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Ramalingam Kalirajan  |3754 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 23, 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
Asked by Anonymous - May 18, 2024Hindi
Money

I intend to retire in next 10 years. I have a daughter who is in class 2. I have a FDs and share portfolio of 35 laks, PF+Gratuity plus nps is about 50 lakhs. I am 40 years old. I own a house currently ( with housing loan o/s Rs. 27 lakh). I want a crore for my child education, and my current expenses are about 65k a month.

Ans: Planning for a Secure Retirement and Child's Education
Understanding Your Current Financial Situation
Firstly, congratulations on your proactive approach to financial planning. Your current assets include fixed deposits and a share portfolio worth ?35 lakhs, and PF, gratuity, and NPS totaling ?50 lakhs. You also own a house with an outstanding loan of ?27 lakhs. Your monthly expenses are ?65,000, and you aim to retire in the next 10 years. Additionally, you want to secure ?1 crore for your child's education.

Your dedication to planning for both your retirement and your child's future is commendable. It's not easy to balance current expenses while planning for significant future needs, and your foresight is truly impressive.

Setting Clear Financial Goals
Retirement Corpus
To retire comfortably in 10 years, you need a clear understanding of your retirement corpus requirements. This will depend on your expected expenses post-retirement, adjusted for inflation. Your current expenses are ?65,000 per month, which will likely increase over time. It is crucial to ensure that your retirement corpus can sustain these expenses for the duration of your retirement.

Child's Education Fund
You aim to accumulate ?1 crore for your child's education. This goal requires disciplined investing and leveraging the power of compounding. Considering the rising cost of education, starting early is beneficial.

Evaluating Your Current Investments
Fixed Deposits
Fixed deposits offer safety but typically provide lower returns compared to other investment options. Given your goals, it might be beneficial to diversify some of these funds into higher-yielding investments.

Share Portfolio
A share portfolio can provide significant returns, but it also comes with higher risk. Ensuring a balanced approach by diversifying across different asset classes can help mitigate risk.

PF, Gratuity, and NPS
These are excellent long-term investments providing stability and returns. They should remain a core part of your retirement planning due to their benefits and relatively lower risk.

Assessing and Managing Debt
Your housing loan of ?27 lakhs is a significant liability. Prioritizing its repayment can free up resources and reduce financial stress. However, it's essential to balance loan repayment with investment to ensure you are still on track to meet your goals.

Recommended Investment Strategy
Diversified Portfolio
Building a diversified portfolio is crucial. This includes a mix of equity, debt, and other investment options. Equity can provide higher returns, essential for your long-term goals, while debt instruments offer stability.

Systematic Investment Plan (SIP)
Investing through SIPs in mutual funds is a disciplined approach to wealth creation. It allows you to invest regularly and benefit from rupee cost averaging, which can mitigate market volatility.

Actively Managed Funds
Actively managed funds, guided by experienced fund managers, can outperform index funds over the long term. They can adapt to market conditions and potentially provide better returns. Unlike direct funds, investing through a certified financial planner (CFP) ensures you receive professional guidance tailored to your needs.

Creating a Financial Plan
Emergency Fund
Maintaining an emergency fund equivalent to 6-12 months of expenses is crucial. This fund should be easily accessible and can be kept in a liquid fund.

Child's Education
Invest in child-specific mutual funds or diversified equity funds with a long-term horizon. These investments should be geared towards achieving the ?1 crore goal for your child's education.

Retirement Corpus
Calculate the corpus needed to sustain your post-retirement expenses, adjusted for inflation. Based on this, create a mix of equity and debt investments to accumulate the required amount.

Debt Management
Aim to repay your housing loan within the next few years while balancing your investment goals. This approach ensures you reduce liabilities while still growing your wealth.

Regular Review and Adjustment
Financial planning is not a one-time activity. Regularly review your investments and goals, and make adjustments as necessary. Market conditions, personal circumstances, and financial goals can change, and your investment strategy should adapt accordingly.

Professional Guidance
Consulting a Certified Financial Planner (CFP) is invaluable. A CFP can provide personalized advice, help you navigate complex financial decisions, and ensure your investment strategy aligns with your goals.

Conclusion
You are on the right path with your current investments and clear financial goals. By diversifying your portfolio, leveraging SIPs, and seeking professional guidance, you can achieve both your retirement and child’s education goals. Balancing debt repayment with investment is crucial to ensure a secure financial future.

Embarking on this journey with discipline and regular reviews will help you stay on track. Your dedication and proactive approach are truly commendable. Let’s work together to secure your financial future.

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  |3754 Answers  |Ask -

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

Asked by Anonymous - May 02, 2024Hindi
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I intend to retire in next 5 years. I have a son who is in class 9th. I have a share portfolio of 2 crores, PF+Gratuity is about 1 crore. I am 42 years old. I dont own a house currently but shall be having one in next 5 years, fully paid. I want a crore for my child education, otherwise my expenses are little, say 30k a month.
Ans: Considering your retirement goal in the next 5 years and your son's education fund target of 1 crore, here's a tailored plan to achieve your objectives:

Retirement Planning:
1. Evaluate Share Portfolio:
Review your share portfolio to ensure it aligns with your retirement timeline and risk tolerance. Consider diversifying into less volatile assets to safeguard your retirement corpus.

2. Optimize PF & Gratuity:
Maximize contributions to your PF and gratuity funds to bolster your retirement savings. Explore investment options that offer growth potential while prioritizing capital preservation as retirement approaches.

3. Plan for Housing:
Prepare a financial strategy to acquire a house in the next 5 years. Allocate funds towards a down payment and consider mortgage options that fit your financial situation. Owning a house can provide long-term stability in retirement.

Child Education Fund:
1. Set Targeted Savings Goal:
With a clear objective of accumulating 1 crore for your son's education, calculate the required monthly contributions to achieve this goal within the next few years.

2. Invest Strategically:
Utilize a combination of investment avenues such as mutual funds, fixed deposits, and education-oriented savings schemes to accumulate the desired corpus. Consider the risk profile and investment horizon to select appropriate instruments.

Expense Management:
1. Budgeting:
Review your monthly expenses and identify areas where you can reduce discretionary spending. Redirect these savings towards your retirement and education funds to accelerate wealth accumulation.

2. Emergency Fund:
Maintain a sufficient emergency fund equivalent to 6-12 months' worth of expenses to cover unforeseen financial emergencies, ensuring your retirement and education goals remain unaffected.

Conclusion:
By implementing these strategies, you can work towards achieving your retirement and education goals effectively. Regularly monitor your progress, and adjust your financial plan as needed to stay on track towards financial security and fulfilling your aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3754 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 2024

Asked by Anonymous - May 13, 2024Hindi
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Money
I am 39 years old earning a monthly salary of 1.20 Lakhs. My investment as on date is PF of Rs. 18 Lakhs, Mutual funds Rs.19 Lakh and Shares of Rs. 8 Lakh. I have covered myself with endowment policy of Rs. 13 Lakhs. I also have a home loan of Rs.75 Lakhs and the repayment will start from Oct 2025. I have covered my life against the loan availed with a term insurance. It’s an under construction flat. Currently I am investing 40k in SIP and 5k in Vol PF. My daughter is 9 years old and in 5th standard. I have 21 years of service left. I am looking for a corpus of 1.5 to 3 crore in the next 5 years and also to close my loan in the next 15 years. At the age of 60 I must be debt free and earning monthly income of at least a Lakh. Please advice. My wife 33 years is also employed she is also earning Rs. 90k per month.
Ans: Crafting a Comprehensive Financial Plan
You've laid out some clear objectives for your financial future, and I'm here to help you navigate the path towards achieving them.

Current Financial Snapshot
Assets
You've made significant investments in PF, mutual funds, and shares, providing a solid foundation for wealth accumulation.

Liabilities
Your home loan presents a sizable debt, but with a structured plan, it can be managed effectively.

Retirement Planning
Corpus Target
Your goal of building a corpus of ?1.5 to ?3 crore in the next 5 years is ambitious yet attainable with disciplined saving and strategic investing.

Investment Strategy
Consider diversifying your investment portfolio further to optimize returns while managing risk effectively.

Loan Repayment Strategy
Loan Closure
Targeting to close your home loan in the next 15 years is a prudent approach to achieving debt-free status by age 60.

Accelerated Payments
Explore options to increase your EMI payments or make lump-sum prepayments whenever possible to reduce the loan tenure and interest burden.

