I have monthly sip investment as follows Rs5000 each in canara robecco Blue chip equity fund and uti midcap fund. Rs2000/- each in tata digital fund,kotak infrastructure and economic reform fund,sbi small cap fund. Is it ok to çontinue them for one child education who is studying 3rd class

Ans: Goal 1: Monthly Investment required is of Rs. 20000 for 5 years

Goal 2: Monthly Investment required is of Rs. 10000 for 10 years

Goal 3: Monthly Investment required is of Rs. 15000 for 18 years

Schemes selected are fine, allot them to each goal

Ans: It's great to see your proactive approach towards saving for your child's higher education. With your current SIP investments, you're already on the right track. However, it's essential to regularly review and adjust your investment strategy to align with your goals and market conditions.

Considering your income and the goal of funding your child's education, diversifying your investments further could be beneficial. You might consider adding SIPs in diversified equity funds or balanced funds to spread the risk and potentially enhance returns.

A Certified Financial Planner can provide personalized advice after assessing your risk tolerance, investment horizon, and financial goals. They can help you optimize your portfolio, recommend suitable fund categories, and suggest any necessary switches to align with your objectives.

Remember, investing is a journey that requires periodic review and adjustments. As you plan to increase your SIP amount, it's crucial to ensure that your investments are well-diversified and aligned with your goals. Seeking professional guidance can help you make informed decisions and achieve your savings target. Best wishes for your child's bright future!

Ans: You have a noble goal to secure your child's education. Increasing SIP investments by 15% annually is a wise approach.

Systematic Investment Plan (SIP)
SIPs in mutual funds can offer substantial growth over time.

Benefits of SIPs
Compounding: Regular investments compound over time. This leads to exponential growth.

Rupee Cost Averaging: Investing a fixed amount regularly reduces the impact of market volatility.

Flexibility: You can start with a small amount and increase it. This matches your plan to increase investments by 15% yearly.

Liquidity: Mutual funds offer easy liquidity. You can withdraw funds when needed for your child's education.

Professional Management: Actively managed funds have professional fund managers. They aim to outperform the market.

Disadvantages of SIPs
Market Risk: SIPs are subject to market risks. However, long-term investments typically smooth out these risks.
Education Policy
Education policies are often insurance products combined with investment.

Benefits of Education Policy
Guaranteed Returns: They offer guaranteed returns. This provides a sense of security.

Insurance Coverage: They often include insurance. This can be beneficial in case of unforeseen circumstances.

Disadvantages of Education Policy
Lower Returns: Returns are usually lower compared to mutual funds. This affects the overall growth of your investment.

Less Flexibility: These policies are less flexible. Early withdrawal may incur penalties.

High Costs: They come with higher costs and charges. This reduces the net returns.

Why SIPs are Better
Higher Returns: Mutual funds, especially equity funds, offer higher returns. This helps in achieving the 1 crore goal faster.

Flexibility and Liquidity: SIPs provide flexibility in investments. They also offer easy liquidity when needed.

Professional Management: Actively managed funds can outperform market indices. This leads to better growth.

Investing Through a Certified Financial Planner
Professional Guidance: A CFP can guide you to choose the best mutual funds. They provide valuable insights and manage your investments.

Regular Funds: Investing through a CFP offers advisory services. Direct funds lack this professional guidance.

Disadvantages of Direct Funds
Lack of Advice: Direct funds do not offer advisory services. This can lead to mismanagement of funds.

Higher Effort: Managing direct funds requires more effort and knowledge. It may not be suitable for everyone.

Avoid Index Funds
Disadvantages: Index funds simply mimic the market. They lack professional management.

Lower Returns: Actively managed funds often outperform index funds. Fund managers adjust for market conditions.

Final Insights
Increasing SIP investments by 15% annually is a wise decision. SIPs in mutual funds offer higher returns, flexibility, and professional management. Education policies, while secure, provide lower returns and less flexibility. Consult a Certified Financial Planner for personalized advice. They can help create a tailored plan to achieve your goal of 1 crore for your child's education.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in