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Ramalingam Kalirajan |10893 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 2025

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 18, 2025Hindi

Sir good morning, I have 3 kids, age 25,20,20 respectively, first kid comoleted graduation, other 2 doing graduation. Shortly i am getting 15 lakhs from LiC india, how to invest this, kindly guide me

Ans: You're doing well by planning ahead. Raising three children through graduation is not easy. You’ve done it with commitment. Getting Rs.15 lakh now gives you a great chance. This amount, if used well, can create real value. Let’s now look at a 360-degree guidance.

? Clarify the Purpose of the Rs.15 Lakh
– Decide the purpose clearly before investing.
– Is it for children’s higher education?
– Or for their marriage, your retirement, or family wealth creation?
– A confused purpose leads to wrong investment.
– Each goal has different time frame and risk need.
– Without purpose, investment will be random and weak.

? Avoid Reinvesting in Any LIC or Traditional Plan
– LIC maturity money should not go back to similar policies.
– Traditional LIC plans give very low return.
– They mix insurance with investment.
– This kills both goals.
– Return is barely 4–5% after tax.
– Don’t get tempted by loyalty bonus or guaranteed income.
– Instead, invest in pure growth-focused options.

? Check If You Hold Any More LIC, ULIP, or Endowment
– If you hold more LIC or ULIP plans, review them.
– These give poor returns and low flexibility.
– ULIPs have high charges and low clarity.
– Surrender them if they are old and underperforming.
– Shift to mutual funds slowly.
– Mutual funds give better compounding and tax benefit.

? Create a Clear Split of Goals
– If the Rs.15 lakh is meant for children’s higher studies, invest in short-term funds.
– If it is for marriage in 5–7 years, use hybrid mutual funds.
– If it is for retirement or future growth, use equity mutual funds.
– Divide the corpus based on each child’s timeline.
– Don’t mix education, marriage and retirement money.
– Separate money gives clear tracking and better discipline.

? Use Mutual Funds Based on Goal Horizon
– Short-term goal (1–3 years): Use ultra-short or short-duration debt funds.
– Medium-term goal (3–5 years): Use hybrid or conservative allocation funds.
– Long-term goal (5+ years): Use actively managed equity funds.
– Active funds beat index funds in flexibility and stock selection.
– Index funds cannot remove weak stocks.
– Active funds take action based on economy and markets.
– You get better long-term results with guidance.

? Invest Only Through Regular Plans with CFP-MFD Support
– Avoid direct mutual fund plans.
– Direct plans give no advisor or support.
– You may choose wrong fund or asset allocation.
– Regular plans via MFD backed by Certified Financial Planner give personal guidance.
– They help you change funds based on goals.
– They help in tax planning and annual review.
– Cost of regular plan is worth the expert support.

? Don’t Invest in Real Estate Now
– Real estate is not suitable for this Rs.15 lakh.
– It is illiquid and bulky.
– Property needs more funds for registration and repair.
– No regular income from it.
– Renting is not guaranteed.
– Future resale is also uncertain.
– Mutual funds are more flexible and liquid.

? Create Emergency Backup if Not Done Already
– Do you have emergency fund already?
– If not, keep at least Rs.2–3 lakh from this amount.
– Use liquid mutual funds or short-term FD.
– Never invest 100% of funds into long-term instruments.
– Life can bring medical, job, or education urgency.
– Stay prepared always.

? Assign Each Investment to a Child or Goal
– Child 1 (25 years): If working, gift a portion to start their investment journey.
– This will build good financial habits.
– Child 2 and 3 (20 years): If graduation is ongoing, plan for PG or skill courses.
– Allocate portion for each of them.
– Set 2–3 year goal-based investment.
– If not needed immediately, keep in hybrid or balanced funds.

? Don’t Use This Money for Lifestyle Expense
– Avoid using this money for travel or buying gadgets.
– Once spent, it won’t return.
– Keep it fully goal-linked.
– Use it only for family building or future safety.
– Wealth grows only when invested with discipline.

? Teach Your Kids to Monitor These Investments
– Involve your children in tracking these funds.
– Let them learn goal-based investing.
– Share portfolio details with them.
– It builds ownership and financial knowledge.
– You are not just giving money, you are teaching values.

? Tax Planning for Returns
– Mutual fund returns are taxed based on duration.
– For equity funds, short-term gains are taxed at 20%.
– Long-term gains above Rs.1.25 lakh taxed at 12.5%.
– For debt funds, both STCG and LTCG are taxed as per your slab.
– Choose funds and redemption timeline accordingly.
– Plan redemptions over 2–3 years to spread taxes.

? Don’t Go for Annuities or Insurance-Based Income Plans
– These plans tie up your funds for long time.
– They give poor return with limited flexibility.
– No inflation protection in many cases.
– Also, you lose access to money early.
– You don’t need fixed income now.
– You need growth, liquidity, and flexibility.

? Review Portfolio Every Year
– Assign dates to check funds once a year.
– See if fund is giving good return.
– Check if fund matches your goal timeline.
– If not, shift fund.
– Don’t hold underperforming funds out of fear.
– With CFP help, you can re-allocate easily.

? Use STP for Large Investment
– Don’t put entire Rs.15 lakh in one day.
– Start with liquid fund.
– Use STP (Systematic Transfer Plan) to shift to equity/hybrid fund.
– This will reduce market timing risk.
– STP gives smooth entry into market.
– It balances volatility in mutual funds.

? Involve a Certified Financial Planner
– Your financial needs are multi-goal now.
– You have children’s future, your own retirement, and family security.
– A CFP-backed Mutual Fund Distributor will plan asset mix.
– They track fund quality and do tax guidance too.
– You will not feel lost or alone with market changes.
– You’ll also avoid emotion-based wrong moves.

? Make Kids Independent Financially
– Instead of only funding children’s studies, teach them to earn early.
– Let them explore part-time work or internships.
– Share investment plan with them.
– Guide them to start their SIPs once they start earning.
– Your money should be seed, not full tree.

? Set Up SIP from This Money
– Use Rs.5–7 lakh to create long-term SIP.
– SIP gives monthly discipline and cost averaging.
– You can start Rs.10,000–15,000 SIP from this amount.
– This will build big corpus in 7–10 years.
– SIPs work best for education and marriage corpus.

? Finally
– Your life stage now is multi-directional.
– Kids growing, responsibilities shifting.
– Rs.15 lakh can become Rs.25–30 lakh if used right.
– First, define the purpose for each rupee.
– Then, assign timeline and product accordingly.
– Use mutual funds, not LIC or real estate.
– Avoid index or direct plans.
– Stick to regular mutual funds with professional help.
– Don't chase short-term returns.
– Use a mix of SIP and STP for smart entry.
– Create individual folios for each goal.
– Get your children to track these plans.
– This one move can build your family’s financial strength for the next 10 years.

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

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.