Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 14, 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
MR. Question by MR. on Aug 13, 2024Hindi
Listen
Money

I want a corpus of 30 lakh in next 7 years. How much daily SIP one should do to achieve this

Ans: To accurately calculate the daily SIP amount required to accumulate ?30 lakhs in 7 years, we need to consider:

Expected Rate of Return: This is the annual growth rate you anticipate from your investment. It's crucial to choose a realistic figure based on historical returns of your chosen investment avenue (e.g., mutual funds, stocks).
Investment Horizon: You've mentioned 7 years.
Goal Amount: This is the corpus you aim to achieve, which is ?30 lakhs.
Using a SIP Calculator:

For a precise calculation, it's recommended to use an online SIP calculator. Many financial websites and apps offer this tool. You can input the above factors, and the calculator will determine the daily SIP amount for you.

Example Calculation (Approximate):

Assuming an expected annual return of 12% (which is a historical average for equity mutual funds), you can use a simple formula to get a rough estimate:

Number of days in 7 years: 7 years * 365 days/year = 2555 days
Future Value (FV) = Present Value (PV) * (1 + r)^n
FV = ?30,00,000
r = Daily interest rate = 12% / 365 = 0.0003288
n = Number of days = 2555
Solving for PV (which is the total SIP amount):
PV = FV / (1 + r)^n
Therefore, roughly, you may have to invest Rs 23000 monthly to get 30 Lacs in 7 years.

Note: This is a simplified calculation and doesn't account for compounding effects on daily SIPs. Using an online SIP calculator will provide a more accurate result.

Important Considerations:

Inflation: Consider adjusting your target amount for inflation to maintain the purchasing power of your corpus.
Risk Tolerance: Choose an investment avenue that aligns with your risk profile. Higher returns generally come with higher risks.
Emergency Fund: Ensure you have an emergency fund before starting long-term investments.
Tax Implications: Understand the tax implications of your chosen investment.
Additional Tips:

Start Early: The earlier you start investing, the lower your monthly SIP amount will be.
Rupee Cost Averaging: SIP helps in rupee cost averaging, reducing the impact of market volatility.
Diversification: Spread your investments across different asset classes to manage risk.

Remember: This is a financial goal, and it's essential to consult with a certified financial planner to create a personalized investment plan based on your specific circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Jan 23, 2024Hindi
Listen
Money
Sir,I am going to retire from psu service in next 5.5 yrs.How much sip is required to generate a corpus of 15 lakh in 5 years from now.Pl suggest some best options available
Ans: To achieve a corpus of 15 lakhs in 5 years, the required SIP amount will depend on the expected rate of return from your investments. Let's break it down.

Firstly, consider the rate of return you expect from your investments. Assuming a moderate rate of return of around 10% per annum, you can use the future value formula to calculate the SIP amount needed.

Given the time frame of 5 years, the power of compounding plays a vital role. With a return of 10% per annum, the SIP amount required would be around 22,000 rupees per month.

However, it's essential to remember that returns can vary based on market conditions and the performance of the chosen funds. Therefore, it might be wise to consider investing in a diversified portfolio of equity and debt funds to balance the risk and potentially enhance returns.

As for the best options, considering your time horizon and risk profile, you might look into balanced funds, multi-cap funds, or even hybrid equity-oriented funds. It's crucial to select funds with a track record of consistent performance and align with your risk tolerance and investment goals.

Always consult with a Certified Financial Planner to tailor an investment strategy that suits your needs and goals best. Remember, investing is a journey, and staying disciplined and patient is key to achieving your financial objectives.

..Read more

Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 2024

Asked by Anonymous - Jun 17, 2024Hindi
Money
I want a corpus of 5 crores in next 7 years. How much daily SIP one should do to achieve this.
Ans: Setting a Goal for a Rs. 5 Crore Corpus in 7 Years
Planning to accumulate a corpus of Rs. 5 crores in 7 years is an ambitious goal. Achieving this requires strategic planning and disciplined investing. Let’s explore how you can reach this target with a daily Systematic Investment Plan (SIP).

Understanding SIP and Its Benefits
A Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly. It’s an effective way to build wealth over time, leveraging the power of compounding and market averaging.

Benefits of SIP
Disciplined Investing: SIP ensures regular investments, fostering financial discipline.

Compounding Effect: The returns earned are reinvested, leading to exponential growth over time.

Market Volatility Management: Regular investments help in averaging out the purchase cost over market cycles.

Calculating the Required SIP Amount
To accumulate Rs. 5 crores in 7 years, we need to calculate the daily SIP amount. Given the following parameters:

SIP Frequency: Daily
SIP Amount: Rs. 12,500
Number of SIP Payments: 2,555 (365 days * 7 years)
Expected Annual Return: 12%
Expected Returns and Investment Analysis
With an expected annual return of 12%, let's analyze how this goal can be achieved:

Total Investment: Rs. 3,19,37,500
Amount at the End of Tenure: Rs. 5,00,53,662.6
Step-by-Step Breakdown
Regular Investments
Investing Rs. 12,500 daily might seem daunting, but it significantly leverages the power of regular investments. Here’s a detailed breakdown:

Consistency: Investing consistently over 7 years is crucial. Missing out on investments can impact the overall returns.

Market Fluctuations: The market will have ups and downs. SIPs benefit from buying more units when prices are low and fewer units when prices are high, averaging the cost.

Power of Compounding
Compounding is a powerful tool in wealth creation. The returns generated on the initial investment amount are reinvested, generating more returns over time. This cycle continues, leading to exponential growth.

Tax Efficiency
Mutual funds, especially equity mutual funds, are tax-efficient compared to other investment avenues. Long-term capital gains (LTCG) tax on equity mutual funds is relatively low, enhancing net returns.

Evaluating Investment Options
Actively Managed Funds
Actively managed funds, where fund managers make strategic investment decisions, can potentially offer higher returns than passive funds. They adapt to market conditions and seek to outperform benchmarks.

Advantages:

Professional Management: Expert fund managers actively manage the portfolio, aiming for superior returns.

Flexibility: They can quickly adapt to market changes, rebalancing the portfolio to optimize returns.

Disadvantages of Index Funds:

Average Returns: Index funds aim to mirror the market index. Hence, their returns are average, not outperforming the market.

Lack of Flexibility: They cannot adapt quickly to market changes, which might limit growth potential.

Regular vs. Direct Funds
While direct funds offer lower expense ratios, regular funds come with advisory services from a Mutual Fund Distributor (MFD) with Certified Financial Planner (CFP) credentials. The guidance can be invaluable in achieving financial goals.

Advantages of Regular Funds:

Expert Advice: CFPs provide tailored advice, helping in selecting the right funds and strategies.

Holistic Planning: Regular reviews and adjustments ensure the investment strategy remains aligned with goals.

Addressing Potential Risks
Market Volatility
Market volatility can affect returns. However, the long investment horizon and regular investing mitigate this risk. SIPs help in averaging the purchase cost, reducing the impact of market fluctuations.

Inflation
Inflation erodes purchasing power over time. The expected 12% return takes inflation into account, ensuring the real value of the corpus is substantial.

Building a Robust Investment Plan
Diversification
Diversifying across different types of mutual funds (large-cap, mid-cap, small-cap, and sectoral funds) can optimize returns and manage risk. A diversified portfolio balances growth and stability.

Regular Monitoring
Regularly reviewing the investment portfolio is essential. Monitoring performance and making necessary adjustments ensures the investment strategy remains aligned with financial goals.

Seeking Professional Guidance
Role of a Certified Financial Planner
A CFP provides expert guidance, helping in creating a comprehensive financial plan. They assist in selecting the right investment avenues, ensuring alignment with financial goals and risk tolerance.

Alternative Strategies
Step-Up SIP
A step-up SIP allows you to increase your SIP amount periodically. This helps in aligning investments with increasing income and inflation, potentially achieving the target sooner.

Lump Sum Investments
In addition to daily SIPs, consider making lump sum investments whenever you receive a bonus or windfall gain. This can significantly boost the corpus.

Evaluating Performance
Benchmarks
Compare the performance of your mutual funds with relevant benchmarks. This helps in assessing whether the fund is performing as expected.

Fund Manager’s Track Record
Assess the track record of the fund manager. Consistent performance across market cycles indicates reliable management.

Adjusting Investment Strategy
Rebalancing
Rebalance the portfolio periodically to maintain the desired asset allocation. This ensures the investment strategy remains aligned with financial goals and risk tolerance.

Switching Funds
If a fund consistently underperforms, consider switching to a better-performing fund. Consult with your CFP before making such decisions.

Long-Term Commitment
Achieving a corpus of Rs. 5 crores requires a long-term commitment. Stay focused on your goal, avoid panic during market downturns, and continue investing regularly.

Final Insights
Reaching a corpus of Rs. 5 crores in 7 years is achievable with disciplined daily SIPs, strategic planning, and professional guidance. Focus on consistent investments, regular monitoring, and staying committed to your financial goals. Diversification, rebalancing, and adapting to market changes are key strategies in this journey. Seek advice from a Certified Financial Planner to optimize your investment strategy and achieve your financial aspirations.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

Asked by Anonymous - Jul 15, 2024Hindi
Listen
Money
I'm a 20 year old student. I want a corpus of 15 crores in the next 15 to 20 years. How much daily SIP should I do? And which type of mutual fund should I invest it.
Ans: Creating a corpus of Rs. 15 crores in 15 to 20 years is a significant goal. You will need a structured investment strategy and disciplined approach to achieve it.

Benefits of Early Investment

Starting investments at 20 gives you a huge advantage. Time is on your side, allowing your investments to compound and grow significantly.

Daily SIP for Consistency

A daily SIP ensures regular investment without burdening you with a large lump sum. It helps inculcate discipline and takes advantage of market fluctuations.

Types of Mutual Funds

Given your long-term horizon, equity mutual funds are ideal. They offer higher returns compared to other types, albeit with higher risk.

Recommended Mutual Funds

Large-Cap Funds

These invest in large, established companies.
They offer relatively stable returns.
Mid-Cap Funds

These invest in mid-sized companies.
They provide a balance between risk and return.
Small-Cap Funds

These invest in small companies with high growth potential.
They come with higher risk but can offer substantial returns.
Flexi-Cap Funds

These funds invest across market capitalizations.
They offer diversification and flexibility.
Sectoral/Thematic Funds

These invest in specific sectors.
Higher risk but can provide significant returns if the sector performs well.
Disadvantages of Direct Funds

Investing in direct funds requires a deep understanding of the market. Without expert guidance, it can be challenging to manage. It's beneficial to invest through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential. They offer professional advice, regular portfolio reviews, and help in achieving your goals efficiently.

Calculating Daily SIP

To estimate the daily SIP amount:

The total corpus required: Rs. 15 crores
Investment horizon: 15 to 20 years
Let's assume an average return of 12% per annum from equity mutual funds. For accurate daily SIP calculation, consider consulting a Certified Financial Planner.

Diversification

Diversifying your investments reduces risk. Allocate your SIP across different fund types to balance risk and returns. For example:

Large-Cap: 30%
Mid-Cap: 30%
Small-Cap: 20%
Flexi-Cap: 20%
Regular Monitoring and Adjustment

Regularly review your portfolio. Market conditions and your financial situation may change. Adjust your investments accordingly.

Building Financial Discipline

Consistent investing and financial discipline are crucial. Avoid unnecessary expenses and focus on your long-term goals.

Importance of Professional Guidance

Consulting a Certified Financial Planner can provide personalized advice and help you navigate market complexities. They ensure your investment strategy aligns with your financial goals.

Final Insights

Achieving a corpus of Rs. 15 crores in 15 to 20 years is ambitious but attainable. Start with a daily SIP in diversified mutual funds. Regularly review and adjust your investments. Professional guidance can greatly enhance your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 16, 2024

Money
I want a corpus of 25 lakh in next 7 years. How much daily SIP one should do to achieve this.
Ans: Planning for your financial goals is a commendable step. Accumulating a corpus of Rs. 25 lakhs in the next 7 years requires careful planning and disciplined investing. A systematic investment plan (SIP) can help you achieve this goal by investing small amounts regularly.

Let's explore how you can plan this effectively.

Understanding SIP and Its Benefits
SIP is an investment strategy where you invest a fixed amount regularly, typically monthly or even daily, into mutual funds. It allows you to benefit from the power of compounding and rupee cost averaging. This disciplined approach ensures that you invest consistently, regardless of market conditions, leading to wealth creation over time.

Estimating the Required SIP Amount
To achieve a corpus of Rs. 25 lakhs in 7 years, you need to decide on a suitable SIP amount. The amount you invest daily will depend on several factors:

Expected Rate of Return:

The rate of return plays a significant role in determining how much you need to invest. Historically, equity mutual funds have provided an average return of 10-12% per annum. However, this is not guaranteed, and the actual returns may vary.
Investment Horizon:

Your investment horizon is 7 years. While this is a decent time frame for equity investments, the longer the horizon, the better the chances of achieving higher returns.
Risk Appetite:

Your risk tolerance will determine the type of funds you choose for your SIP. Higher risk may lead to higher returns, but it also increases the potential for losses.
Calculating the Daily SIP Amount
To accumulate Rs. 25 lakhs in 7 years, you need to calculate the daily SIP amount considering a reasonable rate of return.

