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56-Year-Old Regine Asks: How Can I Earn a Steady Income to Support My Family?

Rajesh

Rajesh Nair  |20 Answers  |Ask -

Hiring, Leadership Expert - Answered on Aug 02, 2024

Rajesh Nair is the CEO of TopGear Consultants, an executive search and recruitment company.
He has over 20 years of experience in executive recruitment and headhunting across industries both in India and abroad.
He specialises in the senior executive, board and C-level hiring, as well as niche roles in the middle to senior management space.
He has built high-performing teams from scratch by mentoring the them.
Rajesh holds a master's degree in marketing from the university of Mumbai.
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MANISH Question by MANISH on Aug 02, 2024Hindi
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Career

I am 56 years old, regine from service in steel marketing company, and as on today we have no earning or no other service/work. I am having respectability of my son who is studying and 13 years old at present. What can be do now for reasonable earning so that i can manage my home smoothly.

Ans: Dear Manish, You should immediately start with updating your cv and uploading the same on all leading portals like naukri.com and shine.com. you can also try for freelancing/consultant roles.
All the best!
Regards
Rajesh Nair
Career

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Ramalingam

Ramalingam Kalirajan  |8111 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 24, 2024

Asked by Anonymous - Jul 07, 2024Hindi
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Money
Dear sir, My husband retaired from tyre factory He earned 1 Lack permonthly. We spend money for children education and we bought one house. Now my husband pension just 4000 and my salary 50k only. My two son are studying. How i will manage current economic situation. After retairement at the age what job he can do? Please give suggestion.
Ans: Current Financial Situation Analysis
Let's assess your current financial situation and explore potential solutions to manage it better.

Income Sources:

Your husband's pension: Rs 4,000
Your salary: Rs 50,000
Major Expenses:

Children's education
Household expenses
Housing costs
It seems that your combined income is Rs 54,000 per month. However, managing with this amount, given your expenses, is challenging.

Immediate Financial Management Steps
Budgeting:

Create a detailed budget. Include all expenses: education, groceries, utilities, and housing.
Track spending and identify areas to cut costs.
Emergency Fund:

Maintain an emergency fund. It should cover at least 3-6 months of expenses.
If you don’t have one, start building it slowly by saving a small amount each month.
Debt Management:

Prioritize paying off high-interest debts first.
Avoid taking on new debt if possible.
Increasing Income
Part-Time Jobs:

Your husband can explore part-time or freelance work. Options include consulting, tutoring, or clerical work.
Websites like Freelancer, Upwork, or local classifieds can offer opportunities.
Skill Development:

Invest in courses or training programs to enhance skills.
This can open up new job opportunities with better pay.
Utilize Assets:

If you have assets like property or gold, consider renting out space or selling non-essential items.
Education Planning
Scholarships and Grants:

Look for scholarships and grants for your children’s education. Many organizations offer financial aid based on merit or need.
Research online or consult school advisors for available options.
Education Loans:

Consider taking education loans if necessary. Choose options with favorable interest rates and repayment terms.
Investment Strategy
Mutual Funds:

Invest in mutual funds through a Certified Financial Planner. They provide professional management and diversify risk.
Opt for regular funds rather than direct funds. Regular funds offer professional advice and support from a CFP.
Avoid Real Estate Investment:

Given your current financial situation, avoid investing in real estate. It requires significant capital and is not liquid.
Actively Managed Funds:

Prefer actively managed funds over index funds. Actively managed funds have the potential for higher returns as they are professionally managed to outperform the market.
Long-Term Planning
Retirement Planning:

Ensure you are saving for retirement. Invest in options like PPF or NPS.
Consult a Certified Financial Planner to create a retirement plan tailored to your needs.
Insurance:

Ensure you have adequate life and health insurance coverage.
It protects against unforeseen circumstances and reduces financial burden during emergencies.
Final Insights
Managing your current economic situation requires careful planning and disciplined financial management.

Focus on budgeting, increasing income, and making informed investment choices. Seek scholarships for education and invest in mutual funds with professional guidance.

Your husband can explore part-time job opportunities to supplement the household income.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8111 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 02, 2024

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Money
Dear sir, My husband retaired from tyre factory He earned 1 Lack permonthly. We spend money for children education and we bought one house. Now my husband pension just 4000 and my salary 50k only. My two son are studying. How i will manage current economic situation. After retairement at the age 60 what job he can do? Please give suggestion.
Ans: Managing finances after retirement can be challenging, especially with ongoing family responsibilities. Let's look at your situation carefully and create a plan to help you navigate these financial pressures.

Income Overview
Pension Income: Your husband’s pension is Rs. 4,000 per month. While this is modest, it provides a steady, reliable income.

Your Salary: You earn Rs. 50,000 per month. This is your primary source of income and will play a crucial role in managing household expenses.

Current Expenses and Priorities
Children’s Education: Education is a significant expense but a necessary one. Prioritizing this is crucial for their future.

Household Expenses: You have already purchased a house, which is a major accomplishment. This helps reduce the burden of rent or home loans.

Other Expenses: Look closely at your monthly expenses. Categorize them into essential and non-essential. Focus on reducing or eliminating non-essential expenses.

Managing Monthly Budget
Create a Detailed Budget:

List all your income sources.
Itemize your monthly expenses.
Include education costs, utility bills, groceries, and any loan EMIs.
Track Spending:

Monitor your expenses weekly.
Identify areas where you can cut back, like dining out or entertainment.
Savings for Future:

Even if it’s a small amount, try to save a portion of your income each month.
Consider opening a recurring deposit or a systematic investment plan (SIP) in mutual funds.
Exploring Additional Income Sources
Potential Jobs for Your Husband
At 60, your husband has valuable experience that can be put to good use. Here are some options:

Consultancy Work:

Leverage his experience in the tyre factory.
He can offer consultancy services to small-scale industries in a similar field.
Part-Time Jobs:

Explore part-time work opportunities in retail, customer service, or administrative roles.
These jobs are often flexible and suitable for retirees.
Tutoring:

If your husband has expertise in a particular subject, he could offer tutoring services.
With education being a priority, tutoring can be both rewarding and a source of income.
Freelance or Contract Work:

Look for freelance or contract-based jobs.
Websites like Upwork or Freelancer offer various opportunities, from writing to project management.
Home-Based Business:

If your husband has a hobby, consider turning it into a small business.
Examples include gardening, woodworking, or even starting a small catering service.
Financial Assistance and Benefits
Government Schemes:

Check if your husband is eligible for any government schemes for retirees.
Senior citizens often have access to subsidized healthcare, travel discounts, and other benefits.
Senior Citizen Savings Schemes:

Consider investing in Senior Citizen Savings Schemes (SCSS) for better returns.
SCSS offers a secure way to invest with decent interest rates.
Health Insurance:

Ensure you have adequate health insurance coverage.
Medical emergencies can be financially draining, so it's crucial to be prepared.
Managing Children’s Education Costs
Scholarships and Grants:

Explore scholarship opportunities for your sons.
Many educational institutions and organizations offer financial aid to deserving students.
Educational Loans:

If required, consider taking an educational loan.
It’s a practical way to manage higher education expenses without disrupting your monthly budget.
Part-Time Jobs for Sons:

Encourage your sons to take up part-time jobs.
It teaches them responsibility and can help ease the financial burden.
Planning for the Future
Emergency Fund:

Set aside a small amount each month to build an emergency fund.
This fund will provide a safety net for unexpected expenses.
Retirement Planning:

Even though your husband is retired, it's essential to plan for the future.
Regularly contribute to a savings account or a low-risk investment to ensure financial stability.
Debt Management:

If you have any outstanding loans, prioritize paying them off.
Reducing debt will free up more of your income for other expenses.
Final Insights
Your situation is challenging but not insurmountable. With careful budgeting, exploring additional income sources, and taking advantage of available financial schemes, you can manage your current economic situation. Encourage your husband to explore job opportunities that align with his experience, and continue to prioritize your children’s education.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8111 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2024

Money
Dear sir, My husband retaired from tyre factory He earned 1 Lack permonthly. We spend money for children education and we bought one house. Now my husband pension just 4000 and my salary 50k only. My two son are studying. How i will manage current economic situation. After retairement at the age 60 what job he can do? Please give suggestion.we have house loan 20L
Ans: I see you’re in a challenging phase of life. Your husband retired from a tyre factory with a pension of Rs. 4000. You earn Rs. 50,000, and you have two sons in school. I understand it’s tough to manage expenses. You also have a house loan of Rs. 20 lakhs. Let’s discuss how to manage your finances better.

Evaluate Current Financial Status

Your monthly income is Rs. 54,000. This includes your husband’s pension and your salary. Your biggest challenge is managing expenses and planning for the future.

Expenses:

Children’s education
Household expenses
House loan EMI
Create a Detailed Budget

Make a budget to track income and expenses. It will help in understanding where your money goes and where you can save. List all fixed and variable expenses.

Fixed Expenses:

House loan EMI
Children’s school fees
Variable Expenses:

Groceries
Utilities
Transportation
Cut Unnecessary Expenses

Identify non-essential expenses and reduce them. This could include dining out, entertainment, or other luxuries. Every rupee saved can help in managing your budget better.

Increase Your Income

Your husband can take up a part-time job or freelance work. This can be a great way to supplement your income. Here are some job ideas for him:

Consulting: If he has expertise in his field, consulting can be lucrative.
Tutoring: Teaching school subjects or specific skills.
Freelance Work: Writing, graphic design, or any skill he possesses.
Online Jobs: Data entry, customer support, or virtual assistance.
Leverage Your Assets

You own a house. If you have an extra room, consider renting it out. This can provide a steady source of income.

Focus on Debt Repayment

Pay off your house loan as quickly as possible. This will reduce your financial burden and free up money for other needs. Prioritize high-interest debts first.

Build an Emergency Fund

Set aside money for emergencies. This fund will protect you from unexpected expenses. Aim for at least six months’ worth of expenses.

Invest in Mutual Funds

Mutual funds are a great way to grow your money. They offer various benefits:

Diversification: Spread your investment across various assets.
Professional Management: Managed by experts to maximize returns.
Flexibility: Start with a small amount and increase over time.
Types of Mutual Funds

Equity Funds: Invest in stocks. High risk, high returns.
Debt Funds: Invest in bonds. Lower risk, stable returns.
Balanced Funds: Mix of equity and debt. Moderate risk and returns.
Power of Compounding

Mutual funds benefit from compounding. This means your returns earn more returns over time. Start investing early and regularly for maximum benefit.

Risks of Mutual Funds

Market Risk: The value of investments can fluctuate.
Interest Rate Risk: Changes in interest rates can affect returns.
Credit Risk: Risk of default by bond issuers.
Benefits of Actively Managed Funds

Actively managed funds have professionals making investment decisions. They aim to outperform the market. This can lead to higher returns compared to index funds, which simply track the market.

Importance of Financial Planning

A Certified Financial Planner (CFP) can help you create a financial plan. They can guide you on investments, insurance, and retirement planning.

Retirement Planning

Plan for your retirement to ensure financial security. This includes:

Retirement Savings: Invest in mutual funds, NPS, or other schemes.
Health Insurance: Ensure adequate coverage for medical expenses.
Pension Plans: Explore plans that provide regular income post-retirement.
Children’s Education Fund

Education costs are rising. Start an education fund for your children. Invest in child-specific plans or mutual funds to grow this fund over time.

Insurance Coverage

Ensure you have adequate life and health insurance. This protects your family in case of emergencies.