Income Generation
Monthly Income Goal
Aiming for a monthly income of at least ?1 lakh by age 60 requires careful planning and investment in income-generating assets.

Dividend Income
Consider investing in dividend-paying stocks or mutual funds to supplement your income stream.

Education Planning
Daughter's Education
With 21 years of service left, prioritize investing in education funds or SIPs to secure your daughter's future educational needs.

Insurance Coverage
Ensure adequate life and health insurance coverage for yourself and your family to safeguard against unforeseen circumstances.

Collaborative Financial Management
Spousal Contribution
Leverage your wife's income to boost your joint savings and investment efforts, enhancing your financial security collectively.

Joint Planning
Work together to align your financial goals, investments, and savings strategies, maximizing efficiency and effectiveness.

Conclusion
With a well-crafted financial plan tailored to your aspirations and circumstances, you can confidently work towards achieving your goals of wealth accumulation, debt freedom, and financial security for yourself and your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3754 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 25, 2024

Asked by Anonymous - May 25, 2024Hindi
Money
Hi Sir, I am 40 years old and working in IT company. My intake monthly salary is 1.10 lakh. I have 6L in PF, 2L in PPF, 4L in stocks, 3.5L in emergency fund inFD and 2.5L in cash. And I have 3L in MF with month sip in 4-4K in HDFC nifty 50 Index fund and HDFC multicap fund and 10k monthly in LIC. I have only 1 child 10 years old and I want to retire with 3-4 crore for my future expenses and for my child education and other things. I can now invest 60k monthly so plz guide me how can I achieve.
Ans: Your goal of accumulating Rs 3-4 crore for future expenses and your child’s education is both achievable and admirable. Given your current savings and investment profile, let’s explore how you can strategically allocate your resources to reach your financial targets.

Assessment of Your Current Financial Position
You have a well-diversified portfolio, which includes provident fund (PF), public provident fund (PPF), stocks, emergency funds in fixed deposits (FD), mutual funds (MF), and life insurance (LIC). Your monthly salary is Rs 1.10 lakh, and you are able to invest Rs 60,000 monthly. Here’s a summary of your current assets:

Provident Fund (PF): Rs 6 lakh
Public Provident Fund (PPF): Rs 2 lakh
Stocks: Rs 4 lakh
Emergency Fund in FD: Rs 3.5 lakh
Cash: Rs 2.5 lakh
Mutual Funds: Rs 3 lakh (with SIPs of Rs 4,000 each in HDFC Nifty 50 Index Fund and HDFC Multicap Fund)
LIC: Rs 10,000 monthly
Evaluating Your Investment Options
Mutual Funds: Actively Managed Funds
You already have investments in index funds and multicap funds. However, actively managed funds could offer better returns due to professional management and active stock selection.

Advantages of Actively Managed Funds:

Professional Management: Experts manage your investments, making strategic decisions to maximize returns.

Potential for Higher Returns: Actively managed funds aim to outperform the market.

Flexibility: Fund managers can quickly adapt to market changes.

Disadvantages of Index Funds:

Market-Linked Returns: Index funds merely replicate the market, lacking potential for higher returns.

No Active Management: Index funds don’t benefit from professional stock selection.

Given these points, consider allocating more to actively managed funds for potentially higher growth.

Systematic Investment Plan (SIP)
SIP is a disciplined approach to investing. It helps in averaging out the cost of investment and reduces the impact of market volatility.

Advantages of SIP:

Rupee Cost Averaging: Reduces the impact of market volatility by averaging out the purchase cost.

Discipline: Ensures regular investment without worrying about market timing.

Compounding: Long-term SIPs benefit from the power of compounding.

You are already investing through SIPs, which is excellent. Increasing your SIP amounts can further accelerate your wealth creation.

Fixed Deposits (FD) for Emergency Fund
Your emergency fund in FD is well-placed for safety and liquidity.

Advantages of FD:

Safety: FDs are considered very safe.

Guaranteed Returns: FDs offer fixed and guaranteed interest rates.

Disadvantages of FD:

Lower Returns: FD returns are generally lower compared to mutual funds.

Inflation Risk: Returns may not keep up with inflation.

Ensure your emergency fund remains adequate but consider other investment avenues for higher returns on excess funds.

Stocks
Your investment in stocks shows a higher risk tolerance, which is beneficial for growth.

