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Can I build a Rs.1 crore corpus through SIP in 8 years with Rs.40,000 monthly investment?

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

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 15, 2024Hindi
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Sir I want to SIP of 40k per month and want to make a corpus of 1cr in coming 8 years kindly suggest

Ans: Evaluating Your Goal
You aim to create a Rs. 1 crore corpus in 8 years. Investing Rs. 40,000 per month via SIPs is a solid strategy. Let’s break it down.

Benefits of Systematic Investment Plans (SIPs)
Disciplined Investing: Helps you invest regularly.
Rupee Cost Averaging: Reduces the impact of market volatility.
Compounding: Small amounts grow significantly over time.
Expected Returns
Assuming an average annual return of 12%, your monthly SIP of Rs. 40,000 can potentially help you reach Rs. 1 crore in 8 years.

Disadvantages of Index Funds
Limited Growth Potential: Only matches market returns.
No Active Management: Lacks strategic adjustments.
Lower Flexibility: Cannot react to market changes.
Benefits of Actively Managed Funds
Expert Management: Professionals manage your investments.
Higher Returns Potential: Aims to outperform the market.
Strategic Adjustments: Reacts to market conditions.
Disadvantages of Direct Funds
No Professional Guidance: You miss expert advice.
Higher Risk: Due to lack of professional management.
Complexity: Requires deep knowledge and time.
Benefits of Investing Through MFD with CFP
Expert Advice: Helps in making informed decisions.
Regular Monitoring: Keeps your investments on track.
Customized Portfolio: Tailored to your goals and risk profile.
Investment Strategy
Step 1: Diversify Investments
Equity Funds: High growth potential.
Debt Funds: Stability and lower risk.
Hybrid Funds: Balanced approach.
Step 2: Regular Monitoring
Review Quarterly: Adjust based on performance.
Rebalance Annually: Maintain your risk-return balance.
Step 3: Increase SIP Amount Annually
Inflation Adjustment: Increase SIP by 5-10% annually.
Step 4: Stay Committed
Market Fluctuations: Stay invested despite market ups and downs.
Long-Term Focus: Keep your eyes on the 8-year goal.
Importance of Professional Guidance
A Certified Financial Planner (CFP) can help you:

Set Realistic Goals: Based on your financial situation.
Create a Plan: Customized to your needs.
Monitor Progress: Ensure you stay on track.
Additional Considerations
Emergency Fund: Keep 6 months of expenses aside.
Insurance: Adequate health and life insurance coverage.
Tax Planning: Use tax-efficient investment options.
Final Insights
To achieve your Rs. 1 crore goal in 8 years:

Invest Rs. 40,000 monthly via SIPs.
Focus on equity funds for growth.
Seek professional advice for customized planning.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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.
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Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

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Hi, i am 28yr old software engineer in Bangalore with 1.5lac/month inhand. I have ULIP of Rs 15000/month for 10yrs, it was started on 2021. 20k in SIP (1 largecap mf, 1hybrid mf, 2 small cap mf) with 5% stepup each year. I have edu loan of 5.5 lac @6%, 4.2lac left till date. Car loan emi 13000pm for 5yrs. I want to create corpus of 5cr in upcoming 5-10 yrs. Please suggest the way for this goal.
Ans: Assessing Your Financial Situation
You are a 28-year-old software engineer in Bangalore. Your current financial details are:

Monthly Salary: Rs. 1.5 lakhs (in hand)
ULIP: Rs. 15,000 per month for 10 years, started in 2021
SIPs: Rs. 20,000 per month in mutual funds with a 5% annual step-up
Education Loan: Rs. 4.2 lakhs remaining (6% interest rate)
Car Loan: Rs. 13,000 EMI per month for 5 years
Your goal is to create a corpus of Rs. 5 crores in the next 5-10 years.

Loan Management
First, manage your loans effectively. Paying off debts will free up funds for investments.

Education Loan: Pay off the remaining Rs. 4.2 lakhs as soon as possible. The interest rate is low, but eliminating debt increases your investment capacity.

Car Loan: Continue paying the Rs. 13,000 EMI. If possible, consider prepaying to reduce interest outgo.

Investment Strategy
To achieve your Rs. 5 crores goal, a disciplined and diversified investment approach is crucial.

Review and Optimize ULIP
ULIP: Assess the performance of your ULIP. If it is underperforming, consider surrendering it and reallocating funds to mutual funds. ULIPs often have high charges and lower returns compared to mutual funds.
Increase SIP Investments
SIPs: Continue and increase your SIPs. Currently, you invest Rs. 20,000 per month. With a 5% annual step-up, this amount will grow over time. Consider increasing the step-up percentage if possible.
Diversify Your Portfolio
A balanced portfolio is essential for achieving high returns with manageable risk.

Large-Cap Funds: These funds are stable and provide consistent returns.
Hybrid Funds: These offer a balance of equity and debt.
Small-Cap Funds: These have higher growth potential but are riskier.
Additional Investments
Equity Mutual Funds: Invest more in equity mutual funds for long-term growth.
Direct Equity: Since you are learning about blue-chip stocks, consider investing directly in them.
Asset Allocation and Diversification
A well-diversified portfolio reduces risk and enhances returns. Here’s a suggested allocation:

Equity (Mutual Funds and Stocks): 70%
Debt (FDs and Debt Funds): 20%
ULIP: 10% (if you choose to continue)
Active Management vs. Direct Funds
Actively Managed Funds
Benefits: Professional fund managers aim to outperform the market. They adjust the portfolio based on market conditions.
Direct Funds
Disadvantages: Direct funds may have lower expense ratios, but they require constant monitoring. Investing through a Certified Financial Planner (CFP) offers personalized advice and regular monitoring.
Regular Review and Adjustments
Regularly review your investment portfolio. Adjust based on market conditions and performance.

Annual Review: Check the performance of your funds and make necessary adjustments.
Rebalancing: Ensure your portfolio maintains the desired asset allocation.
Final Insights
Achieving a corpus of Rs. 5 crores in 5-10 years is ambitious but feasible. Focus on managing your loans first. Optimize your ULIP investment. Increase your SIP contributions and diversify your portfolio. Consider additional investments in equity mutual funds and direct equity. Regularly review and adjust your investments with the help of a Certified Financial Planner. With disciplined investing and regular monitoring, you can achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Radheshyam

Radheshyam Zanwar  |1054 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 21, 2024Hindi
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Hello, I am 3 yr neet dropper.in 2025 it will be my third attempt... I'm trying my best to crack neet ...i don't know what will happen will i score good marks or not ... please help me in suggesting good career options if not crack neet .....there are many options through neet marks also like bhms , veterinary...etc. i will also give entrance exam also like cuet ,gbpuat ,....but i want that what to choose which course will be best for me ...i want to make my life good and happy... having a good degree, good job ,...
Ans: Hello.
Have you analyzed your failure in 2 successive attempts in the NEET examination? If yes, then the question is what you have done for improvement and not then again the question arises why not? Here, I would like to suggest you focus now only on the NEET examination which is your 3rd attempt. Don't think about any other options right now till May 2025. After the NEET exam is over, you have ample time to explore the options available. Depending on your score in NEET 2025, we will guide you at that time. But yet, if you are confused, then looking towards your question and anxiety, you need personal counseling where you can express yourself face-to-face. Only after the NEET exam is over, you contact a counsellor for one-to-one counseling. Till then, keep mum and focus only on NEET. Take this exam as your mission and project. Work on this project, apply forces from all sides, success is there which is waiting for you eagerly.
Best of luck for your bright future.

Some tips: (1) Analyse separately Phy, Che, Bio (2) Prepare a list of hard topics (3) First focus more on the topics which are easy for you and then try to excel in hard topics (4) Appear more and more online/offline examinations (4) Prepare your short-cut file for all subjects (5) Prepare a file for each subject having only synopsis of all chapters (6) Try to solve the problems at the lightening speed and observe the period on regular basis (7) Create your time table to revise the topics on regular basis (8) Do not hesitate to ask your difficulties to your teachers, if you have joined to offline classes (9) Keep the habit of marking the answers which you know 100%. Don't guess the answers and mark them, as there is -ve marking scheme. (10) Be calm, quite, and smiling all the time to release the tension and always have a healthy chat with your friends.

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If dissatisfied with the reply, please ask again without hesitation.
Thanks.

Radheshyam

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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