You can start with an approximate estimate based on an assumed rate of return. Let’s assume a rate of return of around 12% per annum, which is a moderate expectation for equity-oriented funds.

Investment Target: Rs. 25 lakhs
Investment Horizon: 7 years (2,555 days)
Expected Rate of Return: 12% per annum
With these assumptions, a certified financial planner could estimate the required daily SIP amount.

Adapting to Market Conditions
The financial markets are unpredictable. Your actual returns may be higher or lower than the expected 12%. It's important to regularly review your SIP and adjust it if necessary.

If you notice your investments underperforming, you might need to increase your SIP amount or extend the investment horizon.

Diversifying Your SIP Investments
To balance risk and reward, consider diversifying your SIPs across different types of mutual funds. Depending on your risk appetite, you can choose from:

Equity Funds:

These funds have the potential for high returns, especially over a 7-year horizon. They invest primarily in stocks and are suitable for long-term goals like yours.
Hybrid Funds:

These funds invest in both equities and debt instruments. They offer a balance between risk and return, making them a good option for moderate risk-takers.
Debt Funds:

These are lower-risk funds that invest in fixed income instruments. While they provide stability, the returns are generally lower compared to equity funds.
Avoiding Common Investment Pitfalls
When planning your SIP, it’s essential to avoid some common mistakes:

Overestimating Returns:

Be realistic about expected returns. Avoid assuming overly high returns, as this can lead to under-investing.
Ignoring Inflation:

Inflation erodes purchasing power over time. Ensure that your SIP amount is sufficient to meet your goal even after accounting for inflation.
Not Reviewing Your Portfolio:

Regularly review and rebalance your portfolio to ensure it aligns with your goals. Market conditions and personal circumstances change, and your investment strategy should adapt accordingly.
Additional Strategies for Achieving Your Goal
Besides SIP, consider these strategies to enhance your corpus:

Top-Up SIP:

Increase your SIP amount periodically, say annually, by a fixed percentage. This ensures your investments keep pace with inflation and your increasing income.
Lump-Sum Investments:

If you receive a bonus or any other windfall, consider investing it as a lump sum in your existing SIP funds. This can give a significant boost to your corpus.
Tax Efficiency:

Choose tax-efficient funds that align with your financial goals. Equity funds held for more than one year are subject to long-term capital gains tax, which is lower than short-term gains tax.
Emergency Fund:

Ensure you have an adequate emergency fund in place. This prevents the need to dip into your SIP investments in case of unforeseen expenses.
Final Insights
To accumulate Rs. 25 lakhs in 7 years, you need to plan your daily SIP amount carefully. A moderate rate of return, combined with disciplined investing, can help you achieve your financial goal.

Regularly review your investment strategy, and be prepared to make adjustments as needed. Diversifying your investments and staying committed to your SIP plan are key to success.

Consider consulting with a Certified Financial Planner to tailor these strategies to your specific situation. They can provide personalized guidance and ensure you’re on track to meet your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Moneywize

Moneywize   |145 Answers  |Ask -

Financial Planner - Answered on Sep 08, 2024

Asked by Anonymous - Sep 05, 2024Hindi
Listen
Money
I am investing monthly around Rs 18,000 in MFs, as per the following: Canara Robeco Small capMF - Rs 4.5k, PGIM Mid Cap Opportunities - Rs 4.5k, Tata Digital - Rs 4.5k, Quant Active - Rs 4.5k. I am intending to increase monthly investment in MF from present Rs 18k to Rs 40k & needed a corpus of at least 1 cr in next 10 years. Can you check suggest if my portfolio needs any changes or the same appears to be in order?
Ans: To reach a corpus of Rs 1 crore in 10 years, you will need to invest in funds that generate around 10-12 per cent annual returns. Your current portfolio is diversified across small-cap, mid-cap, digital, and active funds, which can work well but also carries some volatility, especially in sectoral and small-cap/mid-cap funds.

Portfolio Review:

• Canara Robeco Small Cap Fund: Good for aggressive growth but highly volatile. Keep it if you're comfortable with higher risk.
• PGIM Mid Cap Opportunities Fund: Another growth-oriented fund with decent potential. It's good to have some exposure to mid-caps.
• Tata Digital Fund: Sectoral funds are risky because they are dependent on the sector's performance. Digital/technology funds can be volatile; consider reducing exposure here.
• Quant Active Fund: A multi-cap approach with flexibility across market caps. This fund provides balance and is good for diversification.

