Will my son have a good future career if he joins CS at DY Patil College of Engineering?

Ans: Whenever your interest earned on FD crosses threshold limit as applicable, based on IT rules, TDS will be deducted by the bank.

Ans: Yes, learning yoga with a guru is essential. A guru will assess your health, flexibility, and needs to create a practice tailored just for you. They guide you in mastering each pose, ensuring you perform them safely and correctly. Without proper guidance, it’s easy to develop bad habits or even injure yourself. A guru also helps you elevate your practice step by step, offering motivation, corrections, and deeper insights. Their experience is invaluable for long-term progress.

R. Pushpa, M.Sc (Yoga)
Online Yoga & Meditation Coach
Radiant YogaVibes
https://www.instagram.com/pushpa_radiantyogavibes/

Ans: Since income of your wife is more than the basic exemption limit of income tax, bank has to deduct
TDS and deposit the same with the department. In future, you may not submit Form 15-G for this purpose.
Most welcome for any further clarification. Thanks.

Ans: Yes. you can purchase units, direct from Aditya Birla Sun Life company (office). there should not be any problem.
Most welcome for any further clarification. Thanks.

Ans: Nadeem Sir, you should talk to Government-Approved Overseas Job Consultants (especially for Singapore). You can apply for any Senior Level Position since you have good knowledge. But stay away from scams about jobs abroad. You can also use LinkedIn, which is a better tool. Have Plan B by trying for jobs in India also. All the BEST for Your Prosperous Future, Sir.

To know more on ‘ Careers | Education | Jobs’, ask / follow Us here in RediffGURUS.

Ans: Congrats to Your Daughter for joining SPA, Delhi. It is good with multiple career options. SPA has over 75% placement records, with around 70 companies visiting the Campus every year. Please advise your daughter to keep upgrading her skills, recommended by her college faculties, till her 4th year and campus recruitment drive. Also, she should have her LinkedIn Profile and keep updating it every 3-months. Putting Job Alerts, related to her domain, in LinkedIn will further help her to know the current/changing job market trends to prepare herself for Campus Placement/Off-Campus. All the BEST for Your Daughter's Prosperous Future.

To know more on ‘ Careers | Education | Jobs’, ask / follow Us here in RediffGURUS.

Ans: Look at it from any perspective, it makes great practical sense to repay the loan now and convert the EMI into SIP.

The returns over 10 years will supercede tax benefit reinvested, handsomely.

Ans: You have a solid foundation in place with investments in mutual funds, PPF, SSY, and NPS. You and your wife have a steady combined income of Rs 1.7 lakh per month, and you are targeting a Rs 10 crore corpus by 2040, which is 16 years away.

The current home loan EMI is manageable, and you're planning to construct a new rental property with an additional loan. Achieving a Rs 10 crore corpus by 2040 will require careful planning and disciplined investment in a diversified portfolio.

Let's evaluate your current strategy and suggest some adjustments to help you reach your goal.

Assessment of Current Investments
SIPs in Mutual Funds:

You are currently investing Rs 20,000 per month across different mutual funds.
With a long-term horizon, mutual funds are a great vehicle for wealth creation.
However, achieving your Rs 10 crore target will likely require increasing your SIPs.
Sukanya Samriddhi Yojana (SSY):

You are contributing Rs 1.5 lakh annually towards SSY for your daughter. This is a good long-term investment, especially for securing her education and future financial needs.
SSY offers tax benefits under Section 80C and has an attractive interest rate, making it a secure investment.
Public Provident Fund (PPF):

Your Rs 1.5 lakh annual contribution to PPF is another tax-efficient, risk-free investment.
PPF provides compounded returns, but the lock-in period means liquidity is restricted.
National Pension System (NPS):

NPS is a good long-term retirement savings tool.
However, only a part of the corpus is tax-free upon withdrawal, and annuity purchase is mandatory, which may limit liquidity in retirement.
Recommendations for Reaching the Rs 10 Crore Corpus
To achieve a Rs 10 crore corpus by 2040, you need to ramp up your SIPs and possibly tweak your investment strategy. Here are a few steps you can take:

1. Increase SIP Contributions:
Your current SIP of Rs 20,000 per month is a good start, but to achieve your goal, consider increasing it.
Start with an additional Rs 10,000-15,000 per month and aim for a 10% step-up each year.
This will allow the power of compounding to work in your favour over time.
Invest across different categories like Flexicap, Midcap, and Smallcap funds, which have the potential for high returns over long periods.
2. Portfolio Diversification:
Large Cap Mutual Funds: Consider adding a large-cap fund for stability. These funds invest in well-established companies with a track record of stable performance.
Mid and Small-Cap Funds: Continue investing in mid and small-cap funds as they offer higher growth potential, though with more risk. You can balance risk by allocating less than 30% of your portfolio to these funds.
Debt Funds or Hybrid Funds: To reduce risk, allocate a portion to debt or hybrid funds. These funds offer lower returns but provide stability and reduce volatility, especially as you approach retirement.
3. Home Loan for Rental Property:
You plan to take a Rs 1.3 crore loan to construct a rental property. Ensure the rental income is sufficient to cover the EMI and maintenance costs.
A rental property can offer a stable income stream, but it should not overly strain your cash flow.
Keep in mind that real estate can be illiquid, and capital appreciation is not guaranteed.
4. NPS Allocation:
You are contributing Rs 50,000 annually to NPS. It’s a solid retirement tool, but the mandatory annuity requirement reduces liquidity at retirement.
Consider increasing equity exposure in your NPS portfolio to maximise growth potential.
Evaluating the Real Estate and Loan Impact
While real estate can provide rental income, it has its limitations. Property appreciation is not always guaranteed, and liquidity can be a challenge. The loan you take for constructing a rental property must be balanced against your other financial goals. Be cautious about how much of your income is tied to servicing the loan.

Here are some points to keep in mind:

Rental Yield vs Loan Cost: Ensure that the rental yield (typically around 2-3%) is higher than the loan interest rate (which can be around 7-9%). If rental yield is lower, it could impact your cash flow negatively.
Liquidity Concerns: Real estate is not as liquid as mutual funds or stocks. In case of emergencies, selling property may take time.
Diversification Risk: Too much investment in real estate can lead to a lack of diversification. Consider balancing it with financial assets like mutual funds, PPF, and NPS.
Suggested Adjustments to Your Portfolio
1. Step-Up SIP Contributions:
Start increasing your SIP amount by Rs 10,000 per month, making it Rs 30,000 in total.
Add Rs 5,000 each to a large-cap and hybrid fund to bring stability to your portfolio.
2. Balanced Approach for Long-Term:
Continue with SSY, PPF, and NPS, but ensure you have adequate exposure to equity mutual funds.
Keep increasing your SIPs with the 10% annual step-up strategy. This will allow you to leverage the power of compounding.
3. Prioritise Debt Reduction:
Pay off your existing home loan as planned in 4 years.
For the new home loan, keep a target to prepay aggressively once your income increases or when you get a bonus.
4. Emergency Fund:
With the upcoming construction loan and increasing SIP commitments, ensure you have an emergency fund that covers 6-12 months of living expenses and loan EMIs.
5. Estate Planning:
You mentioned securing your kids’ future after you and your wife. It is essential to have a clear estate plan in place.
Consider writing a will and reviewing life insurance coverage to ensure your children are well taken care of.
Explore the possibility of setting up a trust to manage your assets for your children, ensuring their long-term financial security.
Final Insights
You have a well-balanced portfolio and are already on the right track. To ensure you reach your goal of Rs 10 crore by 2040, increasing your SIP contributions and maintaining a disciplined approach to debt management will be key. Ensure your portfolio is diversified between equity and debt instruments to manage risk effectively.

