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New to Mutual Funds? Start Your 5-Year Journey with Confidence

Ramalingam Kalirajan |8285 Answers |Ask -Follow

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

Hello sir I want to start mutual fund please let me know how much amount I am looking for 5 years

Ans: Very happy to know that you are planning to invest in mutual funds.
You are moving in the right direction.

Please read each section patiently.

Step 1: First Identify Your Goal Clearly

Please clarify what you want to achieve in 5 years.

Is it for buying a car or house down payment?

Is it for your child’s education?

Or is it for vacation, retirement bridge fund, or emergency backup?

Write the exact purpose and rough amount needed.

This will help decide the right amount to invest.

Step 2: Estimate the Target Amount

Let’s assume a few examples:

If you need Rs 10 lakh in 5 years

You can invest Rs 12,000 per month

Or if you need Rs 5 lakh in 5 years

Then around Rs 6,000 per month is enough

This is assuming mutual fund gives around 10% return yearly

Amount may vary if goal is bigger or smaller

You can tell me your exact target. I’ll give correct amount.

Step 3: Use the Right Type of Funds

For a 5-year goal, use debt + equity hybrid mix.

Avoid 100% equity mutual funds

Avoid short-term debt funds alone

Mix gives stability + moderate growth

Here’s a sample mix:

60% equity-oriented hybrid mutual fund

40% conservative or short-duration debt mutual fund

This mix balances return and safety

Review once a year

Shift to safer fund 1 year before the goal

Step 4: Invest Monthly Through SIP

SIP is best method for 5-year investing.

Small monthly amount builds big wealth

Removes tension of market ups and downs

Brings discipline and better results

Easy to start, easy to stop or increase

Link SIP date just after salary credit date

If you have lump sum money, start with STP from liquid fund.

Step 5: Avoid These Mistakes

Here are mistakes to avoid:

Don’t choose index funds for 5-year goal

Index funds give no protection in bad markets

Don’t invest in direct funds without guidance

Choose regular funds through Certified Financial Planner

Don’t invest in insurance or ULIP thinking it is mutual fund

Don’t chase top-performing fund alone

Don’t stop SIPs when market is low – it’s the best time to continue

Step 6: Add These Good Habits

Here are good habits to follow:

Start SIP today, don’t wait for perfect market

Review funds every 6 to 12 months

Increase SIP by 5% to 10% every year

Track your goal regularly

Add surplus money when you get bonus or extra income

Keep your nominee updated

Step 7: Use a Certified Financial Planner for Better Results

You will get these benefits:

They help match fund with your goal

They keep you on track when market is down

They adjust asset allocation when needed

They help avoid emotional mistakes

They bring discipline in your investment journey

They plan taxes, retirement, emergency, and insurance too

This is why investing through Certified Financial Planner is smart.

Let’s See Sample Plans Based on Goal

Here are a few examples for you:

?? Goal: Rs 5 lakh in 5 years
Invest Rs 6,000/month through SIP (hybrid fund)

?? Goal: Rs 10 lakh in 5 years
Invest Rs 12,000/month through SIP

?? Goal: Rs 15 lakh in 5 years
Invest Rs 18,000/month through SIP

?? Goal: Rs 20 lakh in 5 years
Invest Rs 24,000/month through SIP

These are sample figures with approx. 10% returns

I can give your custom amount if you tell your goal and amount needed

Final Thoughts

Starting mutual fund investment is one of the best steps for your future.

It builds wealth slowly and strongly.

You don’t need to be an expert. Just be consistent.

Start with any small amount like Rs 5,000 or Rs 10,000 monthly.

Use hybrid mutual funds for 5-year goal.

Invest through a Certified Financial Planner for better results.

Avoid direct funds, index funds, ULIP, or insurance-linked plans.

Keep goals clear, stay invested, and trust the process.

I can guide you step-by-step if you give your goal, age, and monthly savings ability.

Your financial freedom journey starts with one small decision today.

I truly appreciate your interest. You are taking a wise path.

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.