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Can I Build a 3-5 Crore Corpus by My Daughter's 18th Birthday? Expert Advice Needed

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 17, 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
Chandra Question by Chandra on Sep 07, 2024Hindi
Money

**Subject:** Request for Investment Review and Future Corpus Estimation Dear Ms.Jinal, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.

Ans: Your goal of building a corpus of Rs 3 to 5 crores for your daughters by the time they reach 18 years of age is realistic, but it needs a detailed evaluation. Let's assess your existing portfolio and provide suggestions to help you reach your target.

You are currently 46, and your elder daughter is 9, giving you around 9 years to achieve your financial goal. Your current investments are diversified, but we’ll focus on optimising them for long-term growth and stability.

Current Investment Portfolio Breakdown
You have a balanced mix of equity mutual funds, debt-oriented instruments, and insurance. Each type of investment serves a purpose, but we’ll examine them to see if they align well with your goals.

Balanced Advantage Funds:

You are investing Rs 50,000 monthly into three balanced advantage funds. These funds are designed to switch between equity and debt, providing a mix of safety and growth. While these funds have performed decently in volatile markets, they may not offer the aggressive growth potential needed to meet your target of Rs 3 to 5 crores in a relatively short timeframe.

Consider reducing the allocation to balanced advantage funds. These funds offer stability but may not provide the aggressive growth you need at this stage of your financial journey.

Instead, consider moving a part of this allocation into funds with higher equity exposure, such as large-cap, multi-cap, or small-cap funds. These have the potential to generate higher returns over a 9-year horizon.

Small Cap and Mid Cap Funds:

You have a strong allocation to small-cap funds, which is a good strategy for long-term growth.

However, small-cap funds are known for their volatility. You should maintain a long-term perspective and not get disheartened by short-term fluctuations.

With a combined monthly SIP of Rs 15,000 in small-cap funds, you can expect higher growth if the market performs well over the next decade. Stick to this strategy but periodically review the performance.

Sukanya Samriddhi Yojana (SSY):

You are consistently investing Rs 50,000 annually in SSY for your 9-year-old daughter. This is a fantastic step for her future education and marriage needs, as SSY offers a high fixed interest rate with tax benefits.

Continue this investment, as it provides a solid foundation for your daughter’s future. The guaranteed returns, along with the tax-free nature, make it an excellent low-risk investment.

However, SSY alone won’t suffice for your Rs 3-5 crore target. Hence, relying on equity mutual funds will be essential for wealth creation.

Provident Fund (PF):

You have Rs 10 lakh invested in PF, which will grow at a stable, assured rate.

PF is a low-risk investment, but its growth potential is limited compared to equities. Since you are already contributing a significant amount here, you don’t need to increase this allocation.

The PF will add to your retirement security but won't contribute significantly to your Rs 3-5 crore target due to the conservative interest rate.

Tata AIA Life Insurance Fortune Pro and SBI Child Plan:

Insurance policies like Tata AIA Life Insurance Fortune Pro and SBI Child Plan serve a dual purpose—insurance and investment. However, these plans typically offer lower returns compared to mutual funds.

Since you have already paid a substantial amount into the SBI Child Plan and Tata AIA, it may be worthwhile to keep these policies until maturity. However, any additional bonus or lump-sum investments should be diverted into equity mutual funds rather than insurance-linked plans.

These investment-cum-insurance policies tend to have high fees and lower returns. If you’re considering any future insurance-linked investments, you should reconsider them in favour of pure term insurance and higher-yielding mutual funds.

Adjustments for Future Growth
Now that we’ve evaluated your existing investments, let’s discuss the adjustments that can help you reach your goal.

Increase Equity Exposure:

Equity mutual funds, particularly large-cap, multi-cap, and small-cap funds, have the potential to generate higher returns than balanced advantage funds or insurance policies.

You should increase your SIP contributions to pure equity funds. While balanced funds offer stability, pure equity funds provide better growth potential, which is necessary to reach Rs 3 to 5 crores in 9 years.

Allocate more to large-cap or multi-cap funds. These funds invest in stable, well-established companies, providing growth potential with comparatively lower risk than small-cap funds.

Diversify Your Bulk Investments:

You plan to invest Rs 3-5 lakh from your working bonus each year. This is an excellent strategy to accelerate your wealth-building process.

Consider investing your bonus in high-growth funds like mid-cap or flexi-cap funds. These funds allow the fund manager to invest across different market caps, offering the potential for better returns.

