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How can I build a 10 crore corpus in 20 years with a family of 5 and limited income?

Ramalingam

Ramalingam Kalirajan  |8322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 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
Krishay Question by Krishay on Jul 15, 2024Hindi
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Dear Sir/Madam, I hope this message finds you well. As the sole earning member of my family, I am 41 years old and responsible for supporting my family of five. Here are the details of my financial situation: Income and Expenses: Monthly salary income: ?1.10 lakhs. Monthly expenses: Rent (?35,000) and household expenses (?50,000). Insurance and Loans: ICICI Lombard term insurance: Coverage of ?50 lakhs with an annual premium of ?9,700. Mediclaim for my mother: Coverage of ?1 lakh with an annual premium of ?13,000. Family mediclaim: Coverage of ?2 lakhs with an annual premium of ?6,700. Loan from LIC: ?2 lakhs. Savings and Investments: PPF savings: ?80,000. Endowment policies with an annual premium of ?24,000. SIP investments in the following mutual funds: Aditya Birla Sun Life Pure Value Fund (G): ?1,000/month. Bandhan Sterling Value Fund - Regular Plan (G): ?1,000/month. DSP Flexi Cap Fund - Regular Plan (G): ?1,000/month. HDFC Mid-Cap Opportunities Fund (G): ?1,500/month. Considering this details do help me to design my portfolio for corpus of around 10crores in next 20 years.

Ans: Age: 41 years
Family: Five members
Monthly Salary: Rs 1.10 lakhs
Monthly Expenses: Rs 85,000 (Rent: Rs 35,000; Household expenses: Rs 50,000)
Insurance and Loans:
ICICI Lombard term insurance: Rs 50 lakhs (annual premium: Rs 9,700)
Mediclaim for mother: Rs 1 lakh (annual premium: Rs 13,000)
Family mediclaim: Rs 2 lakhs (annual premium: Rs 6,700)
Loan from LIC: Rs 2 lakhs
Savings and Investments:
PPF savings: Rs 80,000
Endowment policies: Annual premium Rs 24,000
SIP investments: Rs 4,500/month
Financial Planning Goals
Retirement Corpus: Rs 10 crores in 20 years
Insurance Coverage: Adequate protection for family
Debt Management: Efficiently manage and repay loans
Wealth Creation: Strategic investment for growth
Step-by-Step Financial Plan
1. Review and Enhance Insurance Coverage

Term Insurance: Ensure coverage is at least 10-15 times your annual income
Health Insurance: Increase coverage for family to Rs 5 lakhs
Mediclaim for Mother: Increase coverage to Rs 5 lakhs
2. Create an Emergency Fund

Amount: 6-12 months of expenses
Investment: High-interest savings account or short-term FDs
3. Debt Management

LIC Loan: Prioritize repaying the Rs 2 lakhs loan
Avoid New Loans: Focus on managing current debts
4. Increase SIP Investments

Existing SIPs

Aditya Birla Sun Life Pure Value Fund
Bandhan Sterling Value Fund
DSP Flexi Cap Fund
HDFC Mid-Cap Opportunities Fund
Strategy

Increase Contributions: Gradually increase SIP amount by 10% annually
Diversify: Add more funds for balanced growth and risk management
5. Public Provident Fund (PPF)

Contribution: Continue investing in PPF for tax benefits
Increase Investment: Aim to contribute the maximum limit of Rs 1.5 lakhs per year
6. Endowment Policies

Evaluate Performance: Assess the returns and benefits
Consider Alternatives: If underperforming, consult a Certified Financial Planner for better options
7. Additional Investment Options

Mutual Funds

Equity Funds: For long-term growth
Debt Funds: For stability and regular income
National Pension System (NPS)

Contribution: Invest in NPS for additional retirement corpus
Benefit: Tax benefits under Section 80C and 80CCD
8. Regular Monitoring and Review

Review Portfolio: Regularly review and adjust your investments
Rebalance: Ensure your portfolio aligns with your risk tolerance and goals
Disadvantages of Index Funds
Limited Flexibility

