GD evening sir, My CTC is 18lakhs per annum In stocks mostly in small cap I have invested 14lakhs In mutual funds 12lakh In ppf 10.98 lakhs Sip amt 15k RD 5k One term plan 1crore Health covered by company I wanted to save tax and should I...

GD evening sir, My CTC is 18lakhs per annum In stocks mostly in small cap I have invested 14lakhs In mutual funds 12lakh In ppf 10.98 lakhs Sip amt 15k RD 5k One term plan 1crore Health covered by company I wanted to save tax and should I invest in home and investment for my child

Ans: As per given information, it seems that much of the investment planning has been done by you, however you should have a broader financial plan. Which can include education, marriages of your children in future, purchase of house and also the retirement planning. It will be prudent to contact a certified financial planner in this regard. Investing in home and investment for Child are good options.

Ans: You have built a strong base with good income, zero debt, and a solid investment portfolio. Your clarity in goals and discipline in investments is excellent. Let us now plan for your child’s future in a comprehensive way.

++Your Family’s Financial Position

– Monthly income from all sources is close to Rs 4.3 lakhs.
– Monthly expenses are around Rs 1.5 lakhs, which is well-controlled.
– Rs 2 lakhs invested monthly in shares and mutual funds is a very good habit.
– Additional Rs 1 lakh invested as lumpsum is a strong surplus deployment.
– Rs 1.85 Cr in stocks shows wealth creation focus, but it adds risk.
– Rs 15 lakhs in mutual funds is a good start, but needs expansion.
– Rs 10 lakhs FD as emergency fund is sufficient for your lifestyle.
– No loans or liabilities make the structure financially stress-free.

Your foundation is very strong and ideal to build your child’s future plan on.

++Child’s Future: Key Financial Goals

– You must focus on two major child-related financial goals.
– First is higher education corpus, usually needed after 15–17 years.
– Second is partial support for wedding or life setup corpus, if possible.
– Education corpus will require focused and disciplined equity allocation.
– You already invest in equity, but need to earmark a portion for the child.

++Ideal Approach to Education Planning

– Cost of higher education is rising 8–10% per year.
– A good Indian or international degree may cost Rs 50 lakhs to Rs 1 Cr.
– You need a focused goal-based fund for this, separate from other wealth.
– Start earmarking Rs 50,000–75,000 from your monthly investments for this.
– Prefer mutual funds instead of direct equity for this goal.
– Avoid investing in index funds. They lack flexibility during market cycles.
– Actively managed diversified equity mutual funds are more suitable.
– These funds are better aligned to dynamic economic changes.
– Fund managers take tactical calls to protect and grow wealth better.

++Avoid Direct Equity for Child’s Corpus

– Direct equity is more volatile and emotionally draining in the short term.
– You may panic-sell or over-invest during emotional market phases.
– Not all stocks create long-term value.
– For child’s future, consistent compounding matters more than high returns.
– Mutual funds ensure professional management and diversification.
– They are audited, regulated and more suitable for long-term goal-based plans.

++Regular vs Direct Mutual Funds for Child’s Goal

– Do not go for direct mutual funds for this goal.
– Direct funds lack personal guidance and review support.
– For goal-based planning, regular funds via a Certified Financial Planner are better.
– A CFP will guide you to track the goal, switch assets when needed, and rebalance.
– Regular plans are also useful to avoid emotional investing behaviour.
– Slight cost is worth the long-term discipline and alignment it brings.

++Suggested Strategy to Allocate Investments

– Dedicate Rs 75,000 monthly for child’s higher education goal.
– Out of this, Rs 50,000 in diversified equity mutual funds via SIP.
– Rs 25,000 to be kept flexible for tactical lump-sum during market dips.
– Don’t invest this corpus in real estate. Avoid physical gold also.
– Maintain allocation review once in 6–12 months with your CFP.

++For Child’s Wedding or Life Setup Goal

– This is optional and depends on your surplus and values.
– You may start a small SIP of Rs 10,000–15,000 for this goal.
– Allocate this to balanced advantage or equity savings category funds.
– This goal may not need high growth, but low volatility matters more.
– Continue for next 15–20 years without withdrawals.