You may also consider investing a portion of the bonus in international mutual funds, which can provide diversification and protect against domestic market volatility.

Balanced Asset Allocation:

While increasing equity exposure is essential, you should also maintain a balance in your asset allocation. Diversification between equity, debt, and other instruments will help manage risk.

You have a good mix of safe investments like SSY and PF. These will provide the necessary safety net for your portfolio.

Make sure to periodically review your asset allocation based on your risk tolerance, financial goals, and market conditions.

Reconsider Insurance-Linked Investments:

Insurance-linked investments like Tata AIA Life Insurance Fortune Pro are not ideal for wealth creation. They offer lower returns due to high fees and a limited range of investment options.

Consider completing the premium payments on existing policies but avoid adding more money to such plans. For future lump sum or bonus investments, it’s better to focus on mutual funds or other growth-oriented products.
Maintain Term Insurance:

If your life insurance policies do not include adequate term insurance coverage, you should consider purchasing a pure term plan. Term insurance offers higher coverage at a lower premium compared to investment-linked insurance plans.

A pure term plan will provide financial security for your family, without eating into your investment returns.
Tax Efficiency:

Ensure that your portfolio is tax-efficient. Investments like SSY, PF, and certain debt funds offer tax benefits, but the taxation on mutual funds, especially long-term capital gains (LTCG), can eat into your returns.

Choose funds that are efficient in terms of post-tax returns. This will help you maximize your wealth accumulation.
Review Your Portfolio Regularly:

It’s important to periodically review your portfolio and adjust the investment strategy based on changing market conditions and financial goals.

Conduct an annual review of your portfolio to ensure that your funds are performing as expected. Switch funds if they are underperforming consistently.
Final Insights
You are on the right track with your investments, and the target of Rs 3 to 5 crores is achievable within the given timeframe. However, some fine-tuning in your asset allocation and fund choices is needed to meet this goal.

By increasing your exposure to high-growth equity mutual funds, ensuring diversification, and maintaining a disciplined investment approach, you can significantly enhance your portfolio’s growth potential. Regular reviews will help keep your portfolio aligned with your objectives.

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  |8098 Answers  |Ask -

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**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Ramalingam, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: You’ve put together a well-diversified portfolio with a mix of equity and hybrid funds, Sukanya Samriddhi Yojana (SSY), Provident Fund (PF), and insurance-linked investments. Each of these investments serves a different purpose, and it’s clear that you have a strong focus on building wealth while securing your daughters' future.

Given that you plan to invest a significant portion of your bonus in the coming years, it’s important to assess whether your current strategy will meet your target corpus of Rs 3-5 crores when your daughters turn 18. Let’s evaluate your portfolio in detail.

Assessment of Equity Mutual Funds
Mirae Asset Large & Midcap Fund, Canara Robeco Small Cap Fund, Quant Small Cap Fund: These funds are growth-oriented with potential for substantial returns over the long term. Your monthly SIPs in these funds are well-placed, and their current values indicate a positive trend. However, as small-cap funds tend to be more volatile, it’s important to monitor them regularly and rebalance if necessary.

ICICI Prudential Balanced Advantage Fund, HDFC Balanced Advantage Fund, SBI Balanced Advantage Fund: These funds offer a balanced approach by investing in a mix of equity and debt. They are designed to manage volatility, making them a stable choice for medium-term goals. Your consistent investments in these funds are helping you build a solid foundation for your corpus.

Given that you are contributing significant amounts to Balanced Advantage Funds, this shows a prudent approach to managing risk while aiming for growth. However, it’s crucial to ensure that these funds align with your risk tolerance as you near retirement.

Sukanya Samriddhi Yojana (SSY) for Your Daughter
Sukanya Samriddhi Yojana (SSY): Your annual contribution to SSY for your 9-year-old daughter is a wise choice. This scheme offers guaranteed returns and tax benefits, making it an excellent option for long-term, low-risk investment. With the current value of Rs 5,65,805, you are on track, but it's essential to continue this contribution until maturity to maximize the benefit for your daughter's higher education or marriage expenses.
Provident Fund (PF)
Provident Fund (PF): Your PF balance of Rs 10 lakh is a significant component of your retirement savings. The regular contributions and employer match provide a stable, low-risk return, which is crucial for wealth preservation. This fund will serve as a backbone for your retirement corpus.
Insurance-Linked Investments
Tata AIA Life Insurance Fortune Pro: Insurance-cum-investment products like these generally have lower returns compared to pure investment products like mutual funds. While they provide life cover, the investment returns may not be sufficient to meet your high-growth goals. You might want to evaluate the performance after the lock-in period and consider redirecting future premiums into mutual funds if the returns are unsatisfactory.

