m) 4.icici prudental mutual fund (1000 p0/m) 5.absl midcap fund (2000 p/M) 6.absl cash manager (10000 lumsump) 7.sundaram select midcap fund( 1000 p/m) 8.franklin multicap (2000 p/m)

Amit Trivedi: While I would refrain from commenting on specific schemes, please consider the following points: (1) write down the reasons why you have chosen these 8 schemes mentioned, (2) keep evaluating the schemes in your portfolio periodically (once a year should be ok) in line with the reasons, (3) keep the number of schemes limited to the extent that you can monitor, and (4) please do not consider past performance as the only criteria to evaluate schemes (I am not assuming that is how you have done the selection).

guest: ELSS - In General NAV of Growth is always higher than Dividend option. However it was observed Tata Tax Saver fund and Aditya Birla Tax Saver 96 fund Dividend is significantly greater than Growth Option. Is there any significant reason for this when other ELSS funds are aligned to normal mutual fund norm of Growth greater than Dividend?

Amit Trivedi: What you have said is absolutely right - NAVs of growth plans should be higher than those of dividend plans. I am not sure of the reasons behind the two schemes that you have specifically mentioned. One needs to go to the history to understand what the reasons could be. Long back, some schemes had only a dividend plan and the growth plan was introduced much later. If the growth plan was carved out of the scheme with the prevailing NAV, you would see the growth plan NAV being higher than the dividend plan, but if the growth plan was started at the NAV of Rs. 10, you may see the kind of anomaly you have observed. While this is one of the possibilities I could immediately think of, one needs to check the historical events with the specific schemes.
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