Avoid Real Estate Investments

Real estate can be risky and illiquid. Focus on investments that offer better liquidity and diversification, like mutual funds.

Surrendering Investment-cum-Insurance Policies

If you hold LIC, ULIP, or other investment-cum-insurance policies, consider surrendering them. Reinvest the proceeds in mutual funds for better returns.

Final Insights

Managing finances post-retirement can be challenging. With careful planning and disciplined saving, you can secure your future. Prioritize budgeting, cutting unnecessary expenses, and increasing your income. Invest in mutual funds to grow your wealth. Consider seeking advice from a Certified Financial Planner for personalized guidance.



You’re doing a great job managing your family’s finances during a tough time. Your dedication to your children’s education and securing a home is commendable. Keep up the good work, and with a bit of planning, you’ll navigate these challenges successfully.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ravi

Ravi Mittal  |550 Answers  |Ask -

Dating, Relationships Expert - Answered on Mar 19, 2025

Asked by Anonymous - Feb 02, 2025Hindi
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Relationship
Hello sir/ma'am...i am a girl of 21 yrs and my bf 24yrs.We met each other through an online friendly chat app.Since 1yr,we r chatting,video and voice calls.He told me,he loves me and wanna marry me.I too liked him and I took the matter to my parents and they agreed for our marriage also.I made him talk to my parents.He didn't still let this matter know to his parents.Recently,without my permission..my cousin sis took his insta id and chatted with him like an unknown girl for fun.She created an account in insta and sent a request to him n he accepted that request and continued chatting with her.She told him like she saw his profile and interested and so given a request.He was asking her for voice call,video call,but she didn't accept.She sent some other picture when he insisted her pic and later he asked her "do u like me" for which she funnily replied love at first sight and love you.He told her he want to express his love to her in voice call and later he too proposed..she showed all those screen shots to me. I am broken.I questioned him what is all this?...for which he replied...he just chatted to find out whether that account was a fake account or real account...but,the screen shots were showing something different..when my cousin called him bro..he was very upset and scolded her too. Now,he saying he thought it's a fake boy id and wanted to make fun of and even fought with me saying i don't trust him and without his acceptance..i gave his id to my cousin..but,i havent given.. He is saying he wanted to test whether it is a fake or a real account and so he made fun off and didn't mean it and that too just chatting it is n not to take it seriously and he loves me much.. I am confused after this whether to proceed for marriage..he isthe first guy and love in my life...should i believe him or let him go or should i give him one more chance?..please give u r advice..thank you
Ans: Dear Anonymous,
I am so sorry that you are in this situation. While I can't make a decision for you, I can help you by pointing out how this looks like from an outsider's perspective- your BF's interactions with this profile do not really support his claim of "just testing if it's a fake account." It seems like he was interested in chatting and continuing the flirty conversations. This does not mean he is in love with the person behind that online profile, but it surely looks like he can go behind your back for some thrill.

Trust and honesty are two very important things in a relationship, and if you are planning on getting married, this is not a good start. Moreover, his getting angry at you upon confrontation is a red flag- he tried to gaslight you.
It's your choice whether you want to leave or give him another chance but before you make a decision in haste, ask yourself-
1) If he loves you, would he flirt with someone or even chat with a stranger for entertainment?
2) Would you do the same to him?
3) Is he taking responsibility and asking for forgiveness?
4) Can you trust him completely after this or would you always keep wondering if he is cheating on you?
Once you answer these honestly, I think you will know what's the right thing to do.

Hope this helps.

...Read more

Ramalingam

Ramalingam Kalirajan  |8111 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 19, 2025

Asked by Anonymous - Mar 17, 2025Hindi
Money
I am 39 years old and my wife is 38 working and my son is 7 years. I earn 35LPA my wife 15LPA. I started with zero as from a young age I took care of my parents by paying tuition and funded by my education. I completed engineering and started paying off my education loan from my first day of work. 2015 I got married and in 2016 we bought our first house. I moved my parents there and I take care of them they are financially dependent on me and I have a 4L health insurance for them. The first house is now worth 55L and I have paid off this loan. We built our 2nd house its worth around 1.2 crore and I have a loan of 70 lakhs left. I have a plot worth 30L which I have bought. I have 40L in MF and stocks, I do SIP of 1Lakh per month ( XIRR was good at 20% but now it's at 13%). I have 20L in gold and 10L in EPF. I have a 1cr term insurance and I do Jeevan umang of 4L per year started last year and Jeevan tarun for my son for 1.5L per year started 2 years ago and I have 40k of Jeevan anand started in 2011 for 25 years. My fear : My parents were dependent on me, and I had nothing to fall back on when I started my career. I do not want to be the same for my son. I want to be financially self-reliant when he starts his career and his life. I want to ensure that he doesn't worry about us when he starts his work life or if he wants to start a business, he has the freedom to do so. I have 15 years left in my career. I want to make sure my wife is also secured if I am not around. My questions is what can I do more to ensure we are financially well off?
Ans: You earn Rs. 35 LPA, and your wife earns Rs. 15 LPA.

You support your parents financially and have Rs. 4L health insurance for them.

Your first house is worth Rs. 55L and is fully paid off.

Your second house is worth Rs. 1.2 crore with a Rs. 70L loan.

You own a plot worth Rs. 30L.

Your investments include Rs. 40L in mutual funds and stocks.

You invest Rs. 1L per month in SIPs.

You have Rs. 20L in gold and Rs. 10L in EPF.

Your term insurance is Rs. 1 crore.

You have investment-linked insurance policies.

Your goal is financial independence for yourself and your family. You want to ensure your son does not have financial burdens when he starts his career.

Strengths in Your Financial Planning
You have built wealth despite challenges.

Your high savings rate helps in wealth accumulation.

Your SIPs give long-term compounding benefits.

Your first home is debt-free, providing stability.

Your gold holdings offer liquidity in emergencies.

Your EPF provides retirement security.

Your term insurance gives financial protection.

Areas That Need Improvement
Your insurance-linked policies are not wealth creators.

Your home loan is a major liability.

Your gold holdings may not generate high returns.

Your current insurance cover may not be enough.

Your parents’ health cover might be inadequate.

Your son’s education and future needs require better planning.

Steps to Strengthen Financial Security
Increase Term Insurance Cover
A Rs. 1 crore cover is low given your income and liabilities.

You should have a cover of at least 15 times your annual income.

Increase your term insurance to Rs. 2.5 crore for full protection.

Ensure your wife has her own term cover as well.

Reassess Your Insurance-Linked Investments
Traditional insurance policies offer low returns.

They do not provide inflation-beating growth.

Surrendering them and shifting to mutual funds is a better option.

This will give higher returns and better flexibility.

Pay Off Your Home Loan Strategically
Your home loan balance of Rs. 70L is a major liability.

Focus on repaying it within the next 5-7 years.

Increasing EMI payments or making part prepayments can help.

Avoid extending the tenure to reduce interest burden.

Optimise Your Mutual Fund Investments
Your SIP of Rs. 1L per month is a strong wealth-building tool.

XIRR of 13% is still a good return for long-term investing.

Ensure your portfolio has a mix of large-cap, flexi-cap, and small-cap funds.

Actively managed funds will help in capturing market opportunities.

Avoid index funds as they limit potential gains.

Strengthen Your Parents’ Health Insurance
Rs. 4L health cover for them may not be enough.

Increase their health insurance to Rs. 10L with a super top-up plan.

This will prevent financial stress in case of medical emergencies.

Plan for Your Son’s Education and Future
Higher education costs are rising rapidly.

Start a dedicated mutual fund portfolio for his education.

Avoid insurance-linked child plans as they offer poor returns.

SIPs in equity funds can provide high returns over 10-15 years.

Ensure flexibility in investments to support his career or business plans.

Secure Your Wife’s Financial Future
Your wife should have her own investments independent of you.

Ensure she has adequate insurance and retirement savings.

Consider joint ownership of assets for financial security.

Encourage her to invest in equity mutual funds for wealth creation.

Retirement Planning and Wealth Creation
You have 15 years left in your career.

Focus on accumulating at least Rs. 10-12 crore for retirement.

This will ensure financial independence and a secure future.

Continue SIPs and increase them whenever income grows.

Diversify into debt funds for stability in later years.

Systematic withdrawal plans (SWP) will help manage post-retirement cash flow.

Finally
Increase your term insurance for full protection.

Reallocate funds from low-return insurance policies to mutual funds.

Focus on clearing your home loan early.

Strengthen health insurance for your parents.

Create a dedicated fund for your son’s education.

Ensure your wife has financial security even in your absence.

Keep investing for long-term wealth creation and retirement security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8111 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 19, 2025

Asked by Anonymous - Mar 17, 2025Hindi
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Money
Hello Sir - I have taken a HDFC Unit Linked pension plan in 2008 and the fund value is approx. 49 lakhs. The policy matures in 2030 and allows for commutation of 1/3rd of fund value (with mandatory annuity for balance 67%). My HDFC Life Relationship manager is suggesting that he will transfer the proceeds of this fund to a new HDFC Smart life pension plan (via surrender of old policy and immediate reinvestment as single premium in the new policy) for a term of 5 years. At the vesting date, I will be allowed to remove 60% of the fund value as tax free commuted pension and will need to take annuity only for remaining 40% of fund value. This is beneficial for me (since tax free commutation will be 60% instead of current 33%). In such a case, will the surrender of old policy and immediate reinvestment into new smart pension plan be a taxable transaction in India? I have claimed 80CCC benefits for part of premiums paid in the past. HDFC has informed me that the surrender value will not be taxable as no amount is received by me and the full amount is reinvested into the new policy (HDFC will also not do TDS). Is this correct? Thanks for your advice.
Ans: You have invested in a unit-linked pension plan since 2008.

The current fund value is Rs. 49 lakhs.

The plan matures in 2030.

As per the policy, you can withdraw 33% tax-free and the rest must be used for annuity.

Your relationship manager is suggesting surrender and reinvestment into a new pension plan.

The new plan allows 60% tax-free withdrawal instead of 33%.

You need to evaluate whether this switch is beneficial from a taxation and financial perspective.

Taxation on Surrender of Old Pension Plan
Pension plans under section 80CCC get tax benefits during investment.

If you surrender, the surrender value is taxable as per your income slab.

HDFC claims that no tax will apply as the amount is reinvested directly.

However, as per income tax laws, surrendering a pension plan leads to taxation.

Even if reinvested, the surrender value is added to taxable income.

Since you have claimed 80CCC benefits, surrendering can result in tax liability.

Misconception About Tax-Free Transfer
HDFC is not deducting TDS, but that does not mean no tax is due.

Income tax liability exists even if the amount is not received in hand.

If tax authorities later verify, you may face penalties or additional taxes.

You need written confirmation from HDFC and a tax expert’s opinion.

Evaluating the New Pension Plan Offer
The new plan allows 60% withdrawal instead of 33%.

The remaining 40% must still go into annuity.

Annuity income is fully taxable every year.

The new plan has additional charges, which can reduce returns.

The lock-in period of 5 years restricts flexibility.

If your goal is wealth creation, better options exist.

Should You Switch to the New Plan?
The tax-free withdrawal of 60% seems attractive, but consider the surrender tax.

If you are in the highest tax bracket, surrendering can be costly.

Locking funds in another pension plan reduces flexibility.

Instead, investing in mutual funds can give higher returns and better control.

You can withdraw systematically without annuity restrictions.

Reinvesting in a pension plan limits future financial choices.

Better Alternatives for Retirement Planning
Instead of shifting to another pension plan, consider equity mutual funds.

Mutual funds allow withdrawals with lower tax impact than annuities.

Debt mutual funds provide stability while maintaining flexibility.

Systematic withdrawal plans (SWP) help manage retirement income efficiently.

Combining equity and debt investments gives better post-retirement security.

What Should Be Your Next Steps?
Consult a tax expert before surrendering your pension plan.

Get written confirmation from HDFC on taxation treatment.

Compare annuity income vs. mutual fund withdrawals for retirement.

Ensure flexibility in withdrawals rather than locking into another pension plan.

Build a diversified portfolio that balances risk and liquidity.

Finally
Surrendering your pension plan may trigger tax liability.

Reinvesting in another pension plan may not be the best financial decision.

You need flexibility and better returns for retirement.

Mutual funds offer tax-efficient and high-growth alternatives.

Evaluate all options before making a final decision.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8111 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 19, 2025

Asked by Anonymous - Mar 17, 2025Hindi
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Money
I am investing 1.5lack in sbi smart wealth plan for 7 years. My policy term 12 years. Is it a good plan for good return,2 years completed,fund value 2.7lack,Should this policy be continued? kindly guide me
Ans: You are investing Rs. 1.5 lakh per year in an insurance-cum-investment policy.

The policy duration is 12 years, with a premium payment term of 7 years.

You have completed 2 years, and the fund value is Rs. 2.7 lakh.

You want to know if you should continue this policy.

Insurance-cum-investment plans are not the best for wealth creation. You need to evaluate whether this plan aligns with your financial goals.

Issues with Insurance-Cum-Investment Plans
High Charges: These plans have high fees in the initial years. This reduces actual investment returns.

Low Returns: The returns are usually 4%-6%, lower than equity mutual funds.

Lock-in Period: You are required to stay invested for a long term, with limited flexibility.

Poor Liquidity: Withdrawing funds before maturity may result in high penalties.

Mixing Insurance and Investment: Insurance should provide protection, and investment should focus on growth. A combined product does not serve either goal efficiently.

Performance of Your Policy So Far
You have invested Rs. 3 lakh so far (Rs. 1.5 lakh per year for 2 years).

Your current fund value is Rs. 2.7 lakh, which means a loss of Rs. 30,000.

This is due to high charges deducted in the early years.

Even if the fund performs better in future, the charges will continue to impact returns.

You must decide whether to stay invested or move to better alternatives.

Should You Continue or Exit?
If wealth creation is your goal, this plan is not the best option.

If you need insurance, a pure term insurance plan is more cost-effective.

You can surrender the policy and reinvest the amount in mutual funds for better growth.

The surrender charges may reduce your corpus, but over the long term, mutual funds will give better returns.

Alternative Investment Options
Equity Mutual Funds: These provide better long-term growth than insurance plans.

Balanced Advantage Funds: These funds manage risk while giving decent returns.

Debt Mutual Funds: Suitable if you need stable returns with lower risk.

PPF or EPF: If you want a safe and tax-free investment option.

Reallocating your money into these instruments will give better returns and flexibility.

Tax Considerations on Surrendering
Surrendering before 5 years will add the maturity amount to your taxable income.

If you exit after 5 years, the amount will be tax-free.

The earlier you surrender, the higher the impact, but staying invested will continue to reduce your returns.

Consult a tax expert if required, but in most cases, switching to a better investment is more beneficial.

What Should Be Your Next Steps?
If your goal is wealth creation, surrender the policy and reinvest in mutual funds.

Buy a separate term insurance plan for financial protection.

Avoid future investments in such insurance-linked plans.

Build a diversified portfolio for long-term financial security.

Keep reviewing your portfolio annually to ensure you are on track.

Finally
Insurance-cum-investment plans do not generate high returns.

Your policy is already showing negative growth due to high charges.

Consider surrendering and shifting to a better investment strategy.

Always keep insurance and investment separate for better financial growth.

Make future investments in mutual funds and other flexible options.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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