SBI Child Plan Smart Scholar: Having completed your investment in this child plan, it's time to assess its performance. If the returns are on the lower side, consider using the maturity proceeds to invest in a high-growth equity fund or balanced fund to further boost your corpus.

Planned Bulk Investments
Future Bulk Investments: Your plan to invest Rs 3-5 lakhs annually as a lump sum from your bonuses is a great strategy. However, it's essential to deploy this lump sum in a staggered manner, like a Systematic Transfer Plan (STP), to mitigate market volatility. You might consider adding these funds to existing high-performing equity funds or explore new opportunities in growth-oriented funds.
Future Growth Potential and Target Realization
Assessing the Achievability of Rs 3-5 Crore Corpus
Your goal of building a corpus of Rs 3-5 crores by the time your daughters turn 18 is ambitious but achievable. However, it will require careful planning and disciplined execution. Here are some key points to consider:

Time Horizon: With a 9-year and a 5-year time horizon, your portfolio should focus on growth-oriented investments in the earlier years, gradually shifting towards more stable, low-risk assets as you near the target date. This will help protect your accumulated wealth from market volatility.

Asset Allocation: Currently, you have a mix of equity and balanced funds. As your daughters approach 18, you might want to shift a portion of your equity investments into safer options like debt funds or fixed deposits to preserve the capital.

Inflation and Taxation: Consider the impact of inflation on your target corpus. What may seem like a large sum today may not have the same purchasing power in the future. Also, be mindful of the tax implications on your investments, particularly on the returns from mutual funds and insurance plans.

Suggestions for Portfolio Adjustments
Enhance Equity Exposure: While you have a good mix of funds, increasing your allocation to high-growth equity funds can help you reach the Rs 5 crore target. Consider redirecting the future premiums of your insurance plans or part of your Balanced Advantage Fund investments into aggressive equity funds.

Surrender Underperforming Insurance Plans: If your Tata AIA Life Insurance and SBI Child Plan do not meet expectations, consider surrendering them after evaluating the surrender value and investing the proceeds in higher-return options.

Regular Reviews and Rebalancing: The market environment and your personal circumstances may change over time. Regular reviews of your portfolio and timely rebalancing will help ensure that your investments remain aligned with your goals.

Avoid Over-Diversification: While diversification is important, too much of it can dilute returns. Focus on a few high-performing funds and avoid spreading your investments too thin.

Risk Management: As you approach the end of your working years, it’s crucial to reduce exposure to high-risk assets. Gradually move a portion of your investments into safer instruments like debt funds, bonds, or even a fixed deposit.

Final Insights
Your dedication to building a secure financial future for your daughters is commendable. With consistent and strategic investments, your target of Rs 3-5 crores is within reach. The key will be maintaining a disciplined approach, regularly reviewing your portfolio, and making necessary adjustments based on market conditions and life changes.

Remember to keep an eye on both growth and safety as you transition into retirement. By doing so, you can confidently achieve your financial goals and provide your daughters with a strong financial foundation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Milind Vadjikar  |1108 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 08, 2024

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**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Vivek, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: Yes your target is achievable in the given time frame.(13% return assumed) I am sure you have planned for some regular income after you stop working (~6 years from now) to meet the regular expenses. Plz. Make sure you have good family floater health insurance coverage apart from the employer's group health policy if any. Insurers typically insist 3-4 years of continuous coverage after which pre existing illnesses are covered. Consider investing in SSY in the name of second daughter, if possible. As you approach your target move corpus away from equity MFs into liquid or ultra short term debt funds.

*Investments in mutual funds are subjected to market risks. Please read all scheme related documents carefully before investing

You may follow us on X at @mars_invest for updates

Happy Investing!!

..Read more

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Milind Vadjikar  |1108 Answers  |Ask -

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**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Sunil, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: Yes your target is achievable in the given time frame.(13% conservative return assumed). I am sure you have planned for some regular income after you stop working(~6 years from now) to meet the regular expenses. Please make sure you have good family floater health insurance apart from employer's group health policy if any. Insurers typically insist 3-4 years of continuous coverage after which pre existing illnesses are covered. Consider investing in SSY in the name of second daughter if possible. As you approach your target move corpus away from equity MFs into liquid or ultra short duration debt funds.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing

You may follow us on X at @mars_invest for updates.

