Hi, I'm 37 years old and have one kid studying in 1st std. My yearly income is 12lk , and currently i have invested around 20lk in 4 mutual funds, one is index fund, one is small, one is blue chip and another is flexi cap, have a ppf and invested around 8lks in bonds, i dont have debt. My plan is to earn around 25 crore. Can i achieve this goal if yes by when? Or need more investments?
Ans: Understanding Your Current Financial Position
– You are 37 years old with one child in primary school.
– Annual income is Rs. 12 lakhs, which means Rs. 1 lakh per month.
– You have no debt, which is excellent.
– You have invested Rs. 20 lakhs in 4 mutual funds.
– You have a PPF account and Rs. 8 lakhs in bonds.
That gives you a solid foundation to build on.
Evaluating Your Existing Investment Portfolio
– Your portfolio includes an index fund, small cap, bluechip, and flexi cap fund.
– This shows you are diversifying well across market segments.
– However, index funds come with certain risks you must know.
Disadvantages of Index Funds
– Index funds don’t protect during market downturns.
– They blindly copy the index, even if some companies are weak.
– There is no active fund manager to manage risk.
– They also don't provide alpha (returns beyond the index).
– Volatility is high in market crashes.
You may want to replace index fund with an actively managed one.
Actively Managed Funds Are Better Because:
– Fund managers make timely decisions based on market conditions.
– They aim to outperform the benchmark.
– Active funds can control downside risk better.
– The performance gap widens over longer durations.
For wealth creation, active fund management is more reliable.
Portfolio Type and Fund Access Mode
– If you are investing through direct plans, consider switching to regular plans.
– Direct plans don’t come with personalised support.
– No monitoring or rebalancing guidance is available.
– Also, switching between funds is not properly timed.
– Mistakes in selection and exit strategy are common.
Why Regular Plans Through a Certified Financial Planner Help:
– A Certified Financial Planner (CFP) offers 360-degree guidance.
– You get timely rebalancing, tax planning, and asset allocation support.
– It avoids emotional decisions during market swings.
– CFPs help you align funds to life goals.
– Long-term partnership makes wealth creation disciplined.
Current Asset Summary and Assessment
– Rs. 20 lakhs in mutual funds (diversified across categories).
– Rs. 8 lakhs in bonds, which are safe but low yielding.
– PPF is also a long-term safe asset, but with moderate returns.
– Total financial investments = around Rs. 30+ lakhs.
Your savings pattern is positive, but the target is extremely high.
Your Wealth Goal Assessment: Rs. 25 Crores
– Rs. 25 crore is a very large target.
– Achieving this needs long-term, consistent investments.
– You need higher annual savings and strong equity allocation.
– We need to check both contribution and compounding factors.
Let’s examine whether your current investments are enough.
How Time and Investment Growth Work Together
– You are 37 now.
– Let’s assume you plan to invest for 18 more years till age 55.
– This gives you a medium to long horizon.
– However, just relying on current savings may fall short.
– More contribution is needed to reach Rs. 25 crores.
Let us assess what can be changed to reach the goal.
Income and Savings Pattern Evaluation
– You are earning Rs. 1 lakh per month.
– From that, we don’t know your monthly investment.
– Let’s assume you are saving Rs. 25,000 to Rs. 30,000 monthly.
– At this rate, and with a good return, corpus may reach around Rs. 3.5 to Rs. 4.5 crores in 18 years.
– That’s still far from Rs. 25 crores.
So yes, goal is possible, but only with more savings and discipline.
Needed Change in Investment Contribution
– You need to aim for saving at least Rs. 60,000 to Rs. 70,000 per month.
– That is 60% to 70% of income, which may not be practical now.
– Hence, increasing income should be the parallel focus.
– Also, look for lump sum investments from bonuses or gifts.
Every rupee saved early compounds better later.
Strategy for Mutual Fund Portfolio Optimisation
– Retain small cap, flexi cap, and bluechip exposure.
– Replace index fund with an actively managed large or multi cap fund.
– Keep asset allocation to 70% equity, 20% fixed income, 10% gold.
– Rebalance once a year.
You may need 5-6 diversified funds, not more.
Role of PPF and Bonds in Your Portfolio
– PPF and bonds are safe and long-term oriented.
– PPF helps with retirement and tax saving.
– Bonds give capital protection, but returns are limited.
– You should not increase allocation to bonds beyond 20%.
– Keep equity exposure dominant for wealth creation.
Security is important, but growth is crucial to reach Rs. 25 crores.
Child's Education Planning
– Your child is in 1st standard now.
– You have 10 to 12 years before higher education costs arise.
– This is a defined goal, and must be planned separately.
What you should do:
– Start a separate SIP for child’s education.
– Avoid using current portfolio for this goal.
– Choose long-term equity funds to beat education inflation.
– Increase SIP amount every year.
This avoids goal compromise later.
Retirement Planning Parallelly
– If you plan to retire early, start planning now.
– Rs. 25 crores may include retirement too.
– In that case, don’t use this corpus for child goals.
– For retirement, equity-oriented funds are essential.
– You can also invest in NPS up to Rs. 50,000 for tax benefits.
Separate goals mean focused and accurate planning.
Tax Impact on Mutual Funds (New Rules)
– Long term capital gains (LTCG) on equity above Rs. 1.25 lakhs is taxed at 12.5%.
– Short term gains are taxed at 20%.
– Debt mutual funds are taxed as per income tax slab.
– Plan redemptions to avoid unnecessary tax outgo.
Tax planning must go hand in hand with investment planning.
Emergency Fund and Risk Management
– Ensure you have 6 to 9 months of expenses in emergency funds.
– This keeps your mutual funds safe from panic withdrawals.
– Also review health and life insurance coverage.
– You are the primary earner, so protection is essential.
Insurance is not investment. Keep them separate.
Goal Tracking and Course Correction
– Review your investment progress every year.
– Track your net worth and adjust SIPs.
– If income increases, raise SIPs proportionately.
– Use tools or consult a Certified Financial Planner for help.
Regular tracking ensures you stay on course.
Avoid Common Mistakes in Wealth Creation
– Don’t chase returns. Focus on discipline.
– Avoid frequent switching of funds.
– Don’t fall for exotic products like ULIPs, traditional plans, or endowment policies.
– Don’t stop SIPs in market corrections.
– Don’t take advice from social media blindly.
Focus, discipline, and patience are key.
Finally
– Rs. 25 crore is achievable but very ambitious.
– Your current investments are not enough to reach that number.
– You must increase monthly savings steadily.
– Avoid index funds and direct plans.
– Use regular plans and work with a Certified Financial Planner.
– Separate goals clearly—education, retirement, wealth building.
– Focus on equity, reduce bond exposure.
– Track every year, and adjust as needed.
With effort, focus, and guidance, your goal can turn into reality.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment