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: You have provided valuable details about your financial situation. Let’s analyse your current standing and future goals.

Age: 46 years old
Running Investments:
Pension Plan with a current fund value of Rs 42 lakhs (maturing in 2037).
Equity Mutual Fund with a current fund value of Rs 12 lakhs.
Income & Expenditure:
Monthly rental income of Rs 8,000.
Monthly expenditure of Rs 25,000.
Yearly EMI of Rs 1.2 lakh for ongoing investments.
Savings: Bank balance of Rs 26 lakhs.
Investment Goals:
You want to invest Rs 10-15 lakh to build a corpus of Rs 1 crore in 18 years for your child.
You also need a monthly income of Rs 50,000 in the next 2-3 years.
Given these goals, let’s discuss how you can achieve them.

Income Generation for Monthly Needs (Rs 50,000)
To achieve a monthly income of Rs 50,000 in the next 2-3 years, we need to explore investment options that can generate consistent returns.

Rental Income: You already have Rs 8,000 coming in monthly. This helps reduce your income requirement.

Systematic Withdrawal Plan (SWP):

A Systematic Withdrawal Plan from your mutual funds could be useful.
You can park part of your Rs 26 lakh bank balance into a debt-oriented hybrid mutual fund.
These funds provide stability with moderate returns.
You can withdraw monthly amounts through SWP to meet your requirement.
Based on the fund's performance, you can plan to withdraw around Rs 42,000 per month to reach your target of Rs 50,000 (including Rs 8,000 from rent).
This option allows you to use your capital effectively while keeping it invested for moderate growth.

Fixed Income Options:

You may also consider some amount in fixed deposits or high-interest-bearing savings instruments.
However, they are taxed as per your income tax slab, so this may reduce post-tax returns.
Combining these with SWP ensures liquidity and some level of fixed returns.
This way, your immediate income needs can be met, keeping your capital intact.

Investment Plan for Building Rs 1 Crore for Child's Future
You aim to build Rs 1 crore in 18 years for your child. The best way to achieve this is through equity-based investments, as they tend to offer the highest long-term growth.

Equity Mutual Funds:

For long-term goals like 18 years, equity mutual funds are the most suitable.
Your existing equity mutual funds of Rs 12 lakh can continue to grow.
You can also invest Rs 10-15 lakh from your bank balance into diversified equity funds.
Actively managed equity mutual funds generally perform better over a long period compared to passive index funds, which often lack flexibility in changing market conditions.
It’s crucial to focus on mid-cap and small-cap funds as they have higher growth potential over an 18-year period.
Regular vs Direct Funds:

You might have heard about direct mutual funds, which have lower fees.
However, direct plans require deep market understanding and regular monitoring.
Investing through a Certified Financial Planner (CFP) who works with an MFD can help you manage your portfolio professionally, ensuring that your investments are regularly rebalanced to match market changes.
Regular plans, managed by CFPs, provide professional guidance, making them a better choice for individuals who do not want the stress of tracking every detail.
SIP for Consistent Growth:

You can start a SIP (Systematic Investment Plan) of Rs 50,000 monthly.
This amount will steadily build wealth over 18 years.
By investing Rs 50,000 a month in a mix of large-cap, mid-cap, and small-cap funds, you stand a good chance of achieving your target of Rs 1 crore.
A professional MFD working with a CFP can help you select funds based on your risk profile and growth expectations.
Review of Existing Pension Plan
Your pension plan with a current fund value of Rs 42 lakhs is a significant part of your retirement portfolio.

Performance Review:
It is crucial to review the performance of this pension plan periodically.
Ensure that it continues to give reasonable returns, as you have 13 more years until it matures.
Often, these plans have high charges and lower returns compared to equity mutual funds. You should evaluate if it makes sense to continue with this investment or switch to something more productive.
If the returns are lower than expected, you may want to consider redirecting future premiums into better-performing mutual funds.
Tax Implications on Your Investments
Understanding tax liabilities is essential for maximising your returns.

Capital Gains Tax on Mutual Funds:

For equity mutual funds, LTCG (Long-Term Capital Gains) above Rs 1.25 lakh is taxed at 12.5%.
Short-Term Capital Gains (STCG) on equity mutual funds are taxed at 20%.
For debt mutual funds, LTCG and STCG are taxed according to your income tax slab.
You should consult with your CFP to ensure that your withdrawals and investments are done in the most tax-efficient manner.
Tax on Rental Income:

The Rs 8,000 monthly rental income is also taxable.
Ensure you factor this into your annual tax planning.
By optimising tax strategies, you can maximise your returns while keeping your liabilities low.

Contingency and Emergency Fund
While investing for long-term goals, don’t overlook short-term financial safety.

