Sir, My son is Architect by profession, having own firm since 10 years. His turnover is 80 l last year. His monthly recurring expenses are 2 l per month, which includes car loan, odd loan, salaries, disel charges, food expenses and mis. expenses.Gross income is 3 l per month. Please suggest him how to increase his business to 50 cr. In 2025, investment planning he is 33 year old. Unmarried.

Ans: It's great that your son has started earning, and it's essential to guide him on saving and investing for the future. Here's a step-by-step investment plan tailored for him:

Emergency Fund: Start by building an emergency fund equivalent to 3-6 months of expenses. This fund should be easily accessible, like a savings account or a liquid fund.
Debt Repayment: If he has any high-interest debts like credit card bills or personal loans, it's wise to clear those first to avoid paying hefty interest.
Investment Options:
Equity Mutual Funds: For long-term wealth creation, he can start SIPs in diversified equity funds. A mix of large-cap, mid-cap, and multi-cap funds can provide growth.
PPF (Public Provident Fund): A tax-efficient and safe option for long-term savings with a lock-in period of 15 years.
NPS (National Pension System): A retirement-focused investment with tax benefits, offering a mix of equity, corporate bonds, and government securities.
Term Insurance: Since he's working, consider getting a term insurance plan to ensure financial security for his dependents.
Health Insurance: A comprehensive health insurance plan to cover medical emergencies can provide financial security and tax benefits.
Budgeting and Savings: Encourage him to create a monthly budget to track expenses and identify areas to save. Automating investments through SIPs can also help in disciplined saving.
Financial Education: Educate him about the importance of financial planning, saving, and investing. Encourage him to read books or attend workshops on personal finance.
Starting early with disciplined saving and investing can help him build a substantial corpus over time. Encourage him to consult a financial advisor for personalized guidance tailored to his financial goals and risk tolerance.

Ans: Given your financial situation and goal to save for your son's higher education, you can consider the following approach:

Start by creating an emergency fund equivalent to 6-12 months of your expenses.
Allocate a portion of your monthly income towards systematic investment plans (SIPs) in equity mutual funds. Aim for a diversified portfolio with a mix of large-cap, mid-cap, and multi-cap funds to balance risk and return.

Regularly review and adjust your investment strategy based on changing market conditions and your financial goals.
With disciplined saving and prudent investment choices, you can aim to accumulate a corpus of 50 lakhs to 1 crore over the next 4-5 years for your son's higher education.

Ans: You have created a very good foundation for your son. At 26 years, he is already earning a healthy salary. He is also disciplined with his investments. This is an excellent start. Many people take years to start. He has started at the right time. With right strategy, his goal of Rs 1 crore in 5 years is possible. Let me share a 360-degree approach for his investments.

» present financial picture

– Monthly income is Rs 1.8 lakh.
– Monthly SIPs already at Rs 40,000.
– Monthly expenses at Rs 40,000.
– He plans emergency fund of Rs 2 lakh in FD.
– Additional Rs 70,000 is available for investment.

This shows strong surplus. His savings ratio is very high. At this age, it is a big advantage.

» emergency fund and liquidity

Emergency fund is important. Rs 2 lakh FD is a good beginning. But emergency fund should be at least 6 months of expenses. That means close to Rs 2.5 to 3 lakh. He can keep some in FD and some in liquid mutual funds. This ensures liquidity and better returns than just FD.

Emergency money must stay safe. Do not touch for other goals. This gives peace of mind.

» risk profile and time horizon

He is young and has 5 years horizon for the Rs 1 crore target. With age on his side, he can take higher exposure to equity. But we should balance risk. Goal is short term in equity terms. So we must not go 100% equity. A mix of equity and debt is safer.

For wealth creation in 5 years, equity mutual funds can work. But we must combine with debt funds for stability.

» existing sips assessment

Currently he invests Rs 25,000 and Rs 15,000. Together Rs 40,000. This is good start. If these are in equity mutual funds, then they are well placed. But he must review if these are actively managed funds.

Index funds look attractive for low cost. But they have clear disadvantages. Index funds simply follow market. They cannot outperform. They also carry market risks fully. Actively managed funds are better. They are run by experienced managers. They can select best stocks and sectors. They also reduce risk by active allocation. So continuing with good active funds is wiser.

