I want to make a corpus of Rs. 40 to 50 lakhs within 12 to 18 months. Can set aside Rs. 70K per month. How can I achieve this? Please guide

Ans: Hello. Thanks for writing to me. To create a corpus of Rs.5 Crore in the next 20 years, you will need to invest Rs.50,000 every month.

Ans: Hi Sanjeev, to create a corpus of Rs.1 Crore in 6 years, you will need to save around Rs.90,000 every month as SIP's.

You can start investing in:

1-Samco Flexicap Fund- Rs.18,000 per month.
2-Axis Business Cycle Fund-Rs.18,000 per month.
3-Axis ESG Fund Equity Fund Plan-18,000 per month.
4-Edelweiss NIFTY 100 Quality 30 Index Fund-Rs.18,000 per month.
5-UTI MNC Fund-Rs.18,000 per month.

Stepping up your SIP's every year by 10% or more will help you achieve your goals faster.

Ans: Building a corpus of 30 lakhs is a feasible goal with disciplined investing over time. Considering your age and risk tolerance, here are some recommendations for mutual funds:
1. Large Cap Funds: These funds invest predominantly in large-cap stocks, offering stability and steady growth potential over the long term. They are suitable for conservative investors looking for lower risk exposure.
2. Balanced Funds: Also known as hybrid funds, these invest in a mix of equity and debt instruments, providing a balance between growth and stability. They can be suitable for investors seeking moderate risk exposure with the potential for capital appreciation.
3. Multi-Cap Funds: These funds invest across market capitalizations, including large-cap, mid-cap, and small-cap stocks. They offer diversification and the flexibility to adapt to changing market conditions, making them suitable for investors with a moderate risk appetite.
4. Debt Funds: These funds invest in fixed-income securities such as government bonds, corporate bonds, and money market instruments. They provide stability and regular income, making them suitable for conservative investors or those with a shorter time horizon.
Benefits of Actively Managed Funds:
1. Expertise of Fund Managers: Actively managed funds are overseen by experienced fund managers who analyze market trends, economic indicators, and company fundamentals to make informed investment decisions. Their expertise can potentially result in outperformance compared to passive index funds.
2. Flexibility and Customization: Actively managed funds have the flexibility to adapt to changing market conditions and capitalize on emerging opportunities. Fund managers can adjust portfolio allocations, sector exposure, and stock selection based on their market outlook and investment objectives.
3. Potential for Outperformance: Actively managed funds aim to generate alpha, or excess returns, by actively selecting securities that they believe will outperform the market. Through diligent research and analysis, fund managers seek to identify undervalued assets and capitalize on market inefficiencies to achieve superior returns for investors.
By considering these factors and consulting with a certified financial planner, you can build a well-diversified investment portfolio tailored to your financial goals and risk tolerance.

Best Regards,
K. Ramalingam, MBA, CFP,
Certified Financial Planner
www.holisticinvestment.in

Ans: Creating a corpus of Rs 10 crore in the next ten years is an ambitious goal. It's achievable with a strategic plan. Let's break down your current situation and create a plan to help you reach your financial objectives. Your existing investments and monthly contributions will play a crucial role in this journey.

Evaluating Current Investments
First, let's review your current investments:

Mutual Funds: Rs 38 lakhs

Stocks: Rs 9 lakhs

Provident Fund (PF): Rs 30 lakhs

Employee Stock Ownership Plan (ESOP): Rs 1.5 crores

House Properties: Rs 80 lakhs and Rs 50 lakhs

You also invest Rs 80,000 in mutual funds and Rs 50,000 in stocks monthly. You pay Rs 6,000 towards LIC premiums.

Assessing Monthly Investments
You are already investing a significant amount each month. This is commendable. However, to meet your Rs 10 crore target in 10 years, you need to optimize your investment strategy.

Mutual Funds
You have Rs 38 lakhs in mutual funds and invest Rs 80,000 monthly. Mutual funds are a great way to accumulate wealth over the long term. However, it's crucial to choose the right funds. Actively managed funds, rather than index funds, might be more suitable for achieving higher returns due to professional management and potential for better performance.