Advantages of Stocks:

High Returns: Stocks have the potential for high returns over the long term.

Ownership: Provides ownership in companies and benefits from their growth.

Disadvantages of Stocks:

Volatility: Stocks can be highly volatile and risky.

Time-Consuming: Requires constant monitoring and market knowledge.

Continue investing in stocks but balance this with safer options for risk management.

Strategic Allocation to Achieve Your Goal
To accumulate Rs 3-4 crore, you need a balanced approach that maximizes growth while managing risks.

Step 1: Increase SIP in Actively Managed Mutual Funds
Shift Focus: Allocate more funds to actively managed equity mutual funds instead of index funds.

Diversify: Invest in a mix of large-cap, mid-cap, and multi-cap funds for diversification.

Step 2: Maintain Adequate Emergency Fund
FD for Safety: Keep 6-12 months’ expenses in FD for emergency needs.

Liquid Funds: Consider liquid mutual funds for better returns with liquidity.

Step 3: Continue Investing in Stocks
Balanced Portfolio: Maintain a balanced portfolio of blue-chip and growth stocks.

Regular Review: Periodically review and rebalance your stock portfolio.

Step 4: Utilize PPF and PF Wisely
PPF Contributions: Continue contributing to PPF for tax benefits and safe returns.

PF Growth: Let your PF grow, benefiting from compounded returns.

Step 5: LIC and Insurance Planning
Review Policies: Ensure your LIC policy aligns with your financial goals.

Adequate Coverage: Ensure you have adequate life insurance coverage for your family’s security.
Insurance-cum-investment schemes
Insurance-cum-investment schemes (ULIPs, endowment plans) offer a one-stop solution for insurance and investment needs. However, they might not be the best choice for pure investment due to:
• Lower Potential Returns: Guaranteed returns are usually lower than what MFs can offer through market exposure.
• Higher Costs: Multiple fees in insurance plans (allocation charges, admin fees) can reduce returns compared to the expense ratio of MFs.
• Limited Flexibility: Lock-in periods restrict access to your money, whereas MFs provide more flexibility.
MFs, on the other hand, focus solely on investment and offer:
• Potentially Higher Returns: Investments in stocks and bonds can lead to higher growth compared to guaranteed returns.
• Lower Costs: Expense ratios in MFs are generally lower than the multiple fees in insurance plans.
• Greater Control: You have a wider range of investment options and control over asset allocation to suit your risk appetite.
Consider your goals!
• Need life insurance? Term Insurance plans might be suitable.
• Focus on growing wealth? MFs might be a better option due to their flexibility and return potential.

Planning for Child’s Education and Retirement
Your child’s education and your retirement are your primary goals. Here’s a strategy to address both.

Child’s Education
Education Fund: Start a dedicated fund for your child’s education with equity mutual funds for growth.

Systematic Transfers: As your child approaches college age, systematically transfer funds to safer investments.

Retirement Planning
Retirement Corpus: Focus on building a retirement corpus through a mix of equity and debt mutual funds.

Regular Review: Review your retirement plan annually and adjust contributions as needed.

Estimating Future Value
While specific calculations are beyond this scope, a financial calculator or a Certified Financial Planner can help estimate the future value of your investments. Regularly reviewing and adjusting your strategy is essential to stay on track.

Final Thoughts and Recommendations
Your current financial discipline is commendable. To achieve your goal of Rs 3-4 crore, continue your SIPs, focus on actively managed funds, and maintain a diversified portfolio. Balance risk and safety through strategic asset allocation.

Thank you for seeking my guidance. Your proactive approach to securing your financial future and your child’s education is admirable. Feel free to reach out for further personalized advice.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3754 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 27, 2024

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I am 40 years old. I have monthly income of 2 lakhs. I have one daughter. She is 9 years old. I have savings of 42 lakhs in mutual fund. 65 lakhs in provident fund at intrest rate of 8.15 percentage. 15 lakhs in ppf and sukanya samridhi yojana. Monthly contribution in provident fund is 36000 and in mutual fund I am having total sip of 93500 out of which 65000 in axis small cap, 25000 in sbi small cap, 2500 in mirrae large and mid cap, 1000 in sbi midcap. I don't have any loan. I want to retire at 55. And want to save for my daughter's future. Kindly guide me.
Ans: You have a sound financial base, and you are working diligently towards your goals. This is commendable. Your savings and investments reflect careful planning. Now, let us refine your strategy to align with your retirement and your daughter’s future needs.

