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I'm 24 and earn 50-70k monthly, but how can I build a 2.5 crore corpus by 35?

Ramalingam

Ramalingam Kalirajan  |8005 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 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
Jitesh Question by Jitesh on Jun 18, 2024Hindi
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Hello, sir Please tell me how to create a corps 2.5 cr at the age of 35. My current age is 24 and earning 50 to 70k monthly with other expanses. So where can i investment.

Ans: Defining Your Goal
You aim for a corpus of Rs. 2.5 crore by age 35.

You have 11 years to achieve this goal.

Current Income and Savings
You earn Rs. 50,000 to Rs. 70,000 per month.

Determine your monthly savings potential.

Monthly Investment Plan
Aim to save and invest consistently.

Consider investing a significant portion of your savings.

Investment Options
Focus on mutual funds for growth.

Choose a mix of equity and debt funds.

Benefits of Equity Mutual Funds
Equity funds offer high growth potential.

Ideal for long-term investment goals.

Benefits of Debt Mutual Funds
Debt funds provide stability and reduce risk.

They balance the portfolio.

Starting SIPs
Start SIPs in selected mutual funds.

This ensures disciplined and regular investing.

Professional Management
Seek guidance from a Certified Financial Planner.

Regular reviews and adjustments are necessary.

Final Insights
Consistent investing is key to achieving your goal.

Balance between equity and debt for stability and growth.

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  |8005 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 2024

Asked by Anonymous - Feb 28, 2024Hindi
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Hi ..I am 34 year old married..my monthly income is 80k now as I am in government service. I have invested already 2lakh in equity fund and sip of 2k in canara robocop bluechip MF..how to have a capital of atleast 5 CR when I will b 50
Ans: It's great that you're thinking about your financial future at such a young age. Building a corpus of 5 Crores by the time you turn 50 is an ambitious but achievable goal with careful planning and disciplined investing. Here's a plan to help you reach your target:

Increase Investment Amount: Since you're already investing in equity funds and SIPs, consider increasing your investment amount gradually as your income grows. Aim to maximize your contributions towards long-term wealth creation.
Diversify Your Portfolio: While equity funds offer the potential for high returns, diversifying your portfolio across different asset classes can help manage risk. Consider allocating a portion of your investments to debt funds, real estate, and other avenues based on your risk tolerance and financial goals.
Review and Rebalance: Regularly review your investment portfolio and rebalance it as needed to ensure it remains aligned with your financial objectives. Monitor the performance of your funds and make adjustments based on market conditions and changes in your personal circumstances.
Explore Other Investment Opportunities: Look for additional avenues to grow your wealth, such as investing in tax-saving instruments like ELSS funds, PPF, or NPS. These options offer tax benefits along with the potential for long-term capital appreciation.
Seek Professional Guidance: Consider consulting with a Certified Financial Planner who can provide personalized advice tailored to your specific financial situation and goals. They can help you create a comprehensive financial plan and guide you towards achieving your target of 5 Crores by the age of 50.
Remember, achieving your financial goals requires discipline, patience, and a long-term perspective. Stay focused on your objectives, and with the right investment strategy, you can work towards building a substantial corpus for your future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8005 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 2024

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How can I create 5 crore amount With minimum investment and where to invest? My age is 38
Ans: Strategizing to Attain a 5 Crore Corpus
Your ambition to accumulate a substantial corpus of 5 crores is both ambitious and commendable, especially considering your current age of 38. Let's devise a prudent plan to achieve this financial milestone while ensuring minimal investment and optimal returns.

Understanding Your Financial Landscape
Before diving into investment avenues, it's essential to assess your current financial standing, including income, expenses, existing investments, and risk tolerance. This holistic evaluation forms the bedrock of an effective wealth-building strategy.

Leveraging the Power of Compounding
Given your age, harnessing the power of compounding becomes paramount. By investing early and consistently, you can capitalize on the exponential growth potential of your investments over time.

Exploring High-Yield Investment Options
While seeking minimal investment avenues, it's crucial to identify options offering high growth potential. Equities, particularly diversified mutual funds, have historically outperformed other asset classes over the long term, making them an attractive choice for wealth creation.

Embracing Systematic Investment Planning (SIP)
Systematic Investment Planning (SIP) enables you to invest small amounts regularly, mitigating the need for significant upfront investments. By committing to a disciplined SIP approach, you can gradually build your investment portfolio while benefiting from rupee cost averaging.

Consideration of Risk Appetite
While pursuing aggressive growth targets, it's imperative to align your investment strategy with your risk appetite. Opt for a balanced mix of equity and debt instruments based on your risk tolerance, ensuring a diversified portfolio that withstands market volatility.

Harnessing Tax-Efficient Investment Vehicles
Maximizing tax-efficient investment avenues such as Equity Linked Savings Schemes (ELSS), which offer tax benefits under Section 80C of the Income Tax Act, can bolster your wealth accumulation journey while minimizing tax outflows.

Seeking Professional Guidance
As a Certified Financial Planner, I advocate for seeking professional guidance to tailor an investment plan suited to your financial goals and risk profile. A comprehensive financial advisor can provide personalized insights and recommendations aligned with your aspirations.

Conclusion
In conclusion, achieving a 5 crore corpus demands a combination of strategic planning, disciplined investing, and prudent risk management. By embracing a holistic approach and leveraging suitable investment avenues, you can chart a path towards realizing your financial aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8005 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 14, 2024

Asked by Anonymous - Oct 13, 2024Hindi
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Hello Sir, I am 48 years old.. want to get 2 cr by investing monthly 50000 to 60000 please advise how should i invest to get 2 cr in next 5 years.
Ans: At 48 years old, you are at a critical phase of wealth creation. You want to reach a target of Rs 2 crore by investing Rs 50,000 to Rs 60,000 monthly over the next five years. Achieving this goal requires a disciplined, well-structured approach and smart investment decisions. Here's how you can get there:

Assessing Your Financial Goals
Investment Horizon: You have a relatively short investment horizon of five years. This means that you need a blend of high-growth investments with a certain degree of safety as you approach the target.