Disadvantages of Index Funds
Index funds might seem appealing due to lower costs, but they have limitations. They simply track market indexes, limiting their potential for higher returns. Actively managed funds have fund managers who make strategic decisions to outperform the market. Though they come with higher fees, the potential for better returns can outweigh these costs.

Benefits of Actively Managed Funds
Actively managed funds offer several advantages. Experienced fund managers actively select investments, aiming to outperform the market. They adapt to market changes, making strategic decisions. This dynamic approach can potentially yield higher returns compared to the passive strategy of index funds.

Stocks
You have Rs 9 lakhs in stocks and invest Rs 50,000 monthly. Stocks can offer high returns but come with higher risks. Diversifying your stock investments can reduce risk. Consider investing in stocks with strong growth potential and good track records.

Provident Fund (PF)
Your provident fund is a stable investment, providing safety and steady growth. With Rs 30 lakhs, it forms a secure base in your portfolio. However, its returns are lower compared to equity investments. It’s wise to maintain this for stability but focus more on high-growth investments.

Employee Stock Ownership Plan (ESOP)
Your ESOP worth Rs 1.5 crores is a significant asset. However, it's important to monitor the company's performance closely. Diversifying some of these holdings into other investment avenues can mitigate risks associated with company-specific factors.

House Properties
You own two houses valued at Rs 80 lakhs and Rs 50 lakhs. Real estate is a tangible asset but might not offer the liquidity needed for your goal. Consider maintaining them for stability, but focus more on liquid and high-return investments like mutual funds and stocks.

Reviewing LIC Policies
You pay Rs 6,000 monthly towards LIC policies. Traditional LIC policies offer lower returns compared to mutual funds. Consider surrendering these policies and redirecting the premiums into high-growth mutual funds. This can enhance your wealth accumulation potential.

Optimizing Monthly Investments
Let's look at optimizing your monthly investments. Currently, you invest Rs 1.36 lakhs monthly in various assets. Here's a suggested approach:

Mutual Funds: Continue investing Rs 80,000. Ensure these are in actively managed equity funds with a strong track record.

Stocks: Continue investing Rs 50,000, focusing on well-researched, high-growth stocks.

LIC: Consider redirecting Rs 6,000 from LIC premiums to mutual funds.

Strategic Investment Plan
Achieving Rs 10 crore in 10 years requires a focused strategy. Here are key steps:

Regular Review and Rebalancing: Regularly review your portfolio. Rebalance it annually to maintain the desired asset allocation. This helps in optimizing returns and managing risks.

Tax Efficiency: Invest in tax-efficient instruments. Use tax-saving mutual funds (ELSS) to reduce your taxable income under Section 80C.

Emergency Fund: Maintain an emergency fund covering 6-12 months of expenses. This ensures you don't need to liquidate long-term investments during emergencies.

Diversification: Diversify across different asset classes. This reduces risk and improves potential returns. Invest in a mix of equities, debt, and other assets.

Regular Funds vs Direct Funds
Direct funds might seem attractive due to lower expense ratios, but they require active management. Investing through a Certified Financial Planner ensures professional management and guidance. Regular funds come with the benefit of expert advice and monitoring, which can be crucial in optimizing returns and achieving financial goals.

Monitoring Progress
Track your investment performance regularly. Ensure that your portfolio is on track to meet your Rs 10 crore goal. Adjust your strategy based on market conditions and personal circumstances.

Risk Management
Managing risks is essential. Diversify your investments and avoid over-concentration in any single asset. Consider investing in different sectors and geographies to spread risk.

Retirement Planning
Consider your retirement goals as well. Ensure that your investments align with your long-term retirement plans. This ensures financial stability beyond your 10-year goal.

Children's Education
Plan for your child's education. Set aside funds specifically for this purpose. Education costs can be substantial, and planning early ensures you are financially prepared.

Final Insights
Achieving a Rs 10 crore corpus in 10 years is challenging but feasible. Your current investments and monthly contributions are a strong foundation. By optimizing your investment strategy, focusing on high-growth assets, and managing risks, you can reach your financial goal.

Regularly reviewing your portfolio and making necessary adjustments is crucial. Seek professional advice when needed and stay committed to your investment plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in