Tracking: Index funds strictly follow market indices
Drawback: Lack of active management to adapt to market changes
Lower Returns

Potential: Actively managed funds can outperform index funds
Disadvantages of Direct Funds
Lack of Guidance

Direct Funds: No professional advice
Benefit of Regular Funds: Access to Certified Financial Planner for personalized advice
Convenience

Ease: Investing through Certified Financial Planner offers better management and oversight
Final Insights
Start Early: The sooner you start, the better
Diversify: Spread investments across different asset classes
Consult a CFP: Professional advice ensures a comprehensive plan
Review Regularly: Adjust your plan as needed to stay on track
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  |8322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 21, 2024

Money
Dear sir, I am 50 years old and working in private sector MNC 1.5 Lakhs on hand. My job security is very less. I have two kids aged 18, 14 years old. My wife is housewife. I have 80L in Mutual funds and 20L in stocks, Bank deposits 40L. I am investing in SIP in below Mutual funds all direct growth around 57000 pm. CR Bule chip fund, MA Large and Midcap, HDFC smallcap each 5000 pm (15000) Invesco Infra, JM Value fund, Nippon India Multicap, Small cap, Parag parekh Flexi cap, Quant Small cap, Mid cap each 6000 pm (42000), all these SIPs started recently from June 2024. Some Lumpsum in Axis smallcap 6L, Bandan core Equity 3L, CR Smallcap 8L, DSP smallcap 4L,HSBC Flexicap 3.5, HSBC Smallcap 3L, ICICI Pru Infra 3.5L, Value discovery 3L, Invesco Large & Midcap 2L, JM Flexicap 1L, Motilal Oswal Midcap 8L, SBI Bluechip 7L, Infrastructure 2L, Sundaram Smallcap 3L My expenses per month are 1.2 Lakh. I don't have loans/EMIs. Please advice me for my retirement life which need at least 1.5L per month, my kids education expenses, and also advice to my Portfolio. Thanks and regards, Yours sincerely, Purushotham Thati
Ans: First, you have done well in accumulating Rs 80 lakh in mutual funds and Rs 20 lakh in stocks. Your Rs 40 lakh in bank deposits also provides liquidity for any emergency needs. Your monthly SIPs, totalling Rs 57,000, are a step in the right direction, showing a commitment to long-term wealth creation.

However, job security is a concern, and it is wise to assess the stability of your finances. You aim to ensure Rs 1.5 lakh per month for retirement and also cover your children's education expenses. This is achievable with careful planning.

Assessment of Mutual Fund Portfolio

You have spread your SIPs across multiple mutual funds, with Rs 57,000 allocated monthly. However, this spread across many funds can lead to overlapping, reducing the diversification benefits.

Consolidate Fund Choices: You are invested in too many funds, particularly in the small and mid-cap categories. It’s better to focus on a few quality funds rather than spreading across too many. Funds with overlapping themes might dilute returns and increase volatility.

Rebalance Your Portfolio: Your current SIP choices, especially in small-cap and mid-cap funds, are aggressive. These categories can be volatile, particularly if markets face a downturn. For a person nearing retirement age, a balanced approach is better. You may want to shift some investments into large-cap or flexi-cap funds, which are relatively less volatile.

Actively Managed Funds: Investing in actively managed funds through a Certified Financial Planner (CFP) can give you access to professional expertise and ongoing advice. These funds, with the right guidance, have the potential to outperform and provide you with strategies to navigate different market cycles.

Lumpsum Investments Insight

Your lumpsum investments of Rs 54.5 lakh are heavily concentrated in small-cap funds. Small-cap funds have high growth potential but also come with significant risks. As you approach retirement, this heavy exposure could be dangerous if the market does not perform well. Here’s how you can rebalance:

Review Small-Cap Exposure: Reallocate some of your lumpsum investments from small-cap funds to more balanced categories. This reduces risk while ensuring growth.

Infrastructure Funds: Your investment in infrastructure funds also seems concentrated. This sector can be cyclical. It's better to diversify into more stable sectors or broader market funds for consistent returns.

Retirement Planning

Your goal of securing Rs 1.5 lakh per month during retirement is realistic. But you need to ensure a balanced approach to achieve this. Here's how you can strengthen your retirement planning:

Shift Focus to Stability: As you approach retirement, your portfolio should gradually shift to include more stable, income-generating assets. A balanced or large-cap-oriented mutual fund will offer better stability compared to small caps. You can also consider debt funds or hybrid funds to provide a buffer against market fluctuations.

SIP Continuation: Continue your SIPs but consider moving some of the small-cap allocations into more conservative, large-cap funds. This strategy will help safeguard your retirement corpus from short-term market risks.

Children's Education Planning

With two kids, aged 18 and 14, education costs are likely to be a significant financial responsibility. Here's how you can address this:

Allocate Funds Specifically for Education: Consider creating a separate investment strategy for your children's education. You can explore education-focused mutual funds or a combination of debt funds and equity funds to ensure a steady flow of funds when needed. For your elder child, since education costs may be more immediate, less risky investments, such as debt funds, could be beneficial.

Maintain Liquidity: Keep a portion of your Rs 40 lakh bank deposits available for education expenses. This ensures you are not forced to redeem investments during market downturns.

Job Security and Emergency Funds

With your concerns about job security, having an emergency fund is essential. Here's how you can protect yourself:

Increase Emergency Fund: You have Rs 40 lakh in bank deposits, which is good. However, ensure you keep at least six months' worth of expenses (around Rs 7-8 lakh) in liquid, easily accessible instruments like a savings account or liquid funds. This will cover any unforeseen expenses or job loss situations.

Insurance Review: Ensure you have adequate health and life insurance cover. As your wife is a homemaker, you are the primary breadwinner, so it is important to protect your family in case of any unfortunate event.

Tax Considerations

The taxation of mutual funds is another critical factor. Here’s a brief overview of how taxes will affect your investments:

Equity Mutual Funds: Long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.

Debt Mutual Funds: For debt mutual funds, both LTCG and STCG will be taxed as per your income tax slab. This can significantly affect your returns if not planned well.

Ensure that you track your investments and redeem only when needed to avoid hefty tax implications. A CFP can help structure your investments to minimize tax liabilities.

Final Insights

Here are the key points to keep in mind for a secure financial future:

Simplify and Rebalance: Reduce the number of funds in your portfolio and shift focus towards large-cap and flexi-cap funds for stability.

Education Planning: Set aside a portion of your investments for your children’s education to ensure their future without straining your retirement corpus.

Retirement Strategy: Begin transitioning your portfolio towards more stable investments, like large-cap or balanced funds, as you near retirement.

Tax Efficiency: Plan your withdrawals carefully to minimize tax outflow and preserve your wealth.

Emergency Fund: Keep sufficient liquidity to manage any job loss or unexpected expenses.

By carefully balancing your portfolio, ensuring liquidity, and planning for both retirement and education, you can build a financially secure future for your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

..Read more

Ramalingam

Ramalingam Kalirajan  |8322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 28, 2024

Money
Dear sir, I am 50 years old and working in private sector MNC 1.5 Lakhs on hand. My job security is very less. I have two kids aged 18, 14 years old. My wife is housewife. I have 80L in Mutual funds and 20L in stocks, Bank deposits 40L. I am investing in SIP in below Mutual funds all direct growth around 57000 pm. CR Bule chip fund, MA Large and Midcap, HDFC smallcap each 5000 pm (15000) step up 2000 every 6months. Invesco Infra, JM Value fund, Nippon India Multicap, Small cap, Parag parekh Flexi cap, Quant Small cap, Mid cap each 6000 pm (42000), all these SIPs started recently from June 2024. Some Lumpsum in Axis smallcap 6L, Bandan core Equity 3L, CR Smallcap 8L, DSP smallcap 4L,HSBC Flexicap 3.5, HSBC Smallcap 3L, ICICI Pru Infra 3.5L, Value discovery 3L, Invesco Large & Midcap 2L, JM Flexicap 1L, Motilal Oswal Midcap 8L, SBI Bluechip 7L, Infrastructure 2L, Sundaram Smallcap 3L My expenses per month are 1.2 Lakh. I don't have loans/EMIs. Please advice me for my retirement life which need at least 1.5L per month, my kids education expenses, and also advice to my Portfolio. Thanks and regards, Yours sincerely, Purushotham Thati
Ans: Your current portfolio and investment habits show a good start. Let us evaluate your financial standing, address your goals, and provide suggestions for optimisation.

Assessment of Your Current Financial Position
Income and Expenses: You have a monthly income of Rs. 1.5 lakh and expenses of Rs. 1.2 lakh. This leaves a surplus of Rs. 30,000 per month.

Investment Corpus: Your existing corpus includes Rs. 80 lakh in mutual funds, Rs. 20 lakh in stocks, and Rs. 40 lakh in bank deposits.

SIP Contributions: You are investing Rs. 57,000 monthly across multiple mutual funds.

Lump Sum Investments: You have allocated significant lump sums to small-cap, flexi-cap, and thematic funds.

Goals: Your goals include securing Rs. 1.5 lakh monthly for retirement and funding your children's education.

Planning for Retirement
Corpus Required
You aim for Rs. 1.5 lakh per month during retirement.

Factor in inflation to estimate future monthly expenses.

The current corpus and SIPs must grow consistently to meet this goal.

Recommendations
Maintain a balanced allocation between equity and debt for steady growth.

Avoid excessive concentration in small-cap and thematic funds, which are volatile.

Increase exposure to balanced and flexi-cap funds for stability.

Planning for Children’s Education
Current Needs
Your children are aged 18 and 14, which implies upcoming higher education expenses.

Plan for expenses within the next 4–8 years.

Recommendations
Create a dedicated education fund for both children.

Use debt-oriented hybrid funds or short-term debt funds for near-term goals.

Ensure part of your mutual fund corpus is earmarked for this purpose.

Portfolio Review and Suggestions
Strengths of the Portfolio
Disciplined SIP Investments: Investing Rs. 57,000 monthly shows financial discipline.

Diversification: Exposure to various categories like large-cap, mid-cap, small-cap, and thematic funds.

Areas for Improvement
Excessive Small-Cap Allocation: High exposure to small-cap funds increases volatility.

Thematic Fund Overlap: Thematic funds like infrastructure may lead to concentration risks.

Direct Fund Investments: Direct funds lack professional guidance and ongoing monitoring.

Portfolio Optimisation
Consolidate funds to reduce over-diversification and improve focus.

Shift some SIPs to balanced advantage or hybrid funds for stability.

Review and replace underperforming funds periodically.

Invest through a Certified Financial Planner to benefit from professional advice.

Optimising Lumpsum Investments
Review the performance of your lump sum investments.

Redeploy underperforming small-cap and thematic funds into balanced funds.

Keep a portion of your bank deposits in liquid funds for emergencies.

Avoid high allocations to sectoral or cyclical funds due to their dependency on market conditions.

Tax Planning
Long-term capital gains on equity mutual funds above Rs. 1.25 lakh are taxed at 12.5%.

Short-term capital gains on equity funds are taxed at 20%.

Debt mutual funds are taxed as per your income tax slab.

Plan redemptions considering these rules to minimise tax liabilities.

Emergency Fund Allocation
Maintain at least 6–12 months of expenses in liquid funds or fixed deposits.

This ensures financial security given your low job security.

Allocate Rs. 15–20 lakh from your bank deposits for this purpose.

Recommendations for SIPs
Reduce exposure to small-cap and thematic funds.

Increase allocation to large-cap and multi-cap funds for stability.

Consider balanced advantage funds to manage market volatility.

Step-up SIPs only after assessing fund performance.

Final Insights
Your financial foundation is strong, but optimisation is essential.

Prioritise stability and diversification in your portfolio.

Allocate funds separately for retirement and children’s education.

Maintain a robust emergency fund to handle uncertainties.

Seek professional advice to streamline and monitor your investments.

Consistent review and disciplined investing will help you achieve financial independence and secure your family’s future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2025

Money
I am 50 + yr Engg Graduate and working in Pvt sector in NCR and having approx 10 yrs to retirement. # The Combined Family income (Including Dividend & Interest) : Rs. 22 Lac / Annum. # Yearly Expenditure : Rs.13.1 Lac / Annum (Includes Insurance Premium , fee , Rent etc); # I am Staying in Rent ; I am Have a old parental Flat at Lucknow (Vacant) which will be sold off inleu of a new Flat in next 4-5 years time (Present Value of Flat is approx Rs. 75 Lac ; ) # Term Insurance till age 62 yrs: Sum Insured : Rs. 1.70 Cr ; # Health Insurance Floater : Covered till Rs. 50 Lacs. Portfolio : * MF-SIP : 1.80 Cr.; Monthly investment in SIP: ~ 65000/-. [MF SIP Selection is self] * Combined PPF : Rs.40 Lac * Sukanya Samriddhi Yojana : Rs. 6.0 Lac * Share Value: Rs.50 Lacs * FD with Pvt Financial institutions : Rs. 43 Lac. * Cash in Hand : Rs. 4-5 Lacs Major Expenditure to be done: (a) Higher Studies of Daughter: Going for PG - 1st yr & maybe later Phd. (b) Marriage of Daughter. (c) Higher Studies of Son : Presently in Class IX. (d) Marriage of Son . (e) Buying a new House. Pls advise : 1. How much Corpus will I have in next 10 yrs.? 2. How much should be the minimum corpus I should have at the time of my retirement so that it can last maybe for 25 + years post retirement? 3. Will I be able to achieve the reqd corpus? 4. What is the Likely monthly expenditure post my retirement ? 5. Can I share my List of SIP Portfolio with you so that same can be restructured by you ? 6. Should I go for a Professional Financial Planner ? regards
Ans: You have already done a lot of planning. Your awareness and discipline are strong. This gives you a great advantage for your retirement and children’s future.

Understanding Your Present Financial Snapshot
 

You are above 50 years of age and have around 10 years to retire.

 

Your yearly family income is Rs.22 lakh. Expenses are around Rs.13.1 lakh.

 

That means you are saving close to Rs.8.9 lakh yearly. That’s a strong surplus.

 

Monthly SIP is Rs.65,000. You have a solid SIP discipline in place.

 

Current MF SIP corpus is Rs.1.8 crore. That’s a significant base.

 

PPF corpus is Rs.40 lakh. That’s a good stable portion of your savings.

 

Shares are worth Rs.50 lakh. FD value is Rs.43 lakh.

 

You have Rs.4–5 lakh in liquid cash. Sukanya balance is Rs.6 lakh.

 

You are staying on rent. You have an old flat in Lucknow worth Rs.75 lakh.

 

You want to sell the flat in 4–5 years. Use funds for buying a new flat.

 

Health insurance floater of Rs.50 lakh is excellent.

 

Term insurance of Rs.1.7 crore till age 62 is also strong.

 

Likely Corpus in Next 10 Years
 

Your existing investments are already close to Rs.3.7 crore.

 

With SIPs and expected growth, this corpus will rise steadily.

 

Assuming consistent investment, the corpus could cross Rs.6 crore in 10 years.

 

This figure depends on SIP continuation, market returns, and investment review.

 

If you sell the flat in 5 years, you may get Rs.80–85 lakh or more.

 

That can also be redirected to another house purchase.

 

But remember, house is not an investment. It’s a utility asset.

 

It will not support retirement income unless sold or rented.

 

How Much Corpus Is Needed at Retirement?
 

Your current annual spending is Rs.13.1 lakh.

 

Post-retirement, this may reduce slightly. But not by much.

 

Assume 80% of current expenses will continue. That’s around Rs.10.5 lakh yearly.

 

Over 25+ years, this amount will rise due to inflation.

 

A safe minimum retirement corpus can be around Rs.5.5–6 crore.

 

This should cover lifestyle, healthcare, and emergency spending.

