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Hardik Parikh  | Answer  |Ask -

Tax, Mutual Fund Expert - Answered on Apr 19, 2023

Hardik Parikh is a chartered accountant with over 15 years of experience in taxation, accounting and finance.
He also holds an MBA degree from IIM-Indore.
Hardik, who began his career as an equity research analyst, founded his own advisory firm, Hardik Parikh Associates LLP, which provides a variety of financial services to clients.
He is committed to sharing his knowledge and helping others learn more about finance. He also speaks about valuation at different forums, such as study groups of the Western India Regional Council of Chartered Accountants.... more
Surya Question by Surya on Mar 21, 2023Hindi
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Hi, I am investing 24,000 as a SIP in following MF schemes since 2020. 1. HDFC Taxsaver - 5000 2. HDFC retirement saving - 2000 3. Mirae asset large cap fund - 3000 4. Axis small cap fund - 2000 5. Axis mid cap fund - 2000 6. Axis bluechip fund - 2000 7. Franklin india feeder - US Opp fund - 2000 8. Quant active fund - 3000 9. Parag Parikh flexi cap fund - 3000 Please advise if I need to make any adjustments. I want to make corpus of 1 CR by 2030.

Ans: Dear Surya,

It's great to see that you've been disciplined with your investments since 2020. Your portfolio comprises a mix of tax-saving, retirement, large-cap, mid-cap, small-cap, and international funds, which is a good sign of diversification.

Considering your goal of accumulating a corpus of ₹1 crore by 2030, let's look at your current investment approach and see if any adjustments are needed.

First, let's assume an average annual return of 12% on your investments, which is reasonable for equity-oriented mutual funds in the long term. With your current monthly SIP of ₹24,000, you will have invested ₹2,88,000 annually. By 2030, which is 7 years away, you would have invested ₹20,16,000 in total.

Using the assumed 12% annual return, the future value of your investment by 2030 would be approximately ₹33,38,000. This is significantly short of your ₹1 crore goal.

To achieve your target, you would need to increase your monthly SIP amount. Here's what you can do:

Review your financial situation and identify any areas where you can increase your monthly investments. You may need to invest around ₹50,000 per month to achieve ₹1 crore by 2030, assuming the same 12% annual return.
Reassess your portfolio and its asset allocation. While your current allocation seems well-diversified, it's important to ensure that it's aligned with your risk tolerance and investment horizon. You may need to make some changes to improve the potential for higher returns. Consider discussing this with a financial advisor to ensure your portfolio is optimized for your goals.
Regularly review your investments and their performance. It's essential to keep track of how your mutual funds are performing compared to their benchmark indices and peers. If you find any underperformers, consider replacing them with better-performing alternatives.
Remember that investing is a long-term journey and requires patience, discipline, and regular reviews. It's important to stay committed to your investment plan and make adjustments as needed to reach your financial goals.

Wishing you the best on your journey to ₹1 crore by 2030!

Warm regards,
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 Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 12, 2024

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Hello Sir, I am Sumit. I have been investing in MF since 2018 via regular SIP and lumpsum amounts as per the availability of funds. At present I am having following SIP in my account (1) DSP Flexicap Fund (Rs. 15000), (2) ICICI Prud Banking and Financial (Rs. 10000), (3) Kotak Emerging Equity Fund (Rs 15000), (4) Nippon Small Cap Fund (Rs 5000), (5) Kotak Focused Equity Fund (Rs 10000) and Also following in my mother's name (a) Axis MidcapFund (Rs 5000), (b) DSP Flexicap Fund (Rs 5000) Till May 2023 the SIP was of Rs 40000 which I have increased to 55000 from my account. I have invested around Rs 53 lakh till Dec 2023 and its value as per the present market rate is Rs 81 Lakh. Are these Funds / SIPs properly spread out ? I intend to create 2 Cr by June 2025. Please advise on existing funds or changes to be done. Thank you.
Ans: It's great to see your disciplined approach to investing in mutual funds. Your portfolio appears to be diversified across different categories, which is a good practice for managing risk. However, here are a few considerations and suggestions:

Diversification: Your portfolio seems heavily focused on equity funds, especially mid-cap and small-cap funds. While these funds can offer higher growth potential, they also come with higher risk. Consider diversifying into other categories like large-cap or flexi-cap funds to spread out risk.

