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Ramalingam Kalirajan |7070 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 18, 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 Paul on May 13, 2024Hindi

Hi Sir, My age is 35yrs, I have a 7 year old daughter, i want to achieve 10lakhs at the time of her college education that is 16 or 17years. I have 8 years from now, please suggest the best investment option with low risk to achieve my target.

Ans: Your foresight in planning for your daughter's education demonstrates your commitment to her future well-being.

Analysis:
With an 8-year time horizon, it's crucial to balance risk and return to achieve your financial goal effectively.
Low-Risk Investment Options
Evaluating Fixed Income Instruments:
Sovereign Bonds or Government Securities:

Government bonds offer a low-risk investment option with guaranteed returns, providing stability to your investment portfolio.
Debt Mutual Funds:

Debt mutual funds invest in fixed-income securities like bonds and treasury bills, offering relatively stable returns compared to equity investments.
Assessing Systematic Investment Plans (SIPs):
Balanced Mutual Funds:

Balanced funds allocate assets between equities and fixed income securities, offering a blend of growth potential and capital preservation suitable for medium-term goals.
Short-term Debt Funds:

Short-term debt funds invest in debt securities with shorter maturities, providing stability and predictable returns over the investment period.
Advantages of Low-Risk Investments:
Capital Preservation:

Low-risk investments prioritize the safety of your capital, reducing the potential for significant losses due to market volatility.
Steady Growth:

While low-risk investments may offer modest returns, they provide consistent growth over time, helping you achieve your financial goals with minimal exposure to market fluctuations.
Understanding the Impact of Inflation:
Inflationary Pressure:
While low-risk investments offer stability, it's essential to consider the impact of inflation on the purchasing power of your savings over time. Adjust your investment strategy accordingly to ensure your goals are met.
Conclusion
Considering your goal of accumulating 10 lakhs for your daughter's education in 8 years, low-risk investment options such as sovereign bonds, debt mutual funds, and balanced funds can help you achieve this target while prioritizing capital preservation and steady growth. However, it's advisable to consult with a Certified Financial Planner to tailor an investment plan that aligns with your risk tolerance, financial objectives, and time horizon.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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