Hello Srikanth,
Thanks for your informative blog.
I am 38 years self employed professional. We have 4 years old child.
PRIMARY GOAL:CHILD EDUCATION I would need 45 lakh(value at that time) after 12 years when he would be in college. PLAN FOR CHILD EDUCATION:
Total SIP amount ₹ 16500 /month for next 12 years.
MY COULD BE PORTFOLIO:
All are in direct growth 3 ELSS FUNDS;
A)Birla Sunlife \'96 fund ₹4000
.B)Dsp black rock tax saver. ₹4000
C)Motilal Oswal long term equity fund. ₹3500 1 MID CAP FUND: HDFC mid cap fund. ₹2500 1 SMALL CAP FUND: FRANKLIN INDIA SMALLER COMPANIES. ₹ 2500 SIP at ₹ 16500
so I would require ₹ 7.92 lakh for next 4 years SIP. I have ₹ 7 lakhs in hand now. If I start STP from this ₹7 lakh from ultra short term fund to above mentioned funds for child\'s education, I would not have to think or worry about next 4 years SIP.It would be taken care of by this lumpsum amount by STP route.
MY QUERIES ARE:
1)What is your opinion about spreading money through STP route over next 4 years ? I have read somewhere that money through STP route should not be spread over 1.5 years.
SURPLUS MONEY MANAGEMENT: As of now I have ₹ 20500 surplus money every month though it is not certain. But if possible I want to invest this surplus money into MIP aggressive fund for next 4 years from 2018 to 2021.Then I would use this money for then next 4 years SIP ,from 2022 to 2025. So that I would not have to think or worry about then next 4 years SIP. Why am I not adding this surplus money at ₹ 20500 direct into equity for above mentioned plans for child\'s education because I Would not be able to continue SIP at ₹37000(16500+20500 ) for next 12 years. I can do SIP at ₹16500 only for next 12 years.
2) What is your opinion about this strategy, first accumulate money through MIP aggressive fund for 4 years and then use this money through STP route for further 4 years SIP ,and repeat this cycle upto 12 years ?
GOAL:HOME I want to collect possible money after 5 years by starting SIP at ₹ 5000 for next 5 years. I know it would not purchase home but purpose is to accumulate some money.
3)For this purpose, which category should I choose; multicap,large cap,or balanced fund ?
4)So, if we go in this manner, there would be total 7 funds(5 for child\'s education,1 for surplus money at ₹20500,&1 for home) What is your opinion about having 7 funds in portfolio ? I have read somewhere that there should not be more than 4-5 funds in portfolio.
Thanks.
4 Answers
Hi,
1 - Any specific reason for picking three ELSS funds for Kid's higher education goal?
2 - STP route for lump sum investment is fine.
3 - If you have surplus money then instead of SIPs you can just invest in appropriate mutual funds or existing MFs manually (whenever you have additional sums or when markets are down). Investing in equity funds as when you have money and staying invested for long can be a prudent strategy than to invest in MIP and then diverting the corpus to equity funds.
Kindly read :
https://www.relakhs.com/200-day-moving-average-dma-mutual-funds/
https://www.relakhs.com/sip-systematic-investment-plan/
4 - For a 5 year time-frame, you can consider investing in 1 or 2 balanced funds.
5 - Suggest you to also plan for your Retirement.
Kindly read :
https://www.relakhs.com/calculate-kids-education-goal-amount/
https://www.relakhs.com/retirement-planning-calculator-3-easy-steps/
https://www.relakhs.com/investment-planning-investment-plan/
https://www.relakhs.com/list-of-best-investment-options-schemes-in-india/
Thanks for your reply.
1)I choose 3 ELSS funds for tax planning purpose upto 1.5 lakh.Should it be 2 funds ?
What do you suggest ?
2)I have this surplus money at ₹20500 every month but for how many years it would be ,I don't know due to uncertainty in profession and that is why I want to accumulate money for coming 4 years SIPs (2022-2025) by investing it in appropriate fund say MIP or something else, and then diverting that accumulated lumpsum money through STP route to my main portfolio so I need to worry about next 4 years (2022-2025)'SIPs.
Just asking out of curiosity what may be possible disadvantage in this strategy ?
Right now if I have ₹ 37000 to invest ,and say if I invest it for next 4 years and then due to some reason I pause SIPs for some time but stay invested is a good option
Or,continuously investing ₹16500 for next 12 years is a good option ? But then what should I do with surplus money at ₹20500 every month ?
Kindly suggest something.
Thanks.
Hi,
1 - Kindly note that the units allotted under each ELSS SIP have a lock-in period of 3 years, so you need to be extra careful in planning your accumulation and also withdrawals.
Investing in too many funds that too from same fund category may not be beneficial. We can consider most of the ELSS funds as typical multi-cap funds. The selected funds are good ones, but the point is there can be higher overlap among the Funds' portfolios.
Read :
https://www.relakhs.com/mutual-fund-portfolio-overlap-comparison-tools/
2 - If your job profile is un-secured and you do not know the possible time-frame, yes, you may go ahead and pick Debt/Hybrid/MIP funds.
3 - Kindly give importance to Asset allocation as well, w.r.t to investible surplus.
If you are investing say Rs 100, you can allocate say Rs 70 in Equity funds and Rs 30 in debt oriented products.
Thanks for reply.
Portfolio overlapping between 3 ELSS funds is 15%.
What would have been your picks in my portfolio ?
Thanks.
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