Occasionally, we ask members of our YouTube community to post questions about investing and personal finance. Here are some of them with brief answers.
Q: Sir, for a 30-year-old person who has never invested in MF, which MF is suitable for a lump sum amount for the long term?
A: 50% of Sensex or Nifty 50 index fund and 50% fixed income (PPF, debt funds). See: How to select an index fund: a step-by-step guide. And Which debt mutual funds are suitable for short-term and long-term goals?
Q: N50 AND NN50, how much percentage need to invest – either an 80:20 ratio or 50:50 Or 60:40 ratio? For people age 30… Kindly consider this, plz…
A: Ask yourself this. Would you have asked this Q two years ago when NIfty Next 50 was underperforming? I have written about this many times. See: Handpicked List of Mutual Funds (PlumbLine)
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Q: Sir, are multi-cap funds not good enough for retirement and other purposes?
A: Yes, but they can be risky as they hold too much of mid and small cap stocks.
Q: I have invested Boi small mid and debt fund for small and mid cap exposure will this be enough to cover small and mid cap boom or if it goes sideways will debt component help it out. Thanks in advance
A: If it goes sideways the debt will not help much
Q: Hi I am Akki, Age-28. I have planned the investments based on my goals but my savings rate is high with high income but behaviorally I am not able to put more on equity (60%+) even tough the goal is 10+ yrs away. How to manage this behavior hurdles?
A: Your behaviour is perfectly fine. Stick to it!
Q: Sir which one do you choose from IndexFunds and ETFs?
A: Indxex funds. ETFs are for trading only
Q: Age 23, I try to maximise my money in stocks, only MF i have is Nifty 50 index.
My money is present in stocks mainly, if not then it is in FDs(still interest can be earned when i dont use for stocks). The doubt is when market falls, like it did on june 4, how much money should i use up and buy stocks. In percentage if you can tell, it would be better i think.
A: 1 Focus on a balanced risk-managed portfolio not maximising stock allocation
2 What happened on June 4th is not a fall. Just a blip. A fall is at least 20% or more. Even then focus on asset allocation.
Q: I am currently 32. Equity 75% debt 25%> want to fire in 5 years. How much equity should i hold if fire. I can continue work if i like.
A: Cannot/should not answer with only these inputs. Get validation from a fee-only advisor.
Q: Are mutual funds enough or should we go for shares too? Few people say mutual fund is scam, invest in shares directly or in gold or real estate.
A: MFs are enough. Ask them why. Can Mutual Funds Fail (go bust) Like Banks?
Q: Can we build a portfolio just using factor based index funds? Like Nifty alpha 30 low volatility+ Mirae Midsmall 100 momentum quality + BSE Low volatility index?
A: Yes will be able to take it when they fail?
Q: What is your take on buying a December Put option to hedge our sizable portfolio instead of portfolio rebalancing? This will help us ride the equity with full force and less tax liability costing around 3-5% of portfolio value per year.
A: Difficult to backtest. Opinion: The cost will eat up returns. Fact: Asset allocation is the simplest way to manage equity risk.
Q: What is your view on Momentum funds? Like Mirae asset midsmall cap 400 top 100 momentum fund.
A: People’s love for them will lose momentum when the momentum fades.
Q: Should we keep accumulating irrespective of the price of the index? Also how can we plan for emergencies that depleted our liquid corpus, should we redeem from a certain goal if our emergency corpus is depleted?
A: Invest in a diversified portfolio regardless of market levels or index price. Sadly if the emergency is large, you must redeem from other funds. So keep adding at least 5% to the emergency fund
Q: For my 2.9years daughter I have chosen Nifty 50,Next50 and Midcap 150 index ( in equal %) with SSY for her future need. Am I over-diversified?
A: No, but don’t add any more funds.
Q: There is an aggressive hybrid and a conservative hybrid. Is there any 50-50 hybrid fund, why not? All I see is balanced advantage funds, but 50-50 would also get indexation benefits, etc, but none to be found.
A: There are balanced hybrid funds which come close, but that does not mean they are suitable or desirable. Only 2-3 are available. See: Can I invest in Balanced Hybrid Funds?