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How can I save and invest for my children's education with a limited income?

Ramalingam

Ramalingam Kalirajan  |6992 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 24, 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
Asked by Anonymous - Jul 23, 2024Hindi
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Hai sir I am working in The Singareni Collieries Company Limited My gross salary 65000 Net salary 45000/- In that 25500 are regular chit which at end in 05.02.2025 I had two kids and age is one month both. How to slip the income and start investment in sip and mutual fund. The income should get at the age 20 of my children for education

Ans: Assessing Your Current Financial Situation
You have a gross salary of Rs 65,000. Your net salary is Rs 45,000. You have two young children, aged one month each. Rs 25,500 is tied up in a regular chit, maturing on 05.02.2025.

Understanding Financial Goals
Your main goal is to save for your children’s education. You want the income to be available when they turn 20.

Income Splitting and Investment Strategy
To achieve your goal, a systematic investment approach is crucial. Consider splitting your income as follows:

Essential Expenses: Allocate funds for household and daily expenses.

Emergency Fund: Keep aside money for emergencies, about 3-6 months of expenses.

Investment in SIP: Start a SIP (Systematic Investment Plan) in mutual funds for long-term growth.

Benefits of SIP in Mutual Funds
SIP allows you to invest a fixed amount regularly. It helps in rupee cost averaging and compounding.

Disciplined Savings: SIP ensures regular savings without market timing worries.

Long-Term Growth: Equity mutual funds can offer higher returns over a long period.

Flexibility: SIPs can be started with a small amount and increased over time.

Choosing the Right Mutual Funds
Invest in actively managed funds through a Certified Financial Planner (CFP). Actively managed funds have professionals making investment decisions.

Active Management: Professionals actively manage the funds, aiming for better returns.

Research and Analysis: Fund managers conduct thorough research before making investments.

Performance Tracking: Regularly track the performance and make necessary adjustments.

Steps to Start SIP and Mutual Fund Investments
Here’s a step-by-step guide to start investing:

Assess Monthly Savings: After essential expenses and emergency fund, assess how much you can invest.

Select Funds: Choose a mix of equity and debt funds for a balanced portfolio.

Start SIP: Initiate SIP with the chosen mutual funds.

Review and Adjust: Periodically review your investments and adjust if needed.

Planning for Long-Term Goals
Your children’s education is a long-term goal. Starting early gives you the advantage of compounding.

Start Early: Begin investments as early as possible for better growth.

Regular Contributions: Ensure regular contributions to the SIP.

Review Goals: Review your financial goals periodically and adjust investments accordingly.

Evaluating Investment Options
While choosing funds, consider factors such as:

Fund Performance: Look at the past performance of the funds.

Fund Manager: Consider the experience and track record of the fund manager.

Expense Ratio: Lower expense ratios can lead to better net returns.

Final Insights
To achieve your goal, start investing in SIPs and mutual funds. Ensure regular contributions and periodic reviews. Consult a Certified Financial Planner for personalized advice.

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.
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Ramalingam

Ramalingam Kalirajan  |6992 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 12, 2024

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Hi Joshi Ji, I am 42 years male and having no such exposure in SIP or any other growth funds. Kindly suggest me in which way I can invest at least 35 k/month to generate maximum corpus for my retirement and 20 k/month for my kid's higher education. I have one son and he is currently in class 6th. I have some (approx 50 k/yearly) insurance linked investment rest PF and term insurance, son's tution fees generally fulfill the income tax related requirement. Kindly suggest how to plan my finances. I am seriously feeling that I am late at my financial planning but want to leap it from hereon.
Ans: Dear Sanjay,

Thank you for reaching out for financial advice. It's commendable that you're taking proactive steps towards planning your finances, even if you feel you're starting later than desired. With careful planning and disciplined investing, you can still work towards achieving your financial goals.

Given your objectives of building a corpus for retirement and your child's higher education, here's a suggested plan:

Retirement Planning:

Start investing ?35,000 per month in mutual funds through SIPs targeting retirement. Allocate funds across diversified equity mutual funds to maximize growth potential over the long term.
Consider funds that align with your risk tolerance and investment horizon. Since you're starting relatively late, you may need to take a slightly higher risk to accelerate wealth accumulation.
Regularly review your investment portfolio and adjust asset allocation as needed based on changing market conditions and your evolving financial situation.
Child's Higher Education:

Allocate ?20,000 per month towards building a corpus for your child's higher education.
Invest this amount in a mix of equity and debt mutual funds to balance growth potential with stability. Since your child is in class 6th, you have approximately 6-10 years until higher education expenses arise. You can afford to take a moderate risk with this investment.
Monitor the performance of the funds regularly and make adjustments as needed to stay on track towards your goal.
Insurance and Other Investments:

Continue with your existing insurance-linked investments, PF contributions, and term insurance. Ensure that you have adequate coverage to protect your family's financial future in case of unforeseen events.
Utilize tax-saving investment options such as ELSS (Equity Linked Savings Scheme) mutual funds to optimize tax benefits while building wealth.
Regular Financial Review:

Schedule regular financial reviews with a qualified financial advisor to assess your progress, make necessary adjustments, and ensure that you're on track to meet your financial goals.
Take advantage of any surplus income or windfalls by channeling them towards your investment goals to accelerate wealth accumulation.
Remember, it's never too late to start planning for your financial future. By staying committed to your goals, investing wisely, and seeking professional guidance when needed, you can achieve financial security and provide for your family's needs.

Best regards,

Ramalingam, MBA, CFP
Chief Financial Planner

..Read more

Ramalingam

Ramalingam Kalirajan  |6992 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

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Sir I am 34 year old My 02 Child what Iam Mutual fund start the SIP monthly/Qutraily pay then u give me advice what type start of investment for next 15 year
Ans: Starting Mutual Fund SIPs for Your Children's Future
It's wonderful that you're considering investing for your children's future at such a young age. Let's explore suitable investment options for the next 15 years.

Understanding Your Goals
Genuine Compliments: Your proactive approach towards securing your children's future through mutual fund investments is commendable.

Empathy and Understanding: I understand the importance of providing financial stability and opportunities for your children's growth and development.

Selecting Mutual Fund SIPs
Long-Term Horizon: With a 15-year investment horizon, you have the advantage of harnessing the power of compounding to grow your investments.

Diversification: Investing across different mutual fund categories such as equity, debt, and balanced funds can help spread risk and optimize returns.

Disadvantages of Direct Funds: Direct funds require active management and may not be suitable for all investors, especially those lacking time or expertise.

Benefits of Regular Funds Investing through MFD with CFP Credential: Investing through Mutual Fund Distributors (MFD) with Certified Financial Planner (CFP) credentials provides personalized guidance and ongoing portfolio management.

Tailoring Investment Strategy
Equity Funds: Allocate a significant portion of your SIPs to equity funds for long-term capital appreciation, albeit with higher volatility.
Debt Funds: Consider debt funds for stability and regular income, particularly as your children approach higher education or other milestones.
Balanced Funds: Opt for balanced funds to enjoy the benefits of both equity and debt exposure, suitable for a moderate risk appetite.
Review and Adjustments
Periodic Review: Regularly review your investment portfolio to ensure it remains aligned with your children's goals and your risk tolerance.
Adjust as Needed: Make adjustments to your SIPs based on changes in market conditions, investment performance, and evolving financial goals.
Conclusion
By starting mutual fund SIPs for your children's future and working with a Certified Financial Planner, you can build a robust investment portfolio that helps secure their financial well-being over the next 15 years.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6992 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

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Hai sir, I am working in The Singareni Collieries Company Limited. My gross salary 60000 Net salary 45000 In that 25500/- rupees for regular chits with 1% interest. I had 2 kids and both are one month. How to start investment in sip and mutual fund and I have to income at age children 22y
Ans: You have a stable job with a net salary of Rs 45,000. You are already committed to chits, which takes up a significant portion of your income. With two children, who are just one month old, you’re thinking ahead. You want to plan for their future, especially for when they turn 22 years old.

Evaluating Your Current Commitments

Chit Fund Involvement: You’re investing Rs 25,500 in regular chits. While chits offer liquidity, they may not be the best for long-term wealth creation. The 1% interest is relatively low compared to other investment options.

Remaining Salary: After paying for chits, you have Rs 19,500 left. This amount needs to cover your living expenses and potential investments.

Starting SIPs and Mutual Funds

Starting Small: Begin with SIPs that fit your budget. Even starting with a small amount, say Rs 2,000 to Rs 3,000 per month, can make a difference over time.

Choosing the Right Funds: For long-term goals like your children's education, consider equity-oriented funds. These have the potential to grow significantly over 22 years.

Avoid Index Funds: Index funds track the market but lack flexibility. Actively managed funds can adapt to market changes and may offer better returns.

Planning for Your Children's Future

Goal-Based Investing: You want income when your children turn 22. This aligns with their higher education. SIPs in equity mutual funds can help build a solid corpus over time.

Increase Investments Gradually: As your income grows or once you complete your chit obligations, increase your SIP contributions. This will boost your investment corpus.

Regular Fund Reviews: Work with a Certified Financial Planner to review your investments regularly. This ensures they are on track to meet your long-term goals.

Understanding the Drawbacks of Direct Funds

Limited Guidance: Direct funds may seem cheaper but require active management by you. This can be challenging without financial expertise.

