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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 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

Question by Rk on Jul 11, 2025Hindi

Hello sir, I am 39, private employee and earning a salary of 60k per month. Wife has started job recently and her salary is 15k. We have 2 kids aged 9 and 2. We wish to start saving for their education and my retirement. Our expenses are around 50k and can save 15-20k collectively. We both have epf and medical insurance from my company. What should be my plan for good investments? Thank you.

Ans: Your initiative is truly inspiring. Starting early for children’s education and your retirement is wise. You are in the right direction. Your savings habit is strong. Your clarity of purpose is excellent. Now you need a simple but disciplined plan.

Let us assess your financial situation carefully and build your investment strategy step-by-step.

? Understand your present financial strength

– Your combined income is Rs. 75,000 per month.
– Household expenses are Rs. 50,000 per month.
– You are able to save Rs. 15,000 to Rs. 20,000 monthly.
– That is nearly 25% of your income. This is excellent.
– You are salaried with EPF benefits.
– You already have health cover. That’s a solid start.

? Create a small emergency reserve

– First, build an emergency fund.
– Keep at least 4 to 5 months of expenses aside.
– That means about Rs. 2.5 to 3 lakh as reserve.
– Use liquid mutual funds to park this money.
– This fund is only for emergencies.
– Do not mix it with your investments.
– This will give you peace and flexibility.

? Plan your investment goals with clarity

– You have three key goals:

Elder child’s higher education in 9 to 10 years

Younger child’s higher education in 15 to 16 years

Your retirement in 21 years
– All goals are long-term. That works in your favour.
– You have time to grow wealth using equity mutual funds.

? Prioritise child’s education as your first goal

– Education cost is rising faster than general inflation.
– Higher education may cost Rs. 25-40 lakh per child in future.
– So you must start separate SIPs for each child now.
– You can invest Rs. 6,000 for the elder child’s goal.
– You can invest Rs. 4,000 for the younger child’s goal.
– Choose actively managed equity funds. Avoid index funds.
– Index funds cannot beat market.
– Actively managed funds have scope for better returns.
– Skilled fund managers select stocks after deep research.

? For retirement, start now with slow pace

– Start with Rs. 5,000 to Rs. 6,000 per month SIP for retirement.
– Increase it every year with your salary growth.
– EPF will provide one part of your retirement.
– But EPF returns may not be enough alone.
– Equity mutual funds will boost long-term returns.
– This will help fight inflation and build a strong retirement corpus.

? Use SIP route only for wealth creation

– SIP helps build wealth slowly and safely.
– It gives discipline and reduces risk.
– Start SIPs in regular plans only.
– Do not invest in direct plans.
– Direct plans look cheaper but lack expert support.
– You may select wrong funds or exit at wrong time.
– Invest through a CFP-certified MFD.
– They guide, review, and help with tax planning.

? Asset allocation must be done wisely

– You are 39, so equity can be your main asset.
– Allocate 80% of your SIPs into equity funds.
– Balance 20% in debt or hybrid funds.
– Equity helps in growth.
– Debt gives stability and safety.
– This mix will manage risk and return well.

? Choose diversified mutual funds

– Use 2 or 3 categories only. Avoid too many funds.
– Flexi-cap funds for core investment.
– Large & mid-cap funds for balance.
– Add hybrid or balanced advantage fund for stability.
– Do not invest in sectoral funds or thematic funds.
– They are risky and volatile.

? Increase SIPs as your income grows

– Your wife’s income is likely to grow over time.
– You may also get salary hikes.
– Increase SIPs by 10% every year.
– This will keep you ahead of inflation.
– You don’t need to invest a lot at once.
– Start small but increase steadily.

? Avoid investment-cum-insurance products

– Stay away from LIC policies or ULIPs.
– They give low returns with long lock-ins.
– If you already have such plans, consider surrendering.
– Reinvest the money in mutual fund SIPs.
– Keep insurance and investment separate.

? Retirement plan must include your wife

– Your wife must also start a retirement SIP.
– Her EPF will also contribute to future security.
– You both can build a common retirement corpus.
– Maintain a simple and consistent joint investment plan.

? Don’t rely on real estate as investment

– Real estate is illiquid and needs huge capital.
– Maintenance and legal issues are a concern.
– Mutual funds give better flexibility and liquidity.
– So avoid real estate as a wealth-building tool.

? Tax planning through mutual funds

– Long-term gains up to Rs. 1.25 lakh are tax-free.
– Above that, LTCG from equity funds taxed at 12.5%.
– Short-term gains taxed at 20%.
– Debt fund gains are taxed as per your tax slab.
– With proper planning, tax can be reduced.
– Your CFP-certified MFD can guide you yearly.

? Use children’s names in some SIPs

– You can start SIPs in child’s name for education.
– This creates psychological commitment.
– Joint holding can be done with parent.
– Nominee must be added to all investments.
– It ensures smooth transfer of money in future.

? Review your plan every year

– Once a year, meet your MFD.
– Review your fund performance.
– Make changes only if needed.
– Don’t change funds too often.
– Stick to your plan even in market volatility.

? Teach your children about savings

– Involve kids in small financial decisions.
– Let them see how investments grow.
– This creates financial discipline early.
– It also builds a money-wise mindset.

? Protect your goals with term insurance

– Take a pure term insurance policy.
– It protects your family if anything happens.
– Keep the sum assured at least 15 times your salary.
– Avoid investment-linked life insurance plans.
– Term insurance is simple and low-cost.

? Health cover must be reviewed

– Company health cover is good.
– But take a separate family floater plan.
– Choose Rs. 10-15 lakh cover.
– This helps in case of job loss or retirement.
– Add top-up health insurance as family grows.

? Never stop SIPs due to market fear

– Markets will go up and down.
– Your SIP will average out the cost.
– Don’t stop SIPs when market falls.
– That is when you buy more units.
– This will help in long-term wealth building.

? Keep retirement plan flexible

– You may get extra income sources later.
– You may get bonuses or incentives.
– Use part of that for lump sum investments.
– This will reduce pressure on monthly savings.

? Don’t take loan for education or retirement

– Many people use education loan later.
– But it creates debt burden on kids.
– Retirement loans are not possible.
– So plan properly through SIPs now.

? Make your investments joint and nomination ready

– Add your wife as joint holder in some SIPs.
– Add nominee details in all folios.
– This makes succession easy.
– You can also make a simple Will later.

? Final Insights

– You have taken the right step at the right time.
– You are financially aware and responsible.
– Start your SIPs today. Do not delay.
– Keep your savings consistent.
– Review your goals once a year.
– Get help from a Certified Financial Planner.
– Avoid direct plans and index funds.
– Avoid LIC or ULIPs if you hold any.
– Don’t stop SIPs in between.
– You are building a secure future for your family.
– Your dream is achievable with right discipline.

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.