I am 55 in a pvt company. I want to invest in SIP for a period of 5 yrs to get good returns.
My risk appetite is moderate. I need to plan for my 2 children studies, wedding and my retirement.
I can invest 50k per month. Please let me know in which Mutual funds I should invest?
I have own flat no loans and already saved 70L in FDs. How much corpus I need to get 70k per month .
Ans: Current Financial Position
Age: 55 years
Job: Private company
Risk Appetite: Moderate
Monthly Investment Capacity: Rs 50,000
Existing Savings: Rs 70 lakhs in Fixed Deposits
Goals: Children's education and wedding, retirement planning
No Loans: Own flat
Investment Strategy
SIP Recommendations
Given your moderate risk appetite and a 5-year horizon, a balanced approach is ideal. Here's a structured investment plan:
Balanced Funds: These funds provide a mix of equity and debt. They offer stability and growth.
Large-Cap Funds: These invest in well-established companies. They offer steady returns with lower risk compared to mid-cap or small-cap funds.
Multi-Cap Funds: These invest across large, mid, and small-cap stocks. They offer diversification and potential for higher returns.
Fund Allocation
Balanced Funds: Rs 20,000 per month
Large-Cap Funds: Rs 15,000 per month
Multi-Cap Funds: Rs 15,000 per month
This allocation balances growth and stability, catering to your moderate risk profile.
Planning for Children's Education and Wedding
Education Fund
Time Horizon: Immediate to medium-term
Investment: Continue SIPs and consider partial withdrawals as needed.
Wedding Fund
Time Horizon: 5-10 years
Investment: Maintain current SIPs for 5 years, then assess market conditions for withdrawals.
Retirement Planning
Current Savings
Fixed Deposits: Rs 70 lakhs offers security but low returns. Consider diversifying a portion into mutual funds or other higher-return instruments.
Corpus Needed for Rs 70,000 Monthly Income
Required Corpus: To get Rs 70,000 monthly, you need around Rs 1.75 crore (assuming 5% annual withdrawal rate).
Building the Corpus
Current Investments: Rs 70 lakhs in FDs
SIPs: Rs 50,000 per month for 5 years. This should grow to around Rs 35-40 lakhs, assuming moderate returns.
Recommendations
Actively Managed Funds
Higher Returns Potential: Actively managed funds can outperform the market through expert stock selection.
Professional Management: Funds managed by experienced professionals who adapt to market changes.
Regular vs Direct Funds
Invest Through CFP: Certified Financial Planners offer guidance, helping you navigate market complexities.
Regular Funds Advantage: Though expense ratios are higher, the professional advice can lead to better long-term outcomes.
Risk Management
Diversification
Balanced Portfolio: Diversify across balanced, large-cap, and multi-cap funds. This reduces risk and enhances returns.
Regular Monitoring
Review Investments: Conduct quarterly reviews. Make adjustments based on performance and market conditions.
Rebalance Portfolio: Periodically rebalance to align with your risk profile and financial goals.
Final Insights
Your current financial position is strong. With a well-structured SIP plan and professional guidance, you can achieve your goals. Regular monitoring and a diversified approach will help in mitigating risks and enhancing returns.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
