guiding pointers for diversified equity mf investment in financial planning

POSTED BY bharat shah ON June 21, 2013 12:21 pm COMMENTS (12)

i selected diverfied equity mfs and debt instruments as major avenues for my finance planning. i understand equity diversified equity mfs suitable for long term , 10 yrs or more away goals . also believe SIP investments better for regular stream of investment money . i also believe that it is better time in market rather than timing the market. however honest investment bloggers advise not to be trapped in ovrheated /bubbled market like that of 2007 or there is huge deviation from the mean on positive side ,and one should come out at least partially during such times to reenter when market comes down.similarly they advise to increase the buy (of course for long term) when incidently market moves down from the mean. i like to to monitor the market for such movements on day to day basis , so  i can act during such conditions of the markets. i request to please mention me some websites , which give such data/graphs on day to day basis for indian market.

12 replies on this article “guiding pointers for diversified equity mf investment in financial planning”

  1. bharat shah says:

    thank you for you appreciation , but let me confess that it is due to all of you whom i read here and other blogs .

  2. Dear Bharat, ‘Congratulations’ is the word I w’d like to say for the clarity you have.



  3. bharat shah says:

    @Ashal thank you for your inputs. incidentally before a few minutes while making something like policy statement while making finance planning for my son i made one such statement. i declare the whole statement to bore you and others!:
    1. Assets of ‘ X’ presently invested in QLTE, TIEI,HDFC PRUDENCE, HDFC MIDCAP OPPO., ICICIPRU DISCOVERY and IDFC PREMIER EQ. , total 6 diversified mfs are initially earmarked for the 5 goals, i.e. retirement ( 7%p.a. inflated present Y lacs yearly for 23-24 yrs in retirement), both children education after 12th standard(7%p.a inflated present Z lacs 0ne time for each of two) and both children wedding after 24 yrs of age(7%p.a. inflated present A lacs 0ne time for each of two). 2. as the initial fund is inadequate, it is planned to save at rate of rs. B per annum (3% increase of previous yr ended on 31.03.2013) in 2013-14, and then increase it by 3% per year than previous yr. irrespective of income earned during the yr. this is modest saving , and should be achieved .3. it is thought to invest the existing fund and saving in these diversified equity funds for long term. the following may be practiced , as far as possible: never encash when market is low/crashed. you may switch to all or part of funds from diversified eq. mf at time market euphoria , sensed by sensex/sensex EPS above 25 to debt /liquid funds of same AMC to again enter when the sensex/sensex EPS dropped to 14 or so. 4. monitor regularly, and transfer some fund to debt, if the a/m in diversified increased much more than anticipated a/m because of good performance of equity. 5. always try to keep expenses under control , and save more than the stipulated. the additional saving should be invested in debt instruments for recouping the shortfall in future, other goals not planned (mentioned), emergency fund etc. 6. for house upgrading , now @9 lacs are available, and should be done at the opportune time. 7. the diversified mfs should be monitor with peers and the indexes on yearly bases, but changes to be made only after due consideration, prefrabley in 2-3 yrs. time. 8. as any goal comes near 2-3 yrs, transfer suitable a/m to debt instrument for that goal.

  4. Dear Bharat, I’m doing own boring part. Investing in Eq. MFs. 🙂

    Regarding the rebalancing, you can opt for Pattu’s PE related rebalancing or a %age rise for your own portfolio. Say after 3Y, your Portfolio value should be 5L but it’s 7L Rs. due to god performance, then it’s time to redeem 2L Rs. profit. For a reverse case of 4L Rs. fund value, you need to invest 1L Rs. more. 🙂



  5. bharat shah says:

    thank you Ramesh for your one line input: ‘Once you have settled on this plan, financial planning becomes boring and that is the way it should be.’

  6. bharat shah says:

    i concur with you , but i feel i learn lot from you all and it made my family finance definitely better , i feel. as such , i started my equity share investment in 1982 through public issues (preferential quota for NRI then ) for companies like Asian Paints, Gwalior Rayon,Ranbaxy, Orkay, Andhra Cement,First Leasing Company of India etc. , when i had been in middle east for 4 years , and then in secondary market after returning india depending upon spare fund. though i felt , i knew lot of to read about company’s accounts inspite of non finance education , i never made a fortune out of it, because of personal circumstances, luck and very frankly lacking the clear direction and knowledge , which you all are having. after some lull due to paucity fund, i again started equity investment of a little saving from 2003 after gut smelling start of bull phase through direct equity (use to keep a small no. of scrips) ,and as you understand made a good fortune (to my standard!) till start of 2008 after meeting obligations. till 2006 mid or so, my portfolio performed better than sensex, then it started lagging , so i changed my track from direct equity to diversified equity mf in 2009. now i am managing mostly my only son’s funds with his willingness, rather insistence. when i see back , i could have made better, if i could understand the euphoria of 2007 . or if somebody would have decided to start the equity mf investment with lump sum a/m at that time, so this query. let me clarify that i never feel that equity had me kept financially weak , though not made fortune. on the contrary , i feel , whatever financial comfort is with me, is due to equity, and some basics followed: not fond of life insurance policies of our time due to reading Shanbag’s In Wonderland of Investment, never trading equity etc. etc. forgive in case boring!

    1. Thank you for your detailed response. Half the people who ask questions in this forum don’t even have the courtesy to reply back. There are only two ways out:

      1. Read more about successful stock investing, attend workshops by people who have successful value investors etc.

      2. Just hand over the reins to a good portfolio manager and relax.

      if I were you I do both. Let someone manage my money while I read more about it. I think your son should definitely practice no. 1 if he is not doing so.

      1. bharat shah says:

        thank you for your suggestions.

  7. Ramesh says:

    Nothing to add to Pattu’s comments.
    Once you have settled on this plan, financial planning becomes boring and that is the way it should be.

  8. bharat shah says:

    thank you very much for your inputs FFC. something you narrated are simple but meaningful pointers to follow , as i think. honest investment bloggers are many, including you, as per me. however this refers to one of recent posts of our beloved subra.
    hope other knowledgeable friends on this blog Ramesh, Ashal, Jagdish and others may put their views.

    1. Max % of Subras equity investments are in direct equity. He has 33 years experience in direct equity. He can afford to do any kind of tactical asset allocation he is comfortable with. Such things are not for everyone. Pick a good mutual fund, invest regularly, monitor regularly, rebalance occasionally but periodically. This is good enough for me. I will never get Subras CAGR of 23%. I don;t need it. You will have to look at your own situation and do what is best for you.

  9. Investing more when the Sensex dips by say 2% makes sense. You only need to see any online sensex chart for that.

    tactical asset allocation where an individual exits equities when the PE ratio of the index is above 25 or so and reenters around 14 sounds good in principle. In practice it not so easy on day to day basis.

    If you do want to do this it has to be with lumpsum investments. With SIP you will have issues of tax and exit loads on entry and exit.

    The idea of a SIP is not to worry about tactical asset allocation. Simple rebalancing every 1-3 years should be enough.

    Who are these ‘honest investment bloggers’?

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