Financial Planning for Wealth Creation and Retirement

POSTED BY Reveal All ON May 10, 2012 10:02 am COMMENTS (33)

I am 39 yrs old ,single and have been investing since 2 years in these Mutual Funds via SIP Monthly.
My time horizon is 15 yrs.

How is my portfolio? Does it need any correction?

Roughly how much can I generate from this portfolio.

Franklin India Blue Chip- Rs 4K

Hdfc Top 200- Rs 6k

IDFC Premiur Equity- 3K

ICICI Pru DIscovery Fund- 3k(will start this next month)

SBI Dynamic Bond Fund- 3K

Reliance Gold Saving Fund- 2K (Since last yr)

PPF – Rs 1.5 K

New Pension Scheme- Rs 3K

All r monthly SIPS…

R these funds Ok…do i need changes…

Pls analyse my portfolio and suggest me accordingly..


33 replies on this article “Financial Planning for Wealth Creation and Retirement”

  1. Nitin Verma says:

    1. People always look for a 100% foolproof strategy and in search of that miss out on 90% if they would have started without thinking of a foolproof plan.
    2. Key to a happy future is to start investing early.
    And Last..
    I too hold Kotak a/c… they charge 15 rs per successful Equity SIP not sure about mutual fund SIP. so even if you set to buy 4-5 separate stocks every month it would end up in wastage of 60-75 Rs.. Instead do it manually…

  2. Jig says:

    If i have SIP of sectoral fund( Bank fund) and if i prefer to invest monthly ( SIP ) in some selected bank as Nitin mentioned, what are the pros/con look like? will both working as same or differently?
    I menioned in my prev reply that I would like to invest Good value stocks( which is possibility of available during market correction) and not any blind tips. I use moneysight and sure doing my work before investment. Thanks Ashal and all for providing good healthy discussion.

    Just for info that Kotak Sec has feature for Auto Equity SIP.

  3. Reveal All says:

    even if some one does not know about stock trading and direct equity..but he invests in the same stocks every month for 15 yrs or so …what r the pros and cons of this strategy….would this strategy beat the SIP done in Mutual Funds for 15 yrs or so….Time period will be in favour for the investor…
    Nitin,Just grow ,Ashal,Zion view and all…what r u opinions

    1. Dear Reveal All, please read again the following –

      Also note that SIP in direct Eq. is not the same thing as a SIP in MF.

      Why? Just check the names – silverline technologies, DSQ software, CRB Capital, GTB……………. Try to find some info for these stocks & many more like these & then only you ‘ll come to know what I mean for the difference in Eq. SIP v/s MF SIP.



  4. Reveal All says:

    Hi Nitin,Ashal,Jig and all
    Suppose we go by Nitin’s strategy and start investing every month without fail in the stocks (large , and small mid cap ) for 15 yrs….would that be ok for some one who is not familar with stock trading etc…I mean just invest every month some portion of ur money for 15 yrs in direct equity…

    1. Dear Reveal All, Please read again my prev. reply –

      ” Nth time, it has been told already in the forum to do own research & decide as far as the question of stock selection comes.”

      So instead of riding on some others’ tips, if you are riding on your own & understand what are you doing, you have fair chance of getting as per your expectation.

      Also note that SIP in direct Eq. is not the same thing as a SIP in MF.



  5. Nitin Verma says:

    I agree,,, 🙂 one topic is leading to another.. its always good to do own homework before selecting stocks and if required speak to a certified portfolio planner,, even after the recommendation of a certified planner u still need to do your own homework.. for the Certified planner might be misguiding you for his own good ….
    As Ashal and TheZionView rightly said, never believe stock tippers they are scamsters..Also
    also never blindly believe your brokers recommendations since they have their own selfish motives,,, same is the case with the Analyst on TV news.. they are paid to recommend stocks.. All in all invest safely,,, wisely..

  6. Nitin Verma says:

    In Fact if you know how FNO works.. you can buy some qty of these or any of these stocks at a good price time and again..

    1. Dear Nitin, your intentions may be good for this discussion but the outcome is not going into the direction you want to (or may be I’m wrong as it’s the direction you want to go for this discussion).

      Why I’m saying so? The replies of dear Reveal All & dear Jig say it all. Instead of understanding the point of discussion, both these persons are asking either for direct stock recommendations or views on the stocks discussed.