Suggestions:

• Increase Allocation to Large Cap/Index Funds: You may want to balance your portfolio with a large-cap or index fund like UTI Nifty 50 or Mirae Asset Large Cap Fund. Large-cap funds provide stability and reduce overall portfolio volatility.
• Reduce Sector-Specific Exposure: Consider trimming your allocation to Tata Digital Fund, as sectoral funds can face prolonged underperformance during sector downturns. You can reallocate this to a more diversified fund.
• Balanced Fund: Add a balanced or hybrid fund like HDFC Balanced Advantage Fund or ICICI Prudential Balanced Advantage Fund for better risk management while maintaining growth potential.
• Debt Component: To hedge against equity risk, consider adding a small portion to a short-term debt fund or gilt fund, which can provide stability during volatile periods.

Suggested Structure After Increase:

• Canara Robeco Small Cap Fund: Rs 6,000
• PGIM Mid Cap Opportunities Fund: Rs 6,000
• Quant Active Fund: Rs 6,000
• Mirae Asset Large Cap Fund: Rs 6,000
• HDFC Balanced Advantage Fund: Rs 6,000
• ICICI Prudential Multi Asset Fund: Rs 5,000
• UTI Nifty 50 Index Fund: Rs 5,000

This adjusted allocation will maintain growth potential while providing a cushion against volatility.

...Read more

Kanchan

Kanchan Rai  |331 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Sep 08, 2024

Listen
Relationship
I'm seeking guidance on improving my communication with my daughters. I want to create a more positive and supportive environment at home, especially when discussing their mistakes or weaknesses. Could you please share some strategies on how I can provide positive feedback and encouragement, even when addressing their mistakes? I aim to help them feel comfortable discussing their challenges without fear and to focus on turning negative thoughts into positive ones. Your advice on how to approach this in a friendly and constructive manner would be greatly appreciated. Thank you for your support
Ans: It’s really commendable that you're seeking ways to improve communication with your daughters, especially when it comes to handling mistakes or weaknesses. The goal you're aiming for—creating a supportive environment where they feel safe to share their challenges—is a key part of nurturing a healthy and open relationship.

When addressing their mistakes, it’s important to remember that how they interpret your feedback can shape how they see themselves and their ability to handle difficulties. You want them to feel like they’re not being judged or criticized but instead being guided towards growth. One way to start is by focusing on empathy in your conversations. When they make a mistake, it’s natural to want to correct it quickly, but it can be more productive to begin by acknowledging how they might feel. This lets them know that you understand their experience, and that mistakes are part of life and learning. It shifts the focus from the mistake itself to their emotions, which builds trust.

Another aspect is how you frame the conversation. Instead of honing in on what went wrong, it’s helpful to highlight the effort they put in and the process they went through, even if the outcome wasn’t perfect. Letting them know that their effort is noticed and appreciated can boost their confidence. When they feel that their hard work is valued, they’re more likely to discuss their challenges openly, rather than feeling like they failed. If they feel supported during these moments, they will be more inclined to seek your guidance in the future without fearing a negative response.

Listening is another vital tool. When they make a mistake, resist the urge to immediately jump in with advice or corrections. Instead, ask them how they feel about what happened or what they think they could do differently next time. This not only gives them ownership of their problem-solving but also empowers them to reflect and learn from their experiences. Sometimes, when children are given the space to voice their thoughts, they can surprise you with their insights. And even if they don’t have an answer right away, they’ll appreciate being part of the conversation rather than being lectured.

It’s also important to be patient with progress. Instead of expecting a big shift in behavior or attitude overnight, focus on the small steps they take. Recognizing these smaller victories can go a long way in motivating them to keep improving, even when they stumble. They need to see that progress is more important than perfection, and your role is to guide them through the ups and downs without focusing too much on the final result.

Finally, your own approach to challenges and mistakes plays a big role in shaping how they will handle their own. When they see you approach difficulties with a positive mindset—whether it's a work challenge or a personal frustration—they’re learning that setbacks don’t define them. Modeling this kind of attitude will encourage them to talk about their own struggles more openly and with less fear of judgment.

In essence, the goal is to build trust and maintain a positive tone, even when discussing difficult topics. With this approach, your daughters will not only feel comfortable coming to you but will also develop a stronger sense of resilience in facing their own challenges. You’ll find that as they feel more supported, their confidence in addressing their weaknesses will naturally grow.

...Read more

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x