Hello sir,
We are 35 years old couple earning 1 lakhs per month. We have 3 daughters with elder one 7 years old and younger ones twins of 1 year old. How much should be invest every month and where should be invest to ensure good education and future for our daughters.
Ans: It’s great that you’re thinking about your daughters' future. Financial planning is crucial to ensure a bright future for your kids. With a structured approach, you can secure their education and future.
Understanding Your Financial Situation
You're a 35-year-old couple earning Rs 1 lakh per month. You have three daughters: a 7-year-old and 1-year-old twins. Planning for their education and future requires a strategic approach.
Setting Clear Financial Goals
Education Goals
The primary goal is to secure funds for your daughters’ education. Education costs are rising, so early planning is crucial. Break down the educational milestones like school, college, and higher education.
Future Security
Apart from education, think about other future expenses like weddings and career support. It's essential to have a broad perspective.
Emergency Fund
Always maintain an emergency fund to cover 6-12 months of expenses. This will protect you against unforeseen financial setbacks.
Monthly Investment Planning
Investment Allocation
From your monthly income of Rs 1 lakh, aim to invest 20-30%. This means setting aside Rs 20,000 to Rs 30,000 each month for your daughters’ future. This disciplined approach will accumulate significant wealth over time.
Mutual Funds for Education
Mutual funds are a good option for long-term goals. They provide diversified exposure and the potential for high returns.
Benefits of Actively Managed Mutual Funds:
Professional Management: Experts manage these funds, ensuring better performance.
Diversification: Reduces risk by spreading investments.
Flexibility: Easy to buy and sell, offering liquidity.
SIP (Systematic Investment Plan)
A SIP allows you to invest a fixed amount regularly in mutual funds. This method helps in disciplined investing and benefits from rupee cost averaging.
Assessing Different Investment Options
Equity Mutual Funds
Equity mutual funds are suitable for long-term goals like education. They invest in stocks and have the potential for high returns. Over 10-15 years, equity mutual funds can significantly grow your investment.
Debt Mutual Funds
Debt mutual funds are safer and invest in fixed-income securities. They are ideal for medium-term goals and help balance your investment portfolio.
Balanced Funds
Balanced or hybrid funds invest in both equity and debt. They provide a mix of growth and stability, suitable for investors seeking moderate risk.
Importance of Regular Review
Annual Review
Review your investments annually. Ensure they align with your goals and make adjustments if necessary. This ensures you stay on track to achieve your financial objectives.
Rebalancing Portfolio
Rebalancing is adjusting your portfolio to maintain the desired asset allocation. This helps in managing risk and optimizing returns.
Insurance for Security
Term Insurance
Term insurance is crucial for financial security. It provides a high cover at a low cost. Ensure you have adequate term insurance to cover your family's needs.
Health Insurance
Health insurance protects against medical expenses. With a family of five, ensure you have a comprehensive health insurance policy.
Avoiding Investment Pitfalls
Avoid Low-Return Investments
Avoid traditional savings instruments like fixed deposits for long-term goals. They offer lower returns compared to mutual funds.
Be Wary of Insurance-Cum-Investment Policies
If you have LIC, ULIPs, or investment-cum-insurance policies, consider surrendering them. They often have high costs and lower returns. Reinvest in mutual funds for better growth.
Benefits of Consulting a Certified Financial Planner
Personalized Advice
A Certified Financial Planner (CFP) can provide personalized advice. They understand your unique situation and recommend the best strategies.
Holistic Planning
CFPs offer holistic financial planning, considering all aspects of your finances. This ensures comprehensive and well-rounded advice.
Continuous Support
They provide continuous support and can help adjust your plan as needed. This ensures you are always on the right path.
Final Insights
Investing in your daughters’ future is a noble goal. By setting clear objectives and investing wisely, you can ensure their education and security. Mutual funds, especially equity and balanced funds, offer good growth potential. Regular review and rebalancing keep your investments on track. Ensure you have adequate term and health insurance for added security. Consulting a Certified Financial Planner can provide valuable guidance and peace of mind.
Your commitment to your daughters' future is commendable. With disciplined investing and strategic planning, you can achieve all your financial goals and secure a bright future for them.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
