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Ramalingam Kalirajan |7410 Answers |Ask -Follow

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

Question by Hitesh on Sep 11, 2023Hindi

Hello sir, i am looking for wealth creation in future. I would like to earn 1 lakh per month after ten years for the next 25 years. How much should I for next 10 years to achieve this target and what mutual funds are best for this target to be realistic?

Ans: Strategic Plan for Wealth Creation

Assessment of Financial Goal

Your aspiration to earn Rs. 1 lakh per month after ten years for the next 25 years reflects a commendable vision for long-term wealth creation and financial security.

Evaluation of Investment Strategy

To achieve this target, it's essential to adopt a systematic investment approach that combines disciplined savings with prudent investment choices.

Calculation of Required Investment

To determine the amount you need to invest over the next ten years to achieve your goal, we must consider factors such as the expected rate of return, inflation, and the desired monthly income.

Analysis of Mutual Fund Selection

When selecting mutual funds for this goal, it's crucial to prioritize funds with a proven track record of consistent performance, a focus on capital appreciation, and a suitable investment style aligned with your risk tolerance.

Assessment of Risk and Return

While equity-oriented mutual funds typically offer higher potential returns over the long term, they also carry higher volatility and risk. Balancing risk and return is essential to ensure the stability and sustainability of your investment portfolio.

Recommendations for Portfolio Construction

Diversified Equity Funds: Allocate a significant portion of your investment portfolio to diversified equity funds, including large-cap, mid-cap, and multi-cap funds. These funds offer exposure to a broad range of stocks and sectors, providing growth potential while managing risk.

Systematic Investment Plan (SIP): Implement a SIP strategy to invest regularly over time, leveraging the power of compounding to maximize returns. Consistent investment discipline is key to achieving your long-term wealth creation goal.

Regular Portfolio Review: Periodically review your investment portfolio to ensure it remains aligned with your financial objectives and risk tolerance. Rebalancing may be necessary to maintain the desired asset allocation and optimize returns.

Professional Guidance: As a Certified Financial Planner (CFP), I recommend consulting with a qualified financial advisor to develop a personalized investment strategy tailored to your specific needs, goals, and risk profile. A professional advisor can provide valuable insights and guidance to help you navigate the complexities of wealth creation effectively.

Conclusion

In conclusion, achieving your goal of earning Rs. 1 lakh per month after ten years for the next 25 years requires a strategic investment approach that combines disciplined savings with prudent mutual fund selections. By prioritizing diversified equity funds, implementing a systematic investment plan, and seeking professional guidance, you can enhance the likelihood of realizing your long-term wealth creation objectives.

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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