Freefincal Q & A: lump sum investing to using the same portfolio for all goals

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Each week, I try to answer generic questions from readers. Here is this week’s edition. You can use the form below to ask your questions. I have also included a video showing how one can login into Value Research via Excel. to use the Excel stock screener.

John Galt: What is the procedure to convert existing Regular MF units to Direct via the MFU portal?

Pattu: You can initiate a “switch” transaction from the regular plan for a fund to its direct plan via the MFU console.

Dorothy: Would you please analyse, what makes a better sense – planning annual vacations on your own as and when you need or, one-time investment in club mahindra like offers? I know, it is difficult, unless you know, info on vacations’ frequency and other things… but still you can come up with a post on this topic. Reference:

Pattu: This is not any different from a gold scheme run by a jeweller or a STP from a AMC – it is a way to lock-in business. DIY every aspect of a holiday makes sense to me. I will perhaps Pranav Surya – with whom I am co-authoring a lifestyle book –Gamechanger – to write about this.

RK: I have been reading your blog (and purchased and read your book) for few months. I had not invested in stock so far. I want to start SIPs. However, I truly have lumpsum investments to make – around 15Lak+ , as some FDs are maturing this month and I receive bonus around this time in the year. That is little less than half of my total corpus. So it is definitely a lump sum from all your definitions provided in one of the previous posts. If I invest this as 50k SIP (my normal savings per month), it would take 2+ years, which is clearly not the one you recommend – you suggested 3 months or so I believe. Should I stick with 3 months?

Pattu: Thank you. If you have never invested in equity before, then I suggest you first invest an amount of 50K or less and observe the daily ups and downs for at least a couple of weeks. Then recognise what kind of losses to expect when that amount eventually becomes 15 Lakhs.  Once you are comfortable about this, you can gradually add more. There is no need for a SIP. You can manually invest an amount each week or each month. Or set up a SIP if that is convenient for you. I am assuming that you do not need this money for several years.

Related post: How to invest a lump sum in an equity mutual fund?

Sanjy: Hello Prof.Pattu… I’m 23 and I just started reading your blog. First of all thank you for the informative articles and helpful calculators. My question is regarding the SIP date in some calculators. You have asked to keep the value as 1 if invested in the beginning of the month and 0 if invested at the end. What difference does it make if I make the monthly SIPs at the end of the month or start of the month?

Pattu:   That matters only for the compounding formulae. Not in real life. Don’t worry about it and invest when you can spare the money.

Kiran: Hello Pattu Sir! I have been following your esteemed blog for quite a few months now and have the below questions: 1) Can one have a single Mutual Fund for various goals (like Child’s higher Education, Retirement)? My thoughts were how can one judge when to take out? (I mean if a child’s education is upcoming in 3 years then take out from equity allocation and deploy in debt). However, won’t this alter the surplus for other goals? How to tackle this situation? Is it advisable to have different mutual funds for each of the goals (But again not sure if its too much of an overloaded portfolio) Thank You

Pattu:  Yes, you can have a single portfolio as opposed to separate folios for each goal. There are pros and cons with each approach. If the equity market does well, then there is no much of a problem when you redeem. If it crashes a few years before any of those goals, then when we redeem, we will be eating into the corpus needed for the other goals. So this means will have to gradually shift to debt well in advance and when the market does well. Certainly possible to do, but I personally prefer separate folios.

A unified portfolio can be used by those who cannot invest enough for goals separately. See: Financial Goal Planning with a Unified Portfolio.

Priya: Sir, Which ITR to file if I am filing professional income u/s 44 ADA – presumptive taxation and have income from capital gains as well .. Since ITR 4S doesn’t have cap gains and ITR 3 – don’t know if allowed under presumptive taxations?

Pattu:   According to this, if you are going to file under presumptive income, interest income and capital gains should be added under total income and then you deduct 80C savings from such income.

However, 4S filing is not mandatory. Get an audited report of your income and file ITR 3 or ITR5. If you look at the 4S instructions, then I think this is what you should do.

S Krishnan: Will I T R Filing For A / Y 2017-18 Be Accepted Without Rejecting And / Or Without Treating It As INVALID , If Aadhaar Is Not Linked With P A N ; Unable To Link Due To Mismatch In Name ; Though TheNames printed in P A N Card And Aadhaar Card Are the Same , but In P A N Data , it differs because the name shown in full lengthy ?

Pattu: All you need to do is to mention your Aadhaar no in the ITR form. There is no need to link it with PAN. The govt will bring out a easier method for linking and it is not related to ITR filing.