      Nth time, it has been told already in the forum to do own research & decide as far as the question of stock selection comes. Here I’m more than agree with the views of dear TheZionView for blind tips & no follow up after that.



  7. Nitin Verma says:

    Pros and Cons:

    Con: Stock market is very volatile due to FNO players,.. you need to avoid panic at all times..

    Pros: after 15 -20 years, the possibility is that Value of your Equity investment will have the potential of surpassing your Total Property and financial assets combined.. and the Dividend along with be enough to happily retire…

  8. Nitin Verma says:

    Some good stocks for long term holding:

    Equity Part of Allocation:

    50-60% in Large Cap:
    Axis bank, Corporation Bank, PNB, Ashok Leyland, Glenmark, Tata Steel, HPCL

    30-40%: Midcap and smallcap:
    UCO Bank, Dhanlaxmi Bank, Deepak Fertilizers, Graphite India, City Union Bank.

    I am mostly mentioning banks because if country grows,, banks grow.. and these are banks which have survived some tough times in india and proved their worth.. I have some more stocks but those are high risk reward ratio stocks…. but I am only mentioning a few so that it would be easy for you to track.

  9. TheZionView says:

    Well i can come here and say following stock will give you very good returns over long term
    I can just list stocks like Cravatex,Mayur Uniquoters,VST industries,VST Tillers,YES bank etc

    I say this and i will go home …i wont come back to update you every quarter on whether the story is still intact or should we exit ,is it over priced or under priced,is it time to accumulate,hold,sell.

    These are the few question among many other you will need to know when you go for a direct stock investment.

    Hence a simple reasoning is If you understand then go ahead otherwise stay away.You might not beat indices by mile but you go down under as well

  10. Jig says:

    Good Discussion over here.
    What are the recommended stocks, or how to select the stocks for 10 yr long investment?
    I am doing SIPs in MF also but i would like to invest directly also in equity in good value stocks.
    you can mail me on


  11. Reveal All says:

    Dear All
    thanks for ur suggestions and reply….
    So suppose if I have time in hand (15 yrs) should I take Nitin Verma’s suggestion (out of 19k invest 10k in Mutual Funds and use 6k to buy Good Dividend paying stocks. Like Andhra bank, Corporation Bank, Ashok Leyland and Use 3 K to buy the Small Caps stocks directly)

    This way around 50% investment goes into Mutual funds and another 50% goes into Nitin Verma’s suggestions…
    therefore with time horizon one has investments in both funds and stocks….

    What r the pros and cons of this strategy?

    would appreciate if u all give ur inputs regarding this

    Take care

    1. TheZionView says:

      Reveal All
      Yes Nitin strategy will work for you and for most of the people perfectly if only you understand what you are buying.
      Do you understand what Corporation Bank and other stock he mentions are doing and do you understand the business ,along with potential risk that could bring in for you?

      If your answer is yes to all go ahead with that

  12. Nitin Verma says:

    I agree with Ramesh.. its all about Risk-Reward Ratio with Time factor playing a important role..

  13. Nitin Verma says:

    inflation alone can cause damage to our economy. and Profit margins of the company..

  14. Nitin Verma says:

    @ramesh You are right…..
    Now in your example u have mentioned details of growth funds where dividend is again reinvested.
    And in my example dividend is consumed.. Plus There are also other good PSU stocks that have given good returns.. example
    UCO bank
    5 years ago: Price 23, current price 65 ( 182% Just price based returns.. ) also i am not including the dividend it pays.

    Now in Corporation bank we are consuming our dividend instead of reinvesting it. So over the year we have got back 118 rs in form of dividend.. so our effective investment remains
    202 and now the price have become 407 ( 100% returns ) Now this can be compared with the Reliance banking growth fund..Again if you see.. in Reliance growth fund the amount is reinvested in that sense the returns should be more because of the compounding effect. but that is not the case.

    @ramesh and @Justgrow..: My answer was specific to current market scenario……Ashals question was specific,, so i had to give specific answer,,,his exposure was very particular to ADAG stocks.. and in this country full of Scams its good to be diversified,,,,Again my answer regarding IDFC was also specific..the markets are down .. ripe for picking long term holdings,,, I wouldn’t have spoken it when it was costly and when market was high..infact when market is at high.. I would recommend @Ramesh’s stragey of a good banking fund.. so that after that even if market falls the damage is not that much… But now market is ripe for picking good stocks for long term investments.