Evaluating Your Current Financial Position
Your current monthly income is Rs 2 lakhs. This provides a stable base for your family's needs and future investments.

You have a diversified portfolio with Rs 42 lakhs in mutual funds, Rs 65 lakhs in provident fund (PF), and Rs 15 lakhs in PPF and Sukanya Samriddhi Yojana (SSY).

Your regular contributions include Rs 36,000 monthly to the PF and Rs 93,500 in SIPs. This disciplined saving habit is a significant advantage.

Planning for Retirement at 55
You aim to retire at 55, giving you 15 years to build your retirement corpus.

Considering the rising inflation, it is crucial to ensure your investments grow at a rate higher than inflation. You have Rs 42 lakhs in mutual funds. Small-cap funds, while high-risk, can offer significant growth. However, too much exposure to small-cap funds can be risky, especially as you near retirement.

Balancing Your Mutual Fund Portfolio
Your current SIPs include Rs 65,000 in Axis Small Cap, Rs 25,000 in SBI Small Cap, Rs 2,500 in Mirae Large and Mid Cap, and Rs 1,000 in SBI Midcap.

While small-cap funds can offer high returns, they are also volatile. As you approach retirement, consider balancing your portfolio with more stable, diversified funds. Actively managed funds could be a good option here. They are managed by professionals who can make strategic decisions to navigate market volatility, potentially offering better risk-adjusted returns.

Assessing Direct Funds vs Regular Funds
Investing through direct funds means you handle all transactions and decisions. This can be cost-effective but may lack professional guidance.

Regular funds, managed by a Certified Financial Planner (CFP), offer expert advice and strategic planning. This can be particularly beneficial as you near retirement and need to manage risk carefully.

Provident Fund and PPF Contributions
Your provident fund contributions and its interest rate of 8.15% are solid. The PPF and Sukanya Samriddhi Yojana also offer good returns with tax benefits. These instruments provide stability and security, which are essential as you approach retirement.

Saving for Your Daughter's Future
Your daughter is nine years old. Planning for her education and future expenses is a priority. The Sukanya Samriddhi Yojana is a good start, offering a secure and high-interest savings avenue.

Consider dedicated investments for her higher education, such as child education plans or a diversified mutual fund portfolio. These should be aligned with her education timeline to ensure funds are available when needed.

Diversification and Risk Management
Diversification is crucial to managing risk. While your mutual funds are heavily invested in small-cap funds, consider adding more large-cap or multi-cap funds to your portfolio. These funds are less volatile and can provide stability.

Actively managed funds can offer strategic adjustments based on market conditions, helping mitigate risks associated with market volatility.

Emergency Fund
An emergency fund is essential for financial security. Ensure you have 6-12 months' worth of expenses in a liquid, easily accessible account. This provides a safety net in case of unexpected events.

Monitoring and Reviewing Investments
Regularly reviewing your investments is crucial. Monitor their performance and rebalance your portfolio as needed. This ensures your investments remain aligned with your goals and risk tolerance.

Conclusion
Your disciplined saving and diversified investments are commendable. To optimize your strategy:

Balance your mutual fund portfolio with less volatile, actively managed funds.
Consider the benefits of regular funds managed by a CFP.
Ensure you have an adequate emergency fund.
Regularly review and adjust your investments.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Asked by Anonymous - Jun 16, 2024Hindi
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Hi sir, my son got 9323 rank in comedk and 23350 rank in KCET. As per last year cutoff he may get Mechanical seat in BMS or MSRIT. Please suggest which one is good for Mechanical engineering
Ans: Both are equally good for Mechanical. Some factors to keep in mind before choosing either college for your Son: (1) Location Preference (2) Will stay in Hostel (or) study as Day Scholar (3) Your affordability for fees (if there is a major difference in fees between these 2 colleges & (4) Availability of transport from your home to college. Whatever Institute / University & Branch your Son chooses, he should keep upgrading his skills from his 1st year itself till his Campus Placement during his last year, from LinkedIn, Coursera, NPTEL, Internshala etc. and / or any other online platforms, recommended by his College Faculties, to be COMPETENT among other Students.