 

It also assumes a balanced investment portfolio post-retirement.

 

PPF, FDs, and some debt funds can give regular income.

 

Equity mutual funds should be continued partially for growth.

 

Can You Achieve the Required Corpus?
 

Yes, based on your present investments and habits, you are on track.

 

You must keep SIPs running without breaks for the next 10 years.

 

Increase your SIPs by 8–10% every year.

 

This single habit increases your total retirement corpus sharply.

 

Don’t withdraw from MF portfolio for house or other large expenses.

 

Use surplus from share sale or FD maturity for daughter’s or son’s needs.

 

Maintain separate goals. Don’t mix retirement and child-related funds.

 

Likely Monthly Expenses After Retirement
 

Your monthly spending may reduce, but not disappear.

 

House rent may go if you buy a flat. But other costs may rise.

 

Healthcare costs will rise as you age. So will travel and daily needs.

 

Monthly spending may be around Rs.80,000 to Rs.90,000 after retirement.

 

This will keep increasing due to inflation.

 

Plan for this by keeping a rising income source post-retirement.

 

Part of your MF portfolio must remain in equity to beat inflation.

 

Should You Restructure Your SIP Portfolio?
 

Yes. You can share your SIP portfolio. It should be reviewed in detail.

 

Fund selection must suit your goals, risk, and retirement timeline.

 

If SIPs are selected by self, mistakes may remain unnoticed.

 

Self-managed portfolios often carry duplication and poor diversification.

 

Review will ensure you hold right funds in correct proportion.

 

Regular rebalancing and fund replacement are also needed.

 

Avoid index funds. They copy the index. No expert decision-making involved.

 

Actively managed funds give better chances of outperformance.

 

A fund manager takes timely calls based on market data.

 

Direct Plans vs Regular Plans
 

Many people choose direct funds thinking returns will be more.

 

But direct plans give no advice, no monitoring, no fund review.

 

Wrong choices can erode gains, which you may not notice.

 

Investing through MFD with CFP support gives many advantages.

 

You get continuous guidance, strategy correction, and emotional discipline.

 

A small extra cost is worth it for safer long-term performance.

 

Use regular plans under a Certified Financial Planner to avoid mistakes.

 

Should You Hire a Certified Financial Planner?
 

Yes, it is the right time to do so.

 

You are close to retirement. No room for errors now.

 

One bad year or wrong withdrawal can hurt long-term stability.

 

A planner prepares a full retirement roadmap. Step-by-step.

 

Helps manage retirement income, investment allocation, and cashflow.

 

Plans for children’s education, marriage, and tax-saving.

 

Also prepares a Will, estate plan, and contingency system.

 

You have built wealth. A planner helps protect and grow it safely.

 

Other Action Points You Must Consider
 

Keep 6 months’ expenses in liquid mutual funds. That’s your emergency fund.

 

Keep track of new MF capital gains tax rules.

 

If equity MF gains exceed Rs.1.25 lakh in a year, excess is taxed at 12.5%.

 

If sold within one year, tax is 20% on profits.

 

For debt funds, all gains are taxed as per your income slab.

 

File taxes properly. Use Form 26AS and AIS to avoid mismatch.

 

Make a written Will. Register it if possible.

 

Update nominations in all mutual funds, FDs, and insurance.

 

Involve your spouse in all investment decisions. Keep them informed.

 

Retirement Income Management Strategy
 

Break your retirement portfolio into three buckets.

 

First: Emergency and liquidity. Use FDs and liquid funds here.

 

Second: Stable monthly income. Use PPF, debt mutual funds, and bonds.

 

Third: Long-term growth. Keep some mutual funds in equity.

 

Withdraw only what is needed. Keep rest invested.

 

Review once a year with your planner.

 

Children’s Education and Marriage Planning
 

PG for daughter is immediate. Use FD interest or surplus cash.

 

Don’t disturb mutual funds meant for retirement.

 

PhD is long-term. Plan SIPs separately for that.

 

Son’s education is 4–5 years away. Start new SIPs today.