Emergency Fund:
Out of your Rs 26 lakh bank balance, set aside at least Rs 4-5 lakh as an emergency fund.
This will help you manage any unforeseen expenses without disturbing your investments.
Keep this amount in a liquid or short-term debt fund for easy access.
Health Insurance:
Since your wife is the sole earning member now, ensure that you have adequate health insurance coverage.
This will help safeguard your family’s finances in case of medical emergencies.
Revisit Your Financial Plan Regularly
It is essential to track your financial journey.

Review Performance:

Regularly review the performance of your mutual funds and pension plans.
Make adjustments based on market conditions and your changing life circumstances.
Stay on Track with Goals:

Ensure that you are consistently investing towards your Rs 1 crore goal.
Keep in touch with your CFP to monitor if you’re on track, and take corrective actions if required.
By actively managing your investments and reviewing your goals, you can ensure financial security for your family.

Finally
Your situation is unique, and your goals are achievable with a disciplined approach.

By combining equity mutual funds, SWPs, and systematic SIPs, you can grow your wealth and generate regular income. Balancing risk and return is essential to meet your child’s future needs and your immediate income requirements.

Keep your financial plan flexible, review it often, and stay committed to your goals.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You are 35, earning Rs 64,000 monthly. You have two life insurance policies, two kids aged 9 and 2, and your spouse manages family expenses and loans. You aim to build Rs 2 crore corpus each for both kids. That is a total of Rs 4 crore. You can invest Rs 30,000 monthly toward this goal. You are also investing Rs 3,600 in an index fund and Rs 1,000 in an opportunity fund. You hold a 6 cent land as a backup.

Let’s now plan how to achieve your Rs 4 crore goal smartly and safely.

? Understanding Your Financial Goals

– You have two major education goals.
– Each child’s education needs Rs 2 crore.
– You have around 9 years for your elder child.
– You have around 16 years for your younger child.
– Rs 30,000 monthly investment is available for both goals.
– You also hold land as a future backup.

? Why Your Current Investments May Not Work

– You invest Rs 3,600 in an index fund.
– Index funds don’t suit goal-based investing.
– They follow the market without managing downside.
– They fall as much as the market during crisis.
– They offer no active decisions or risk control.
– For child education, you need less risk and more control.
– You also invest Rs 1,000 in an opportunity fund.
– That is too low to make any real impact.

? Disadvantages of Index Funds

– Index funds don’t protect capital in falling markets.
– They don’t rebalance between safer and growth assets.
– No fund manager actively manages risks.
– In a bad market, they can lose 30%–40%.
– You may panic and stop SIP.
– That puts your child’s future at risk.
– Goal-based investing needs active control.
– That comes only from actively managed funds.
– Stay away from index funds in education planning.

? Why Regular Plans Are Better than Direct Plans

– Direct mutual funds save commission.
– But they give no personalised support.
– You must track performance and do rebalancing alone.
– That is not easy when markets crash or underperform.
– Regular plans through MFD with CFP give guidance.
– A CFP gives discipline, tracking, and rebalancing support.
– For education goals, advice is more important than saving fees.
– A Certified Financial Planner is like a doctor for your goals.
– Don’t go direct unless you are a market expert.

? Assessing Your Insurance Policies

– You pay Rs 4,500 per month and Rs 50,000 per year.
– That is Rs 1.04 lakh per year in insurance.
– These are likely traditional endowment or moneyback plans.
– They give low returns of 4% to 5%.
– These plans also lock your money for long.
– If you have term insurance separately, you can surrender these.
– Use surrender proceeds to invest in mutual funds.
– If surrender value is low now, make it paid-up.
– Do not continue new premiums in these policies.
– Insurance is not investment. Keep both separate.

? Create Separate Portfolios for Each Child

– Elder child has 9 years.
– Younger child has 16 years.
– Don’t mix both goals.
– Use separate SIPs and tracking for each.
– This helps you plan better and track clearly.

? Investment Plan for Elder Son (Rs 2 Cr in 9 years)

– Use 70% equity and 30% debt mix.
– Use large & midcap, flexicap and balanced advantage funds.
– Add 1 conservative hybrid or short-term debt fund.
– Keep SIP of Rs 18,000 monthly here.
– Review portfolio every year.
– Reduce equity slowly after 6 years.
– Shift to hybrid or short-term funds for safety.
– Avoid risk in last 2 years before goal.
– Also don’t withdraw everything at once.
– Withdraw in 3–4 steps to reduce market risk.

? Investment Plan for Younger Son (Rs 2 Cr in 16 years)

– You have time on your side.
– Use 80% equity and 20% debt mix.
– Choose smallcap, midcap, flexicap, and multi-asset funds.
– Add short-term debt or conservative hybrid for safety.
– Start with Rs 12,000 monthly SIP here.
– Equity gives better growth in long term.
– After 10 years, shift slowly to less risky funds.
– Don’t wait till last year to change allocation.
– Final years should be more safe and steady.
– Avoid all equity in the last 2 years.

