Should I Invest My Son's Matured Policy in Corporate Bonds?

Ans:

1. HDFC Top 100 fund

2. HDFC Hybrid equity fund

3. Mirae asset tax saver fund

4. Axis long term equity fund

5. Axis blue chip fund -- direct

6. SBI magnum multi cap -- direct growth

7. SBI equity hybrid fund -Reg plan growth

All the funds mentioned are decent. We would recommend investing through SIP in 5 of the above funds spread across market caps.  

Ans: Hi Akhilesh, thank you for writing to me. As your goal duration is long, your son will see the benefits of compounding.

As your goal seems to be long term wealth creation, I recommend you invest in equity and hybrid funds.

You can consider starting monthly SIP's in:
1-Samco Flexicap Fund- Rs.2,500
2-Edelweiss Nifty 100 Quality 30 Index Fund- Rs.2,500
3-DSP Quant Fund-Rs.2,500
4-HDFC Top 100 Fund-Rs.2,500

Ans: Hello Raghav. Based on your requirements, the selected schemes are well aligned with the market. As your target amount is for over ten years, I recommend you diversify by category. Additionally, it is recommended that you increase your SIP to 14k in order to achieve a corpus of 50 lakhs. You may consider smallcap, Midcap, and multicap for your increased sip amount.

Ans: Dear Sanjay,

Thank you for reaching out for financial advice. It's commendable that you're taking proactive steps towards planning your finances, even if you feel you're starting later than desired. With careful planning and disciplined investing, you can still work towards achieving your financial goals.

Given your objectives of building a corpus for retirement and your child's higher education, here's a suggested plan:

Retirement Planning:

Start investing ?35,000 per month in mutual funds through SIPs targeting retirement. Allocate funds across diversified equity mutual funds to maximize growth potential over the long term.
Consider funds that align with your risk tolerance and investment horizon. Since you're starting relatively late, you may need to take a slightly higher risk to accelerate wealth accumulation.
Regularly review your investment portfolio and adjust asset allocation as needed based on changing market conditions and your evolving financial situation.
Child's Higher Education:

Allocate ?20,000 per month towards building a corpus for your child's higher education.
Invest this amount in a mix of equity and debt mutual funds to balance growth potential with stability. Since your child is in class 6th, you have approximately 6-10 years until higher education expenses arise. You can afford to take a moderate risk with this investment.
Monitor the performance of the funds regularly and make adjustments as needed to stay on track towards your goal.
Insurance and Other Investments:

Continue with your existing insurance-linked investments, PF contributions, and term insurance. Ensure that you have adequate coverage to protect your family's financial future in case of unforeseen events.
Utilize tax-saving investment options such as ELSS (Equity Linked Savings Scheme) mutual funds to optimize tax benefits while building wealth.
Regular Financial Review:

Schedule regular financial reviews with a qualified financial advisor to assess your progress, make necessary adjustments, and ensure that you're on track to meet your financial goals.
Take advantage of any surplus income or windfalls by channeling them towards your investment goals to accelerate wealth accumulation.
Remember, it's never too late to start planning for your financial future. By staying committed to your goals, investing wisely, and seeking professional guidance when needed, you can achieve financial security and provide for your family's needs.

Best regards,

Ramalingam, MBA, CFP
Chief Financial Planner

Ans: You have taken time to shortlist your funds. That itself shows good research and intent.

Your plan—Rs. 20–25 lacs in lumpsum, and Rs. 2 lacs monthly SIP—is sound.

You are looking at 7 to 8 years minimum. Optionally, extending to 10 years.

This long horizon gives space for equity funds to grow well.

Below is a detailed review of your plan from a Certified Financial Planner’s perspective.

I have evaluated it from multiple angles—allocation, category, fund strategy, and diversification.

Also included are suggestions on government bonds and post-investment strategies.

Let’s take it step by step for better clarity.

Overall Asset Allocation Strategy

You are aiming for 100% equity allocation. That’s suitable for your long horizon.

Since there is no withdrawal pressure in short-term, equity volatility is manageable.

However, from a 360-degree view, having 5–10% in debt can bring balance.

Equity does best over 7–10 years, but risk control is equally important.

You may consider adding a dynamic asset allocation fund instead of another pure equity fund.

Category-Wise Evaluation of Your Fund Mix

Let’s review your selected categories step by step. I’ll explain the strengths and risks too.