 

Marriage cost is hard to predict. But start a separate investment for that now.

 

Keep gifts, bonuses, or land sale proceeds for such events.

 

Don’t allow such costs to delay or reduce your retirement corpus.

 

Final Insights
 

You are in a strong financial position. That itself is an advantage.

 

But with multiple goals ahead, clear planning becomes important.

 

Don’t self-manage complex portfolios at this stage.

 

Avoid real estate dependence. Use it only for living, not investing.

 

Stay away from index and direct funds. They don’t give personal strategy.

 

Increase SIPs each year. Tag each goal separately.

 

Use a Certified Financial Planner to guide your retirement strategy.

 

Update nominations, Will, and insurance coverage.

 

Monitor your retirement portfolio closely, but don’t panic with market ups and downs.

 

Stay invested. Think long-term. Follow a guided, reviewed plan.

 

You can retire comfortably and fulfil all family goals with peace of mind.

 

Best Regards,
 

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8322 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2025

Money
Dear sir, I am 46 yrs old investing in SIP of 25000 monthly last 4.5 Yrs in different companies mutual fund. I wants retire after 10 yrs and need a corpus of 5 crore. I have 2 children studying @ 6&8 grade. Invested in money back policy of 5-8 Lakh. 1C land purchased 2 yrs back. Comprehensive Health insurance is available for 5L yearly and Term insurance of 60L is available. Kindly let me know what sort of planning required.
Ans: It shows you are thinking ahead for your family and future. That itself is a great start.

Let’s break this down step by step.

 

Retirement Planning – 10 Years Away
 

You want Rs.5 crore in 10 years.

 

You are already investing Rs.25,000 monthly through SIPs. This is a good habit.

 

But just investing isn’t enough. The amount, fund selection, and review also matter.

 

Rs.5 crore is a big target. It needs a solid, focused investment plan.

 

You need to check whether Rs.25,000 per month is enough for this goal.

 

Based on typical growth rates, it may fall short. We need to increase SIPs gradually.

 

A Certified Financial Planner can help assess the exact shortfall. Then a step-wise plan can be made.

 

Your retirement plan should not depend on land. Land is not liquid. Selling it can take time.

 

Continue SIPs and increase it by 10% every year. That helps stay ahead of inflation.

 

Actively managed mutual funds should be selected. They give a better edge with expert fund manager decisions.

 

Index funds lack flexibility. They copy the index. No chance to beat the market.

 

With actively managed funds, the fund manager reacts fast to changes. That is an advantage.

 

Asset allocation should be reviewed every year. Rebalancing keeps the risk in control.

 

Keep a separate portfolio for retirement. Do not mix children’s education goal with this.

 

Children’s Education Planning
 

Your children are now in 6th and 8th grades.

 

In 6–8 years, you’ll need funds for their higher education.

 

Education costs are rising sharply. This cannot be ignored.

 

Start separate SIPs for their education goal now.

 

Do not depend on money-back policies for education.

 

These give low returns. Hardly beat inflation. Not suitable for education needs.

 

Surrender these policies. Reinvest the proceeds into mutual funds.

 

A Certified Financial Planner can guide on which policies to surrender and how.

 

Use mutual funds for better returns and flexibility.

 

Choose a mix of equity and balanced funds. This gives better growth with some safety.

 

Review this portfolio every year. Make changes if fund performance drops.

 

Never use retirement funds for education or other goals.

 

Keep clear boundaries between each financial goal.

 

Insurance Assessment – Life and Health
 

You have Rs.60 lakh term insurance. It is a good starting point.

 

But is it enough? Likely not.

 

A person at age 46 with children and a Rs.5 crore retirement goal needs more cover.

 

Term cover must be at least 12–15 times your annual income.

 

It should also cover children’s education and liabilities.

 

Top up your term insurance with an additional Rs.40–50 lakh at least.

 

Premiums are still manageable at your age.

 

Avoid ULIPs or money-back plans for life cover. They mix insurance and investment.

 

You have Rs.5 lakh health insurance. That is a positive step.

 

However, with rising medical costs, it is not enough.