Happy Investing

..Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 09, 2024

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**Subject:** Request for Investment Review and Future Corpus Estimation Dear Mr.Nikunj, I hope this message finds you well. I wanted to review my current investment portfolio and seek your expert advice regarding the future growth potential, as I aim to build a corpus of at least INR 3 - 5 crores by the time my daughters turn 18 years old. Is this figure realizable? Here’s a breakdown of my current investments: 1. **Mirae Asset Large & Midcap Fund (Direct Growth)** – INR 5,000 monthly - Current value: INR 135,281 2. **Canara Robeco Small Cap Fund (Direct Growth)** – INR 10,000 monthly - Current value: INR 210,164 3. **Quant Small Cap Fund (Direct Plan Growth)** – INR 5,000 monthly - Just started; current value: INR 5,190 4. **ICICI Prudential Balanced Advantage Fund (Growth)** – INR 20,000 monthly - Current value: INR 583,113 5. **HDFC Balanced Advantage Fund (Growth)** – INR 15,000 monthly - Current value: INR 503,604 6. **SBI Balanced Advantage Fund (Regular Growth)** – INR 15,000 monthly - Current value: INR 321,491 7. **Sukanya Samriddhi Yojana (SSY)** – INR 50,000 annually for my 9-year-old daughter - Current value: INR 565,805 (since 2016) 8. **Provident Fund (PF)** – Current balance: INR 10 lakh 9. **Tata AIA Life Insurance Fortune Pro ** – Started last year INR 150,000 to be paid for 5 years till 2027 10. SBI Child Plan Smart Scholar - Completed INR 500,000 Total Investment for 5 Years in 2024. From this year every financial year I plan to invest my working bonus of INR 3 Lacs to INR 5 Lacs every year as a bulk investment and diversify in different funds. I am 46 years old and plan to continue working and investing for another 5 to 6 years due to health reasons. My spouse is 37, and we have two daughters aged 9 and 5. My goal is to accumulate a corpus of at least INR 3 to 5 crores by the time my daughters reach 18 years of age. Based on my current investments, do you think this target is achievable within the given timeframe? I would greatly appreciate any suggestions or adjustments you might recommend to help reach this goal. Thank you for your guidance.
Ans: You’ve put together a well-diversified portfolio with a mix of equity and hybrid funds, Sukanya Samriddhi Yojana (SSY), Provident Fund (PF), and insurance-linked investments. Each of these investments serves a different purpose, and it’s clear that you have a strong focus on building wealth while securing your daughters' future.

Given that you plan to invest a significant portion of your bonus in the coming years, it’s important to assess whether your current strategy will meet your target corpus of Rs 3-5 crores when your daughters turn 18. Let’s evaluate your portfolio in detail.

Assessment of Equity Mutual Funds
Mirae Asset Large & Midcap Fund, Canara Robeco Small Cap Fund, Quant Small Cap Fund: These funds are growth-oriented with potential for substantial returns over the long term. Your monthly SIPs in these funds are well-placed, and their current values indicate a positive trend. However, as small-cap funds tend to be more volatile, it’s important to monitor them regularly and rebalance if necessary.

ICICI Prudential Balanced Advantage Fund, HDFC Balanced Advantage Fund, SBI Balanced Advantage Fund: These funds offer a balanced approach by investing in a mix of equity and debt. They are designed to manage volatility, making them a stable choice for medium-term goals. Your consistent investments in these funds are helping you build a solid foundation for your corpus.

Given that you are contributing significant amounts to Balanced Advantage Funds, this shows a prudent approach to managing risk while aiming for growth. However, it’s crucial to ensure that these funds align with your risk tolerance as you near retirement.

Sukanya Samriddhi Yojana (SSY) for Your Daughter
Sukanya Samriddhi Yojana (SSY): Your annual contribution to SSY for your 9-year-old daughter is a wise choice. This scheme offers guaranteed returns and tax benefits, making it an excellent option for long-term, low-risk investment. With the current value of Rs 5,65,805, you are on track, but it's essential to continue this contribution until maturity to maximize the benefit for your daughter's higher education or marriage expenses.
Provident Fund (PF)
Provident Fund (PF): Your PF balance of Rs 10 lakh is a significant component of your retirement savings. The regular contributions and employer match provide a stable, low-risk return, which is crucial for wealth preservation. This fund will serve as a backbone for your retirement corpus.
Insurance-Linked Investments
Tata AIA Life Insurance Fortune Pro: Insurance-cum-investment products like these generally have lower returns compared to pure investment products like mutual funds. While they provide life cover, the investment returns may not be sufficient to meet your high-growth goals. You might want to evaluate the performance after the lock-in period and consider redirecting future premiums into mutual funds if the returns are unsatisfactory.