Consider real estate as a part of your income stream but don’t over-rely on it for long-term growth. Keep a strong focus on mutual funds for long-term wealth accumulation. Also, estate planning is crucial to ensure your children’s financial well-being.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: You have successfully built a well-rounded portfolio across various asset classes. As you are planning for a stable withdrawal phase while ensuring your wealth continues to grow for your children, let's take a detailed look at your portfolio and develop a strategy that offers growth, safety, and consistency.

Here’s a breakdown of your current investments:

Rs 1.13 crore in PPF accounts (your and your wife’s accounts).
Rs 90 lakhs in mutual funds.
Rs 60 lakhs in direct stock investments through smallcase.
Rs 22 lakhs in a trading account for swing trading.
Rs 45 lakhs in fixed assets.
You are now looking to ensure that, after 8 years, you can withdraw a safe monthly amount while ensuring that your portfolio continues to grow to secure your family’s future.

Let’s discuss each part of your portfolio, evaluate its advantages and risks, and arrive at a sustainable withdrawal strategy.

1. Evaluating Your PPF Investments
Public Provident Fund (PPF) is a solid foundation for any portfolio, especially for investors seeking low-risk, long-term growth. Currently, the PPF offers an interest rate of 7.1%, which is tax-free.

Advantages of PPF:

Guaranteed returns: The government backs PPF, so there is no risk of capital loss.
Tax benefits: Both contributions and maturity proceeds are tax-exempt.
Low-risk: It provides a safe option to preserve your wealth.
Growth Estimate: Assuming you do not make additional contributions, your current Rs 1.13 crore in PPF will continue to grow at 7.1%. After 8 years, this amount could grow to around Rs 1.94 crore, providing a safe and steady portion of your overall portfolio.

Since PPF is a conservative option, it offers safety. However, you may not want to rely solely on it for growth, as its returns are relatively lower than equity-based options.

2. Assessing Your Mutual Fund Investments
With Rs 90 lakhs in mutual funds, you are already participating in market-linked growth opportunities. Mutual funds, especially actively managed ones, tend to outperform other investments like fixed deposits over the long term.

Advantages of Mutual Funds:

Diversification: Mutual funds invest in a wide array of stocks, reducing the impact of any single stock’s poor performance.
Professional management: Fund managers actively manage the portfolio to maximize returns.
Liquidity: Mutual funds are easy to redeem, offering flexibility.
Growth Potential: Assuming a 10% average annual return (which is common for equity mutual funds over the long term), your Rs 90 lakhs could grow to Rs 1.94 crore after 8 years.

By investing regularly in mutual funds and sticking to your SIP strategy, you will continue to build a strong financial base.

3. Direct Stock Investments via Smallcase
You have allocated Rs 60 lakhs to smallcase investments. Smallcase offers curated baskets of stocks based on certain themes or ideas, which makes it attractive for investors looking to gain exposure to specific sectors or strategies. While smallcase offers convenience, there are some limitations when compared to smallcap mutual funds.

Disadvantages of Smallcase:

Higher risk due to concentration: Smallcase portfolios tend to be more focused on specific sectors or themes. This can lead to higher volatility compared to diversified mutual funds.
Active management burden: Unlike mutual funds, smallcase portfolios are not actively managed by professionals on a daily basis. You will need to monitor and rebalance the portfolio regularly.
Transaction costs: Every buy or sell order in smallcase comes with a brokerage fee, adding to the overall costs. In mutual funds, transaction costs are embedded in the expense ratio.
Comparison with Smallcap Mutual Funds:

Smallcap mutual funds pool money from many investors and invest in small-cap stocks while managing risk through professional expertise.
Risk management: Smallcap mutual funds tend to be more diversified within the small-cap space, reducing the overall impact of a single stock underperforming. Smallcases can be much more concentrated, which increases the risk.
While smallcase can provide decent returns, its risk is higher. It may be worth considering increasing your allocation to smallcap mutual funds for the benefits of diversification, professional management, and potentially lower volatility.

4. Swing Trading and Its Risks
You also engage in swing trading, with Rs 22 lakhs in a trading account. Swing trading aims to capitalize on short-term price fluctuations, and while it can generate higher returns over the short term, it carries substantial risks.