Benefits of Regular Funds with CFP Guidance: Investing through regular funds managed by a Certified Financial Planner provides expert advice. It helps in selecting the right funds and managing risks.

Maximizing Your Savings

Emergency Fund: Ensure you have an emergency fund. It should cover at least 3 to 6 months of your expenses. This can protect your investments in case of unexpected financial needs.

Avoid High-Cost Debt: If possible, avoid high-interest loans or debt. Focus on investing your savings in growth-oriented options like mutual funds.

Final Insights

You’re on the right track by planning for your children’s future. Starting SIPs in equity mutual funds can help you build a substantial corpus over the next 22 years. Keep your goals in mind, and invest steadily. Gradually increasing your SIP contributions and working with a Certified Financial Planner will ensure your investments are aligned with your objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |6992 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 08, 2024

Money
Sir please review my mutual fund sip portfolio * Axis Mid Cap Fund - Direct Growth = 1000 * ICICI Prudential BHARAT 22 FOF - Direct Plan = 1000 * Mirae Asset Emerging Bluechip Fund - Direct Plan = 1000 * Parag Parikh Flexi Cap Fund - Direct Plan = 1000 * quant Small Cap Fund - Direct Plan Growth = 1000 * SBI Small Cap Fund Direct Growth = 2000 * SBI PSU direct plan growth = 1000 My age is 27 . Looking a long term investment with higher return. Shall I continue this portfolio or any changes required? Kindly give your valuable suggestions . Thank you
Ans: Your portfolio looks well-constructed, with a strong foundation in mid-cap, small-cap, and flexi-cap funds. Each fund you've chosen reflects a strategic approach for growth. Let's evaluate each category and make any necessary suggestions to ensure you achieve the best potential returns over the long term.

Overview of Your Current Portfolio
You’ve diversified well across categories, with each fund serving a unique role. Let’s analyze the strengths and potential improvements in each area of your portfolio.

Mid-Cap Funds
Mid-cap funds, like the one in your portfolio, focus on companies with substantial growth potential but higher risk compared to large-cap companies. Over the long term, these funds often outperform due to their growth-focused nature.

However, consider monitoring this fund periodically. Mid-cap stocks can face higher volatility, which may impact returns if held solely without re-evaluation.

Small-Cap Funds
Small-cap funds are growth-oriented, targeting smaller companies with significant room for expansion. You’ve allocated well to this category, focusing on funds with robust track records.

Due to their volatile nature, however, they can experience sharp swings. A Certified Financial Planner can offer guidance to rebalance if necessary, which could enhance returns and help you avoid undue risk over the long term.

Flexi-Cap Funds
Flexi-cap funds have the flexibility to invest across large, mid, and small-cap companies, making them versatile. This allocation ensures that you have exposure to high-growth stocks while benefiting from the stability of large-cap stocks.

This type of fund aligns well with your long-term goal as it can balance risk across market cycles. Continue with this allocation for stable yet high-growth potential.

Sectoral Funds (Public Sector & PSU Funds)
Sectoral funds focused on PSUs add a thematic angle to your portfolio, providing exposure to government-linked companies. Such funds may perform well during economic growth phases or government-led initiatives but might also experience phases of underperformance.

For long-term investors like you, relying heavily on sectoral funds can add cyclical risk. A diversified equity fund may offer higher long-term growth with less risk than sector-specific investments.

Evaluation of Direct Fund Plans
Sir, investing through direct plans saves on expense ratios, which may seem beneficial at first. However, there are significant drawbacks:

Lack of Advisory Support: Direct plans don't offer professional guidance. Over time, tracking and rebalancing become crucial, and a Certified Financial Planner (CFP) with an MFD (Mutual Fund Distributor) credential ensures optimal management.

Market Cycles and Rebalancing: Without expert oversight, you could miss critical adjustments during volatile market phases, affecting returns. A CFP helps in such rebalancing for better performance.

Tax Implications and Withdrawals: Selling or withdrawing from mutual funds, especially equity funds, incurs tax. Long-term capital gains (LTCG) on equity mutual funds are taxed at 12.5% for gains above Rs 1.25 lakh, while short-term gains (STCG) incur 20%. A regular plan with an MFD provides ongoing tax-efficient strategies.

Opting for regular plans via an MFD with a CFP credential will enable you to maximize returns while accessing insights that make a difference long term.

Suggested Modifications for Higher Returns and Stability
Focus on Balanced Funds Over Sectoral Exposure

To limit risks tied to sectoral funds, consider allocating a portion to balanced or diversified funds. These funds balance equity with stable instruments like debt, reducing volatility and sustaining growth.

Revisit Small and Mid-Cap Allocations

With multiple small-cap and mid-cap funds, consider focusing on one fund in each category. Over-diversification in these can dilute returns and increase tracking requirements. A strategic reallocation could yield more focused, consistent growth.

Consider SIP Step-Up for Long-Term Compounding

An annual SIP step-up, even a small amount, could enhance long-term wealth creation significantly. This adjustment boosts your corpus over time and aligns with your long-term goal of maximizing returns.

Seek Guidance from a Certified Financial Planner

Having a CFP manage your portfolio brings personalized insight into market trends, rebalancing, and tax-efficient strategies. A CFP ensures you capitalize on growth while maintaining balance and tax efficiency.

Key Benefits of Actively Managed Funds Over Index Funds
Sir, I noticed you are not invested in index funds, which is beneficial for your growth objective. Actively managed funds outperform index funds, especially in dynamic market conditions. Here’s why:

Higher Returns Potential: Actively managed funds provide the flexibility to capitalize on changing market opportunities, which index funds lack due to their passive structure.

Adaptive Strategy: Fund managers of actively managed funds adjust to market shifts, providing growth and safety in a fluctuating market.

Downside Protection: During bear markets, actively managed funds can adjust exposure, while index funds simply follow the market downturn. Active management can minimize losses, giving a steadier performance over time.

Final Insights
Sir, you have built a promising portfolio with well-selected funds across categories. A few modifications could ensure a more balanced, growth-oriented, and tax-efficient portfolio. The following adjustments will help you achieve higher returns with sustained stability:

Consider balanced or diversified funds for steadier growth.

Limit mid-cap and small-cap fund overlaps to reduce portfolio complexity.

Use the expertise of a CFP to handle rebalancing, tax efficiency, and market cycle adaptations.

Continue focusing on actively managed funds over index funds, as these provide better long-term value.

Through these steps, you can optimize your portfolio for maximum growth and stability, setting a strong foundation for your long-term investment goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Anu

Anu Krishna  |1287 Answers  |Ask -

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

Asked by Anonymous - Nov 07, 2024Hindi
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Relationship
Hi Anu Mam Im 27 yrs old ( married) and 10 yrs old daughter. Im seperated from my husband since 2 yrs due to several reasons like he is drinking and Totally addicted to it. And he is totally dependent and now today also roaming on the roads of some streets of hyd. I belongs to an orthdox family. Now the question is one backward caste man who is married age : 33 he is interested in me and proposed me to a marriage after knowing all my past and saying that he accepts my child too. And the thing is he said a lie to me at first that he is unmarried and even though i had a good impression on him about the way he behaves with me he even treat me in a very polite manner. He says he loves me even though i too had a good impression but the things are the castes and can we both settle down with a marriage can we be happy or he is only trying to convince me to get him a wife to care care of him or only for his parents, he always talks about his own sister and also the office colleagues calls them sister and get emotional about them those who left the office. And he cries a lot which i dont trust on him and the face i see him that was not an real cry that looks like an act which i dont like in him. May he is acting ? Or really loving me, ge cares alot i feel like he is over reacting
Ans: Dear Anonymous,
If you are in doubt, then it's highly likely that he is putting on an act. Go with your intuition and hey hey, you said that he is married and so are you...You do realize that you just can't go ahead and marry while you are already to other people, right?
Focus on what's happening in your life; you obviously have to do something about it...Other relationships can wait!

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

...Read more

Anu

Anu Krishna  |1287 Answers  |Ask -

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

Asked by Anonymous - Nov 06, 2024Hindi
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Relationship
Hello Ms Anu, I am a 42yr female..married since 14 yrs and have 10yr old son . I am highly qualified and financially independent. My marriage was a arranged one.. but in these 14 yrs.. I never experienced love or and attachment from my husband's side. He is a family man.. there is no other woman involved..He loves his parents and his two sisters immensely... but always treats me as a option. I feel humiliated and lonely and he has short temper when i talk about this issue... so basically I don't discuss... but that is no solution... I am suffering and unhappy. What should I do?
Ans: Dear Anonymous,
A few married men can be more focused on the women on their side of the family; it becomes easy to express love, care and attention to them as he has grown with them.
A wife happens to be someone that he is yet to understand. It requires effort to make a marriage work; your husband finds it convenient to take the easy way out and 'hang out' with his family.
So, here you take the lead and start. Start not by bringing forth your complaints as this is going to push him further to them which is going to annoy you BUT by inviting him to be with you. A lot of work, I get it...but the bottom line: that's what you want, right?
Plan dates evenings, take short vacations together, work-out together...the key is to establish a connection which never had its chance in the first place...So, give your best shot! Most times actions speak louder than words ever can...

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

...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.

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