SBI Child Plan Smart Scholar: Having completed your investment in this child plan, it's time to assess its performance. If the returns are on the lower side, consider using the maturity proceeds to invest in a high-growth equity fund or balanced fund to further boost your corpus.

Planned Bulk Investments
Future Bulk Investments: Your plan to invest Rs 3-5 lakhs annually as a lump sum from your bonuses is a great strategy. However, it's essential to deploy this lump sum in a staggered manner, like a Systematic Transfer Plan (STP), to mitigate market volatility. You might consider adding these funds to existing high-performing equity funds or explore new opportunities in growth-oriented funds.
Future Growth Potential and Target Realization
Assessing the Achievability of Rs 3-5 Crore Corpus
Your goal of building a corpus of Rs 3-5 crores by the time your daughters turn 18 is ambitious but achievable. However, it will require careful planning and disciplined execution. Here are some key points to consider:

Time Horizon: With a 9-year and a 5-year time horizon, your portfolio should focus on growth-oriented investments in the earlier years, gradually shifting towards more stable, low-risk assets as you near the target date. This will help protect your accumulated wealth from market volatility.

Asset Allocation: Currently, you have a mix of equity and balanced funds. As your daughters approach 18, you might want to shift a portion of your equity investments into safer options like debt funds or fixed deposits to preserve the capital.

Inflation and Taxation: Consider the impact of inflation on your target corpus. What may seem like a large sum today may not have the same purchasing power in the future. Also, be mindful of the tax implications on your investments, particularly on the returns from mutual funds and insurance plans.

Suggestions for Portfolio Adjustments
Enhance Equity Exposure: While you have a good mix of funds, increasing your allocation to high-growth equity funds can help you reach the Rs 5 crore target. Consider redirecting the future premiums of your insurance plans or part of your Balanced Advantage Fund investments into aggressive equity funds.

Surrender Underperforming Insurance Plans: If your Tata AIA Life Insurance and SBI Child Plan do not meet expectations, consider surrendering them after evaluating the surrender value and investing the proceeds in higher-return options.

Regular Reviews and Rebalancing: The market environment and your personal circumstances may change over time. Regular reviews of your portfolio and timely rebalancing will help ensure that your investments remain aligned with your goals.

Avoid Over-Diversification: While diversification is important, too much of it can dilute returns. Focus on a few high-performing funds and avoid spreading your investments too thin.

Risk Management: As you approach the end of your working years, it’s crucial to reduce exposure to high-risk assets. Gradually move a portion of your investments into safer instruments like debt funds, bonds, or even a fixed deposit.

Final Insights
Your dedication to building a secure financial future for your daughters is commendable. With consistent and strategic investments, your target of Rs 3-5 crores is within reach. The key will be maintaining a disciplined approach, regularly reviewing your portfolio, and making necessary adjustments based on market conditions and life changes.

Remember to keep an eye on both growth and safety as you transition into retirement. By doing so, you can confidently achieve your financial goals and provide your daughters with a strong financial foundation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Hi, I am 46 years old residing in a B Town in India. I have 2 daughters one 16 years old and second 7 years old. I have Savings of 25 Lakh in my account as emergency find. I have FD of 65 Lakhs. PF, PPF and NPS of 25 Lakhs, Mutual Fund and Shares of 25 Lakhs, Lic policies worth 25 Lakhs, Gold around 1.2 Crores. I have a medical insurance of 20 Lakhs for me and my family, Term insurance of 1Cr. As properties. I own 2 independent houses, 2 flats and 2 plots in Bangalore which has a current value of about 4.5 Cr. In my home town i have 2 Houses, 1 apartment and plots which has a current value of 2.75 Cr. Currently i am drawing a monthly salary of 2 Lakh rupees and get a rent of 30K/ month. I donot have any emi's and my monthly expenses is currently 75K. I am planning to retire at the age of 50. Is my financial condition stable to retire at the age of 50? Thanks for your suggestion in advance.
Ans: Hi,

Lets understand the value of your current Investments at the time of retirement. Below is the list with its current value and (expected rate of return).
Emergency Fund - 25 lakhs (3.5%)
Fixed Deposits - 65 lakhs (7%)
PF/PPF/NPS - 25 lakhs (8%)
MF/Stocks - 25 lakhs (10%)
LIC Policies - 25 lakhs (no change)
Your current investments listed above will achieve a value of 3.5 crore at the time of retirement 4 years from now.