Performance Review: Evaluate the performance of each fund in your portfolio relative to its benchmark index and peers. If any fund consistently underperforms or does not align with your investment objectives, consider replacing it with a better-performing alternative.

Risk Assessment: Given your goal of achieving Rs 2 Crore by June 2025, assess whether your current asset allocation aligns with your risk tolerance and investment horizon. Adjust your portfolio composition accordingly to balance risk and return potential.

Continued Monitoring: Keep a close watch on market developments, economic indicators, and fund performance. Regularly review your portfolio to ensure it remains aligned with your financial goals and make adjustments as necessary.

Consultation: Consider consulting with a financial advisor who can provide personalized guidance based on your financial situation, goals, and risk profile. They can help you optimize your portfolio and make informed investment decisions.

Remember that achieving your financial goals requires patience, discipline, and periodic review of your investment strategy. By staying informed and making prudent investment decisions, you can work towards building wealth and achieving your objectives.

..Read more

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Ramalingam Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 05, 2024

Asked by Anonymous - May 05, 2024Hindi
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Sir, I started investing in MFs since 2007. These are the schemes where I am investing currently. Do I need to make any changes to my portfolio? I am planning to invest Rs 50,000 per month for a period of 20 years. I want a corpus of Rs 5 cr after 20 years. Do I need to add any new schemes to reach my target? * Mirae Asset Tax Saver Fund G * Motilal Oswal NASDAQ 100 ETF * Parag Parikh Flexi Cap Fund * Aditya Birla Sun Life Mfg Equity Fund * Aditya Birla Sun Life Tax Relief 96 * 360 One Focused Equity Fund - Growth * Mirae Asset Emerging Bluechip Fund - Growth * Quant Tax Plan * Axis Bluechip fund * Canara Robeco Emerging Equities * Canara Robeco Equity Tax Saver * HDFC Gold Trader Fund Growth - Direct * HDFC Tax saver ICICI Prudential Technology Fund – Growth
Ans: You've built a diversified portfolio over the years, showcasing a thoughtful approach to long-term wealth creation. It's commendable how you've spread your investments across different market segments and themes.

To reach your target corpus of Rs 5 crore in 20 years with a monthly investment of Rs 50,000, it's essential to periodically review and adjust your portfolio. Consider rebalancing to ensure alignment with your goals and market conditions.

While your current portfolio includes a mix of equity, tax-saving, and thematic funds, consider adding diversified options to enhance portfolio resilience. Focus on funds with strong track records, experienced fund managers, and consistent performance.

As market dynamics evolve, keep an eye on new investment opportunities and emerging sectors. Stay informed and open to adjustments to optimize your portfolio for long-term growth and stability.

Remember, investing is a journey, and it's essential to stay patient, disciplined, and focused on your goals. With prudent planning and regular review, you're well-positioned to achieve your financial aspirations. Keep up the good work!

..Read more

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Ramalingam Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 11, 2024

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I am 42 years salaried person investing in MF through SIP from 2014 current corpus is 37 Lakhs in MF. My Current SIP's amount is rs 22000 PM as follows- 1. Nippon Small cap - 2000, 2. Mahindra manulife midcap fund - 7000, Mahindra Manulife Small cap - 4000, PGIM Midcap opportunities Fund - 3000, Quant Flexicap fund - 6000. SIP increasing every year by 5% to 10% No Home loan, term insurance 55 lakhs, medi-claim 10 lakhs, PF & VPF accumulation Rs 16 lakhs. I want to create a good corpus of Rs 6 - 7crore for retirement at 58 years of age. Please suggest if any change required in investment amount or funds.
Ans: It's commendable that you've been consistently investing in mutual funds through SIPs for several years, laying a strong foundation for your retirement. Let's evaluate your current investment strategy and make adjustments to align with your retirement goal.

Your portfolio reflects a diversified mix of small-cap, mid-cap, and flexi-cap funds, which offer growth potential over the long term. However, given your goal of building a substantial corpus for retirement, we may need to reassess your asset allocation and make some adjustments.

Firstly, let's review your SIP amounts and consider increasing them gradually to accelerate wealth accumulation. Since your SIPs increase by 5% to 10% annually, this incremental growth can boost your investment corpus significantly over time.

Consider reallocating some of your SIP amounts to funds with a proven track record of consistent performance and lower volatility. While small-cap and mid-cap funds can offer higher returns, they also come with increased risk. Diversifying across large-cap funds or balanced funds can provide stability to your portfolio.

Moreover, review your overall asset allocation to ensure it remains aligned with your risk tolerance and investment objectives. While equity investments offer growth potential, it's essential to balance them with fixed-income securities like debt funds or PPF to mitigate risk.

Given your age and retirement horizon, periodically reassess your investment strategy and make necessary adjustments to stay on track towards your goal. Consider consulting with a Certified Financial Planner to develop a personalized retirement plan tailored to your needs and aspirations.

In conclusion, by fine-tuning your investment strategy, increasing your SIP amounts, and maintaining a disciplined approach, you can work towards achieving your retirement goal of building a corpus of Rs 6 - 7 crores by the age of 58.

Best Regards,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 03, 2024

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Hi, I am 47 years old and have been investing in MF’s since age of 29. My current valuation of MF’s is 1.6 Cr. Below are my SIP’s details – I do step up of around 5000-8000 every year. My goal is to have a corpus of Rs. 5 Cr at age of 60. Kindly suggest if with current investments I can achieve the goal and also suggest if I need to change any MF schemes. Fund SIP Canararob Small Cap 4000 Dsp Small Cap 5000 Edelweisis Flexi 6000 Franklin Focussed 2000 Hdfc Mid Cap 2000 Mirae Multicap 5000 Mirae Midcap 13000 Mirae Large and Midcap 9000 Nippon Multicap 17500 Franklin India Opportunities 4000 Bank of India Flexicap 4000 Total 66500 Regards, Nitin M
Ans: Nitin, you've done a commendable job investing in mutual funds from the age of 29. You have built a substantial corpus of Rs 1.6 crore. Investing Rs 66,500 monthly, along with regular step-ups, shows your commitment to long-term wealth building. Your goal of Rs 5 crore by the age of 60 is achievable, but it requires a careful analysis of your current portfolio and projections.

Let’s break down the strategy and see if adjustments are needed.

Current SIPs Overview
Here are your SIP details:

Canara Robeco Small Cap: Rs 4,000
DSP Small Cap: Rs 5,000
Edelweiss Flexicap: Rs 6,000
Franklin Focused: Rs 2,000
HDFC Midcap: Rs 2,000
Mirae Multicap: Rs 5,000
Mirae Midcap: Rs 13,000
Mirae Large and Midcap: Rs 9,000
Nippon Multicap: Rs 17,500
Franklin India Opportunities: Rs 4,000
Bank of India Flexicap: Rs 4,000
Total monthly investment: Rs 66,500.

Let's first check if your current portfolio aligns with your Rs 5 crore goal.

Goal Achievement: Will You Reach Rs 5 Crore by 60?
You have 13 years left to achieve your goal, from age 47 to 60. You’re currently investing Rs 66,500 per month, and you also increase your SIPs by Rs 5,000 to Rs 8,000 annually.

Considering an average return of 10-12% per year from your mutual funds, and taking into account your step-up plan, you should comfortably achieve your Rs 5 crore target by age 60. But to ensure consistent growth, your portfolio should be well-diversified and structured.

Projections:

Your current SIPs, along with annual step-ups, should grow your corpus significantly over the next 13 years.
You’re likely on track for your Rs 5 crore goal, assuming stable market conditions and continued step-up.
Assessing Portfolio Diversification
1. Overlap in Funds

You hold several mid-cap and multicap funds, which could lead to overlap. For example, your Mirae Midcap and HDFC Midcap funds might hold similar stocks. It’s important to avoid too many funds in the same category to prevent redundancy and excessive risk exposure.

Suggested Action: Trim the number of overlapping funds. Keep one or two solid midcap funds instead of multiple, and the same for flexicap/multicap funds.

2. Excessive Exposure to Small Caps?

You have Rs 9,000 in small-cap funds (Canara Robeco Small Cap and DSP Small Cap). Small caps are more volatile and can swing widely based on market conditions. While small-cap funds have high growth potential, they also carry higher risk.

Suggested Action: Keep a balance between small, mid, and large caps. Limit small-cap exposure to no more than 10-15% of your total portfolio to reduce volatility risk.

Step-Up Strategy: Continue or Adjust?
Your current step-up of Rs 5,000 to Rs 8,000 per year is an excellent strategy. It ensures that your investments grow in line with your income and inflation. I suggest continuing this step-up approach as it will help you reach your Rs 5 crore goal faster.