All The BEST for your Son’s Bright Future.

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Asked by Anonymous - Jun 16, 2024Hindi
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I'm a girl from Jharkhand, I got 91.87%ile in jee mains, crl 1.22 lakh, category rank 40k. In which counselling program should I apply for and what colleges can I get at this rank? Is there any chance to get colleges through board %age as I got 95% in CBSE class XII
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Asked by Anonymous - Jun 16, 2024Hindi
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My daughter scored 251 in BITSAT, and 25k in jee mains. She is getting mechanical and chemical in warangal nit. What should we do?
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All The BEST for your Daughter’s Bright Future.

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Career Counsellor - Answered on Jun 17, 2024

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Hi,My son got sandip University nashik cse (AIMl) is it good college to go for his studies or else need to try another colleges in Bangalore??
Ans: Raju Sir, you have asked the need for Bengaluru Colleges. If your son has appeared for COMEDK or any other Private Colleges' its own entrance exams, better he tries through them. It depends upon your son's Rank / Score & the streams he prefers. Recommended before your son goes for Sandip University (if he has no other option, as time is very less now). Whatever Institute / University & Branch your Son chooses, he should keep upgrading his skills from his 1st year itself till his Campus Placement during his last year, from LinkedIn, Coursera, NPTEL, Internshala etc. and / or any other online platforms, recommended by his College Faculties, to be COMPETENT among other Students.

All The BEST for your Son’s Bright Future.

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

Asked by Anonymous - Jun 17, 2024Hindi
Money
I want to invest in 10 L lumpsum for 3-5 years. What is the best strategy for getting good returns (at least 12-15 %)? I want to use this money further for my own business.
Ans: Understanding the Investment Landscape
Investing a lump sum of Rs 10 lakh with the goal of achieving good returns requires a thorough understanding of the investment landscape. Given your objective to use this money for your own business in 3-5 years, it's important to choose a strategy that balances potential returns with acceptable levels of risk.

The Importance of Time Horizon
Your investment time horizon significantly impacts the type of investment strategy you should adopt. While you are considering a 3-5 year period, achieving a 12-15% return may require a slightly longer horizon.

Investing for at least 7 years could better align with your return expectations and allow your investment to ride out market volatility.

Embracing Market Volatility
Investing in the market inherently involves dealing with volatility. Market fluctuations are natural and can impact short-term investment performance.

However, historically, equity markets have shown growth over longer periods, offering potential for substantial returns. Embracing this volatility is crucial to achieving your financial goals.

Benefits of Mutual Funds
Mutual funds offer a diversified investment option that can help mitigate risks while providing exposure to growth opportunities. Actively managed funds, in particular, are managed by professional fund managers who aim to outperform the market by making strategic investment decisions.

Advantages of Actively Managed Funds
Professional Management: Skilled fund managers actively monitor and adjust the portfolio, aiming for higher returns.

Diversification: Mutual funds invest in a variety of assets, reducing the risk associated with individual investments.

Liquidity: Mutual funds offer liquidity, allowing you to redeem your investment when needed.

Transparency: Regular updates and reports keep investors informed about their investments.

Disadvantages of Index Funds
Market Mimicry: Index funds aim to replicate the performance of a specific index, limiting their potential to outperform.

No Active Management: Lack of professional management can lead to missed opportunities in dynamic market conditions.

Limited Flexibility: Index funds follow a predetermined strategy, offering little flexibility in response to market changes.

Benefits of Investing Through Certified Financial Planners
Investing through a Certified Financial Planner (CFP) ensures that your investments are aligned with your financial goals.

CFPs offer personalised advice and can help navigate the complexities of the financial markets.

Advantages of Regular Funds
Expert Guidance: MFDs with CFP credentials provide valuable insights and strategic advice.

Tailored Solutions: Regular funds offer customised investment strategies based on individual goals and risk tolerance.

Support and Service: Professional support for investment decisions and portfolio management.

Holistic Planning: CFPs consider your overall financial situation, ensuring comprehensive financial planning.

Understanding Investment Risks
Every investment carries a certain level of risk. It's crucial to understand and accept these risks when aiming for higher returns.

Types of Risks
Market Risk: The risk of investments declining due to market fluctuations.