» investment allocation for new surplus

He can invest extra Rs 70,000 per month. The allocation should be balanced:
– Around Rs 50,000 in diversified equity mutual funds.
– Around Rs 20,000 in debt mutual funds or short-term funds.

This balance reduces volatility. It also ensures steady growth.

» why avoid direct funds

Direct plans look attractive with lower expense ratio. But direct investing has hidden challenges. Without guidance, investors choose wrongly. Regular plan through a Certified Financial Planner gives professional monitoring. It ensures portfolio rebalancing at right time. It avoids costly mistakes. The extra expense is like insurance for portfolio. The long-term benefits are far higher.

» taxation perspective

For equity funds, new rules apply. If held over 1 year, gains are long-term. Above Rs 1.25 lakh, LTCG is taxed at 12.5%. Short-term gains are taxed at 20%. For debt funds, both STCG and LTCG are taxed at income slab. So he should hold equity funds for at least 1 year. This will reduce tax burden. He should also plan redemptions smartly to keep tax low.

» goal planning for Rs 1 crore

He wants Rs 1 crore in 5 years. With Rs 40,000 SIP and Rs 70,000 extra SIP, total becomes Rs 1.1 lakh monthly. With disciplined equity exposure, reaching Rs 1 crore is realistic. Returns from active funds can compound. But he should not expect straight line growth. There will be volatility. Staying invested is key.

» diversification strategy

He should spread across:
– Large-cap equity funds for stability.
– Mid-cap equity funds for higher growth.
– Hybrid funds for balance.
– Debt funds for safety.

This avoids concentration risk. It ensures smoother growth.

» review and monitoring

Portfolio must be reviewed once a year. Not more frequent, not less. Review should check:
– Fund performance compared to peers.
– Allocation balance as per goal.
– Any need for rebalancing.

If a fund underperforms consistently, it should be replaced. Otherwise, stay patient. Switching too often destroys returns.

» insurance protection

Before wealth creation, protection is must. He should take term insurance. At his age, premium will be low. Cover should be at least 15 times annual income. Also health insurance is compulsory. Even if employer provides, buy one personal cover. Emergency fund, term cover, health cover form a shield. Only after that, investments grow safely.

» behaviour discipline

Most investors fail not due to markets, but due to behaviour. He should stay calm during market falls. He should avoid stopping SIPs. He should avoid withdrawing early. He should not chase latest hot fund. He should trust the process. Patience is the biggest wealth builder.

» retirement and long-term vision

Though current goal is Rs 1 crore in 5 years, he must also plan long-term. Retirement will need a much larger corpus. Starting early gives huge advantage. Even after reaching Rs 1 crore, he must continue SIPs. Wealth creation is not one-time. It is a lifelong journey.

» tax saving investments

He can use tax saving mutual funds under 80C. These give equity exposure with tax benefit. But he must not overinvest only for tax. Tax saving is secondary. Wealth creation is primary.

» lifestyle management

His expenses are Rs 40,000 now. They will grow with lifestyle. But he should avoid lifestyle inflation eating into savings. Saving rate should always stay above 40%. This habit will ensure financial freedom early.

» asset allocation principle

Asset allocation is the engine of growth. Equity gives power. Debt gives balance. A young investor can keep higher equity. But since goal is only 5 years, some debt is needed. 70:30 ratio works well. Closer to goal, reduce equity. Increase debt. This protects the corpus.

» importance of goal-based investing

Every investment should be tied to a goal. Here, goal is Rs 1 crore in 5 years. But he may also have goals like car, house, marriage, retirement. For each, create separate portfolio. This avoids confusion. It also ensures right allocation.

» mistakes to avoid

– Do not stop SIPs midway.
– Do not chase quick returns.
– Do not depend only on FD.
– Do not take tips from friends.
– Do not mix insurance with investment.

Avoiding these mistakes is half the success.

» finally

Your son has strong base. At 26, he is already ahead. With Rs 1.1 lakh monthly SIP, disciplined investing and balance, his Rs 1 crore target in 5 years is achievable. He must stay patient, review yearly, and trust the process. He must continue beyond 5 years for bigger wealth. His early start is his biggest gift. This will give him financial freedom sooner than most people.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment