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Ramalingam

Ramalingam Kalirajan  |9854 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 02, 2025

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
Rakesh Question by Rakesh on Jul 02, 2025Hindi
Money

In continuation of above query, I need this amount partially or in full in 4-5 years for kids higher education and current valuation is around 18.5L. As you have mentioned to follow a balanced approach please suggest more on this.

Ans: Since you’ll need the Rs.18.5L in 4–5 years for your child’s education, a balanced and phased exit is the right approach.

Here’s a simple plan:

Move the full amount to a conservative hybrid fund using STP from your current equity fund.

Complete the STP transfer in 6–12 months to reduce market timing risk.

After transfer, let the hybrid fund grow safely for 3–4 years.

Begin Systematic Withdrawal Plan (SWP) in the 5th year to fund education needs.

This way, you protect gains, reduce volatility, and align with your timeline.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |9854 Answers  |Ask -

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

Money
Sir, I am 41 years old. I need fund for my daughter's higher education after 4.5 years and the same for my son after 9.5 years. Kindly suggest me suitable SIP and amount for the same.
Ans: You are 41 years old and need funds for your children’s higher education. Your daughter’s education is in 4.5 years, and your son’s in 9.5 years. These are your primary goals. Ensuring adequate funds for these milestones is crucial. Let's break down how to approach this systematically.

Importance of Goal-Based Investing
Clear Objectives: Your goals are specific and time-bound. This clarity is essential for effective financial planning.

Risk Tolerance: Your risk tolerance should be moderate to high, especially for your son’s education fund. With more time, you can absorb market volatility.

Staggered Investment Strategy: Given the different time horizons, you should use a staggered approach. This means investing differently for each goal based on the timeline.

Investment Strategy for Your Daughter’s Education (4.5 Years)
Moderate Risk Approach: With only 4.5 years, the investment should be cautiously balanced. A mix of equity and debt funds is suitable. Equity can offer growth, while debt ensures stability.

Systematic Investment Plan (SIP): A SIP allows you to invest a fixed amount regularly. This reduces the impact of market volatility and builds your corpus gradually.

Avoid Pure Equity Funds: Pure equity funds are riskier over short periods. Instead, consider a balanced or hybrid approach that reduces risk as the goal nears.

Debt Allocation: As you approach the end of 4.5 years, increase the debt component. This protects your corpus from market fluctuations, ensuring funds are available when needed.

Investment Strategy for Your Son’s Education (9.5 Years)
Aggressive Growth Strategy: With 9.5 years, you can take a more aggressive stance. Higher equity exposure is advisable for potential growth.

Equity Focus: Equity mutual funds should form the core of your investment. They have the potential to deliver superior returns over a longer period.

Review and Adjust: Periodically review your investments. As you approach the 9.5-year mark, gradually shift towards debt funds. This protects the accumulated corpus.

Disadvantages of Index Funds
Limited Flexibility: Index funds simply replicate the market. They lack the flexibility to outperform the index, especially in a volatile market.

Actively Managed Funds Preferred: Actively managed funds offer the potential for higher returns. A skilled fund manager can navigate market fluctuations better, which is crucial for achieving your goals.

Regular Funds vs. Direct Funds
Benefits of Regular Funds: Investing in regular funds through a Certified Financial Planner offers professional guidance. This ensures your investments align with your risk tolerance and goals.

Disadvantages of Direct Funds: Direct funds may appear cheaper due to lower expense ratios. However, they require you to actively manage and monitor your investments, which can be challenging without professional expertise.

Long-Term Impact: Over time, the benefits of professional guidance outweigh the cost differences. It ensures your portfolio remains on track to achieve your goals.

SIP Amount Calculation
Estimate Future Costs: Start by estimating the cost of your children’s education. Consider inflation and the rising cost of education. This gives you a target corpus.

Determine SIP Amount: Based on the target corpus and time horizon, calculate the SIP amount. For your daughter, the SIP should be higher due to the shorter time frame.

Example Strategy: If you aim for Rs 20 lakhs for your daughter in 4.5 years, and Rs 25 lakhs for your son in 9.5 years, the SIP amounts should reflect these targets.

Asset Allocation for Balanced Growth
Diversification: Diversify your investments across different asset classes. This reduces risk and improves the chances of achieving your target corpus.

Equity Allocation: For your daughter, a 60:40 equity-to-debt ratio is advisable. For your son, consider an 80:20 equity-to-debt ratio initially.

Debt as a Stabilizer: As you approach the goal, gradually shift to debt funds. This ensures stability and protects against market downturns.

Importance of Professional Guidance
Certified Financial Planner (CFP): Engaging a Certified Financial Planner can help tailor your investment strategy. They can provide personalized advice based on your financial situation and goals.

Regular Monitoring: It’s essential to regularly monitor and review your portfolio. A CFP can help you adjust your strategy based on market conditions and any changes in your financial goals.

Risk Management
Insurance Coverage: Ensure you have adequate life and health insurance. This protects your family’s financial future in case of unforeseen events.

Emergency Fund: Maintain an emergency fund equivalent to 6-12 months of expenses. This ensures you don’t have to dip into your investments for short-term needs.

Final Insights
Start Immediately: The sooner you start, the better. Time is a critical factor in building a substantial corpus for your children’s education.

Consistency is Key: Stick to your investment plan. Avoid making emotional decisions based on short-term market movements.

Professional Advice: Consult a Certified Financial Planner. Their guidance ensures your investments are aligned with your goals and risk tolerance.

Review and Adjust: Regularly review your investments and adjust as needed. This keeps your portfolio on track to achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9854 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 2024

Money
Greetings!! I am 33 years old, working as a civil engineer residing in Chennai with a family of four [ wife and two daughters]. I am earning Rs. 80,000 per month. My investment portfolio is given as below:- LIC - Single Premium Endowment Plan One Time ? 5,68,230 LIC - Single Premium Endowment Plan One Time ? 4,32,250 LIC - New Money Back Plan - 25 yrs 821 Every Six Months ? 14,511 Public Provident Fund Yearly ? 1,50,000 Sukanya Samriddhi Yojana Yearly ? 1,50,000 Mutual Funds: SIP - Equity Funds Monthly ? 12,500 Mutual Funds: Lumpsum - Equity Funds One Time ? 10,00,000 My investment goals are: - To provide a quality education in an international school to my two daughters with multiple exposure to sports & arts. Savings for the construction of a house of 3500 sqft in Chennai in about 10 years. Savings towards retirement fund. A broad breakup of my monthly expenses as against my income is given below: - Groceries & Vegetables. Rs. 20,000 Maid Salary. Rs. 14,000 Children Education. Rs. 16,000 Utilities. Rs. 3,000 Investments. Rs. 28,000 Entertainment Rs. 4,000 As you can see above I am finding it difficult to sustain as my expenses are shooting up over the income. In this regard, I would like to request the following advice: - Whether my investments are on the right track to achieve my goals or should I alter my investment portfolio ? Are there any options such as stock markets to generate passive income to strengthen my financial situation ? Looking forward to hearing from you.
Ans: Comprehensive Financial Planning for Education, Housing, and Retirement

Greetings! It’s commendable to see your proactive approach towards financial planning and investing for the future of your family. Let’s evaluate your current investment strategy and explore options to better align your investments with your financial goals.

Current Financial Situation
Monthly Income and Expenses
Monthly Income: ?80,000
Expenses Breakdown:
Groceries & Vegetables: ?20,000
Maid Salary: ?14,000
Children Education: ?16,000
Utilities: ?3,000
Investments: ?28,000
Entertainment: ?4,000
Total Expenses: ?85,000
Current Investments
LIC Single Premium Endowment Plans: ?5,68,230 and ?4,32,250 (One-time)
LIC New Money Back Plan: ?14,511 (Every six months)
Public Provident Fund (PPF): ?1,50,000 (Yearly)
Sukanya Samriddhi Yojana: ?1,50,000 (Yearly)
Mutual Funds - SIP in Equity Funds: ?12,500 (Monthly)
Mutual Funds - Lumpsum in Equity Funds: ?10,00,000 (One-time)
Financial Goals
Quality Education for Daughters
Construction of a 3500 sqft House in Chennai in 10 Years
Retirement Savings
Evaluating Current Investments
LIC Policies
LIC plans, while safe, typically offer lower returns compared to other investment options. Re-evaluating the need for these endowment and money back plans is crucial, as they might not align well with high-growth financial goals.

Public Provident Fund (PPF)
PPF is a safe investment with tax benefits and decent returns. Continue with your PPF contributions, as they offer a good balance of safety and returns.

Sukanya Samriddhi Yojana (SSY)
SSY is an excellent scheme for your daughters’ future expenses, given its attractive interest rates and tax benefits. Continue your contributions.

Mutual Funds - SIP and Lumpsum
Your investment in equity mutual funds via SIP and lumpsum is prudent, as equity funds typically provide higher returns over the long term.

Recommendations
1. Reallocate LIC Investments
Consider discontinuing further investments in LIC endowment and money back plans. Redirect these funds into higher-yield investments like mutual funds, PPF, and SSY, which better align with your long-term goals.

2. Optimize Mutual Fund Investments
Increase SIP Contributions: Increase your SIP contributions in equity mutual funds. Diversify across large-cap, mid-cap, and multi-cap funds to balance growth and risk.
Regular Review: Regularly review the performance of your mutual funds and adjust as necessary. Consulting a Certified Financial Planner (CFP) can help in optimizing your portfolio.
3. Create a Separate Education Fund
Open a dedicated investment account for your daughters’ education. Consider child-specific mutual funds, which cater to education expenses with appropriate risk management.

4. Plan for Home Construction
Dedicated Savings Plan: Open a recurring deposit or SIP in a balanced or debt fund dedicated to your house construction goal. Aim to accumulate the required corpus over the next 10 years.
Systematic Investments: Regularly invest a portion of your savings towards this goal to ensure you have the necessary funds when needed.
5. Retirement Planning
Increase PPF Contributions: Maximize your PPF contributions to ?1.5 lakh per year for steady, tax-free returns.
Diversify Retirement Portfolio: Include a mix of equity and debt mutual funds to build a robust retirement corpus. Start a SIP in balanced advantage funds to ensure stability and growth.
Managing Expenses and Generating Passive Income
1. Expense Management
Budgeting: Track your monthly expenses diligently and look for areas to cut back, especially on discretionary spending.
Emergency Fund: Maintain an emergency fund equivalent to 6 months of expenses to cover unexpected costs.
2. Generating Passive Income
Dividend-Paying Mutual Funds: Invest in mutual funds that offer regular dividends, providing a steady passive income stream.
Systematic Withdrawal Plan (SWP): Consider setting up an SWP from your mutual fund investments to generate regular income without liquidating your investments.
Explore Other Avenues: Avoid direct stock market investments if you lack the time or expertise. Focus on mutual funds and other safer, managed investment options.
Conclusion
Your current investments are on the right track but can be optimized for better returns. By reallocating funds from LIC policies to higher-yield investments, increasing SIP contributions, and maintaining a disciplined savings plan, you can achieve your financial goals. Regular reviews and consulting with a Certified Financial Planner will ensure you stay on course.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9854 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 2025

Asked by Anonymous - Jun 18, 2025Hindi
Money
Hlo sir , I am 45 year old lady. My salary is 35 k and have an FD of 9 lakh, investing in ppf from last year only ie. 60 k per year and have done SIP of 5000 k per month ie. HDFC small Cap 1500 , HDFC Mid cap opportunities - 1000 k , HDFC Small Cap - 1500 , and HDFC Flexi cap - 1000 I need 25 lakh in 3 years for my daughter's education even right now spending 1 lakh per year in my son's education. Please suggest how it will be possible? Regards
Ans: Your efforts to invest regularly despite a modest income are truly appreciable. Let's now assess your present situation from all angles and create a solid, practical plan.

Understanding Your Financial Position
You are 45 years old and earn Rs 35,000 per month.

You have Rs 9 lakh in fixed deposits.

You have started PPF last year with Rs 60,000 per year contribution.

SIP of Rs 5,000 monthly across four equity mutual funds.

You need Rs 25 lakh in 3 years for your daughter’s education.

You currently spend Rs 1 lakh per year for your son’s education.

This shows you are balancing short-term needs and long-term goals. But the Rs 25 lakh target in 3 years needs extra planning and prioritisation. Let’s evaluate this deeply.

Immediate Challenges and Time-Sensitive Goals
Your most urgent goal is your daughter’s education corpus in 3 years.

Your current monthly income is tight after your expenses and SIPs.

SIP amount is small compared to the goal. So lump sum planning is necessary.

Fixed deposit is your biggest current resource. But it’s earning low returns.

Equity SIPs are good but high-risk for 3-year time frame.

So now we’ll look at this from three angles: Optimising your current resources, restructuring investments, and ensuring your goals are realistically achievable.

Step-by-Step Review of Your Mutual Funds
You are investing Rs 5,000 per month in:

HDFC Small Cap – Rs 1,500

HDFC Mid Cap Opportunities – Rs 1,000

HDFC Flexi Cap – Rs 1,000

One more entry for HDFC Small Cap mentioned – likely repeated

Let us assume your total SIP is split properly across these categories. But two things need urgent correction:

You are investing in two small cap funds. That is duplicate and risk-heavy.

For a 3-year goal, small cap and mid cap are too volatile. They may fall sharply.

Your SIP strategy is good for long-term wealth building, not for short-term goals. So, changes are needed.

Suggested Changes in SIP Allocation
Stop one of the HDFC Small Cap SIPs immediately. You don’t need both.

Pause the small and mid cap SIPs for now.

Redirect entire Rs 5,000 SIP into a short-duration debt fund or hybrid conservative fund.

Use only regular plans through a Certified Financial Planner or MFD. Avoid direct funds.

Direct funds don’t offer human guidance or support. You need monitoring, rebalancing, and exit support—especially during market corrections. Regular plans via MFDs with CFP credentials offer better care.

Issues with Index Funds or ETFs
You’ve not invested in index funds. That’s good. Index funds are unmanaged. They follow the market blindly. In volatile times, they fall as fast as the market does. You have a short goal. You need protection.