Interest Rate Risk: The risk of interest rate changes affecting investment values.

Inflation Risk: The risk of inflation eroding purchasing power over time.

Importance of Staying the Course
Investing with a long-term perspective requires patience and discipline. Market volatility can be unsettling, but staying the course is essential for achieving your investment goals.

Strategies for Staying the Course
Avoid Emotional Decisions: Base your investment decisions on facts and long-term goals, not short-term market movements.

Regular Reviews: Periodically review your investment portfolio to ensure it aligns with your goals and risk tolerance.

Rebalancing: Adjust your portfolio to maintain your desired asset allocation.

Reinvestment Strategies
If you hold LIC, ULIP, or investment-cum-insurance policies, consider evaluating their performance.

Surrendering underperforming policies and reinvesting in mutual funds can potentially yield better returns.

Benefits of Reinvestment
Higher Returns: Mutual funds typically offer higher returns compared to traditional insurance policies.

Flexibility: Reinvestment in mutual funds provides more flexibility and control over your investments.

Cost Efficiency: Mutual funds often have lower costs and fees compared to insurance policies.

Strategic Asset Allocation
Asset allocation is crucial for managing risk and achieving your desired returns. A well-balanced portfolio should include a mix of equity, debt, and other instruments.

Suggested Allocation
Equity Funds: Allocate a significant portion to equity funds for growth potential.

Debt Funds: Include debt funds for stability and regular income.

Hybrid Funds: Consider hybrid funds for a balanced approach to risk and return.

Regular Monitoring and Adjustments
Continuous monitoring and adjustments to your portfolio are necessary to ensure it remains aligned with your financial goals.

Benefits of Regular Monitoring
Performance Tracking: Monitor the performance of your investments regularly.

Timely Adjustments: Make necessary adjustments to optimise returns and manage risks.

Goal Alignment: Ensure your investments remain aligned with your evolving financial goals.

Final Insights
Investing a lump sum of Rs 10 lakh requires careful planning and a strategic approach.

Understanding the investment landscape, embracing market volatility, and opting for actively managed mutual funds are key steps towards achieving your financial goals.

Staying the course, regularly reviewing your portfolio, and seeking professional guidance from a Certified Financial Planner can enhance your investment experience and outcomes. By focusing on a balanced and diversified investment strategy, you can work towards achieving your desired returns while preparing for your business ventures.

Invest wisely, stay informed, and be patient to see your investments grow.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Nayagam P

Nayagam P P  |390 Answers  |Ask -

Career Counsellor - Answered on Jun 17, 2024

Asked by Anonymous - Jun 17, 2024Hindi
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Please include one more choice in the selection criteria 1. Vit Vellore CSE in 4th category 2. Pes ec campus CS 3. MIT BANGALORE CSE We are staying in Bangalore, which choice is better and please help with reasoning?
Ans: You have not mentioned in which-all Entrance Exams you appeared (COMEDK \ KCET etc.)? However, order of Preference (1) PES (Electronic City) (2) MIT-Bengaluru (here, however, please note, for some students this is not suitable due to its culture (non-academic / psychological factors). (3) VIT-Vellore (check the fee structure of all 4-years for affordability). If you have appeared in COMEDK & KCET also, find out 1-2 options even the colleges belong to Tier 2 category. Whatever Institute / University / Branch / Domain you choose, keep upgrading your skills from 1st year itself till your Campus Placement during your last year, from LinkedIn, NPTEL, Coursera, Internshala etc. and / or any other online platforms, recommended by your College Faculties, to be COMPETENT among other Students, for jobs.

All The BEST for your Bright Future.
To know more on ‘ Careers | Education | Jobs | Resume Writing | Profile Building | Salary Negotiation Skills | Building Professional LinkedIn Profile | Choosing Right School Board (State | Matriculation | CBSE | ICSE |International Board) | Student Psychological Counselling | Exam Preparation Techniques (Board | Entrance & Competitive)| Strategies to Attempt Exams | Job Interview Skills | Skill Upgrading | Parenting & Child Upbringing Skills | Career Transition | Abroad Education | Education Loan (India | Abroad) | Scholarship (India | Abroad) | SOP Writing Tips’, please FOLLOW me in RediffGURU here.

Nayagam PP |
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https://www.linkedin.com/in/edujob360/

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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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