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Ramalingam Kalirajan |11062 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jul 02, 2025Hindi

Hi, I'm 37 years old and have one kid studying in 1st std. My yearly income is 12lk , and currently i have invested around 20lk in 4 mutual funds, one is index fund, one is small, one is blue chip and another is flexi cap, have a ppf and invested around 8lks in bonds, i dont have debt. My plan is to earn around 25 crore. Can i achieve this goal if yes by when? Or need more investments?

Ans: Understanding Your Current Financial Position
– You are 37 years old with one child in primary school.
– Annual income is Rs. 12 lakhs, which means Rs. 1 lakh per month.
– You have no debt, which is excellent.
– You have invested Rs. 20 lakhs in 4 mutual funds.
– You have a PPF account and Rs. 8 lakhs in bonds.

That gives you a solid foundation to build on.

Evaluating Your Existing Investment Portfolio
– Your portfolio includes an index fund, small cap, bluechip, and flexi cap fund.
– This shows you are diversifying well across market segments.
– However, index funds come with certain risks you must know.

Disadvantages of Index Funds
– Index funds don’t protect during market downturns.
– They blindly copy the index, even if some companies are weak.
– There is no active fund manager to manage risk.
– They also don't provide alpha (returns beyond the index).
– Volatility is high in market crashes.

You may want to replace index fund with an actively managed one.

Actively Managed Funds Are Better Because:
– Fund managers make timely decisions based on market conditions.
– They aim to outperform the benchmark.
– Active funds can control downside risk better.
– The performance gap widens over longer durations.

For wealth creation, active fund management is more reliable.

Portfolio Type and Fund Access Mode
– If you are investing through direct plans, consider switching to regular plans.
– Direct plans don’t come with personalised support.
– No monitoring or rebalancing guidance is available.
– Also, switching between funds is not properly timed.
– Mistakes in selection and exit strategy are common.

Why Regular Plans Through a Certified Financial Planner Help:
– A Certified Financial Planner (CFP) offers 360-degree guidance.
– You get timely rebalancing, tax planning, and asset allocation support.
– It avoids emotional decisions during market swings.
– CFPs help you align funds to life goals.
– Long-term partnership makes wealth creation disciplined.

Current Asset Summary and Assessment
– Rs. 20 lakhs in mutual funds (diversified across categories).
– Rs. 8 lakhs in bonds, which are safe but low yielding.
– PPF is also a long-term safe asset, but with moderate returns.
– Total financial investments = around Rs. 30+ lakhs.

Your savings pattern is positive, but the target is extremely high.

Your Wealth Goal Assessment: Rs. 25 Crores
– Rs. 25 crore is a very large target.
– Achieving this needs long-term, consistent investments.
– You need higher annual savings and strong equity allocation.
– We need to check both contribution and compounding factors.

Let’s examine whether your current investments are enough.

How Time and Investment Growth Work Together
– You are 37 now.
– Let’s assume you plan to invest for 18 more years till age 55.
– This gives you a medium to long horizon.
– However, just relying on current savings may fall short.
– More contribution is needed to reach Rs. 25 crores.

Let us assess what can be changed to reach the goal.

Income and Savings Pattern Evaluation
– You are earning Rs. 1 lakh per month.
– From that, we don’t know your monthly investment.
– Let’s assume you are saving Rs. 25,000 to Rs. 30,000 monthly.
– At this rate, and with a good return, corpus may reach around Rs. 3.5 to Rs. 4.5 crores in 18 years.
– That’s still far from Rs. 25 crores.

So yes, goal is possible, but only with more savings and discipline.

Needed Change in Investment Contribution
– You need to aim for saving at least Rs. 60,000 to Rs. 70,000 per month.
– That is 60% to 70% of income, which may not be practical now.
– Hence, increasing income should be the parallel focus.
– Also, look for lump sum investments from bonuses or gifts.

Every rupee saved early compounds better later.

Strategy for Mutual Fund Portfolio Optimisation
– Retain small cap, flexi cap, and bluechip exposure.
– Replace index fund with an actively managed large or multi cap fund.
– Keep asset allocation to 70% equity, 20% fixed income, 10% gold.
– Rebalance once a year.

You may need 5-6 diversified funds, not more.

Role of PPF and Bonds in Your Portfolio
– PPF and bonds are safe and long-term oriented.
– PPF helps with retirement and tax saving.
– Bonds give capital protection, but returns are limited.
– You should not increase allocation to bonds beyond 20%.
– Keep equity exposure dominant for wealth creation.

Security is important, but growth is crucial to reach Rs. 25 crores.

Child's Education Planning
– Your child is in 1st standard now.
– You have 10 to 12 years before higher education costs arise.
– This is a defined goal, and must be planned separately.

What you should do:
– Start a separate SIP for child’s education.
– Avoid using current portfolio for this goal.
– Choose long-term equity funds to beat education inflation.
– Increase SIP amount every year.

This avoids goal compromise later.

Retirement Planning Parallelly
– If you plan to retire early, start planning now.
– Rs. 25 crores may include retirement too.
– In that case, don’t use this corpus for child goals.
– For retirement, equity-oriented funds are essential.
– You can also invest in NPS up to Rs. 50,000 for tax benefits.

Separate goals mean focused and accurate planning.

Tax Impact on Mutual Funds (New Rules)
– Long term capital gains (LTCG) on equity above Rs. 1.25 lakhs is taxed at 12.5%.
– Short term gains are taxed at 20%.
– Debt mutual funds are taxed as per income tax slab.
– Plan redemptions to avoid unnecessary tax outgo.

Tax planning must go hand in hand with investment planning.

Emergency Fund and Risk Management
– Ensure you have 6 to 9 months of expenses in emergency funds.
– This keeps your mutual funds safe from panic withdrawals.
– Also review health and life insurance coverage.
– You are the primary earner, so protection is essential.

Insurance is not investment. Keep them separate.

Goal Tracking and Course Correction
– Review your investment progress every year.
– Track your net worth and adjust SIPs.
– If income increases, raise SIPs proportionately.
– Use tools or consult a Certified Financial Planner for help.

Regular tracking ensures you stay on course.

Avoid Common Mistakes in Wealth Creation
– Don’t chase returns. Focus on discipline.
– Avoid frequent switching of funds.
– Don’t fall for exotic products like ULIPs, traditional plans, or endowment policies.
– Don’t stop SIPs in market corrections.
– Don’t take advice from social media blindly.

Focus, discipline, and patience are key.

Finally
– Rs. 25 crore is achievable but very ambitious.
– Your current investments are not enough to reach that number.
– You must increase monthly savings steadily.
– Avoid index funds and direct plans.
– Use regular plans and work with a Certified Financial Planner.
– Separate goals clearly—education, retirement, wealth building.
– Focus on equity, reduce bond exposure.
– Track every year, and adjust as needed.

With effort, focus, and guidance, your goal can turn into reality.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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