    And even if market crashes it would be good since the investment horizon is 15 years.
    In Short: when market is high Buy Mutual funds.. But when Market has corrected 15-20% from its previous high.. slowly start picking good stocks…

    Also small caps if chosen carefully can give your retirement extra punch that it needs. But again you have to be very careful while choosing these small caps.

    @Ashal: Euro Nations problems, US debt, India fiscal deficit.. China slow down,,Middle east issues,, all has potential of crashing our market.. coz FII’s are happy with less returns by investing in Indonesia than by investing in India.. they are ready to invest in india.. but our Govt has made it difficult for them.. the day Govt gets its act straight.. Infra is going to be major beneficiary.. and even if that doesn’t happen Inflation alone

    1. Ramesh says:

      Diversification is important to protect your portfolio from single-point failures (the same way, single-point great performance also does not cause the portfolio to have an overall great performance).

      Having a very concentrated portfolio is not advisable in today’s world (scams happen and companies fail everywhere in the world- it is just not a particularly India-specific thing).

      It is better to have a proper investment statement and be consistent about it (whether you follow MF, index or active, or direct stocks), since the most important link in the portfolio performance is the person himself.

      EDIT: Added link-

    2. Dear Nitin, I chose ADAG stocks randomly & there was no particular choice for these stocks. The same can be done with many other stocks. What my intention was – It’s quite difficult to a common investor to pick the winners & more importantly holding these winners as rightly told by dear Ramesh.

      I’m not going to comment for that Indonesia v/s India thing for FII money as my own knowledge is very limited for these matters. I’m not sure that you are talking for FII investments or the market returns for past few months?



      1. Nitin Verma says:

        FII’s have money which the US govt has printed out of thin air.. ie out of no where.. All because they can print their currency and the Individual Countries in EU cant…Chinese Pension Funds have started buying gold.. coz the paper currency is loosing its value due to mindless printing of it.. .. the more you know the facts the more clearer the current market scenario becomes.. I would not be surprised if market crashes like it did in 2008. .I am not saying it will happen.. but there is a tiny possibility. Market returns are directly related to Money that flows into it.. Retail participation has been declining.. Govt can come up with a scheme ” The Rajiv Gandhi Equity Scheme” where the investor can invest directly into stock market gets tax benefit upto 25,000 for 50,000 (max) Invested directly into stock market, with a lock in period of 3 years..
        This will be a costly mistake if people start jumping into it without knowledge of stock market.. People have mentality that smaller price share gives good returns and they are cheap.. the are hardly aware of a debt of a company, PE ratio.. current management plans.. This scheme has potential of easily burning hands of many people in india..

  15. @All – What Nitin is suggesting is that there indeed are ways to beat the MF returns big time which is true. The problem is the ‘suitability’ of such a strategy to all and one.

    @Nitin – It definitely needs a lot of discipline to own stocks – most of all the ability to pick stocks, the conviction the decision is right and the temperament to hold in violent downturns. Since almost the bulk of the population lack in one of the above characteristics they will all benefit by the collective schemes – Mutual Funds, than by owning stocks. Call it the lazy man’s gold mine but at the end of the day MFs are a gold mine.

    In the IDFC example about 12-14 months ago IDFC was close to 200 and dropped to 90 in Aug/Sep 2011 and rose to 160 in Jan 2012 and is at ~ 120 today. 50% drop in 8 months, then 60% gain in 5 months and again a 25% drop in 3 months?! Most poeple cant hold thru this and will exit at random points. There in lies the risk of direct stock investment.

    While I will personally vouch any day for your strategy I would not see it suitable in open forums like this where people can misconstrue recommendations.

  16. Nitin Verma says:

    Well.. I would say let the Corp bank be in portfolio and do its work.. and Regarding ADAG stocks.. Have 50-50 contribution in it.. ie
    out of 100 % that you intend to invest in Rcom.. put 50% in Rcom and 50% in Idea
    out of 100 % that you intend to invest in Rinfra .put 50% in Rinfra and 50% in Idfc.
    Both are delicate sectors.. especially infra sector.. If India gets serious on its infra development plan and remove all the bottenecks that are hampering our growth.. both these infra stocks have good potential.
    But again since these are 2 sectors.. ie telecom and Infra.. These should each be 15% of your portfolio.. not more.. and with Corp Bank in portfolio it would be 3 sectors covered.. ie Banking, Telecom and infra. And in banking u can also rely on a another good dividend paying bank ie Andhra bank. so that makes 50% in Corporation and 50% in Andhra bank out of your 100% contribution in banking sector,, which should not be more than 15% of your total portfolio.

