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44 Year Old Wants Advice On Child's Education Fund

Ramalingam

Ramalingam Kalirajan  |6991 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 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 - Jul 10, 2024Hindi
Money

Dear Jinal Mehta, I am 44 years old, Please review my SIP plans which I started to invest last 6 months goal to have healthy kids educational they are at the age 12 and 3 years old Kindly let me know ether I need to change plan or amount to have good corpus amount to 3-5 crore in next 15 years. Let me with current investment what kind of amount I can achieve. SIP Plans as given below and investing 5K each. Quant Small cap Nippon Small cap SBI Small cap Kotak Emerging Equity Mid cap Quant large and Mid cap Motilal Oswal Mid cap. Please advise. Thanks with regards.

Ans: Reviewing your SIP (Systematic Investment Plan) strategy and goals is essential for ensuring you are on the right path to achieving your financial objectives. You have a well-diversified portfolio focusing on small-cap, mid-cap, and large-cap funds. However, let's take a closer look to ensure your investments align with your goal of accumulating a corpus of Rs 3-5 crore in the next 15 years for your children's education.

Understanding Your Current Portfolio
You are investing Rs 30,000 monthly across six different funds:

Quant Small Cap
Nippon Small Cap
SBI Small Cap
Kotak Emerging Equity Mid Cap
Quant Large and Mid Cap
Motilal Oswal Mid Cap
Your portfolio is diversified across small-cap, mid-cap, and large-cap funds, which is a good strategy for long-term growth. However, it's important to assess the performance, risk, and potential returns of these funds.

Evaluating Small-Cap Funds
Small-cap funds tend to have higher growth potential but also come with increased volatility and risk. You are investing in three small-cap funds, which may expose you to significant market fluctuations. While this can be beneficial in a bull market, it could be detrimental during market downturns.

Consider reducing your exposure to small-cap funds and reallocating some of your investments to more stable options within your mid-cap or large-cap funds. This will help balance your risk and potentially provide more consistent returns.

Assessing Mid-Cap Funds
Mid-cap funds offer a balance between growth and stability. They typically provide higher returns than large-cap funds but with less volatility than small-cap funds. You have chosen Kotak Emerging Equity Mid Cap and Motilal Oswal Mid Cap, which are strong contenders in this category.

It's essential to monitor the performance of these funds regularly. Look at their historical returns, fund manager's track record, and consistency in performance. If they continue to perform well, they can be a core part of your portfolio.

Analyzing Large and Mid-Cap Funds
The Quant Large and Mid Cap fund provides exposure to both large-cap and mid-cap stocks. This mix can offer a good balance of stability and growth. Large-cap stocks provide stability and steady returns, while mid-cap stocks offer growth potential.

Ensure that this fund aligns with your risk tolerance and investment goals. If it shows consistent performance, it can be a reliable part of your portfolio.

Adjusting Your Investment Strategy
Given your goal of accumulating Rs 3-5 crore in 15 years, let's consider the potential growth of your current investments. Assuming an average annual return of 12% (a reasonable expectation for a diversified equity portfolio), we can estimate the future value of your investments.

Based on the current monthly SIP of Rs 30,000:

In 15 years, the estimated corpus would be approximately Rs 1.5 crore.
This amount is significantly lower than your target of Rs 3-5 crore. To bridge this gap, you might need to increase your monthly investment.

Increasing Your SIP Amount
To achieve a corpus of Rs 3-5 crore, you need to increase your monthly SIP. Here's an estimate of the required monthly investment:

To reach Rs 3 crore in 15 years, you would need to invest approximately Rs 60,000 per month.
To reach Rs 5 crore in 15 years, you would need to invest approximately Rs 1,00,000 per month.
These estimates assume an average annual return of 12%. Adjusting your SIP amount to these levels will significantly enhance your chances of achieving your financial goals.

The Importance of Consistent Monitoring
It's crucial to review and monitor your investments regularly. Financial markets are dynamic, and the performance of mutual funds can change over time. Regular reviews help ensure your investments are on track to meet your goals.

Consider seeking the advice of a Certified Financial Planner (CFP) who can provide personalized guidance based on your financial situation and goals. A CFP can help you make informed decisions, adjust your investment strategy as needed, and provide peace of mind.