Portfolio Simplification and Trim
With 11 funds in your portfolio, there is room to streamline for better management and performance tracking.

Suggested Action: Reduce your portfolio to around 6-8 funds. You don’t need to hold too many funds. Focus on the best performers across categories like large-cap, mid-cap, and flexi-cap.

Tax Efficiency and Fund Management
When selling mutual funds in the future, keep the tax implications in mind:

Long-Term Capital Gains (LTCG): Above Rs 1.25 lakh is taxed at 12.5% for equity mutual funds.
Short-Term Capital Gains (STCG): Are taxed at 20%.
Given your long-term horizon, focus on funds that offer strong long-term growth potential and avoid frequent churn to minimize tax impact.

Active Management vs Passive Funds
Since you haven’t mentioned index or direct funds, let me briefly explain why actively managed funds are preferable in your case.

Active Funds: Offer potential for better returns as fund managers actively pick stocks.
Passive Funds: Like index funds, simply track the index and may underperform during market downturns.
Stick with actively managed funds, especially those overseen by experienced fund managers, to give your portfolio a better chance of outperforming the market.

Term Insurance and Other Investments
While it wasn’t mentioned, if you don’t have a term insurance plan, consider getting one. Term insurance provides financial protection for your family in case of any unfortunate event and is cost-effective.

Suggested Action: Secure a term insurance plan if you don’t already have one. Avoid mixing insurance with investments like ULIPs, as they don’t offer optimal returns.

Additional Recommendations
Diversify Across Asset Classes: Consider adding some debt or hybrid mutual funds to your portfolio. These will act as a cushion during market downturns and provide stability.

Emergency Fund: Keep at least 6-12 months of living expenses in a liquid or short-term debt fund as an emergency fund. This ensures you won’t need to redeem your equity investments during market corrections.

Final Insights
Your current portfolio is on the right track to achieve the Rs 5 crore target by age 60. However, simplifying the number of funds, balancing risk with diversification, and continuing your step-up strategy will help you stay on track. Focus on strong-performing funds, limit small-cap exposure, and ensure you have a balanced mix of large, mid, and multi-cap funds.

Lastly, keep an eye on market performance and review your portfolio annually to make adjustments if needed.

Best Regards,

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

..Read more

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Ramalingam Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 13, 2025

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Hi, my in hand salary is 1 lac , have no plans yet. Planning of buying a house and car in next 5 years. Pls suggest how to invest money and where.
Ans: Your monthly in-hand salary of Rs. 1 lakh gives good opportunity.
You have no liabilities yet. No existing EMIs. That’s a strong base.
You plan to buy a car and a house in the next 5 years.
Let’s look at your goals and create a step-by-step financial plan.

? Monthly Cash Flow Management

– Begin by tracking your monthly expenses carefully.
– Try to save at least 40% of your income.
– That means saving Rs. 40,000 every month.
– Keep expenses below Rs. 60,000 monthly if possible.
– Savings is the first step to investment.

Don’t let your salary slip away in small expenses. Budgeting is a habit.

? Emergency Fund Setup

– Emergency fund gives peace of mind in tough times.
– Save 4 to 6 months of expenses first.
– If your expenses are Rs. 60,000, keep Rs. 3.6L as emergency fund.
– Use a mix of savings bank, FD, and liquid mutual funds.
– Don’t use equity for emergency money.

This amount should be always accessible, but not mixed with regular savings.

? Car Purchase Planning (5-Year Goal)

– Buying a car is a short to medium-term goal.
– Don’t invest this money in equity or shares.
– Equity has risk of short-term losses.
– Use recurring deposit or short-term debt mutual funds.
– Save separately for car down payment.

Suppose you need Rs. 6L for the car.
You need to save Rs. 10,000 per month approximately.
Stick to the plan. Don’t delay saving.

? House Purchase Planning (5-Year Goal)

– House purchase is a high-value goal.
– It also needs big down payment.
– You may need Rs. 15L to Rs. 20L as down payment.
– This is achievable in 5 years with consistent savings.
– Don’t put this in low-return instruments.

Use balanced mutual funds and flexi-cap funds.
They are managed by professionals and grow well.
Choose regular plans through an MFD with CFP support.

Direct mutual funds may seem low-cost.
But they have no expert to guide you.
A small mistake in fund or timing can cost you years.

Regular plan via Certified Financial Planner and MFD ensures proper tracking.
You get goal-based review. Not random investing.

? Monthly Investment Allocation

– Out of Rs. 1L salary, save Rs. 40,000 minimum.
– Split this Rs. 40,000 into three parts:

Rs. 10,000 for car goal (debt fund or RD)

Rs. 20,000 for house down payment (mutual funds)

Rs. 10,000 for long-term wealth creation (mutual funds)

This mix covers your present and future well.
Don’t skip SIP. Don’t redeem unless needed.

? Mutual Fund Investing Strategy

– Equity mutual funds are for long-term growth.
– Use large-cap, flexi-cap, and mid-cap funds in mix.
– Don’t invest in index funds.
– Index funds have no downside protection.
– They follow market blindly. No manager decisions.
– Actively managed funds perform better in tough markets.

Start with SIPs. Stay consistent.
Increase SIP amount every year with salary hike.

Use regular mutual funds through MFD for service and advice.
Avoid DIY investing unless you track markets full time.

? Investment Discipline and SIP Benefits

– SIP builds investing habit.
– You invest monthly, same date, same amount.
– No need to time market.
– Avoid lump sum investing unless goal is near.
– SIP benefits from rupee cost averaging.

Over time, SIP can grow into big corpus.
Don’t stop SIP if markets go down.
That is when you buy more units.
This builds wealth faster.

? Insurance Planning (Term + Health)

– Insurance is protection, not investment.
– First get a pure term life insurance.
– If you are unmarried now, still take Rs. 1Cr cover.
– Premium is low if taken early.

– Also take health insurance for yourself.
– Start with a cover of Rs. 5L.
– Add top-up later when you have dependents.
– Don’t depend only on office health cover.
– Job change or job loss can remove it.

Buy personal cover which continues always.

? Avoiding Insurance-Linked Investments

– Don’t invest in ULIP or LIC money-back plans.
– These mix insurance with returns.
– Returns are low and lock-in is long.
– Term insurance is better. It’s simple and pure.
– For investment, choose mutual funds separately.

If you already have such plans, check surrender value.
Then move that money to mutual funds.

? Long-Term Wealth Creation

– Start early with equity mutual funds.
– Time in market is more important than timing.
– Set up SIPs for 10+ years.
– Use this for retirement or passive income.

Compound growth works best over long term.
Every delay reduces future gains.

Track your SIPs once a year.
Take help from Certified Financial Planner regularly.

? Tax-Saving Investments

– Use Section 80C limit of Rs. 1.5L every year.
– Choose ELSS mutual funds to save tax and grow wealth.
– ELSS has 3-year lock-in. Shortest among all 80C options.
– Avoid PPF or traditional LIC unless for specific use.

Also claim 80D for health insurance premiums.
Keep tax planning and wealth building connected.

? Asset Allocation Strategy

– Don’t keep all money in one place.
– Mix debt, equity, and cash for right balance.
– Short term goals in debt.
– Long term goals in equity.
– Emergency fund in cash and liquid assets.

Review allocation every year.
Rebalance when market or income changes.

A wrong allocation can ruin best investment choices.
A CFP helps in adjusting this correctly.

? Avoid These Mistakes

– Don’t invest without clear goals.
– Don’t mix investment and insurance.
– Don’t follow random stock tips or apps.
– Don’t stop SIPs due to market fall.
– Don’t delay emergency fund.
– Don’t invest in real estate unless for personal stay.

Real estate lacks liquidity. Also needs huge cash.
Returns are uncertain and often overestimated.

? Start with These Steps Now

– Track all expenses this month.
– Fix Rs. 40,000 for monthly saving.
– Open a SIP in equity mutual fund via MFD.
– Start RD or debt mutual fund for car goal.
– Take term insurance and health cover.
– Keep Rs. 50,000 in savings bank as emergency start.
– Set calendar reminder to review monthly.

Financial discipline beats big income.
Start small but stay regular.

? Finally

– You are at the perfect stage to build strong wealth.
– No loans, no EMIs, and good salary.
– Your 5-year goals are realistic.
– Right investment choices will help you reach them.
– Don’t wait too long to begin.
– Use mutual funds wisely. Avoid index and direct options.
– Direct funds lack guidance. Regular plans with MFD + CFP is safer.
– Use SIPs, avoid lump sum for now.
– Don’t depend on fixed deposits or saving account.
– Don’t forget health and term insurance.