? Investing in Actively Managed Mutual Funds

– Choose mutual funds managed by good fund houses.
– Use regular plans through an MFD with CFP.
– A Certified Financial Planner helps in goal review.
– They will rebalance yearly.
– They reduce risk in falling market.
– They help stay calm during volatility.
– This avoids sudden withdrawal mistakes.
– Active funds also help beat index returns.
– Long-term equity returns of 11%–13% are possible.
– Use SIPs to stay consistent.

? Tax Planning on Mutual Fund Returns

– Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.
– Short-term capital gains in equity are taxed at 20%.
– Debt fund gains are taxed as per your slab.
– Withdraw carefully in last years to avoid high tax.
– Use growth option, not dividend.
– Avoid too many switches to save tax.

? Monitoring and Goal Adjustment

– Review your portfolio every year.
– Check whether returns are matching your goal.
– If gap is large, increase SIP by 5% yearly.
– Even small top-up helps meet goal faster.
– Remove poor performing funds.
– Add better quality funds based on advice.
– Don’t invest blindly by star rating.
– Get advice from a CFP for every fund change.
– Track your corpus vs goal every year.

? What to Do with 6 Cents Land

– Don’t count this for your Rs 4 crore goal.
– Treat it only as a backup safety net.
– When you sell it, invest full amount into same goal fund.
– Don’t keep money in savings account.
– Use it to reduce SIP burden or fast-track goal.
– Don’t delay sale hoping for big appreciation.
– Liquidity matters more than paper value in emergency.

? Avoiding Investment Traps

– Don’t invest in chit funds or gold schemes.
– Don’t buy ULIPs or child plans from agents.
– Don’t invest in NFOs or complex structures.
– Don’t go by friends’ suggestions or trending funds.
– Stick to your goal-based strategy.
– Focus on safety, consistency and clarity.

? Insurance Correction for Protection

– Make sure you have term insurance of at least Rs 1 crore.
– Premium should be low and pure term plan.
– Don’t mix investment and insurance.
– Also have Rs 10–15 lakh family health cover.
– Medical emergencies can derail education savings.
– Protect your goals with insurance and emergency fund.

? Build a Simple Action Plan

– Stop all old traditional insurance plans.
– Split Rs 30,000 monthly SIP into two goal plans.
– Use 4–5 actively managed mutual funds for each.
– Maintain proper goal tracking sheet.
– Review with a CFP once every year.
– Do goal-top-up every 2–3 years if needed.
– Focus more on safety in later years.
– Aim for Rs 4 crore in total by careful investing.

? Finally

– You are already thinking for your children’s future.
– That itself puts you ahead.
– Rs 30,000 monthly SIP is a good start.
– You also have land as extra support.
– Don’t depend on index or direct funds.
– Use active mutual funds via trusted MFD with CFP.
– Review goals yearly and adjust as needed.
– Protect with term and health insurance.
– Avoid fancy plans and confusing products.
– Keep it simple, goal-based and consistent.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: Hi Syed,

Let us have a detailed look below:
- Your monthly income - 1 lakhs, expenses - around 75k , and money for saving - approx. 25k per month.
- Emergency fund - 1.5 lakhs . Would suggest you to make a FD of this fund as emergency fund.
- Term and Health insurance - covered. But sum assured is less for your family. It should be increased.
- One house - 15 lakhs; 2 commercial shops - 50 lakhs.

Requirements:
- Need 5 crores by 2035 i.e. in 10 years
- Need fund for higher education and marriage of 5 children
- Retirement corpus required after 10 years

To achieve all these goals, you need to invest starting right now in aggressive mutual funds with 25-30k left with you. And you can increase your investment with the increase in your income.
Realistically, retirement after 10 years is not possible, but you can try and upgrade your skills to earn more and invest more.

You are also getting 4 lakhs next month. Invest entire amount in aggressive mutual funds. Mutual funds will give you an annual return of 14-15% very easily. This is the best way to build wealth for the goals that you mentioned.
>> Make sure to stay away from LIC policies and ULIPs and other plans which lock your money.

As you are not much aware about mutual funds and investment, you should work with a professional who will draft a plan for you.

Hence, please consult a professional Certified Financial Planner - a CFP who can guide you with exact funds to invest in keeping in mind your age, requirements, financial goals and risk profile. A CFP periodically reviews your portfolio and suggest any amendments to be made, if required.

Let me know if you need more help.

Best Regards,
Reetika Sharma, Certified Financial Planner
https://www.instagram.com/cfpreetika/