Diversifying Across Different Asset Classes
While you have a well-diversified portfolio within equity funds, it's also wise to consider other asset classes for overall financial stability. Diversifying across different asset classes like debt funds, gold, and other fixed-income instruments can provide stability to your portfolio and reduce overall risk.

Disadvantages of Direct Funds
You may have heard about investing in direct funds to save on expense ratios. However, direct funds come with their disadvantages:

Lack of Professional Guidance: Investing directly means you won't have the expertise of a Certified Financial Planner to guide you.
Time and Effort: Managing and monitoring investments on your own can be time-consuming and challenging.
Risk of Mistakes: Without professional guidance, there's a higher risk of making uninformed decisions that could impact your returns.
Benefits of Regular Funds through a CFP
Investing in regular funds through a CFP offers several benefits:

Expert Advice: A CFP provides personalized advice based on your financial goals and risk tolerance.
Portfolio Management: Regular monitoring and adjustments to your portfolio ensure it remains aligned with your goals.
Peace of Mind: Professional guidance gives you confidence that your investments are on the right track.
The Role of Financial Planning in Achieving Goals
Financial planning goes beyond just selecting the right mutual funds. It involves comprehensive planning to ensure all aspects of your finances are in order. This includes:

Retirement Planning: Ensuring you have enough savings and investments to enjoy a comfortable retirement.
Insurance Planning: Protecting your family and assets with adequate insurance coverage.
Tax Planning: Minimizing tax liabilities through efficient tax planning strategies.
Estate Planning: Ensuring your assets are distributed according to your wishes.
A holistic approach to financial planning helps you achieve all your financial goals and provides financial security for you and your family.


We understand the importance of providing quality education for your children. It's a noble goal and one that requires careful planning and dedication. Your proactive approach to investing through SIPs shows your commitment to securing your children's future.


You've made a great start by investing in mutual funds and seeking advice on how to improve your strategy. Your dedication to building a substantial corpus for your children's education is commendable. It's clear you are focused on their future and willing to take the necessary steps to ensure their success.

Final Insights
In conclusion, you are on the right track with your SIP investments. However, to achieve your goal of Rs 3-5 crore in 15 years, you need to increase your monthly SIP amount. Diversify your investments, reduce exposure to high-risk small-cap funds, and seek professional guidance from a Certified Financial Planner. Regular reviews and adjustments to your portfolio will ensure you stay on track to meet your financial goals. Your dedication and proactive approach will undoubtedly benefit your children's future education.

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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Hi Sir, I am investing in SIP since last 5years and presently below are the SIP's. 1. PARAG PARIKH FLEXI CAP FUND - GROWTH - 20000, 2. SBI FOCUSED EQUITY FUND REGULAR GROWTH -5000 ,3. Mirae Asset Emerging Bluechip Fund - 20000 , 4. Canara Robeco Bluechip Equity Fun - 5000 , 5. Mirae Asset Large Cap - 10000 6. AXIS MIDCAP FUND - 10000 . Apart from SIP , PPF and SSY - 1.5lakh /year each With the SIP's any modification required please suggest. and my goal plan is as my daughter aged 5years now for her Education ,marriage and self retirements after 20 years and a house of 50lakhs at 2030. can it be ok . give more idea on this financial planning base on my goal.
Ans: It's fantastic to see your dedication to investing and planning for your future and your daughter's. Let's dive into your current SIP portfolio and goal planning:
• Firstly, kudos on maintaining a disciplined approach to SIP investing over the past five years. Consistency is key!
• Your SIP portfolio consists of a mix of flexi-cap, large-cap, mid-cap, and focused equity funds, providing diversification across market segments.
• Additionally, investing in PPF and SSY reflects your commitment to long-term savings and securing your daughter's future.
Now, let's focus on your goals:
• Education & Marriage: Allocating funds for your daughter's education and marriage is crucial. Consider estimating the future expenses for these goals and adjusting your investment allocations accordingly.
• Retirement: Planning for your retirement after 20 years is wise. Ensure your investment portfolio aligns with your retirement goals and risk tolerance. Regularly review and adjust your investments as needed.
• Home Purchase: Saving for a house by 2030 is a significant goal. Factor in inflation and property price trends while estimating the required corpus. You may need to increase your savings rate or explore additional investment avenues.
Here are some additional pointers:
• Regular Review: Periodically review your investment portfolio to ensure it remains aligned with your goals and risk tolerance.
• Emergency Fund: Build an emergency fund equivalent to 6-12 months of expenses to handle unforeseen financial challenges.
• Professional Advice: Consider consulting with a Certified Financial Planner to fine-tune your financial plan and receive personalized advice tailored to your goals and circumstances.
Remember, financial planning is a dynamic process, and adjustments may be needed along the way. Keep up the good work, and if you have any further questions or need assistance, feel free to reach out. You're on the right track to financial success!

