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Ramalingam

Ramalingam Kalirajan  |8442 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 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 - Apr 17, 2024Hindi
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Hello, I want to invest for my girl child for her higher education, she is currently 1yr old. Please suggest some good investment plans or schemes other than SSY.

Ans: Investment Plans for Your Child’s Higher Education
Investing early for your child's higher education is a wise decision. Starting now allows you to take advantage of compound interest, ensuring a substantial corpus when she reaches college age. Let’s explore various investment options that can help you achieve this goal.

Equity Mutual Funds
Equity Mutual Funds are an excellent option for long-term goals like your child's education. They offer higher returns compared to traditional savings schemes. Given the long investment horizon (17-18 years), you can benefit from the power of compounding and ride out market volatility.

Large Cap Funds: Invest in well-established companies with a track record of steady returns. They are less volatile than mid and small cap funds.

Mid Cap and Small Cap Funds: While riskier, these funds offer the potential for higher returns. Allocate a smaller portion of your portfolio to these funds for diversification and growth.

Systematic Investment Plans (SIPs)
Systematic Investment Plans (SIPs) allow you to invest a fixed amount regularly in mutual funds. This method is ideal for long-term investing as it averages out the cost of investments over time and reduces market timing risk.

Advantages: Disciplined investing, rupee cost averaging, and compounding benefits.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is a safe and tax-efficient investment option with a long-term horizon. It offers attractive interest rates and the interest earned is tax-free.

Tenure: 15 years, which can be extended in blocks of 5 years.

Benefits: Safe investment, tax-free returns, and compounding benefits.

Child Plans from Insurance Companies
Child Plans offered by insurance companies are specifically designed to meet future educational expenses. These plans provide insurance cover and an investment component.

Types: Unit Linked Insurance Plans (ULIPs) and traditional endowment plans.

Features: Regular payouts during key educational milestones, life cover for the parent, and waiver of future premiums in case of the policyholder's untimely demise.

Sukanya Samriddhi Yojana (SSY)
While you mentioned excluding SSY, it's worth noting that SSY is a government-backed scheme offering attractive interest rates and tax benefits, specifically designed for the girl child’s future education and marriage expenses.

National Savings Certificate (NSC)
National Savings Certificate (NSC) is a fixed-income investment scheme that offers guaranteed returns and tax benefits.

Tenure: 5 years.

Benefits: Safe investment, guaranteed returns, and tax benefits under Section 80C.

Gold ETFs or Sovereign Gold Bonds
Gold ETFs and Sovereign Gold Bonds are effective ways to invest in gold without holding physical gold. They offer a hedge against inflation and portfolio diversification.

Gold ETFs: Trade on the stock exchange, offering liquidity and convenience.

Sovereign Gold Bonds: Issued by the government, providing interest payments and the benefit of capital appreciation.

Diversified Portfolio
Creating a diversified portfolio can mitigate risks and enhance returns. Here’s a suggested allocation:

Equity Mutual Funds: 50-60% for growth and compounding benefits.

PPF and NSC: 20-30% for stability and tax benefits.

Child Plans: 10-20% for targeted educational milestones and insurance cover.

Gold ETFs or Bonds: 5-10% for inflation protection and diversification.

Regular Monitoring and Rebalancing
Regularly monitor and rebalance your portfolio. Ensure that your investments align with your goals and risk tolerance. As your child approaches college age, gradually shift from equity to more stable, fixed-income investments to protect the corpus from market volatility.

Consulting a Certified Financial Planner
Engaging with a Certified Financial Planner can provide personalized advice tailored to your financial situation. They can help you create a comprehensive investment plan that aligns with your goals and risk tolerance.

Conclusion
By starting early and choosing a mix of investment options, you can build a substantial corpus for your child's higher education. Diversify your investments, monitor them regularly, and seek professional advice to stay on track. Your thoughtful planning will ensure a bright future for your daughter.

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  |8442 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 07, 2025

Asked by Anonymous - Feb 02, 2025Hindi
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What are the best ways to invest for a child, not aware of it's a boy or girl at this time. Investment should take care of education preferably getting some returns at a fixed time interval so that it take care of educational expenses at several stages. Also something for marriage or for further education.
Ans: Investing for a child’s future is a great decision. You need a structured plan. Your investment should cover education at different stages. It should also provide funds for higher education or marriage. A mix of investment options will ensure stable and timely returns.

Understanding Financial Goals for the Child
The first goal is school education expenses.

The second goal is higher education at 18 years.

The third goal is marriage or further studies after 22 years.

Investments should align with these timelines.

Investment Strategy for School and Higher Education
Education costs rise every year due to inflation.

A long-term investment approach will help in wealth creation.

Investments should give returns at different stages.

Equity Mutual Funds for Long-Term Growth
Equity mutual funds provide high returns over long periods.

They help in building a strong education fund.

Actively managed funds perform better than index funds.

SIPs ensure regular contributions with rupee-cost averaging.

Debt Mutual Funds for Stability
Debt mutual funds provide low-risk returns.

They are useful for short-term education needs.

Withdrawals are easier compared to FDs.

Hybrid Mutual Funds for Balanced Growth
These funds combine equity and debt.

They provide stable returns with controlled risk.

Suitable for medium-term goals like college fees.

Systematic Withdrawal Plan (SWP) for Regular Payouts
SWP helps in getting a fixed amount at regular intervals.

You can plan withdrawals for school and college fees.

It ensures cash flow without disturbing long-term investments.

Gold for Future Expenses
Gold investments can be used for marriage expenses.

Gold ETFs and digital gold are better than physical gold.

They are safe and do not have storage risks.

Insurance for Child’s Financial Security
A term insurance plan is essential.

It ensures financial stability in case of uncertainties.

Do not mix insurance with investment.

Tax Considerations
LTCG above Rs 1.25 lakh on equity mutual funds is taxed at 12.5%.

STCG is taxed at 20%.

Debt mutual fund gains are taxed as per the income slab.

Final Insights
Start early to maximize returns.

Choose investments based on different education stages.

Use SWP for regular payouts during school and college.

Ensure term insurance for financial security.

Avoid insurance-linked investment plans.

Keep reviewing and adjusting investments as needed.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8442 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 15, 2025

Asked by Anonymous - Apr 15, 2025Hindi
Money
I want to invest in my daughter's education. She is 3 years now. I am investing in Sukanya Samriddhi Yojana. I would like to invest Rs 10,000 to Rs 15,000 every month for her education and future. Can you please suggest the best schemes?
Ans: It’s truly wonderful that you’re thinking about your daughter’s education early.
This habit of planning ahead gives her a strong foundation.

Let’s look at the best way to invest Rs 10,000 to Rs 15,000 monthly.
We will build a 360-degree plan that is simple, stress-free, and goal-focused.

Understanding the Time Horizon
Your daughter is now 3 years old.

You need funds in two stages – school and college.

School needs may arise in 5 to 8 years.

Higher education needs come in 12 to 15 years.

This gives us two time horizons – medium-term and long-term.

Your strategy must match these time goals for right growth.

Your Existing Investment: Sukanya Samriddhi Yojana
This is a good step.

The interest is tax-free.

It gives capital safety and fixed returns.

But returns are not high enough to beat future inflation.

So, this is only a partial solution.

You must add growth-oriented investments for better wealth.

Risk and Reward Balance
Since the goal is more than 10 years away, equity helps.

Equity gives higher returns over the long term.

But it has ups and downs in the short run.

Don’t worry, we will balance this with stable options.

Let us now split your monthly investment.

Suggested Investment Structure (Rs 15,000 Monthly Plan)
You can adjust to Rs 10,000 also.
The structure stays same.

1. Equity Mutual Funds – Rs 9,000
Invest in actively managed equity mutual funds.

Choose diversified funds with consistent past performance.

Actively managed funds are handled by expert fund managers.

They aim to beat the market.

These funds can give better returns than index funds.

Index funds only follow the market.

They don’t protect you in falling markets.

In your case, beating inflation is more important.

So, avoid index funds. Choose regular active mutual funds.

Invest through a Certified Financial Planner or MFD.

Don’t invest directly.

Direct funds look cheaper but give poor guidance.

You may miss fund reviews, rebalancing, or right asset mix.

A Certified Financial Planner ensures your portfolio stays aligned to your goal.

2. Hybrid or Balanced Mutual Funds – Rs 3,000
These funds mix equity and debt.

They reduce risk, and give more stable returns.

Use them for medium-term needs.

School education and coaching expenses may start in 5–7 years.

These funds give moderate returns with lower risk than pure equity.

Invest regularly through SIPs.