Disadvantages of Swing Trading:
High risk and volatility: Swing trading is speculative and depends heavily on market timing. Markets can be unpredictable, and even experienced traders can face significant losses.
Emotional decision-making: Swing trading often requires quick decisions, which can lead to emotional and irrational trades, especially during market volatility.
Short-term capital gains tax: Profits from swing trading are subject to short-term capital gains tax, which is 20% on equity-based instruments. This reduces your net returns significantly.
Time-intensive: Unlike long-term investing, swing trading requires constant monitoring of the markets and stocks. This can be stressful and time-consuming.
Swing trading can be lucrative in the short term, but the risks associated with it are high. As you are planning for a long-term, stable withdrawal strategy, it might make sense to limit swing trading and shift more of your portfolio towards long-term, safer investments like mutual funds or PPF.

5. Other Fixed Assets
You hold Rs 45 lakhs in fixed assets. Fixed assets are typically illiquid, which means they may not provide you with regular income unless they are rented or otherwise income-producing. While these can appreciate over time, their illiquidity means they may not be ideal for generating monthly withdrawals in retirement.

Safe Withdrawal Strategy After 8 Years
After 8 years, you are looking to withdraw a safe monthly amount from your portfolio without depleting it. Let’s calculate a strategy that allows for sustainable withdrawals while ensuring your portfolio continues to grow.

Estimating Your Portfolio’s Future Value
PPF: Rs 1.13 crore growing at 7.1% annually will become Rs 1.94 crore in 8 years.
Mutual Funds: Rs 90 lakhs growing at 10% annually will become Rs 1.94 crore in 8 years.
Direct Stocks (Smallcase): Rs 60 lakhs growing at 10% annually will become Rs 1.29 crore in 8 years.
Swing Trading: For swing trading, it’s more complex to estimate returns due to the speculative nature. Let’s conservatively assume this grows at 8%, turning Rs 22 lakhs into Rs 40 lakhs in 8 years.
This gives you a total portfolio value of approximately Rs 5.57 crore after 8 years.

Sustainable Withdrawal Rate (SWR)
A commonly recommended safe withdrawal rate is 4% per year. This allows your portfolio to grow while providing a steady income. Here’s how that works:

Total portfolio: Rs 5.57 crore
Annual withdrawal: 4% of Rs 5.57 crore = Rs 22.28 lakhs
Monthly withdrawal: Rs 22.28 lakhs divided by 12 = Rs 1.85 lakhs per month.
With this strategy, you can withdraw Rs 1.85 lakhs per month after 8 years while ensuring that your portfolio continues to grow.

6. Long-Term Wealth Preservation for Your Children
After you and your wife, you want your wealth to continue growing safely for your children. Here are some steps to ensure that:

Increase allocation to safer assets: As you approach retirement and beyond, you may want to shift a portion of your portfolio from volatile assets (like stocks and swing trading) into safer options, such as mutual funds, PPF, and debt instruments.
Estate planning: Ensure you have a well-drafted will and estate plan in place. This will ensure your wealth is passed on to your children in a tax-efficient and hassle-free manner.
Minimise risks as you age: Gradually reduce exposure to high-risk investments like swing trading. Consider focusing more on growth-oriented but stable investments like mutual funds.
Diversify within mutual funds: Continue with your SIP investments and aim for diversification across large-cap, mid-cap, and small-cap funds for balanced growth.
Finally
Your portfolio is well-diversified, and you are on a solid path to achieving your financial goals. By focusing on long-term growth and maintaining discipline in your investments, you can ensure a steady and safe withdrawal strategy. While swing trading and smallcase investments may offer short-term gains, consider balancing the risks with more stable, professionally managed investments like mutual funds.

With a safe withdrawal rate of 4%, you can comfortably withdraw Rs 1.85 lakhs per month after 8 years, while ensuring your wealth continues to grow for your children.

Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment