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Ramalingam Kalirajan |7367 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 karthikeyan on May 29, 2024Hindi

Hello Sir Very good morning Myself Karthikeyan.S from Hosur. Age 36 i have 2 son ( Age 8, 4 ). I Would like to create a wealth to achieve below goals. Child education - 1 crore after 10 years Additional backup amount - 1 crore after 15 years Retirement Plan - At my age of 55 with monthly return of 25000. So , pls guide me how to invest to achieve this goals .

Ans: Crafting a Comprehensive Wealth-Building Strategy
Karthikeyan, it's great that you're planning for your children's education, additional backup, and retirement. This forward-thinking approach will help secure your family's future. Let’s structure your investments to achieve your goals effectively.

Goal 1: Child Education - Rs. 1 Crore After 10 Years
Investment Strategy
To accumulate Rs. 1 crore for your children's education in 10 years, consider an aggressive investment approach. Equity mutual funds are suitable for long-term goals due to their potential for high returns.

Recommended Fund Types
Large Cap Funds: These funds invest in well-established companies with a proven track record.

Mid Cap Funds: These funds offer a balance between risk and return, investing in companies with high growth potential.

Multi Cap Funds: These funds diversify across different market capitalizations, reducing risk while aiming for growth.

Suggested Allocation
Large Cap Funds: 40%
Mid Cap Funds: 30%
Multi Cap Funds: 30%
Goal 2: Additional Backup Amount - Rs. 1 Crore After 15 Years
Investment Strategy
For your additional backup fund, a slightly balanced approach is suitable. Combining equity and debt funds can help achieve this goal with moderate risk.

Recommended Fund Types
Balanced Advantage Funds: These dynamically manage the allocation between equity and debt based on market conditions.

Hybrid Funds: These funds invest in both equity and debt, providing balanced risk and return.

Aggressive Hybrid Funds: These have a higher equity component, offering potential for higher returns.

Suggested Allocation
Balanced Advantage Funds: 40%
Hybrid Funds: 30%
Aggressive Hybrid Funds: 30%
Goal 3: Retirement Plan - Monthly Return of Rs. 25,000 at Age 55
Investment Strategy
To generate a monthly return of Rs. 25,000 at age 55, you need a mix of growth and stability. Systematic Withdrawal Plans (SWP) from mutual funds can provide regular income during retirement.

Recommended Fund Types
Debt Funds: These provide stability and regular income.

Hybrid Funds: These balance growth and income needs.

Equity Income Funds: These generate dividends and offer potential for capital appreciation.

Suggested Allocation
Debt Funds: 50%
Hybrid Funds: 30%
Equity Income Funds: 20%
Monthly Investment Plan
To achieve your goals, consistent monthly investments are crucial. Here’s a structured plan:

Child Education
Assuming an average annual return of 12%, you need to invest around Rs. 50,000 per month in the suggested equity funds.

Additional Backup
Assuming an average annual return of 10%, you need to invest around Rs. 25,000 per month in the suggested balanced funds.

Retirement Corpus
Assuming an average annual return of 8%, you need to invest around Rs. 15,000 per month in the suggested funds.

Reviewing and Rebalancing
Regularly review your portfolio to ensure it aligns with your goals. Rebalance annually to maintain your desired asset allocation.

Conclusion
Karthikeyan, your dedication to planning for your family's future is admirable. By following this structured investment strategy, you can achieve your financial goals with confidence. Keep track of your investments, stay disciplined, and adjust as needed.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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