A 360-degree plan gives both safety and growth.
Follow this path with consistency and patience.
You will build wealth faster than you expect.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 13, 2025

Asked by Anonymous - Jul 12, 2025Hindi
Money
I'm 35 years old. I want to retire by 2045. I'm investing 5000 in UTI index fund and 5000 in parag parikh flexicap fund. I would like to invest 10000 more. I'm planning to increase my corpse by 6% every year. Please give your suggestion.
Ans: ? Assessing Your Current Investment Approach
– You are 35 years old and plan to retire in 2045.
– That gives you around 20 years to build your retirement corpus.
– You're investing Rs. 5,000 each in an index fund and a flexicap fund.
– You also plan to invest Rs. 10,000 more each month.
– Plus, you wish to increase your corpus annually by 6%.

? Drawbacks of Index Funds for Long-Term Investors
– Index funds only follow the market, they do not try to beat it.
– These funds invest in all companies in an index, even poor ones.
– In falling markets, index funds do not offer protection.
– They have no fund manager to track changing economic trends.
– They lack flexibility to switch between high-performing sectors.
– Actively managed funds aim for better returns with controlled risk.
– A qualified fund manager uses strategy, not passive tracking.
– Over a long term, active funds have outperformed index funds.
– For retirement goals, this extra return matters a lot.

? Concerns with Direct Mutual Funds
– Direct funds seem to offer lower expense ratios.
– But they lack expert guidance from qualified professionals.
– You may end up with overlapping or unsuitable funds.
– Regular funds through a Certified Financial Planner offer monitoring.
– You get periodic reviews and timely course corrections.
– Guidance from a CFP helps avoid panic during market volatility.
– You also get help with rebalancing and tax-efficiency.
– Retirement is too crucial to rely on DIY or direct funds.

? Importance of Portfolio Diversification
– Currently you have exposure to equity only.
– Even within equity, you hold only large-cap and flexi-cap.
– A well-diversified plan includes mid-cap and small-cap too.
– These offer better growth during certain phases of the market.
– You can also include international or global funds with caution.
– Hybrid funds are useful to balance risk later in life.
– Avoid overlapping funds with similar underlying stocks.
– Mix of equity, debt, and hybrid offers balanced growth and safety.

? Asset Allocation for Retirement Planning
– Since you have 20 years, you can hold higher equity now.
– Gradually shift towards balanced and debt as you near 2045.
– Start with 80% equity, 20% hybrid or debt.
– After age 45, reduce equity step by step every five years.
– This gives better protection against sudden market corrections.
– Retirement corpus should not be at full market risk.

? Suggested Allocation of Rs. 10,000 Additional Monthly Investment
– Rs. 4,000 in a well-managed large and mid-cap fund.
– Rs. 3,000 in an aggressive hybrid fund.
– Rs. 3,000 in a pure mid-cap or small-cap fund.
– Avoid sectoral or thematic funds unless for small allocation.
– This mix improves long-term growth and cushions short-term losses.

? The Power of SIP Step-Up Strategy
– Increasing SIP by 6% annually is a strong move.
– This helps fight inflation and improve your final corpus.
– It uses your growing income for better compounding.
– Stay committed to annual increase, even if markets fall.
– SIP step-up builds financial discipline over long term.
– It makes even modest SIPs powerful wealth creators.

? Why Regular Portfolio Review Is Critical
– Investments must align with your changing life needs.
– A Certified Financial Planner monitors risk, performance, and market changes.
– Reviews ensure your asset allocation remains on track.
– You can also modify funds that underperform consistently.
– Without review, you may carry dead-weight funds unknowingly.
– Regular checks help avoid last-minute stress near retirement.

? Retirement Planning Beyond Mutual Funds
– Retirement requires more than just investments.
– Have health insurance with adequate cover.
– Avoid using retirement funds for child education or marriage.
– Keep a separate emergency fund equal to 6 months’ expenses.
– Nominate and update all investment documents.
– Estate planning (will writing) is equally important.
– Prepare a monthly retirement budget to estimate real need.

? Tax Efficiency and Withdrawals After Retirement
– Post-retirement, income will come from fund withdrawals.
– Plan Systematic Withdrawal Plan (SWP) to avoid tax spikes.
– Equity mutual fund gains above Rs. 1.25 lakh taxed at 12.5%.
– Short-term equity gains are taxed at 20%.
– Debt funds taxed as per your income slab.
– A Certified Financial Planner can guide optimal withdrawal mix.
– You can balance growth, safety, and taxation smoothly.