Apart from this you have mentioned properties worth 7.25 Cr. Assuming you will only use/liquidate them if required, so excluding them from consideration for now.

You total income is 2.30 lakhs per month (includes rent) and expenses are 75k per month. So there is potential to add to the above investments for the next 4 years.

I will assume your current expenses are sufficient for the lifestyle you want to continue post retirement.
You will require a corpus on retirement after 4 years to sustain your expenses adjusted with inflation of 6% which will be close to 1 lakh per month (at the time of retirement).
With this starting point, and adjusting for inflation of 6% each year, and life expectancy of 30 years post retirement you need a corpus of approx. 2.5 crore - again assumed this will earn a return of 8% for the 30 years.
If you can invest wisely and generate a slightly higher return of say 10%, the corpus requirement will be 2 crore.

Your current investments at the time of retirement with value of 3.5 crore is sufficient to cover your expenses for the next 30 years inflation adjusted at 6%.
And this is excluding the properties you own and additional investments you can make for the next 4 years.

Summary - You are more than stable as far as your financial state is concerned. You have a strong base to meet your retirement needs and also a potential to create wealth for the generations ahead.

I want to highlight/recommend few points -
1. Increase the medical Insurance for yourself and family to 1Crore as medical expenses will only increase in future.
2. Stop the Term Life Insurance and save the premium for investment. As you have no liabilities and net-worth is high enough to cover any outcomes in life ahead, this premium is a lost cause considering your strong financial state.
3. Revisit the LIC Policies you have and consider surrendering/stopping them if they are not nearing their maturity. They are not giving you enough cover and providing below par returns. So do discuss with a trusted licensed advisor and evaluate them. If they will mature in the next 4 years, ignore this point.
4. Post retirement period is a long duration of 30 years, so do consider getting a good advisor - a Certified Financial Planner who can guide you to plan your retirement well and help you design a portfolio for additional wealth creation as a legacy for your children/dependents.


Thanks & Regards
Janak Patel
Certified Financial Planner.

...Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 11, 2025Hindi
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Hi, I have the following funds part of my SIP and the last 4 funds are my one time lump sum of 35K each and invested sometime in November last year. Are these good to hold (lump sum) and rest as SIP for another 5 years. 1 Kotak Flexicap Fund - Reg Gr 2 Kotak Flexicap Fund - Dir Gr 3 Tata Multi Asset Opp Dir Gr 4 TATA Nifty 50 Index Dir Pl 5 Technology Plan - Direct - Growth 6 Bandhan Sterling Value Fund-(Reg PIn) -Gr 7 Nifty Smallcap250 Quality 50 Index Fund - Dir - G 8 | HDFC Dividend Yield Direct Growth 9 Quant Large and Mid Cap Fund Direct Growth 10 Quant Multi Asset Fund Direct Growth 11 Groww Nifty Non Cyclical Consumer Index Fund Direct Growth 12 Motilal Oswal Midcap Fund Direct Growth Thanks in advance for your guidance.
Ans: You have invested in multiple funds through SIP and lump sum. Holding them for the next 5 years is a good approach. However, it is important to check if your portfolio is diversified, aligned with your goals, and tax-efficient.

Overlap Between Funds
Your portfolio has multiple funds from the same category.

Too many similar funds do not improve returns but make tracking difficult.

Checking fund overlap can help avoid duplication.

Actively Managed vs Index Funds
You have index funds in your portfolio.

Index funds do not offer downside protection in market corrections.

Actively managed funds can outperform the index in volatile markets.

Switching from index funds to actively managed funds can improve growth.

Direct vs Regular Funds
You have invested in direct funds.

Direct funds may seem cheaper, but they lack expert guidance.

Investing through an MFD with CFP credentials ensures better selection and tracking.

Regular funds provide better decision-making support over time.

Sector-Specific and Thematic Funds
You hold a technology fund.

Sector funds are high-risk, as they depend on one industry’s performance.

If the sector underperforms, returns may be negative for years.

