Which direct stocks should I invest in to prevent overlapping?

1. Is my Mutual Fund (MF) portfolio good or should I change something?

2. If I Can Invest 25-30k per month, what percentage allocation should be in direct stock and MF?

3. If I am already investing in MFs, given the fact that I invest in direct stocks, what type of stocks should I invest in so that there is no overlap?

—Ashutosh Pali

Right now you are investing half of your monthly allocation in large-cap funds, one fourth in flexi-cap funds and the remaining quarter in mid-cap funds. If there is one change I would like to add an international fund to your portfolio in the form of Motilal Oswal S&P 500 Index Fund. However, fresh inflows into international funds have been suspended due to the mutual fund industry reaching the SEBI limit. The limit is expected to be increased soon. You can reduce your large cap fund allocation 2,000 each and investment 4,000 in this fund. This will give you a portfolio with better diversification. Investing in direct stocks can be exciting and educative. However, it can also be risky and requires a lot of attention and maintenance. Therefore, it would be prudent to have no more than 20% of the size of your investment portfolio in terms of direct exposure to stocks. So, if you are investing 30,000 in total, keep your stock investment no more than 6,000. You can proceed with your stock investment step by step to get comfortable and familiar with the process. You can start by investing in a handful of bluechip stocks and observe its movements in relation to the overall market. After a year or two, as your observational and analytical skills get better, you can start trying to pick winners from a large universe or mid and small cap stocks. In the early stages, resist the temptation to engage in initial public offerings.

Shrikant Meenakshi is the founder of Primeinvestor.in.