SUBHASH VHATKAR: I am serving in Central Govt. Service since 24.03.1990 and I will get old pension plan. I saved more than Rs.1,50,000/- in GPF, re-payment of Housing loan, insurance, etc. Further, I saved Rs.50,000/- in New Pension Scheme on 21.01.2017 under section 80 CCD (1b) and submitted my Income Tax Declaration Form to my Department. My Department ignored the saving of Rs.50,000/- in NPS under section 80 CCD (1b) stating that I have not appointed in Central Govt. Service on or after 01.01.2004. Kindly advice that I can claim the deducted Income Tax of Rs.10,300/- through Income Tax Return for the financial year 2016-17 or otherwise. Your kind advice in helpful to me. Thanking you, Madam

Pattu: Of course you can claim it and get reimbursed. What your department did is  wrong.

Kranti Goyal: Hi, Apart from salary, if I have only long term capital gain from equity. Do i suppose to file ITR2 in this case or ITR1 will be sufficient? Thanks and Regards Kranti

Pattu: You will have to file ITR2

SIDDHARTHA: 1.Is it true that buying mutual fund from a NRE account is costlier than normal savings account? 2.If I wanna invest direct in AMC site(mannual SIP;MSIP),can I have any bank savings account or only some saving account do the purpose?

Pattu: You will have to link your NRE account with the AMC. Mr Rajesh Babu after seeing my response has confirmed that there is no difference between NRE and normal SB acct with reg to mf investing expenses.

DHIREN SHAH: I have self-occupied property which is inherited and in my name.The same has been let out and we are staying in the other property on rent basis.In this case , Rent received can be adjusted again the rent paid and net has to be shown as Income from House Property. Can you guide for the same.

Pattu: The rent received is to be added to total income. The rent paid can be claimed against the HRA received, subject to limits.  Even if you do not get a HRA, up to 60,000 a year can be claimed as a deduction. See this for details.

Suhas: Hello Sir, Thanks for such a wonderful informative blog. My question is for young earners, during their first few years of earning most young people would have invested in wrong products just to save taxes, and once he/she starts to know more about financial planning they will understand the importance of investing in right products, starting early, knowing expenses and also about planning and investing based on goals. While he appreciates all these , he is confused about goals part, most young earners say 24-25ys old wouldn’t know what could be future goals and it might vary drastically as they get old, but they may be in a good position to articulate their goals only say 10-12 yrs down the line when they are kind of “settled”, so assuming the financial goals will be clear by 35-37yrs what do you think should be the strategy of investing be for young 25-27yrs olds for the next 10-12yrs time frame? Thanks, Suhas

Pattu:   Most earners in the mid-20s dont care to think about life goals. If they do, it will become clear that financial independence is a common goal for all. If they can manage to invest an amount in equity that matches their EPF contribution, that is enough. A clear goal is not necessary.

How to Login to Value Research Via Excel


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  1. You mentioned “If they can manage to invest an amount in equity that matches their EPF contribution, that is enough. A clear goal is not necessary.”

    Perhaps you are not aware that a lot of private companies limit the EPF contributions to Rs. 1800, and that is irrespective of the salary earned by the individuals (Even for a person earning 1 lakh a month). So it is definitely not enough to invest Rs. 1800 a month to equity and feel that everything is going to be okay.

    1. I certainly am not and I don’t understand how that is possible. I thought there were min contribution rules associated with an EPF. In any case, my point was to match that 12% contribution and now I should add, else at 10-15% of the take home pay. Not investing enough is not as bad investing a large amount in the wrong product.


    Under EPF:
    -> The contributions are payable on maximum wage ceiling of Rs 15000/- by employee and employer.
    -> The employee can pay at a higher rate and in such case employer is not under any obligation to pay at such higher rate.
    -> To pay contribution on higher wages, a joint request from Employee and employer is required [Para 26(6) of EPF Scheme]. In such case employer has to pay administrative charges on the higher wages (wages above 15000/-)

    The employee and employer in many companies are not willing to pay at higher rates, as it reduces the take home salary. So, the first is used (12% of Rs. 15000 = Rs. 1800)

  3. I’m referring to the above question asked by Kranti regarding ITR when you have long term capital gains. Since long term capital gains from equity is tax free, is it necessary to file ITR2? I’ve been filing ITR1 though I’ve long term capital gains under the assumption that long term capital gains from equity is tax free, so ITR1 is good enough.
    Please confirm

  4. Long Term Capital Gains is Tax Free, but it is required to declare it to be Tax Complient. So this requires ITR-2 actually.

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