++Insurance Coverage and Risk Protection

– Your current health insurance is employer-linked.
– It will lapse if you quit or retire from your job.
– You must buy a standalone family floater health insurance of Rs 15–20 lakhs.
– Include both parents, spouse and child in the plan.
– Consider super-top-up of Rs 25 lakhs for low cost, high cover.
– Also check if your parents need senior citizen plans separately.
– Take a term life insurance of at least Rs 1 Cr if not already done.
– This ensures that your child’s plan runs uninterrupted in your absence.

++Emergency Fund and Backup Liquidity

– Rs 10 lakhs in FD is a very good emergency fund.
– Do not touch this for investments or expenses.
– Keep it in joint names, with sweep-in FD option if possible.
– You may also explore liquid funds for slightly better returns.
– But keep at least 50% in FD for guaranteed liquidity.

++Rental Income and Asset Usage

– Rs 1.22 lakhs rental income gives excellent support.
– Do not use this income for monthly expenses.
– Consider this as a passive inflow to be used for child’s fund or parents’ care.
– If possible, invest part of this rental income into your child’s goal corpus.
– Avoid selling any of the flats or shop for this goal.
– Real estate exit is slow and lacks liquidity when needed for education.

++Mutual Fund Taxation Rules

– When you redeem equity mutual funds, gains above Rs 1.25 lakhs/year are taxed at 12.5%.
– If redeemed before 1 year, then taxed at 20%.
– For debt funds, all gains are taxed as per your income slab.
– Hence, keep your child’s education corpus in equity-oriented hybrid or equity funds.
– Time your redemptions across financial years to reduce tax.
– Plan in advance. Don’t wait till last year of college.

++Child's Name Investments – Pros and Cons

– You can invest in your name and tag goal as "Child’s Education".
– Or you can invest in child’s name using minor account with parent as guardian.
– Minor accounts require more documentation for withdrawal.
– Taxation is clubbed with parent till child turns 18.
– Keeping in your name makes tracking and management easier.
– Use goal tracking in app or spreadsheet to stay aligned.

++Retain Flexibility in Investment Style

– Avoid rigid structures like insurance-cum-investment policies.
– They give low returns and lock your money.
– If you already have ULIP or LIC endowment policies, consider surrendering them.
– Redeploy funds in mutual funds for higher growth.
– Keep your child’s corpus liquid, flexible and market-linked.
– Equity SIPs give compounding with full liquidity and no lock-in.

++Parental Wealth and Succession Planning

– Parents are financially independent. That is excellent.
– Do prepare a Will for both parents.
– Ensure shop and rental property rights are clearly documented.
– You may create a family trust if you want future income to go to child.
– Succession planning ensures your child benefits from family wealth smoothly.

++Education Inflation vs Investment Returns

– Education cost rises 8–10% per year.
– Mutual fund SIPs in equity give 11–14% CAGR over long term.
– You are beating inflation by a healthy margin.
– Maintain SIPs for 10–15 years to reach Rs 1–1.5 Cr easily.
– Avoid stopping SIPs in market corrections. That’s when wealth is created.

++Track, Review and Rebalance Regularly

– Tag all SIPs and investments clearly as per goal.
– Review once in 6 months or 1 year.
– Rebalance if any fund is underperforming consistently for 2–3 years.
– Avoid emotional decisions. Stay with plan even in volatility.
– Use Certified Financial Planner to guide you with regular reviews.
– Don’t follow market tips or YouTube noise for child’s goal.

++Final Insights

– Your financial base is very strong. That gives you a big advantage.
– Now, add structure and discipline around your child’s future goal.
– Use mutual funds with SIP, not direct equity or real estate.
– Keep portfolio flexible, liquid and tax-efficient.
– Avoid insurance-linked investments and direct funds.
– Involve a Certified Financial Planner for personalised guidance.
– Protect your family with proper term and health insurance.
– Tag, track, review, and stay invested with patience.
– In 15 years, your child’s future will be fully secured.

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