Hi Sreekanth,
Hope everything is well with you. I've read your recent post on 200 Days Moving Average and it was very informative.
Once, you've written post about choosing Mutual Funds based on the measures of Volatility. It was indeed a very good post and covers well to understand the terms associated with Mutual Fund analysis. Thanks for that informative post.
Now I would like to understand, How I can choose the Mutual Funds based on the Goals?
Ex: Children Education Planning.
I've a young daughter of age 3 years and I would like to plan for her education. So the goal term is 15 years and I would like to save approximately 40K per month for this goal (Assuming she would choose to study MBBS).
But I'm puzzled about, what type funds to choose? Should I only choose the large cap funds as it's a long term investment or should I've the mix of Large Cap, Mid Cap, Small Cap and Balanced funds depending on how much risk I'm willing to take based on my age?
To give you more info, For retirement planing - I've taken my PF contribution, my wife's PF contribution, my NPS contribution and Few Large Cap & Mid Cap MF SIPs as investments for that specific goal - considering that, Retirement planning is a very long term and I'm looking at safety of monies as a primary thing.
For other goals, I'm not able to decide this "primary" factor! Please help.
Thanks in advance,
Srikanth Varma
2 Answers
Dear Srikanth,
Thank you for reading my Blog posts!
Besides your current age, you need to also look at your current income, future income potential, time-frame, other obligations, etc., to know if you can take high risk or not.
For long term goals like your Retirement or Kid's education goal which has 15 years time-frame, you may have to take more risk to accumulate desired corpus (goal amount).
Suggest you to kindly go through below articles, and you may revert to me with your analysis ;
https://www.relakhs.com/retirement-planning-calculator-3-easy-steps/
https://www.relakhs.com/calculate-kids-education-goal-amount/
Do you have adequate life insurance cover? What about health insurance for self & family?
Dear Srikanth,
1 - Your thought of making your existing LIC plans as PAID-UP ones can be a PRUDENT one. You may try explaining the low yielding case of these plans to your family member(s) based on below articles ;
https://www.relakhs.com/traditional-life-insurance-plan/
https://www.relakhs.com/term-insurance-plan-a-waste-of-money/
These traditional plans eat way your wealth...considering positive inflation rate in a growing country like ours.
2 - Do you have Personal Accident plan (stand-alone) (or) at least Disability rider attached to your term insurance plan?
Kindly read ;
https://www.relakhs.com/best-personal-accident-insurance-policies-in-india-details-comparison/
3 - Kindly do not depend entirely on Employers' provided group cover. It can be very tough / high cost to get yourself (family) covered once you grow older. So, suggest you to buy a diabetic specific plan for self and a separate mediclaim for spouse.
Kindly read :
https://www.relakhs.com/diabetes-hypertension-health-insurance/
https://www.relakhs.com/factors-tips-best-health-insurance-plan-india/
https://www.relakhs.com/employer-based-health-insurance-plans-vs-individual/
4 - Shares can be avoided for an Emergency fund. You may pick Liquid funds / Arbitrage funds as an option.
5 - You may start investing in Equity funds for your long term goals. The average per month investment can be increased year on year (if required).
You may pick one fund from each fund category.
https://www.relakhs.com/best-mutual-fund-schemes-2017/
https://www.relakhs.com/my-mutual-fund-portfolio-mf-picks/
https://www.relakhs.com/best-mutual-fund-scheme-risk-ratios/
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