Hello, I am 20 Years old and my name is DEVAGYA. I want to generate around 50 crores in the next 15 years for my STABLISH NEW BUSINESS FOR MY child's education. Please suggest the SIP amount and the funds that will help me achieve this target?

Ans: Hello,

Glad to know that our names are same. Secondly, you also have your financial goals mentioned which is really a good sign to more forward with structured investment and tracking of your investments.

Looking at your requirement, please find the below solution from my side.

1) I am supposing that both your goals are maturing in the same year after 15 years.

2) I am assuming the returns of 12% and i am assuming that the figure which you have mentioned is already inflation adjusted which is Rs 5 crore.

Based on this information and assumption, you should have SIP of Rs 1,07,000.

I would recommend to invest in following funds:

1) large & Midcap Fund- 25%
2) Midcap Fund- 25%
3) Flexicap Fund- 25%
4) First Small Cap Fund- 13%
5) Second Small Cap Fund- 12%

You can select any good fund in these categories and stick to it for long term until and unless there are not any major changes to the fund.

Remember one thing, investment is not about selecting the best funds but 95% success in fulfilling your financial goal is managing your emotions and behavior in your journey of wealth creation.

I hope this will help you... Happy Investing...

Disclaimer: This information is only for educational purpose and it should not be taken as buy or sell recommendation. I may or may not have any position in these mutual funds or stocks while answering this question.

Ans: Please do SIP in actively managed diversified equity funds which are performing consistently.

Ans: Certainly, aiming to accumulate INR 5 crores in the next 8 years is an ambitious goal. To achieve this, you'll need to invest strategically and consistently. Considering your age and goal timeline, it's crucial to balance growth potential with risk management.

Firstly, let's calculate the required SIP amount. Assuming an annual return of 10%, you would need to invest approximately INR 3,20,000 per month to reach your target of INR 5 crores in 8 years. However, this calculation is based on ideal conditions and does not account for market fluctuations.

For fund selection, I recommend a diversified portfolio that includes a mix of large-cap, mid-cap, and multi-cap funds to spread risk while maximizing growth potential. Look for funds with a strong track record of performance, consistent fund management, and a focus on quality stocks.

Here are some fund categories to consider:

Large-cap funds for stability and steady growth.
Mid-cap funds for higher growth potential.
Multi-cap funds for flexibility and diversification across market segments.
However, it's essential to conduct thorough research or consult with a Certified Financial Planner to tailor your investment strategy to your risk tolerance, financial situation, and long-term goals. Remember, regular review and adjustments may be necessary to stay on track towards achieving your target.

Ans: Investing with a goal in mind is much like planting a tree. The earlier and more diligently you nurture it, the stronger and more fruitful it grows over time. To aim for a 50 lakh corpus in 15 years, starting early and being consistent with your SIPs is key.

Considering the time horizon and your risk appetite, diversifying across different asset classes might be a wise strategy. It's a bit like cooking a balanced meal, where each ingredient plays a vital role in the overall taste and nutrition.

Remember, the journey of investing is as important as the destination. It's not just about the numbers but also about creating a financial discipline and understanding the markets. A Certified Financial Planner can guide you through this journey, helping you navigate the complexities and ensuring you stay on track.

So, let's embark on this journey together, nurturing your investments and watching them grow towards your goal.

Ans: Understanding Your Goal
Achieving Rs. 1 crore in 5 years is an ambitious target. It requires careful planning and disciplined investing.

You currently invest Rs. 10,000 per month in mutual funds. Let's analyse the situation and devise a strategy to reach your goal.

The Power of Systematic Investment Plans (SIPs)
Systematic Investment Plans (SIPs) allow for disciplined, regular investments in mutual funds. SIPs help in averaging out market volatility and accumulating a significant corpus over time.

Investing regularly can help achieve large financial goals. Let’s explore how much you need to invest monthly.

Calculating the Required SIP Amount
To achieve Rs. 1 crore in 5 years, we need to understand the rate of return and the amount to be invested.

Assuming a conservative annual return of 12%, we can calculate the required SIP amount using a financial formula.

The formula for Future Value of SIP is:

Future Value = P * [ (1 + r/n)^(nt) - 1 ] / (r/n)

where:

P is the SIP amount
r is the annual return rate (decimal)
n is the number of times the interest is compounded per year
t is the number of years
To achieve Rs. 1 crore in 5 years, with an annual return of 12%:

1,00,00,000 = P * [ (1 + 0.12/12)^(12*5) - 1 ] / (0.12/12)

Solving this will give us the SIP amount required.

Assessing the Required SIP Amount
Using the formula, we find that you need to invest around Rs. 1,29,800 per month to achieve Rs. 1 crore in 5 years with a 12% annual return.

This amount is significantly higher than your current investment of Rs. 10,000 per month. Let's explore how you can adjust your strategy.

Exploring Investment Options
Increase Monthly SIP:

Consider increasing your SIP amount gradually.
Start with an affordable increase and aim to reach the required amount.
Increase Investment Horizon:

Extending your investment period reduces monthly SIP requirement.
A longer horizon allows more time for compounding to work.
Seek Higher Returns:

Explore funds with higher potential returns, keeping in mind the risk involved.
Diversify your portfolio to balance risk and returns.
Benefits of Actively Managed Funds
Actively managed funds involve professional fund managers making investment decisions. These managers aim to outperform the market.

Advantages:

Potential for higher returns compared to index funds.
Professional management ensures better asset allocation.
Flexibility in investment strategies to adapt to market conditions.
Disadvantages of Index Funds:

Limited to the performance of the index.
Less flexibility in asset allocation.
No active management to mitigate risks or seize opportunities.
Importance of Regular Funds
Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) ensures professional guidance.

Benefits:

Regular funds provide ongoing advisory services.
Access to research and insights for informed decisions.
Assistance in portfolio rebalancing and adjustments.
Disadvantages of Direct Funds:

Lack of professional guidance.
More responsibility on the investor to make informed choices.
Potential for missed opportunities or increased risk.
Adjusting Your Financial Plan
To bridge the gap between your current investment and the required SIP, consider these steps:

Increase Income:

Explore ways to boost your income.
Additional income can be directed towards your SIP.
Reduce Expenses:

Cut unnecessary expenses and redirect savings to investments.
Prioritize your financial goal over discretionary spending.
Bonus and Windfalls:

Invest any bonuses, incentives, or windfalls.
Lump-sum investments can significantly boost your corpus.
Track and Review:

Regularly review your investment portfolio.
Adjust based on market conditions and financial goals.

You have a commendable goal and the discipline to invest regularly. This shows your dedication towards achieving financial freedom.

Your current SIP is a great start. With strategic adjustments, you can reach your goal.

Understanding Risks and Returns
Investing involves risks. Higher returns often come with higher risks. It’s important to understand your risk tolerance.

Diversify your investments to balance risk and returns. Diversification spreads risk across various assets, reducing overall risk.


We understand that achieving Rs. 1 crore in 5 years seems challenging. However, with a disciplined approach, it is achievable.

Financial planning requires commitment and sometimes tough decisions. But your long-term financial security is worth the effort.

Final Insights
To achieve Rs. 1 crore in 5 years, you need to significantly increase your monthly SIP. Consider increasing income, reducing expenses, and investing windfalls.

Seek higher returns through actively managed funds. Diversify your portfolio to balance risk. Invest through a Certified Financial Planner for professional guidance.

Regularly review and adjust your investments. Stay disciplined and committed to your goal.

You are on the right path. With strategic adjustments, you can achieve your financial goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in