I am 35 yrs. old my wife 32 years old my son is now 5 years old. As per your previous advice I selected following funds
HDFC Mid-Cap Opportunities Fund DIRECT (G) – 3000/- per month for 20 yrs.
SBI Blue Chip Fund DIRECT (G) – 1000/- (already started from Aug-15 planning to add 1000/- more per month) total 2000/- per month for 20 yrs.
HDFC Balanced Fund DIRECT (G)- 3000/- per month for 20 yrs.
HDFC TAXSAVER DIRECT (G) MF 1000/- per month for 20 yrs.
I have 2 goals
Want around Rs. 11,00,000/- in next 9 years. and want to retire with around 2 Cr. in next 20 years. i also contribute Rs.6500/- per month in PPF, my PF contribution is Rs.21000/- per year, Current Bank balance around Rs.150000/-. Please suggest from above funds which are suitable for 9 years withdrawal and which are suitable for retirement.
And can in continue any fund after 9 years partial withdrawal and continue it for a further goal.
Paresh-Funds are good and you can continue. Regarding goals, if we consider the return on investment as 12% then for 9 years goal to achieve, you have to invest Rs.5,702 monthly. At the same time, to generate Rs.1 Cr within 20 years then you have to invest Rs.10,108. So total investment required is Rs.15,810. Considering both equity investment and PPF&EPF investment, I feel it is achievable. But the problem here is to rebalance the portfolio, which you have to do 60:40 for 9 years goal and 70:30 for 20 years goals (equity:debt). This you have to maintain for each goals. Maintain this portfolio and rebalance if necessary once in a year.
Thank you very much Sir for your valuable opinion.SirWant to ask you one more query that, when ever we say that switching from one fund to other is that means we have to stop SIP of old mutual fund and transferred all the amount available with that fund to new fund and then start new SIP for same amount or we have to just stop SIP of old mutual fund and withdraw all the amount available and then start with new fund with new SIP from beginning. My question is if we switching from one fund to another then how will we get compounding effect and that can cause of less returns. Please give your opinion on the same.Please
Paresh-Switching means stopping the SIP from old fund. Once everything stopped then first moving the units which are one year older. The investment which you did in less than year must be moved to new fund only after completing a year. Because if you move within a year, then you are liable for short-term capital gains. Then immediately start a new SIP in a new fund.
Let me know what you lose by switching? Compounding depends on the fund performance.
Sir you mean to say that if any fund perform good in 3 years and in 4th & 5th year its very poor then we withdraw 4th and 5th year investment and moved in to another fund and continue old investment with old fund without further SIP and start new fund with moving out amount with new SIP, if it is correct then please tell me that how will we came to know at the time of withdrawal fund amount, which is 1st year SIP and which is 5th year SIP? Please guide me.
Paresh-Let us say the fund is not performing well for 1-2 years. Then if you dediced to swith. First you have to request for SIP cancellation. Move the units which are more than one year older (to avoid taxation) to new fund. Start a new SIP in new fund. Once a year completes for all old fund, then move all funds to new one. This will be available in your account statement like what it happens with ELSS funds. Like in ELSS, you notice the units which are free units and which are locked in units. It is exactly like FIFO (First In First Out).
ohh now I got it Sir, thanks a lot, please continue to give your expert advise in future also, Thanks – Thanks a lot.