? Common Pitfalls to Avoid
– Don't depend on just two mutual funds for retirement.
– Avoid chasing short-term returns or switching too often.
– Do not pause SIPs during market falls.
– Avoid investing based on TV tips or YouTube trends.
– Avoid ULIPs and insurance-linked investments.
– If you already have such policies, consider surrendering.
– Reinvest surrender amount in well-chosen mutual funds.

? Final Insights
– You are starting early. That is your biggest strength.
– Rs. 10,000 additional SIP with step-up will create a strong base.
– Shift from index to active funds for better long-term outcomes.
– Avoid direct mutual funds unless you’re an expert.
– Get help from a Certified Financial Planner regularly.
– Diversify your investments across categories.
– Secure your retirement with health cover and estate planning.
– Stay invested, review annually, and enjoy peace of mind later.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9712 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 13, 2025

Money
Hi Sir, Both My wife and I work as a software engineer. We have a 6 month old baby girl. My current salary is 12L LPA and my wife's salary is 9LPA. My question is how to plan fir my baby education goal and planning to buy car and long term goal is purchase house(more than 10years my aim). How should I plan my finantial goals? 1. Monthly expenses: 50000rs(including house rent). We don't have own house in present working location. 2. Stock market investment: Last 3years inveting in stock market, monthly 20k and as of now total value is 6L. 3. Insurance: term insurance 1.5CR cover for 75 years, Annual premium is 45000 for 12years. This is for me only. 4. Health insurence : Taken for both mother and father with premium of 66000/year(father is 60+ and mother is 55+ ages). 5. Land investment: own farm land worth 6L, no return expected. Planning to sell it and invest that amount in MF or stocks. 6. Planning to open SSY acc for my baby once aadhar is ready. 7.Mutual funds: Started investing from this month of 20k SIP every month.(quant small cap fund 5k, parag parikh flexi cap fund 4k, UTI nifty50 fund 3k, Mothilal oswal midcap fund 5K, Canera robeco large cap fund 3k). 8. Saving: 1L in liquid cash, 3L in bank savings, 7L FD's. I am not sure how to utilise this by invest. 9. Car purchase: planning to buy car in 2years. need to learn.
Ans: You and your wife have done many things right already. A clear vision and steady approach can create financial freedom. Below is a comprehensive 360-degree plan to guide your family’s financial journey.

? Monthly Cash Flow Evaluation

– Monthly income is around Rs. 1.75L (yours + wife).
– Monthly expenses are Rs. 50,000.
– Rs. 1.25L is surplus every month. That’s a strong saving potential.
– You’re already investing Rs. 40,000 in mutual funds and stocks.
– This leaves Rs. 85,000 more which can be better allocated.

Use this surplus for long-term and short-term goals separately. Don't leave too much in bank savings.

? Emergency Fund Planning

– Emergency funds are for job loss or medical need.
– You have Rs. 1L in cash, Rs. 3L in savings, Rs. 7L in FD.
– That’s Rs. 11L in total. This is excellent.
– Keep Rs. 6L as your emergency fund (around 6 months of expenses).
– Keep Rs. 3L in FD or liquid mutual funds for short-term plans.
– Don’t over-park funds in FDs. They give low returns.

Keep emergency fund always liquid, not invested in stocks.

? Stock Market Investment Assessment

– You've been investing Rs. 20K/month in stocks for 3 years.
– Current value is Rs. 6L. This return is moderate.
– Stocks need skill, time, and research.
– It’s risky if not tracked properly.
– You can consider shifting to mutual funds slowly.
– MF gives better diversification and managed exposure.
– Use stock investing only with specific goals. Don’t overdo.

Equity stocks need discipline and stop-loss strategy. Avoid random stock buying.

? Mutual Fund Investment Plan

– You are investing Rs. 20K monthly in 5 funds.
– You’ve chosen a mix of small cap, flexi cap, midcap, and large cap.
– This is a good mix across categories.
– Avoid index funds like Nifty 50.
– Index funds give average returns.
– They don’t protect in down markets.
– Actively managed funds outperform over long term.
– A Certified Financial Planner with MFD license gives better support.
– Invest via regular plans through MFD for guidance.

Direct funds may look cheaper. But they lack professional advice.
Wrong choice or exit timing can damage goals. Regular plan + MFD support is safer.

