Please advice me on the best SIP to invest on monthly basis to earn 1 crore in 3 years

Ans: I have no idea about your age, future financial goals, your risk profile and your existing investments. So, while giving one suggested solution to you, I’m assuming that you’re young (less than 40 years of age), are open to equity investing, have a long term horizon of at least 7 years or more and would have the nerves to not get unduly perturbed if markets go temporarily down.

Very first point to note is that when you write that you’re investing for 20 years, please do imbibe it into your thinking too that you’re in it for a very long term. Typically, investors change their investing horizon as per the market conditions – if markets remain good, they’re long term players, if markets turn down, they start exiting in panic and become short term players. Please remember that markets will always give great returns only if you ‘spend time in the markets, rather than try timing the market’.

Since you’re just 37 years old, you have a huge age advantage (those younger have even more advantage!) – use it to your benefit. I have no idea about your other investments, your future financial goals and your risk profile (implying how much volatility are you comfortable with in the markets).

So, I’m just giving you a high-equity portfolio which is a long term portfolio but needs to be reviewed and maybe rebalanced every year. I’m also assuming that you have no other funds or equity.
The portfolio that I would suggest is:-
1. Large Cap - 20% of SIP amount - HDFC Index Fund
2. Flexicap – 20% - Parag Parikh Flexicap Fund
3. Midcap – 20% - Kotak Emerging Equity Fund
4. Aggressive Hybrid – 20% - Canara Robeco Equity Hybrid Fund
5. Small Cap – 20% - SBI Small Cap Fund

In the above portfolio, the last, Small Cap category, will be very volatile and you will need to get used to it. If you’re not up to its gyrations, stick to first four with 25% allocation each.

Ans: The funds will depend on your future requirements and the time duration of your investment.
Generally for a younger age group who has a time horizon of 7 years + , one can invest in small caps, mid caps and thematic funds.

Ans: start with a large cap mutual fund any 4 + star rated one

Ans: Congratulations on your commitment to financial planning! Let's embark on a journey to design a strategic investment plan that aligns with your long-term goals.

Assessment of Financial Goals

Understanding your financial aspirations is crucial for devising an effective investment strategy. By comprehensively assessing your goals, risk tolerance, and investment horizon, we can tailor a plan to suit your needs.

Evaluation of Current Financial Situation

Before charting the course ahead, let's evaluate your current financial landscape. This involves analyzing your income, expenses, existing investments, and liabilities to gain a holistic understanding of your financial standing.

Strategic Asset Allocation

Based on your risk appetite and investment horizon, we'll craft a diversified portfolio comprising a mix of asset classes such as equities, debt instruments, and alternative investments. This balanced approach aims to optimize returns while mitigating risks.

Benefits of Actively Managed Funds

Actively managed funds offer several advantages over passive index funds or ETFs. They are overseen by experienced fund managers who actively research and select investments, aiming to outperform the market. This proactive approach can potentially generate higher returns and adapt to changing market conditions.

Risks of Direct Funds vs. Benefits of Regular Funds through MFD with CFP Credential

Investing directly in mutual funds may seem convenient, but it comes with inherent risks such as lack of professional guidance, emotional decision-making, and inadequate diversification. On the other hand, investing through a Certified Financial Planner (CFP) accredited Mutual Fund Distributor (MFD) offers several benefits, including personalized advice, goal-oriented planning, and access to a diversified range of funds tailored to your needs.

Exploring Investment Avenues

With a strategic framework in place, let's explore various investment avenues suited to your goals and risk profile:

Equity Mutual Funds: These funds offer long-term growth potential by investing in a diversified portfolio of stocks across different market segments. They are ideal for investors with a higher risk appetite and a long-term investment horizon.

Debt Mutual Funds: Debt funds provide stability and regular income through investments in fixed-income securities such as government bonds, corporate bonds, and money market instruments. They are suitable for conservative investors seeking capital preservation and steady returns.

Systematic Investment Plans (SIPs): SIPs offer a disciplined approach to investing, allowing you to invest small amounts regularly over time. This systematic investment strategy harnesses the power of compounding and helps in rupee cost averaging, reducing the impact of market volatility.

Conclusion

By adopting a strategic investment approach, leveraging the expertise of a Certified Financial Planner (CFP), and diversifying your portfolio across various asset classes, you can pave the way for long-term financial success and achieve your life goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Investing in a Systematic Investment Plan (SIP) is a wise decision for securing your financial future. At 44 years old, you have a 15-year horizon for your SIP investment of Rs. 5000 per month. This long-term approach can yield significant returns due to the power of compounding. Let's explore how you can optimize your SIP investment strategy.

Genuine Compliments and Understanding
Your decision to invest regularly and plan for the long-term is commendable. It's never too late to start, and your foresight will benefit you greatly in the years to come.

Understanding SIPs and Their Benefits
What is a SIP?
A SIP allows you to invest a fixed amount regularly in a mutual fund scheme. This methodical investment helps in building wealth over time without the stress of market volatility.

Benefits of SIPs
Rupee Cost Averaging: SIPs reduce the risk of market volatility by averaging the cost of your investments over time.
Power of Compounding: Regular investments grow exponentially due to compounding, especially over a long period.
Financial Discipline: SIPs inculcate a habit of regular saving and investing.
Evaluating Your Financial Goals
Long-Term Goals
Your primary goal is to achieve a substantial corpus after 15 years. This corpus can serve various purposes such as retirement, children's education, or other financial aspirations.

Selecting the Right Mutual Funds for SIP
Equity Mutual Funds
Equity mutual funds are suitable for long-term investments due to their potential for higher returns. These funds invest in stocks of companies, aiming for capital appreciation.

Types of Equity Funds
Large-Cap Funds: Invest in large, established companies with a stable performance history.
Mid-Cap Funds: Invest in medium-sized companies with high growth potential but slightly higher risk.
Small-Cap Funds: Invest in smaller companies that can offer high returns but come with higher risk.
Multi-Cap Funds: Invest in companies of all sizes, providing a balanced approach to risk and return.
Actively Managed Funds vs. Index Funds
Disadvantages of Index Funds
Index funds track a specific index and offer average returns matching the index performance. They lack the flexibility to adapt to market changes.

Advantages of Actively Managed Funds
Actively managed funds, guided by professional fund managers, aim to outperform the market. Fund managers make strategic decisions based on market analysis, potentially offering higher returns.

Importance of Professional Guidance
Consulting a Certified Financial Planner
A Certified Financial Planner (CFP) can provide personalized advice tailored to your financial goals and risk tolerance. They help in selecting the right mix of funds to optimize your investment portfolio.

Diversification for Risk Management
Diversified Portfolio
Diversifying your investments across various types of equity funds mitigates risk. A well-diversified portfolio balances potential high returns with the stability of safer investments.

Systematic Withdrawal Plan (SWP) for Future Stability
As you approach your financial goals, consider a Systematic Withdrawal Plan (SWP) to withdraw your investments in a structured manner. This ensures a steady income stream without depleting your corpus rapidly.

Monitoring and Adjusting Your Investment
Regular Review
Periodically review your investment portfolio to ensure it aligns with your goals. Market conditions and personal financial situations change, and your investment strategy should adapt accordingly.

Rebalancing
Rebalance your portfolio if certain funds significantly outperform or underperform. This maintains the desired asset allocation and risk level.

Tax Efficiency
Tax Planning
Effective tax planning enhances your returns. Equity mutual funds held for more than a year qualify for long-term capital gains tax, which is lower than short-term gains tax.

Emergency Fund and Insurance
Maintaining an Emergency Fund
Ensure you have an emergency fund equivalent to 6-12 months of expenses. This safeguards against unforeseen financial needs without disturbing your investments.

Adequate Insurance Coverage
Having adequate health and life insurance protects your financial plan. Insurance coverage ensures that unexpected medical expenses or unfortunate events do not derail your financial goals.

Conclusion
Your decision to invest Rs. 5000 per month in SIPs for 15 years is a strategic move towards financial security. By selecting the right equity mutual funds and diversifying your portfolio, you can achieve substantial returns. Regular monitoring, tax planning, and professional guidance will further enhance your investment strategy.

Your commitment to investing for the long-term is commendable. With careful planning and disciplined execution, you can achieve your financial aspirations and secure a stable future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in