Sir
I.am 54 yesrs , my son going abroad for studies 2 years , want atleast 250000 per month for him
Was having office from 20 yrs which was on rent and i use to get not more than 35000 per month after tds abd maintenance, so sold that now worried as fd gives very less returns
Thinking for mutual fund but worried
At present have one od account too where can manage his studies, but office sell pymt 1 cr want some good returns so that can return at the end to od act
Please help
Ans: Understanding Your Financial Needs
You are 54 years old, and your son is going abroad for studies.
You need Rs. 2,50,000 per month for the next two years for his education.
You sold your office property and have Rs. 1 crore.
You aim to invest this amount to get good returns.
You also have an overdraft (OD) account to manage expenses temporarily.
Evaluating Investment Options
Fixed Deposits (FDs)
Fixed Deposits are safe but offer low returns.
They provide guaranteed returns but may not meet your monthly needs.
FDs are suitable for conservative investors but might not generate sufficient monthly income.
Mutual Funds
Mutual funds can offer higher returns compared to FDs.
Equity mutual funds have potential for growth but carry higher risk.
Debt mutual funds are less risky and provide moderate returns.
Balanced or hybrid mutual funds invest in both equity and debt, balancing risk and return.
Creating a Balanced Investment Plan
To achieve your financial goals, consider a balanced investment plan.
This can include a mix of mutual funds and fixed deposits.
The goal is to generate monthly income while preserving capital.
Monthly Income from Investments
You need Rs. 2,50,000 per month for your son's education.
This translates to Rs. 30,00,000 annually.
Let's explore how to achieve this through investments.
Systematic Withdrawal Plan (SWP)
A Systematic Withdrawal Plan (SWP) from mutual funds can provide regular income.
SWP allows you to withdraw a fixed amount periodically.
This can help in generating the required monthly income.
Equity Mutual Funds
Equity mutual funds can offer higher returns.
They invest in stocks and have potential for capital appreciation.
However, they come with higher risk due to market volatility.
Debt Mutual Funds
Debt mutual funds invest in fixed income securities like bonds.
They are less risky and provide stable returns.
Debt funds can be a good option for generating regular income.
Creating a Diversified Portfolio
Diversification helps in balancing risk and return.
Consider investing in a mix of equity and debt mutual funds.
A balanced portfolio can provide growth potential and stability.
Emergency Fund
Keep a portion of your funds as an emergency reserve.
This ensures liquidity for unforeseen expenses.
An emergency fund provides financial security and peace of mind.
Consulting a Certified Financial Planner
Consider consulting a Certified Financial Planner (CFP).
A CFP can provide personalized advice based on your financial goals.
They can help create a comprehensive investment strategy.
Tax Efficiency
Tax planning is crucial to maximize returns.
Invest in tax-efficient instruments to reduce tax liability.
Consult a CFP for tailored tax-saving strategies.
Monitoring and Reviewing Investments
Regularly monitor your investments.
Review your portfolio to ensure it aligns with your goals.
Adjust investments based on market conditions and financial needs.
Calculating Required Returns
To generate Rs. 2,50,000 per month, let's calculate the required returns.
Assuming a 10% annual return, calculate the monthly withdrawal amount.
Creating a SWP Plan
Set up a SWP from mutual funds to get the required monthly income.
Choose a mix of equity and debt funds to balance risk and return.
Review the SWP plan periodically.
Balancing Risk and Return
Assess your risk tolerance before investing.
Equity investments have higher risk but potential for higher returns.
Debt investments are safer but offer lower returns.
Benefits of a Diversified Portfolio
A diversified portfolio reduces risk and enhances stability.
Investing in a mix of asset classes balances potential returns.
Diversification is key to a successful investment strategy.
Conclusion
At 54, planning for your son's education is critical.
A balanced investment strategy can help generate the required monthly income.
Consider a mix of mutual funds and fixed deposits.
Consult a Certified Financial Planner for personalized advice.
Regularly review and adjust your investments to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