A diversified approach reduces risk compared to sector-based investing.

Smallcap and Midcap Allocation
You have smallcap and midcap funds.

These funds can be highly volatile in the short term.

Holding them for 5+ years is necessary to reduce risk.

Ensure you rebalance if the portfolio gets too aggressive.

Multi-Asset and Dividend Yield Funds
Multi-asset funds provide stability during market corrections.

Dividend yield funds are suitable for conservative investors.

These funds help in balancing the portfolio between risk and return.

Final Insights
Reduce overlapping funds and focus on fewer, well-performing funds.

Exit index funds and shift to actively managed funds for better growth.

Consider switching from direct funds to regular funds for expert tracking.

Keep sector funds below 10% of your portfolio to avoid concentration risk.

Continue SIPs in high-quality diversified funds for long-term wealth creation.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

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Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

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Can I run my family with 15 k exp and 20k retirement income
Ans: You have a monthly retirement income of Rs 20,000 and expect monthly expenses of Rs 15,000. On paper, this looks manageable, but there are important financial factors to consider. Let us analyse whether this income will be sufficient for the long term.

Cost of Living and Inflation Impact
Expenses will increase over time due to inflation.

If inflation is 6% per year, your Rs 15,000 monthly expenses may double in 12 years.

If income remains Rs 20,000, the gap between income and expenses will widen.

Healthcare and Medical Costs
Medical expenses increase with age.

Even with health insurance, out-of-pocket medical costs can rise.

If a medical emergency arises, your savings could be depleted quickly.

Emergency Fund Requirement
A sudden family emergency can strain finances.

Having at least 2–3 years' worth of expenses in a liquid fund is necessary.

If you do not have an emergency fund, your retirement income may not be sufficient.

Unplanned Expenses and Lifestyle Changes
New financial needs may arise, such as helping family members or home repairs.

You may want to travel, pursue hobbies, or engage in social activities.

A fixed retirement income can make such expenses challenging.

Investment Strategy for Long-Term Security
To beat inflation, invest a portion of savings in growth-oriented assets.

A mix of equity and debt funds will help generate better returns.

A Systematic Withdrawal Plan (SWP) from equity funds can provide a higher monthly income.

Alternative Income Sources
Consider part-time work, freelancing, or consulting if possible.

Rental income or dividends from investments can support retirement cash flow.

Final Insights
Rs 20,000 may be enough now, but inflation and rising costs can make it insufficient later.

A combination of investments, emergency funds, and alternate income sources will provide financial security.

Regularly review and adjust your financial plan to sustain your retirement lifestyle.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 11, 2025Hindi
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Hello sir, I have about 28 lakhs invested in different MF. Now i want a SWP of 35000 per month from that total fund. Looking at the current market situation I was either thinking if dividing the fund between debt 30% and equity 70%. But instead of investing a lumpsum amounts will it make more sense to park all my funds in a dynamic debt fund and then every month do SIP of maybe one lakh each to equity fund or balanced fund. Also i would like to know what difference will it make in my investment returns between sip and lumpsum except ofcourse averageing the market volatility in case of SIP and getting more UNITS if done lumpsum.
Ans: You have Rs 28 lakh invested in mutual funds and want to withdraw Rs 35,000 per month through a Systematic Withdrawal Plan (SWP). You are considering whether to invest the corpus as a lump sum in a 70% equity – 30% debt allocation or to park the full amount in a debt fund and do an SIP of Rs 1 lakh per month into equity.

Your goal should be to generate stable withdrawals while preserving your capital and ensuring growth. Below is a structured approach to managing your funds wisely.

Understanding SWP and Its Impact on Your Corpus
SWP is a cash flow strategy, allowing regular withdrawals while the remaining corpus continues to grow.

The key challenge is to balance withdrawals and growth so that the corpus does not deplete too soon.

Investing in a mix of debt and equity will ensure stability while benefiting from market growth.

Option 1: Investing 70% in Equity and 30% in Debt
This allocation is suitable for long-term growth. Equity provides growth, while debt ensures stability.

A balanced portfolio helps manage volatility and ensures a steady SWP.

The downside is that a lump sum investment in equity exposes you to market fluctuations.

If the market falls after investing, the SWP may lead to selling equity at a lower value, reducing corpus longevity.

Option 2: Parking in a Debt Fund and Doing Monthly SIPs
This reduces market timing risk by investing gradually.

Debt funds provide low but steady returns, protecting the corpus while equity exposure increases.