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Radheshyam

Radheshyam Zanwar  |1031 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Nov 08, 2024

Asked by Anonymous - Nov 08, 2024Hindi
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Career
My son is in grade 10th, he wants to prepare for neet but he went for counselling twice where he had given some test which gave him results to prefer engineering now he is confused if i will not be able to do fare in neet thn what should i opt for since hes planning to go for integrated? Ease help
Ans: Hello.
To which tests your son appeared is not mentioned by you. I am assuming that he may be based to appear for either an IQ test or a DMIT Test. I would like to say that there is no need to 100% trust these tests. The results of these tests depend on the mindset of a student at that time. These tests are never 100% correct. Hence there is no need to worry about the results of these tests and what the counselor has told you.
Here are some key points on which you can work:
(1) Please ask his school teachers about his subject understanding.
(2) Please take an overall review of maths and science subjects from an understanding point of view only.
(3) Have an open talk with your son about his interest either in mathematics or biology.
(4) If possible, try to make an interaction with senior students who are preparing for JEE or NEET.
(5) Even though the coaching is now focussing either on PCM or PCB groups, it is advisable to take all 4 subjects PCMB in the 11th standard.
(6) Take a trial for at least 2 initial months in 11th standard for maths and biology subjects.
(7) Your son will automatically tell his interest in either engineering or medicine.
(8) Don't force your willingness on him to prepare for NEET.
(9) Based on the final decision, you may think of integrated courses.
(10) Your's sons interest matters more. If he is firm to go for NEET, then motivate him and keep the results of counselor tests aside.
Best of luck to your son for his bright future.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
Thanks.

Radheshyam

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Ramalingam

Ramalingam Kalirajan  |6991 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 08, 2024

Asked by Anonymous - Nov 07, 2024Hindi
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Hi sir/madam, My target is 2 crore corpus by 45 I just saved 5 lacs earning 1 lac per month.I do SIP in 4 SIP each of 5000 monthly. HDFC Flexi plan direct growth-5000, ICICI prudential bluechip fund direct-5000, Kotak flexi cap fund direct-5000, ICICI prudential transportation and logistics fund direct-5000 Please advice me to achieve my goal by 45 years currently I am 35y
Ans: To achieve a Rs 2 crore corpus by age 45, an SIP of Rs 60,000 per month with a 10% annual increase is indeed a strategic approach. Here’s how this plan can align with your target.

Calculating Your Path to Rs 2 Crore
Current SIP Investment: With a starting SIP of Rs 60,000 per month at a 12% CAGR, your investments have the potential to grow substantially over time.

Annual Step-Up: Increasing your SIP by 10% each year harnesses the power of compounding, helping you reach your goal faster. This incremental increase supports growth to match inflation and your rising income.

Expected Growth Rate: With a 12% CAGR, a disciplined 10-year investment horizon should help you accumulate approximately Rs 2 crore. This CAGR is reasonable for equity mutual funds based on historical performance.

Practical Benefits of This Strategy
Power of Compounding: The combination of a 10% step-up and 12% CAGR significantly accelerates growth, turning monthly contributions into substantial wealth over 10 years.

Simplicity in Execution: A single SIP contribution with a systematic increase each year streamlines your investment process, making it easier to manage.

Steps for Success
Commit to the Annual Step-Up: Consistently increasing SIP contributions is crucial. Even during years with market volatility, stick to the increase for long-term gains.

Portfolio Review with a Certified Financial Planner: Annual reviews ensure your portfolio remains aligned with your goals, especially as you approach the 10-year mark.

Final Insights
An SIP of Rs 60,000 with a 10% annual increase and 12% CAGR is a robust plan for reaching Rs 2 crore in 10 years. With disciplined investing and regular review, this strategy should help you reach your financial target by age 45.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,

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

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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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