Monday Queries (6th August, 2018)

I invested in mutual funds through systematic investment plans (SIPs) in April 2018, The funds are: HDFC Top 100 Fund (Rs 2,000), Reliance Large Cap Fund (Rs 2,500), Kotak Multicap Fund (Rs 2,500), HDFC Mid-Cap Opportunities Fund (Rs 2,000) and Sundaram Mid Cap Fund (Rs 1,000). How much more do I need to invest every month to accumulate Rs 2 crore after 12 years?

Since you have not mentioned the duration of your SIP, we assume that you would continue these SIPs for the next 12 years. We cannot predict exact returns from equity markets, but considering an expected average return of 15 per cent per annum in line with index performance since inception, you should invest Rs 50,000 per month in such SIPs to achieve your goal. Alternatively, you may use SIP calculators available online for advance calculations.

I am 26 years old and my annual income is between Rs 5 lakh and Rs 5.5 lakh per annum. I have been working for the past two years and have Rs 1 lakh in my Public Provident Fund and about Rs 3 lakh in cash. I plan to invest in mutual funds through systematic investment plans and direct shares. How should I plan my portfolio? I need advice on long-term investment and a good option for liquid money.

Looking at your age, a regular income source and risk appetite, you should start investing through SIP in equity mutual fund to meet your long-term objectives. For your short-term requirements, shift your money from your bank account to mutual fund liquid funds that offers both liquidity and better returns. Even starting systematic transfer plans (STPs) from liquid funds to equity funds in current scenario may be a good option.

When buying mutual fund online, how can I ensure that the SIP amount will be automatically taken from my bank every month? Is it possible to increase or reduce the SIP once started without redemption? Is a top-up SIP plan advisable? I have read that one should buy extra units of funds when the market falls. How can I do that? Can I make one-time purchase and add it to my existing funds?

As you have not mentioned the online platforms through which you invest in mutual funds, we assume that it is on direct platform. A majority of online platforms offers lump sum or SIP option for investing. When you set up SIP, it requires bank mandate/national automated clearing house (NACH) to enable auto execution of SIP amount - from your linked bank account to SIP investments - at a chosen frequency. In case you require a change to a higher amount, you can start new SIPs in small denominations in the same fund. You can stop anytime when you want to reduce investment. You can even accumulate more units of the same mutual fund through lump sum investments in case the market falls.

I am salaried employee. I trade in futures and options (F&O) and intraday. In my IT return, I have filed F&O as short-term capital gain. Should it be business income? My turnover in F&O is about Rs 40 lakh which ended up in loss. Do I need to file an audit?

F&O trades are treated as business loss or income, and tax computations are done as per final output income. For example, if there is loss in F&O, this can be adjusted to business income and taxability can be reduced to that extent. Tax-related matters have to be assessed by a chartered accountant. We request you to get tax filing done by an expert.

I am a 44-year-old non-resident Indian living in Oman. I recently bought a Mirae Asset India Equity Fund Direct Plan (G) through the Mirae Asset website. I wanted a SIP, but I am unsure whether the plan I have chosen is a lump sum or SIP. How can I review my investment portfolio and take corrective action? What is that we have to review, whether these are long-term investments or goal-based, and if both, how?

You can review your mutual fund holdings by comparing annual performance of your fund with their benchmarks and peers of the same segment. Higher alfa funds indicates their efficiency to beat benchmark returns. Goal-based investments in mutual funds should be reviewed on the basis of time of their planned achievement. Long-term goal-based investments through SIP does not require frequent review and change. A majority of open-ended funds allows both lump sum and SIP mode of investments. You can even choose to get your portfolio reviewed in detail by industry experts.