Having mutual funds from all AMCs to buy from at the click of a button is a “convenience” only for those who know what they are doing and when to stop. Many young earners make the mistake of starting SIPs in multiple mutual funds from day one. And multiple here means more than 10! The following is a comment on our YouTube channel
.”Sir, I have made a massive mistake, I reckon. I have invested in nearly 25-30 mutual funds through sip from different platforms. I have started in July recently, so I can’t even exit because of the exit load. And more than 60% of my stocks overlap because of that. Except for thematic, sectoral and international funds. Please help how to proceed. Should I exit with bearing exit load, or should I stay put for at least 1 or 2 years? The expense ratio will also cut down my profit in the long term like this”
Yes, it is a massive mistake, but it is easily redeemable. Please follow these steps to get sorted.
Do not buy any more mutual funds!
List your long term goals. That is your financial need for which money is required after at least ten years.
Suppose you have two long term goals; assign one large cap fund to each goal. If there are some index funds like NIfty or Sensex in that mix, pick them. So that is two large cap funds, one for each goal. If you are comfortable, you can also use a single fund for both goals.
Stop your SIPs in all the remaining funds. Don’t think, just hit that “stop button”. You will not miss anything if you stop investing in mid cap funds, small cap funds, flexicap, hybrid, international, sectoral or thematic funds.
Then get rid of all investing apps and portals. Create an account directly with the AMC and invest from there. Do not track your portfolio frequently. Once a year with a simple spreadsheet for review is all you need.
Don’t worry about “diversification benefits” that does not apply to a portfolio with diworsification syndrome,
Now focus on reaching an asset allocation of 50% equity and 50% fixed income. You will need to reduce the equity exposure down the line, but that know-how can wait.
Wait for a year to pass. Up to one lakh of capital gains from equity mutual funds is tax-free. So you can redeem a proportional amount to reduce the number of funds. Note that international equity funds are not eligible for this benefit. Invest that money into your existing funds (which hopefully will still be two!)
Whenever a fund is in “red”, that is, the current value is lower than the total investment made, you can again redeem from such funds and invest it into your existing funds.
This way, the exposure to funds tagged to goals will increase, reducing the importance of the other funds.
Get yourself a productive hobby away from financial news. Unfollow all financial guys on social media, YouTube and email, including freefincal.
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 13 years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.Our flagship course!Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions!⇐More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.Increase your income by getting people to pay for your skills!⇐More than 800 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you. (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos! Our book for kids: “Chinchu Gets a Superpower!” is now available!Both the boy and girl-version covers of "Chinchu Gets a superpower". Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. The narrative revolves around what he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management. What readers say!Feedback from a young reader after reading Chinchu gets a Superpower!
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Dr M. Pattabiraman (PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over 13 years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), LinkedIn, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free, AUM-independent investment advice.
Published by CNBC TV18, this book is designed to help you ask the right questions and find the correct answers. Additionally, it comes with nine online calculators, allowing you to create custom solutions tailored to your lifestyle. Get it now.
This book is designed for young earners to get their basics right from the start! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
This is an in-depth exploration of vacation planning, including finding affordable flights, budget accommodations, and practical travel tips. It also examines the benefits of travelling slowly, both financially and psychologically, with links to relevant web pages and guidance at every step. Get the PDF for Rs 300 (instant download)