Risk Appetite: Since you are nearing retirement, your ability to take risks may not be as high. However, to achieve Rs 2 crore in five years, you will need to consider moderately aggressive options.

Investment Flexibility: With a monthly commitment of Rs 50,000 to Rs 60,000, you have the flexibility to diversify your portfolio effectively.

Investment Strategy
Diversified Portfolio:

A balanced portfolio between equity and debt is necessary for your goal. Investing entirely in equities may offer higher returns but comes with higher risks, especially in the short term. On the other hand, debt-oriented investments offer stability but may not generate the required returns.

Equity Allocation: Given your time frame, allocate around 60% to 70% of your monthly investments into equity mutual funds. Actively managed funds are better in this scenario than index funds. Active funds provide opportunities for fund managers to outperform benchmarks, while index funds simply replicate the market performance, which may not be sufficient to meet your high return target.

Disadvantages of Index Funds: Index funds tend to underperform in volatile markets because they lack the flexibility to adapt. A Certified Financial Planner can guide you toward actively managed funds, which can better suit your five-year horizon. Moreover, active funds may help mitigate the impact of downturns due to professional management and sector rotation.
Debt Allocation: Allocate 30% to 40% of your portfolio to debt mutual funds. Debt investments provide stability and balance your portfolio’s risk. Debt funds can protect you from market volatility as you approach the end of your investment horizon.

Systematic Investment Plan (SIP):

Investing monthly through SIPs in mutual funds is ideal for your needs. It provides a disciplined way of investing and helps in rupee cost averaging, which reduces the impact of market fluctuations over time.

SIP in Equity Mutual Funds: You should focus on diversified equity mutual funds that invest in large-cap and mid-cap stocks. These funds can offer potential growth while balancing risk.

SIP in Debt Mutual Funds: Debt funds provide more consistent returns. You can consider funds with lower interest rate sensitivity for safety. SIPs into these funds can ensure you don’t put too much at risk while still gaining moderate returns.

Review Your Existing Insurance and Policies
If you have any existing LIC or ULIP policies, review their performance. Many of these traditional plans may not offer the kind of returns you need for wealth creation. In such cases, consider surrendering these policies and reinvesting the proceeds into mutual funds with the help of a Certified Financial Planner (CFP). A CFP will guide you on how to exit these policies without losing too much and reinvest for better returns.

Tax Efficiency in Mutual Fund Investments
Given the new mutual fund capital gains taxation rules, you need to consider tax implications while planning your investments.

Equity Mutual Funds: The long-term capital gains (LTCG) tax on equity mutual funds is now applicable above Rs 1.25 lakh, and it is taxed at 12.5%. This tax can impact your returns in the long run, so proper tax planning is essential. When you sell your funds, any profits beyond Rs 1.25 lakh in a financial year will be taxed, which needs to be factored into your overall return calculation.

Debt Mutual Funds: For debt mutual funds, capital gains are taxed based on your income tax slab. If your income falls in a higher tax bracket, this could significantly impact your returns. Short-term capital gains (STCG) from debt funds are taxed as per your income tax slab, while LTCG from debt funds are also taxed based on the slab rate.

To minimise tax impact, your CFP will guide you in structuring withdrawals and optimising your tax liabilities by keeping an eye on the investment tenure and tax slabs.

Increase Your SIP Contributions Annually
As your income increases or you receive bonuses, try to increase your SIP contributions. Small increments can make a big difference in achieving your Rs 2 crore target. A step-up SIP strategy allows you to increase your investment amount every year, boosting your chances of meeting your goal within the given time frame.

Emergency Fund
Even though your goal is to build a Rs 2 crore corpus, you must not overlook building an emergency fund. Your emergency fund should cover at least six months of your living expenses. Having this buffer will ensure that you don’t need to withdraw from your long-term investments in case of unexpected events.

An emergency fund can be held in liquid mutual funds or fixed deposits. These options provide liquidity while offering moderate returns.

Contingency Planning
While you are focusing on building a significant corpus, also ensure you have adequate contingency plans in place. Since you are 48 years old, health insurance and life insurance are crucial to protect your family in case of any unexpected events. Review your existing health insurance coverage to ensure it is adequate. You may need to enhance it based on your current financial status and family needs.

Health Insurance: If you don’t have health insurance, get a robust plan that covers critical illnesses. This ensures you don’t have to dip into your savings for medical emergencies.

Life Insurance: Term insurance is the most cost-effective option for covering life risk. Ensure that the sum assured is enough to meet your family’s needs in case of your absence.

Investment Monitoring
Regularly monitor your portfolio performance. Review your investments at least once every six months. This will allow you to make adjustments if needed, especially if your investments are underperforming or if there are significant market changes.

Also, keep an eye on your goals. If there’s a shortfall or if the market environment changes, you can tweak your portfolio to get back on track. Work closely with your CFP, who can provide guidance during volatile markets or periods of underperformance.

Final Insights
Reaching Rs 2 crore in five years is ambitious but achievable with careful planning. Balancing high-growth equity investments with safe debt options is essential. A Certified Financial Planner can help you select the right mutual funds and maintain tax efficiency.

By investing Rs 50,000 to Rs 60,000 monthly, sticking to your plan, and reviewing it regularly, you will increase your chances of success. Remember, wealth creation requires discipline, patience, and a balanced approach.

Ensure you have sufficient insurance coverage to protect your family and have an emergency fund in place.

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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