I am 25 years old. My risk profile is aggressive. I have SIPs running in the following funds: Axis Long Term Equity (Rs 4,000), Axis Focused 25 (Rs 3,000), HDFC Index Fund (Rs 4,000), HDFC Small Cap (Rs 2,000), Mirae Asset Emerging Bluechip (Rs 5,500) ), Motilal Ostwal S&P 500 Index (Rs 4,000) and SBI Small Cap (Rs 3,500). My take-home salary is Rs.81,000 and I also invest in PPF and FD. I have been investing since last 3 years. Should I increase the allocation for Flexi-Cap? Would you recommend Momentum Fund? My horizon is 15-20 years, so is it worth it to be at all idle given the time frame? Also, would you recommend investing in small-caps? index funds? my goal is making money.
Vidya Bala, Co-Founder, PrimeInvestor.in replies: Consider increasing your exposure to flexi-cap or even large-cap index funds and cut back to small-, mid- and large- and mid-cap funds. Keep the latter around 25-30% of your portfolio. Even if you invest in PPF and FDs for debt, it will be difficult to rebalance your portfolio unless you have few debt funds. So add some ultra-short or short-duration funds from time to time to rebalance your portfolio. Passive option is good for those who do not want the hassle of tracking investments. At present, small-cap funds still have an edge over the index. You can have a mix of passive and active funds.
I want to invest around Rs.10,000 per month in international fund with me as primary applicant and my US citizen daughter as secondary applicant. I am 80 years old and my primary objective is to transfer this fund to my daughter after my death. Please suggest which fund can I invest in and how should I ensure that there are no complications in redeeming after my demise?
Raj Khosla, Founder and Managing Director of MyMoneyMantra.com replied: you can make your own NRI Daughter co-applicant for your mutual fund holdings in foreign or domestic funds. For your convenience, ensure that you have selected the method of holding as ‘Either or Survivor’ and not as “Combined”. Joint application requires the consent of both applicants before investment or redemption. Whereas in ‘E or S’, any applicant can effect investment/redemption decisions. After death, the money will be given to your daughter and will ensure smooth succession. However, you should also understand the implications of investing in foreign funds. Any change in the Rupee-Dollar exchange rate will affect your returns as well. For less than three years of the holding period, beneficiaries are subject to short-term capital gains tax on profits at the usual applicable tax rates. For holdings for more than three years, the returns will be treated as long-term gains and will be taxed at 20%, post indexation.