Flexi Cap / Multi Cap / Large & Midcap Funds

You have a good spread here.

These funds can shift allocation between market caps. That brings flexibility.

4 to 5 funds in this space may be excessive.

You can trim one and increase allocation to small or mid cap.

Small Cap Funds

You have 3 small cap funds. That’s aggressive, but okay with your horizon.

Small caps are very volatile but deliver well over 8–10 years.

Keep total allocation below 20%. You are currently near that. That is acceptable.

Large Cap / Focused / Dividend Yield

Your exposure here seems slightly low. These bring stability to the portfolio.

One fund focusing on dividend yield is a good diversifier.

Focused funds can outperform but also bring concentration risk.

A single focused fund in the portfolio is enough. You have done that right.

Contra / Value / Thematic Funds

A contra fund adds strategy diversity. It suits long-term investors like you.

Infrastructure fund is thematic. These are cyclical in performance.

Consider reducing allocation here or keeping them under 5%. You already did that. Good.

Fund Count and Consolidation Advice

You have 14 funds. That’s on the higher side.

8 to 10 well-chosen funds are enough to diversify.

Too many funds bring overlap and reduce manageability.

Consider trimming 3 to 4 schemes. Focus on quality, consistency, and style difference.

Avoid similar funds from same category. Multi-cap and flexi-cap from different AMCs often overlap.

SIP Strategy Review

SIP of Rs. 2 lacs per month is well thought.

3 to 4 years of SIP with long holding is effective for wealth creation.

Use STP from liquid funds for lumpsum. Helps manage entry-point risk.

Don’t increase SIPs too fast. Let it match your surplus income and liquidity comfort.

Exit Planning: SWP and Arbitrage Funds

SWP post 8 to 10 years is suitable for regular income.

Use arbitrage or ultra-short duration funds as SWP source.

Shift from equity gradually, not all at once. Use 1–2 year transition for SWP.

Choose SWP funds with low volatility and stable NAV.

Don’t chase high return during SWP phase. Capital protection is key.

Structured Products Review

These are complex products. Often hard to track.

Only consider them with clear understanding of risk and payoff logic.

Prefer simple, transparent MF structure unless tax or liquidity need justifies structured product.

Government Bonds: How to Use Them

You may keep 5–10% in government bonds. Good for risk balancing.

Look at RBI Floating Rate Bonds. No credit risk. 7.5% interest.

Sovereign Gold Bonds also are an option if you like gold exposure.

Avoid long-term G-Secs unless interest rate outlook is clear.

Use Bharat Bond ETFs only if liquidity and exit are not a concern.

New Capital Gains Tax Rules: What to Know

On equity mutual funds, LTCG above Rs. 1.25 lakh taxed at 12.5%.

STCG taxed at 20%. This rule is new and matters for your exit strategy.

Track realized gains each year. Use tax harvesting if needed.

For debt mutual funds, gains taxed as per your slab.

Regular Funds vs. Direct Plans

Direct funds may look cheaper. But they lack human guidance.

You miss strategy alignment and real-time help during volatile markets.

Regular plans via Certified Financial Planner offer long-term clarity.

Right advice avoids wrong exits and wrong fund choices. That benefit is much bigger.

Portfolio Monitoring Strategy

Review your portfolio once in 6 months. Don’t do frequent changes.

Evaluate on fund consistency, AMC quality, and style fit. Not only past returns.

Avoid changing funds based on short-term ranking. Focus on long-term behaviour.

Stick to your plan unless there is a major reason to change.

Additional 360° Suggestions

Use a capital gains tracker every year. Helps tax planning.

Don’t ignore health insurance and term insurance. It protects your financial goals.

Set clear goal amounts for each future purpose—child education, retirement, etc.

Your financial plan should integrate income, insurance, expenses, goals, and liquidity.

Assign nominees and maintain a digital record of investments. Keep family informed.

Finally

Your fund shortlist is well selected across styles and themes.

Few small changes can bring sharper structure and clarity.

Trim overlapping schemes. Reduce to 10 or 11 funds.

Maintain discipline in SIP and avoid panic in market dips.

Plan withdrawal early. Don’t leave decisions for the last year.

Consider Certified Financial Planner for review and monitoring. Regular review ensures alignment.

Stay long term, stay invested, and stay balanced.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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