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Ramalingam Kalirajan |8291 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 30, 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 Chandra on Sep 24, 2023Hindi

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Hi Anil, considering I have two daughter aged 8 and 4, I would like to have a corpus fund of 1 - 2 crore by the time they turn 18 for their education. Can u suggest some funds that I can make a lumpsum investment of INR 10 Lacs or multiple funds where average of 20000 per month can be invested for 5 years. Current investment is with Canara Robeco Small Cap Fund Direct Growth with 10000 Per Month and Mirae Asset Emerging Bluchip Fund Direct Growth 2500 Per Month

Ans: Your goal of creating a corpus fund for your daughters' education is admirable. With a well-planned strategy, you can achieve this target.

Current Investment Overview

You are investing Rs 10,000 per month in Canara Robeco Small Cap Fund and Rs 2,500 per month in Mirae Asset Emerging Bluechip Fund. These funds are strong performers in their categories, which is a good start.

Lump Sum Investment Strategy

Investing Rs 10 lakhs as a lump sum can provide a solid foundation. Consider allocating this amount across multiple funds to diversify and reduce risk. Choose funds with a mix of large-cap, mid-cap, and small-cap exposure.

Monthly SIP Investment Strategy

To build a corpus of Rs 1-2 crore, a disciplined SIP approach is crucial. You can invest Rs 20,000 per month across a diversified set of funds. This systematic approach allows you to benefit from rupee cost averaging and market volatility.

Optimising Fund Selection

Evaluate funds with consistent performance, lower expense ratios, and good historical returns. Diversify across equity, hybrid, and debt funds to balance growth and stability. This blend maximises potential returns while managing risk.

Advantages of Actively Managed Funds

Actively managed funds offer professional oversight, adapting to market changes. This flexibility can result in higher returns compared to index funds, which simply track market indices.

Disadvantages of Index Funds

Index funds lack the professional management that actively managed funds provide. They may not perform well during market downturns, limiting potential returns.

Benefits of Investing through a Certified Financial Planner

A Certified Financial Planner can provide personalised advice and select funds tailored to your goals. They offer expertise in creating a balanced and effective investment portfolio.

Risks of Direct Funds

Direct funds may seem appealing due to lower expense ratios, but they lack the professional guidance available through regular funds. Investing through a certified planner ensures informed decision-making and portfolio management.

Periodic Review and Rebalancing

Regularly reviewing and rebalancing your portfolio ensures it remains aligned with your financial goals. This approach helps optimise returns and manage risks effectively.

Creating a Comprehensive Financial Plan

In addition to mutual funds, consider other aspects like emergency funds, insurance, and tax planning. A holistic financial plan ensures a secure and well-rounded approach to your financial goals.

Monitoring Market Trends

Stay informed about market trends and economic factors. This knowledge helps you make timely adjustments to your investments, maximising returns and mitigating risks.

Conclusion

Your dedication to investing for your daughters' education is impressive. By strategically allocating your lump sum and SIP investments, and seeking professional guidance, you can achieve your goal of building a substantial corpus for their future education needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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