Actively managed funds are better here. Fund managers can take defensive steps. They can shift to cash or avoid falling sectors. That’s vital for your case.

Your Fixed Deposit—A Powerful Tool If Used Wisely
You have Rs 9 lakh in FD.

In 3 years, it will not grow much. Interest is taxed as per your slab.

For education goal, this is your main resource.

My recommendation:

Don’t wait for maturity. FD returns are low after tax.

Break the FD in parts.

Shift at least Rs 6 lakh into low-risk hybrid mutual fund in regular plan.

Keep Rs 2 lakh in a liquid mutual fund for emergencies.

Keep Rs 1 lakh in FD if you feel emotionally secure with it.

FDs are not wealth creators. They just preserve capital. But education inflation is rising fast. You need 8% to 9% growth. Hybrid mutual funds give this with limited risk over 3 years.

Strategy to Reach Rs 25 Lakh in 3 Years
Your possible sources to fund the education:

Rs 6 lakh from FD to be invested today.

Rs 5,000 SIP every month for next 36 months.

Potential education loan as last resort if target falls short.

Use a hybrid or balanced advantage mutual fund. Keep growth plan.

Avoid equity-heavy plans. That can backfire in case of a correction in 2026–27.

Also consider putting money in tranches, not in one shot. Use 2–3 instalments.

Review progress every 6 months with your MFD or CFP.

What About the PPF?
PPF is a great product. But it is a 15-year lock-in. You cannot touch it now.

Keep contributing Rs 5,000 monthly or Rs 60,000 annually.

Don’t expect help from PPF for daughter’s education. It will help in retirement or for son's college.

So continue as is. Don’t reduce this amount. It builds tax-free future wealth safely.

Managing Son’s Education Alongside
You already spend Rs 1 lakh per year on your son.

Ensure this cost is accounted for in your annual budgeting.

If needed, reduce luxury spending or pause non-urgent expenses.

Use Rs 1 lakh emergency reserve (liquid fund) to support any shortfall.

But don’t touch investments marked for daughter’s education. Keep those separate.

Importance of Personal Insurance Cover
You haven’t mentioned any insurance.

If you don’t have term life insurance, please buy it today.

A Rs 25 lakh to Rs 50 lakh term plan is needed.

Very affordable. Premium will be under Rs 7,000 annually.

Don’t buy LIC, ULIP, or investment-linked insurance.

Those are inefficient. They eat your money with low return and high charges.

Stick to pure term cover.

Emergency Reserve and Liquidity
You should maintain Rs 2 lakh in liquid funds.

This gives confidence and freedom during emergencies.

Avoid breaking long-term investments under pressure.

Add any annual bonus or gift money to this reserve.

How to Track and Adjust Progress
Review all investments every 6 months.

If market is doing well, start partial withdrawal one year before goal.

Keep moving goal money to liquid or overnight funds as the goal nears.

Take support from a trusted MFD or CFP to handle this process.

Always invest through regular plans. They offer alerts, rebalancing, goal updates.

Education Loan—A Back-Up Plan
If you still fall short, consider education loan.

Don’t avoid higher education due to gap of Rs 2–3 lakh.

Many banks offer low-interest education loans for girls.

Repayment starts after course ends.

But use this only as Plan B. Try to reach 90% target through investments.

Tax Implications of Your Investments
Short-term capital gains from mutual funds are taxed at 20%.

Long-term gains over Rs 1.25 lakh are taxed at 12.5%.

So, plan your redemptions in a tax-efficient way.

If your SIP gives large profits, stagger withdrawal across financial years.

Avoid These Common Mistakes
Don’t invest in direct mutual funds on your own.

Don’t invest in index funds or ETFs for short goals.

Don’t mix insurance with investment.

Don’t keep all funds in FD. It erodes value.

Don’t delay investing due to fear. Time is your ally.

What You’re Already Doing Well
You’ve started early despite salary limitations.

You are already using SIPs regularly.

You’ve understood the importance of PPF.

You’re planning ahead for children’s education.

This mindset is rare and precious. You are already halfway there.

What You Must Do Next
Realign your SIPs for short-term goals.

Break FD and reallocate strategically.

Maintain emergency reserve in liquid mutual funds.

Use a certified MFD or CFP for guidance.

Start goal tracking semi-annually.

Finally
You are trying to create a strong future with limited income. That shows wisdom.

Your 3-year goal is achievable, but needs focused realignment today.

Use your FD wisely. Stop risky SIPs meant for long term.

Shift towards safer hybrid mutual funds via regular plans.

You will reach close to Rs 25 lakh without burdening yourself.

If gap remains, use an education loan as final option.

Stay disciplined. Review often. And don’t do it all alone. Use help from a trusted CFP.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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