Team CrawFin/ Harshal Jawale CFPCM
All of us work hard to earn money, save a little by the end of day. Yet trouble doesn’t end here now we want someone specialist who can manage our savings for the future needs. Finding financial advisor itself is a task these days, we want the best money manager but without any charges.
Mutual Funds offer such facility at very little charge if not free. Fund manager is an appointed expert by AMC who manages money collected from thousands of investors like us and invests into asset classes like Equity/ Gold/ Bonds etc.
Large/Mid/Small cap funds =
Approx 50-60% of the money may be invested into these funds. A systematic investment on regular basis is the best approach advisable. Where large caps provide stability to portfolio small caps provide superior returns over longer period of time.
Tax saver MFs can be termed into large cap funds for allocation purpose.
Sectoral Funds =
Approx. 20% of the money may be invested into these funds. Banking/IT/Pharma/Media/FMCG/Infra etc options are available in the market. These funds are used to provide trading returns to the portfolio and hence are short term in nature, typically 6-12 months. It depends upon market condition and is risky in nature and hence require informed decision making.
Gold Funds =
If you are more worried about charges while investing then Gold fund is a must buy for you. According to my estimate it saves more than 5% of charges as against physical purchase of Jewellary/coins/bars. Buying Gold ETF into smaller quantities is preferred with time duration of more than one year. Approx 10-15% of the portfolio can be invested into Gold.
Debt Funds =
If you have idle money but don’t want to go for fix deposits in order to keep it liquid or worried about tax liability on interest on fixed deposit then debt funds/FMP are the best options for you. It may be short term/long term in nature. Allocation to these funds should be increased as the age increases.
One may follow following distribution of wealth into various assets using MFs
- Large Cap - 30%
- Mid Cap - 20%
- Small Cap - 10%
- Sector 1 - 10%
- Sector 2 - 10%
- Gold - 10%
- Debt - 10%
Allocation of funds may vary depending upon individual risk, earnings and needs. Above broad based allocation is given to provide general idea of how one can build portfolio and take exposure to various assets using MFs.
Trouble still doesn’t end here, there are 30+ Funds with 1000+ schemes to choose from, you may need financial advisor to take informed decision on selecting MF schemes and keep monitoring them. Do not forget to check his/her credentials to advise you, mere designation provided by broker/banks/MFs cannot be trusted when you put your money. Independent advisors too opt for higher commissions compromising on your needs and still require your verification of his/her credentials.
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