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Ramalingam Kalirajan |6991 Answers |Ask -Follow

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

Question by Mohit on May 09, 2024Hindi

I want to invest Rs. 1 lac lumpsum yearly in mutual funds for my children for the next 15 years. What kind of funds will be apt? (I will increase the lumpsum amount by 10% yearly).

Ans: Given your goal of investing a lump sum of Rs. 1 lakh annually for your children's future over the next 15 years, with a planned 10% increase in the investment amount each year, let's devise an investment strategy tailored to your objectives.
Considering the long investment horizon and the goal of wealth accumulation for your children, a diversified portfolio of mutual funds with a focus on growth potential and risk management would be appropriate. Here's a suggested allocation:
1. Equity Funds: Allocate a significant portion of your investment towards equity funds to capitalize on the potential for higher returns over the long term. Opt for a mix of large-cap, mid-cap, and multi-cap funds to diversify across market segments and mitigate risk. These funds offer exposure to quality stocks with strong growth prospects and can help in wealth creation over time.
2. Debt Funds: Incorporate debt funds into your portfolio to provide stability and reduce overall volatility. Debt funds invest in fixed-income securities such as government bonds, corporate bonds, and money market instruments. They offer steady income streams and can act as a buffer during periods of market turbulence. Consider allocating a portion of your investment to debt funds to balance risk and optimize returns.
3. Balanced Funds: Balanced funds, also known as hybrid funds, combine equity and debt instruments in a single portfolio. These funds offer a balanced approach to investing, providing growth potential from equity exposure while offering downside protection through debt allocation. Including balanced funds in your portfolio can help in achieving stable returns while managing risk effectively.
4. Children's Funds: Some mutual funds are specifically designed for children's education or future needs. These funds typically have longer investment horizons and may offer unique features such as lock-in periods or dedicated investment strategies tailored to children's goals. Exploring children's funds can provide a focused approach to investing for your children's future needs.
Regularly review your investment portfolio and adjust your allocations as needed to stay aligned with your financial goals and risk tolerance. Additionally, consider seeking guidance from a Certified Financial Planner to customize your investment strategy based on your specific circumstances and objectives.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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