 

Add a super top-up policy of Rs.10–15 lakh. It is cost-effective and gives added protection.

 

Ensure the entire family is covered under the policy.

 

Also keep some emergency fund in liquid funds for minor health expenses.

 

Emergency Fund and Contingency Planning
 

An emergency fund gives peace of mind.

 

It should cover at least 6 months of expenses.

 

Keep this in a liquid mutual fund or savings account.

 

Never invest emergency funds in equity or land.

 

Refill the fund if you use it anytime.

 

Existing Land Investment
 

You mentioned buying land two years ago.

 

It can be a personal asset. But not an investment.

 

Land does not generate regular income.

 

Selling land can take time. Liquidity is low.

 

Do not depend on land for your retirement or education goals.

 

Do not count land value in your net worth for investment planning.

 

Keep it as a reserve or personal utility asset only.

 

Money-Back Policies – Action Plan
 

You have Rs.5–8 lakh in money-back policies.

 

These offer low returns. Do not help in long-term wealth creation.

 

It is best to surrender these now. Don’t wait.

 

Reinvest that money into mutual funds through a Certified Financial Planner.

 

Use regular plans through MFDs. They offer continuous support and monitoring.

 

Direct mutual funds offer no guidance. That leads to mistakes and poor returns.

 

Regular funds give access to a CFP’s review and hand-holding.

 

Small cost difference, but better long-term results.

 

SIP Management – Next Steps
 

You are already investing Rs.25,000 monthly. That is commendable.

 

Increase it every year. This is called SIP step-up.

 

If your income rises, increase SIPs by 10–15% yearly.

 

This one habit helps you reach goals faster.

 

Choose 4–5 diversified equity funds. Review them every 6 months.

 

Use funds with consistent track records and experienced managers.

 

Avoid index funds. They are passive. No fund manager input.

 

Actively managed funds offer better opportunities.

 

Tax Planning – For Today and Tomorrow
 

Make use of Section 80C for tax savings. SIP in ELSS can help here.

 

Avoid locking too much in PPF or NSC. They are not flexible.

 

For capital gains tax, keep new rules in mind.

 

If you sell equity funds, gains above Rs.1.25 lakh are taxed at 12.5%.

 

If sold before 1 year, gains are taxed at 20%.

 

For debt funds, all gains are taxed as per your income slab.

 

Always check tax implication before switching or redeeming funds.

 

Goal-Based Investment Planning
 

Link each SIP to a specific goal.

 

One SIP for retirement.

 

One SIP for child 1 education.

 

Another SIP for child 2 education.

 

Do not combine goals. That leads to confusion later.

 

Clear goal tagging helps track progress.

 

A Certified Financial Planner can prepare this map for you.

 

Use colour-coded tracking for each goal.

 

Will, Nomination, and Estate Planning
 

Make a basic Will. Even if your assets are small today.

 

Nominate properly in every investment and insurance.

 

Review nominations every 2 years.

 

Teach your spouse the basics of your financial plan.

 

Keep one folder with all details – policies, accounts, mutual funds.

 

Inform your family where the file is kept.

 

Three Yearly Review System
 

Review your financial plan every year.

 

Do it with the help of a Certified Financial Planner.

 

Track SIP growth. Are goals on track?

 

Rebalance asset allocation if equity grows too much.

 

Check insurance covers every 2 years.

 

Update Will, nominations, and goals if needed.

 

Final Insights
 

You have taken important first steps. That shows awareness.

 

But awareness needs a plan to be successful.

 

Surrender low-yielding policies. Reinvest wisely.

 

Keep land aside. Do not count on it for goals.

 

Increase SIPs steadily. Choose only actively managed funds.

 

Use regular mutual funds through a Certified Financial Planner.

 

Protect family with higher life and health insurance.

 

Separate SIPs for each goal. Link every investment to a purpose.

 

Review your plan once every year. Adjust when needed.

 

Your dream of Rs.5 crore and children’s education is possible.

 

But you need focused, guided steps to reach there.

 

Best Regards,
 

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

...Read more

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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