SIPs spread the risk over time, ensuring better price averaging.

The downside is that debt funds provide lower returns, which may impact the final corpus.

SIP vs Lump Sum: Key Differences
SIP helps in market averaging, reducing the impact of volatility.

Lump sum investment can generate higher returns if the market performs well.

SIP is better for those worried about market crashes, while lump sum works well for long-term investors willing to take higher risks.

Best Strategy for You
A hybrid approach will work best:

Step 1: Park Rs 28 lakh in a low-duration or dynamic debt fund.

Step 2: Start an SIP of Rs 1 lakh per month into equity for 24–28 months.

Step 3: Withdraw Rs 35,000 per month from the debt fund until equity allocation builds up.

Step 4: After 2–3 years, rebalance to maintain a 60% equity – 40% debt allocation for stability.

Tax Implications of SWP
Withdrawals from equity funds held for over 1 year attract 12.5% tax on LTCG above Rs 1.25 lakh.

Withdrawals before 1 year attract 20% STCG tax.

Withdrawals from debt funds are taxed as per your income tax slab.

Final Insights
A mix of debt and equity will ensure growth and stability in your SWP plan.

Parking the corpus in a debt fund first and then gradually shifting to equity is a safer approach.

Rebalancing every 2–3 years will help manage risk and sustain withdrawals.

Keep track of taxation to optimise post-tax returns.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

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Ramalingam

Ramalingam Kalirajan  |8098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 13, 2025

Asked by Anonymous - Mar 12, 2025Hindi
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Hello Sir, I am 46. Unemployed due to health reasons. I have 28 lakhs i want to invest in SWP . I need 35000 monthly. How long do I have before my fund runs out? How should I invest to make the most of it? I want my funds to appreciate as well to be atleast propionate to my need of 35000. Given- if i invest in lumpsum than I get higher number of units and if i take the SIP route it can negate the market volatility. Looking at the current market scanerio i believe it may take couple of years to see proper returns. I was also thinking of pooling the entire corpus in Aggressive debt funds and then do a SIP to an actively managed equity fund. Under these circumstances please provide fund names also. Thanks in advance.
Ans: You are 46 and unemployed due to health reasons. You need Rs 35,000 per month from your investments. Your goal is to make your funds last longer while allowing growth.

Let us analyse your options and create a plan.

Assessing Your Requirement
You need Rs 4.2 lakh per year (Rs 35,000 x 12 months).

Your corpus is Rs 28 lakh.

If you withdraw Rs 4.2 lakh annually without growth, your funds will last less than 7 years.

You need growth to sustain withdrawals for a longer period.

Challenges with a High SWP Rate
A SWP of 15% per year (Rs 4.2 lakh from Rs 28 lakh) is too high.

Safe withdrawal rates are usually 4-6% per year.

A high withdrawal rate will deplete your corpus fast.

Investment Strategy for SWP
You need a mix of equity and debt to balance growth and stability.

Step 1: Allocate Corpus Wisely
Equity (50%): Invest for growth.
Debt (50%): Keep funds for the next 5-6 years of withdrawals.
This approach helps maintain stability while allowing long-term appreciation.

Step 2: SWP from Debt Funds
Start your SWP from debt funds to avoid withdrawing from volatile equity investments.

Debt funds provide stability and minimise short-term risk.

This ensures your equity investments have time to grow.

Step 3: Systematic Transfer to Equity
Keep your equity allocation in a flexi-cap or multi-cap fund for diversification.

Invest in a systematic transfer plan (STP) from a debt fund to an equity fund.

This reduces market timing risk and balances volatility.

Expected Corpus Longevity
If your portfolio grows at 8-10% annually, your funds may last 10-12 years.

If the market performs well, your funds may last longer.

A lower withdrawal rate will further extend sustainability.

Alternative Options to Sustain Your Corpus
Reduce withdrawals: If possible, lower monthly expenses to Rs 25,000-30,000.

Part-time income: If health permits, explore work-from-home or passive income options.

Medical emergency fund: Keep at least Rs 2 lakh aside for medical needs.

Review investments: Rebalance every year to maintain growth and stability.

Final Insights
Your current withdrawal rate is high.

A balanced equity-debt approach can extend the longevity of your corpus.

Use SWP from debt funds and STP to equity for better returns.

Monitor the portfolio regularly to ensure sustainability.

If possible, reduce withdrawals slightly to make the corpus last longer.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

...Read more

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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