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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 24, 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 - Jun 23, 2025Hindi

I am 38 years old,I have a baby boy 9 months old ,where can I invest for his future,also I have to plan for a home,My annual income is around 15 lakhs.No loans or Emi s

Ans: You are 38, with a 9-month-old baby boy. Your annual income is Rs. 15 lakhs. You have no loans or EMIs. You want to plan for your child’s future and buy a home.

This is a very good stage to start. You have good cash flow and zero debt. With structured planning, you can create wealth for your family. Let's look at your goals in a detailed and simple way.

Understand Your Financial Priorities First
Your child’s future.

Buying a home.

Creating an emergency reserve.

Saving for your retirement.

You need to balance these well. Investing without clarity may create confusion later.

Begin With a Strong Emergency Fund
Keep at least 6 to 12 months’ expenses in a liquid fund.

This includes rent, food, medical, school, and monthly needs.

Park this money in a low-risk mutual fund, not in a savings account.

Don’t invest this fund in equity mutual funds or ULIPs.

Emergency fund gives peace of mind during job loss or health issues.

Take Health Insurance Before Investing
Cover yourself, your spouse, and your baby.

Go for a family floater policy with at least Rs. 10 lakh sum insured.

Pick a reputed insurer with fast claim settlement.

Don’t rely only on employer-provided cover. Personal policy is a must.

Secure Your Family With Term Insurance
A term insurance of Rs. 1 crore or more is needed.

Premium is low if you buy early.

Buy till your child turns 25 or you reach 60.

This will protect your child’s future in your absence.

Create a Dedicated Child Education Fund
You have around 17 years to plan. Start now to gain from compounding.

Ideal Investment Approach:
Start SIP in diversified equity mutual funds.

Choose funds with long-term performance across market cycles.

Review every 12 months with a Certified Financial Planner.

Don’t invest in ULIPs or traditional LIC policies.

If you already have them, it is better to surrender and reinvest in mutual funds.

Why Mutual Funds Are Better for Child’s Education
Mutual funds offer higher growth than fixed deposits or LIC.

Equity funds beat inflation in the long term.

You get flexibility, transparency, and liquidity.

Avoid child insurance plans. They give poor returns and low coverage.

Why You Should Avoid Index Funds for Child Goals
Index funds are passive. They copy the market. No fund manager is involved.

Problems with index funds:

Cannot manage risk actively.

Underperform in falling markets.

No protection against poor-performing sectors.

Instead, go with actively managed equity funds. A good fund manager can avoid weak sectors and ride strong trends.

This is very helpful in long-term goals like child education.

Why Direct Funds May Not Suit You
Direct funds have lower expense ratio. But they come with responsibility.

Disadvantages of Direct Funds:

No guidance from an expert.

You have to do all research and portfolio rebalancing.

You may exit too early or stay too long due to lack of advice.

Instead, invest through a Certified Financial Planner via a regular plan. He will:

Monitor your goals.

Switch your funds when needed.

Keep your emotions in check during market ups and downs.

The small cost of regular plan gives huge value in goal achievement.

Home Purchase Planning – Do This Smartly
First, decide how much house you want to buy.

Set a timeline for buying (3 years, 5 years, etc).

If buying within 3 years, use low-risk debt mutual funds.

Don’t invest this amount in equity mutual funds or stocks.

For a longer horizon (5+ years), use aggressive hybrid mutual funds:

65–80% equity + 20–35% debt.

Less risky than pure equity but better than FD.

As you get closer to your home buying date, slowly move funds to debt mutual funds.

Avoid Real Estate as Investment
Buy a house for use, not for investment.

Real estate has problems:

Low liquidity.

High maintenance costs.

Poor transparency.

Long holding period.

For wealth building, mutual funds are better.

Set Up a SIP-Based Monthly Investment Plan
Assume you can invest Rs. 50,000 per month from your income.

You can split this way:

Rs. 25,000 in equity mutual funds for child education.

Rs. 15,000 in hybrid mutual funds for future home.

Rs. 10,000 in debt mutual funds for short-term goals.

If you start early and stay disciplined, you can reach all goals easily.

Keep Reviewing With a Certified Financial Planner
Financial plans are not fixed. Life situations change.

Review your goals every 12 months.

Increase SIP amount with income rise.

Track your funds’ performance regularly.

Rebalance when required.

Only a Certified Financial Planner can do this professionally and without bias.

Taxation Rules You Should Know (For Awareness)
Equity mutual funds: If gains are above Rs. 1.25 lakh in a year, 12.5% tax.

Gains below that – no tax.

Debt mutual funds: Taxed as per your income slab.

So, for child and home goals, keep these tax rules in mind while selling.

Avoid Annuities or Insurance-Cum-Investment Plans
They give low returns (less than 5–6%).

Your money gets locked for many years.

Inflation eats away the value.

Only term insurance + mutual funds work best.

Some Smart Tips to Stay Financially Strong
Don’t mix insurance with investment.

Don’t chase returns. Focus on goals.

Don’t panic in a market crash.

Don’t borrow for luxury.

Don’t take advice from unqualified agents.

Always take help from a Certified Financial Planner for better results.

Finally
You are already doing many things right. You have no debt. You are clear on goals.

Protect your family first with term and health cover.

Build an emergency fund now.

Invest monthly through SIPs in the right mutual funds.

Keep your child’s future as a separate goal.

Don’t delay home planning. Link it to a 3–5 year goal.

Get expert help from a certified person.

Follow this structured path for 2 decades. You will create wealth, peace, and freedom.

Stay disciplined. Keep reviewing. Avoid shortcuts.

You will be financially free. And your child will thank you one day.

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

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.