I need to get 5 crore in 15 years for my children higher study.. Marriage and my early retire... How much should I invest in mutual fund to achieve the target.... My current income is 2 lakh per month and monthly expenses of 1.7 lakh per month

Ans: Firstly, let me commend you on your foresight in planning for your children's higher education, marriage, and your early retirement. It's crucial to start early and set clear financial goals to ensure a secure future for yourself and your loved ones.

Understanding Your Financial Goal

Your goal of accumulating ?5 crore in 15 years for various life events requires careful financial planning and disciplined savings. It's essential to assess your current financial situation and determine the required investment amount to achieve this target.

Analyzing Income and Expenses

Your monthly income of ?2 lakh and expenses of ?1.7 lakh indicate a healthy surplus that can be utilized for investments. It's commendable that you have a comfortable margin between your income and expenses, which provides room for savings and investments.

Estimating Required Investment Amount

To estimate the required investment amount to accumulate ?5 crore in 15 years, we need to consider factors such as:

Time Horizon: With a 15-year investment horizon, you have a reasonable timeframe to achieve your goal, allowing you to benefit from the power of compounding.

Rate of Return: The expected rate of return on your investments plays a crucial role in determining the required investment amount. While past performance is not indicative of future results, historical data can provide insights into potential returns.

Systematic Investment Plan (SIP): Investing through SIPs allows you to regularly invest fixed amounts over time, leveraging the benefits of rupee cost averaging and compounding.

Calculating Required Monthly Investment

Based on the estimated rate of return and investment horizon, we can calculate the required monthly investment amount to achieve your target corpus of ?5 crore in 15 years. By factoring in the power of compounding, we can determine the optimal investment strategy to reach your financial goal.

Assuming a conservative rate of return on your investments, we can use financial planning tools to calculate the monthly SIP amount needed to accumulate ?5 crore in 15 years. By inputting variables such as the expected rate of return, investment duration, and target corpus, we can arrive at the required monthly investment amount.

Benefits of Actively Managed Funds

Actively managed mutual funds offer several advantages over passive index funds or ETFs:

Professional Management: Skilled fund managers actively monitor market trends and adjust portfolio allocations to capitalize on growth opportunities, potentially leading to higher returns.

Customized Strategies: Actively managed funds employ dynamic investment strategies tailored to market conditions and investment objectives, providing investors with a personalized approach to wealth accumulation.

Disadvantages of Direct Funds

Direct funds require investors to research and select funds independently, which can be time-consuming and challenging for those with limited financial knowledge. Additionally, the absence of professional advice may result in suboptimal investment decisions and higher risks.

Benefits of Regular Funds Investing through MFD with CFP Credential

Investing in regular funds through a Certified Financial Planner (CFP) credentialled Mutual Fund Distributor (MFD) offers several benefits:

Professional Guidance: A CFP-certified MFD provides personalized investment advice tailored to your financial goals and risk profile, helping you make informed decisions.

Access to a Wide Range of Funds: MFDs offer access to a diverse range of mutual funds, including both actively managed and index funds, enabling you to build a well-rounded investment portfolio.

Final Words

Achieving a target corpus of ?5 crore in 15 years requires a disciplined savings approach and strategic investment planning. By investing regularly in mutual funds through SIPs and leveraging the benefits of compounding, you can work towards realizing your financial aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in