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55-Year-Old Wants Investment Advice for Children's Studies, Wedding, and Retirement

Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

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

Question by ram on Jul 15, 2024Hindi

I am 55 in a pvt company. I want to invest in SIP for a period of 5 yrs to get good returns. My risk appetite is moderate. I need to plan for my 2 children studies, wedding and my retirement. I can invest 50k per month. Please let me know in which Mutual funds I should invest? I have own flat no loans and already saved 70L in FDs. How much corpus I need to get 70k per month .

Ans: Current Financial Position
Age: 55 years
Job: Private company
Risk Appetite: Moderate
Monthly Investment Capacity: Rs 50,000
Existing Savings: Rs 70 lakhs in Fixed Deposits
Goals: Children's education and wedding, retirement planning
No Loans: Own flat
Investment Strategy
SIP Recommendations
Given your moderate risk appetite and a 5-year horizon, a balanced approach is ideal. Here's a structured investment plan:

Balanced Funds: These funds provide a mix of equity and debt. They offer stability and growth.

Large-Cap Funds: These invest in well-established companies. They offer steady returns with lower risk compared to mid-cap or small-cap funds.

Multi-Cap Funds: These invest across large, mid, and small-cap stocks. They offer diversification and potential for higher returns.

Fund Allocation
Balanced Funds: Rs 20,000 per month
Large-Cap Funds: Rs 15,000 per month
Multi-Cap Funds: Rs 15,000 per month
This allocation balances growth and stability, catering to your moderate risk profile.

Planning for Children's Education and Wedding
Education Fund
Time Horizon: Immediate to medium-term
Investment: Continue SIPs and consider partial withdrawals as needed.
Wedding Fund
Time Horizon: 5-10 years
Investment: Maintain current SIPs for 5 years, then assess market conditions for withdrawals.
Retirement Planning
Current Savings
Fixed Deposits: Rs 70 lakhs offers security but low returns. Consider diversifying a portion into mutual funds or other higher-return instruments.
Corpus Needed for Rs 70,000 Monthly Income
Required Corpus: To get Rs 70,000 monthly, you need around Rs 1.75 crore (assuming 5% annual withdrawal rate).
Building the Corpus
Current Investments: Rs 70 lakhs in FDs
SIPs: Rs 50,000 per month for 5 years. This should grow to around Rs 35-40 lakhs, assuming moderate returns.
Recommendations
Actively Managed Funds
Higher Returns Potential: Actively managed funds can outperform the market through expert stock selection.

Professional Management: Funds managed by experienced professionals who adapt to market changes.

Regular vs Direct Funds
Invest Through CFP: Certified Financial Planners offer guidance, helping you navigate market complexities.

Regular Funds Advantage: Though expense ratios are higher, the professional advice can lead to better long-term outcomes.

Risk Management
Diversification
Balanced Portfolio: Diversify across balanced, large-cap, and multi-cap funds. This reduces risk and enhances returns.
Regular Monitoring
Review Investments: Conduct quarterly reviews. Make adjustments based on performance and market conditions.

Rebalance Portfolio: Periodically rebalance to align with your risk profile and financial goals.

Final Insights
Your current financial position is strong. With a well-structured SIP plan and professional guidance, you can achieve your goals. Regular monitoring and a diversified approach will help in mitigating risks and enhancing returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Asked on - Aug 29, 2024 | Answered on Sep 02, 2024

Hello Ramalingam garu, I can invest 60000 per month for 5 years. Could you please advise me which MFs I should invest in? which gives better rewards for my retirement corpus.

Ans: Investing Rs. 60,000 per month for 5 years can significantly boost your retirement corpus. Here’s a recommended approach:

Large-Cap Funds (30% allocation): These funds invest in well-established companies, offering stability and steady returns.
Mid-Cap Funds (25% allocation): Invest in growing companies, offering a balance of risk and reward.
Small-Cap Funds (15% allocation): High potential for growth but with higher volatility. A smaller allocation here can boost overall returns.
Flexi-Cap Funds (30% allocation): These funds adapt to market conditions, providing diversification and balanced risk.
Choose regular funds through a Certified Financial Planner for expert guidance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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