Review MF performance every 6 months. Replace lagging ones with better options.

? Insurance Coverage Review

– You have a term insurance of Rs. 1.5Cr.
– The premium is Rs. 45,000/year for 12 years.
– This is sufficient for now.
– You may need more cover later as goals increase.
– Your wife should also take term insurance of Rs. 1Cr minimum.

– Health insurance for parents is covered.
– Premium is Rs. 66,000/year. That’s reasonable for their age.
– Make sure it has no room rent capping.
– Also add health cover for yourself and wife.
– Family floater of Rs. 10L is ideal.

Medical costs are rising. A good health cover protects long-term wealth.

? Sukanya Samriddhi Yojana for Daughter

– SSY is a good start for your baby’s future.
– Interest is tax-free and safe.
– You can invest up to Rs. 1.5L/year.
– But don’t rely on SSY alone.
– Combine with mutual funds for better growth.

SSY gives safety. Mutual funds give high return. Mix both for child goal.

? Education Goal Planning

– You have 15 to 17 years for this goal.
– A mix of flexi cap, large & midcap funds is ideal.
– Don’t depend only on small cap for long term.
– They are volatile and risky.
– Keep SIPs dedicated for education goal.
– Start SIP in child’s name in regular plan via MFD.

Split the goal into 3 stages – school, college, and post-graduation.
Match fund type with time horizon.

Track every year and increase SIP with income hike.

? Car Purchase Planning

– You want to buy a car in 2 years.
– Start a separate RD or short-term debt MF for this.
– Keep this goal away from equity funds.
– Equity is not for short term.
– Use FD, ultra-short-term debt funds or recurring deposit.

Save monthly for down payment. Avoid big car loans.
Buy a car that fits your budget, not image.

? House Purchase Planning (10+ Years)

– You have a 10+ year window.
– Long horizon is good for equity mutual funds.
– Allocate a part of monthly surplus towards this.
– Mix flexi cap, large & midcap funds.
– Use regular plan with MFD support.

You can set up SIPs of Rs. 25K for this goal.
Rebalance every 2 years. Shift to debt 3 years before goal.

Don’t lock funds in land or property unless it's for usage.

? Asset Allocation Insight

– You have Rs. 6L in stock, Rs. 6L land, Rs. 7L FD, Rs. 4L in cash/savings.
– That’s Rs. 23L total assets.
– Only Rs. 6L is in growth instruments.
– Rest are in low-return areas.
– Land is idle. Plan to sell and reinvest.

Redeploy land sale into equity mutual funds.
Don’t wait too long. Let money grow, not sleep.

Asset allocation should be 70% growth, 30% stable. Adjust every 2 years.

? Tax Planning Thoughtfully

– Invest in ELSS to claim 80C benefit up to Rs. 1.5L/year.
– SSY, PF, Term Insurance premium also count under 80C.
– Avoid insurance policies that mix investment and insurance.
– They give poor returns.

Use Section 80D for health insurance premium.
Plan all tax saving through goal-based investing.

Don’t chase only tax saving. Focus on wealth building.

? Investment Discipline

– Keep SIPs automated.
– Increase SIP by 10-15% yearly.
– Avoid withdrawing from mutual funds randomly.
– Don’t check daily returns.
– Track yearly and rebalance if needed.

Stay away from direct stock tips.
Follow goal-based investment only.

Avoid debt for luxury or holidays. Use cash surplus.

? Long-Term Wealth Creation Strategy

– Combine mutual funds, SSY, and SIPs for child goal.
– Start separate SIP for house purchase.
– Increase term cover later when EMI starts.
– Use health insurance actively.
– Save for short-term goals in FD or debt MF.
– Avoid gold, chit funds, and Ponzi schemes.

Wealth is not about income. It’s about disciplined investing.

Take help from a Certified Financial Planner for clarity and regular monitoring.

? Final Insights

– You are already on a strong path.
– Your savings rate is very high.
– With structured investing, you can meet all goals.
– Start using surplus efficiently.
– Don’t let money idle in bank or FD.
– Avoid index funds. They underperform in down markets.
– Direct mutual funds seem cheaper but lack guidance.
– Choose regular plans with Certified Financial Planner and MFD license.
– That guidance will help avoid costly mistakes.

Review financial goals every 6 to 12 months.
As income grows, scale your investments.

Create peace of mind by setting goal-wise SIPs.
Not just saving. But smart investing.

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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