Keep investing even during market ups and downs.

3. Debt Fund or Short-Term Recurring Deposit – Rs 2,000
Use this for very short-term or emergency school needs.

Or yearly fees, books, school trips, etc.

Recurring deposits give capital safety and fixed returns.

You can also use debt mutual funds.

These have slightly better tax benefits if held long.

But debt fund returns are now taxed like interest.

Both options are safe and useful for predictable needs.

Investment Planning for Rs 10,000 Monthly Option
If you want to start with Rs 10,000, here is the split.

Rs 6,000 in equity mutual funds (long term)

Rs 2,500 in hybrid mutual funds (medium term)

Rs 1,500 in RD or debt funds (short term)

Benefits of SIPs (Systematic Investment Plans)
SIP builds discipline.

You invest monthly without timing the market.

It gives compounding benefits.

You average the cost by buying in both low and high markets.

SIPs are best for long-term goals like education.

Why Not Index Funds or ETFs?
Index funds copy the market.

They don’t aim to beat it.

No protection in falling markets.

No professional risk management.

Your goal needs customised solutions.

Active funds give this edge.

ETFs are passive. You also need a Demat account.

They suit traders more than long-term savers.

Avoid them for your child’s goal.

Why Not Direct Plans?
Direct funds skip distributor cost.

But they give no human advice.

You are alone to monitor, rebalance, and manage.

Over 15 years, this becomes difficult.

Mistakes can reduce your final amount.

Better to invest via regular plans with Certified Financial Planner.

You get proper handholding and goal tracking.

You can revise portfolio when goals or risks change.

Review and Rebalance Every Year
Your SIPs must be reviewed every year.

You may need to change funds or amount.

Your daughter’s education needs may increase.

So, rebalancing is important.

Don’t keep investing blindly.

Check performance yearly with the help of a Certified Financial Planner.

Create a Goal-Based Investment Tracker
Write your goal in a book or Excel file.

Write monthly SIP, total invested, and expected returns.

Track this once every year.

This gives motivation and clarity.

You will know if you are on track.

Prepare an Emergency Backup
Education plans can face surprises.

Health issues or job loss may affect savings.

Keep a separate emergency fund for 6–12 months expenses.

Don't use your daughter’s fund for other needs.

This helps you stay committed to her dream.

Prepare Mentally for Long Term
Market may go up and down.

Don’t stop SIPs in bad times.

These phases give the best returns later.

Stay patient and goal-focused.

Avoid panic decisions.

Every rupee invested today brings peace later.

Education Inflation is Real
Education costs are rising 8–10% every year.

A Rs 15 lakh course today may cost Rs 30 lakh in 15 years.

Only growth investments can beat this.

Bank FDs and fixed deposits will not be enough.

Use Sukanya for stability and mutual funds for growth.

Tax Considerations You Should Know
Equity mutual funds give tax benefit if sold after 1 year.

LTCG above Rs 1.25 lakh taxed at 12.5%.

Short-term gains taxed at 20%.

Debt fund gains taxed as per your income slab.

Sukanya returns are tax-free.

NPS has tax benefit also, but partial withdrawal only.

Diversify in a Smart Way
Use 3–4 good mutual fund schemes.

Not more than that.

Too many funds confuse tracking.

Keep it simple.

Focus on long-term performance and fund quality.

Add a Term Plan for Yourself
If you’re the earning parent, take term insurance.

It protects your daughter’s education in case of your absence.

Don’t mix insurance with investment.

ULIPs or money-back plans are not suitable.

Take pure term plan. Low premium and high cover.

Don’t Stop SIPs Midway
Many parents stop SIPs after few years.

Don’t do that.

Continue till her college admission.

You will be thankful later.

Start Early, Benefit More
Your daughter is just 3.

You have 15 years.

Starting early gives big compounding benefits.

Even small monthly SIPs become big corpus.

Educate Your Child Gradually
As your daughter grows, teach her about money.

Let her understand savings and goals.

This habit will help her in adult life.

Finally
Planning your daughter’s future is a noble goal.
You have already started the right steps.

Sukanya Yojana gives stability.
Mutual funds give long-term growth.

Use SIPs in actively managed regular plans.
Take guidance from a Certified Financial Planner.

Keep goals written and reviewed.
Invest every month without fail.

Let your money work while you sleep.
And your daughter’s dreams grow strong.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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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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