    1. Dear Nitin, From your own reply –

      “If India gets serious on its infra development plan and remove all the bottenecks that are hampering our growth.”

      In how many days or months or years can we see the removal of bottle necks.



    2. Ramesh says:

      So you have simply jumped from a single stock to 6 stocks (= in simpler terms, diversified).

      An MF gives you diversification at a reasonable cost (thats all).

      Regarding your comparison data: How come you have compared UTI Bond (Debt Income fund) with a banking stock. If you want to compare, compare apples with apples and not apples and oranges.

      So compare a banking stock with a banking fund. The Reliance Banking fund was @ 43.4, 5 years ago and presently it is 84.9 (a return of 14% CAGR per annum). 🙂

  17. Nitin Verma says:

    As per Me though Funds are relatively safer but the returns are not that good.
    With Time factor in our hand we can easily Earn Good. Let me show you an example:
    Lets Take:
    1) UTI Bond ( Dividend )
    5 Years ago its Nav: 10.98
    Current price: 12 ( Just Price based return: 9% in 5 years ie without dividend, Dividend details i have mentioned below)

    Dividend History
    Record DateDividend (Rs/unit)
    28-Mar-2012 0.15
    29-Dec-2011 0.26
    28-Sep-2011 0.22
    30-May-2011 0.11
    29-Mar-2011 0.11
    30-Dec-2010 0.09
    30-Sep-2010 0.13
    30-Jun-2010 0.09
    31-Dec-2008 0.40
    31-Dec-2007 0.18
    2). Lets take Corporation Bank Share:
    5 Years ago : 320 price
    Current price: 407 ( Just Price based return: 34% in 5 years ie without dividend, Dividend details i have mentioned below)

    Year Month Dividend (%)
    2012 May 205 ( ie face value (10) x 205% = 20 rs per share )
    2011 Apr 200
    2010 Apr 165
    2009 Apr 80
    2009 Feb 45
    2008 Apr 60
    2008 Mar 45
    2007 Apr 50
    2007 Mar 40 ( 4 rs per share. )
    Again.. Mutual funds might be safe.. but what is use of that safety when its not giving desirable returns. I suggested the strategy mentioned above coz u have time in hand..u can easily maximize your returns. All u need is discipline.

    Nitin Verma

    1. Dear Nitin, how about replacing that Corp Bank share with Reliance Communication or Reliance Infra & many others?



  18. Reveal All says:

    Dear Ashal
    Thanks for the reply…Yes I m investing for my retirement..what r ur comments on Nitin vermas advise..He suggests to invest in Stocks..Pls see his repl..Remember we left our discussion in the middle at F.Book…Can u give me final picture of my portfolio with some important tips…Thanks again…

    1. Dear Reveal all, as we were discussing the matter in pvt. chat, I w’d like to discuss there itself as & when both of us are available on FB at the same time.



  19. Dear Reveal all, please check my reply for your similar query –




  20. Nitin Verma says:

    The 4 % is in form of 100-200% dividend which these companies pay.

  21. Nitin Verma says:

    So total 25.5k Per Month; Try This
    Instead of 19k in Funds Only keep 10k in Funds and use 6k to buy Good Dividend paying stocks. Like Andhra bank, Corporation Bank, Ashok Leyland. Keep adding this. This will not only give you close to 4% returns yearly which savings account also gives but has the potential of becoming 2-4 times in next 5-10 years.
    Use 3 K to buy the Small Caps stocks direcly.. becareful in choosing them. they have to be fundamentally good. You can contact me .. i can share you my number if you want to.
    Gold Has had a good Run so good that you are not over exposed to it.
    Make PPF, 2 K and
    Instead of NPS do FD in a Nationalized bank only ( This will ensure liquidity when needed).
    You haven’t specified if you are properly insured. And also if you want i can share my number to clear your doubts.

    1. Ramesh says:

      What is your own track-record in stock-selection? As compared to Dividend focused funds (read UTI and Birla’s dividend funds), and eg DSP microcap / mid-and-small cap fund.

      It is such a waste of money to act on stock tips, without doing the diligent work. By providing them, you are actually harming people (though, you may have the right intentions).

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