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Aashish

Aashish Sood  |114 Answers  |Ask -

CAT, Management Expert - Answered on Mar 01, 2024

Aashish Sood is an IIM-Lucknow alumnus who has been teaching maths and quantitative aptitude to MBA aspirants for over a decade.
He also mentors management student hopefuls for the group discussion and personal interview rounds that follow competitive examinations.
He has appeared for CAT seven times since 2016 and scored in the 99.9 percentile.
Sood has 16 years of work experience as a management consultant, strategy consultant and research associate.... more
Asked by Anonymous - Mar 01, 2024Hindi
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My son has done his Btech in electronics and instrumentation from BITS Pilani. He's working in bigbasket as a software developer. He is confused about whether he should pursue MBA or not. He doesn't want to study abroad. Please guide if doing MBA from a good college in India after getting into software is a good option or not?

Ans: MBA after a career in IT is nothing new, honestly speaking

The thing that you need to confirm with your son is if he is actually interested in doing an MBA or not!

Why does he want to change his current profile? How long has he been working in the current profile? Why did he get in to this profile in the first place?
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Nayagam P

Nayagam P P  |1803 Answers  |Ask -

Career Counsellor - Answered on Jul 12, 2024

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Hello mam, During the mid of my 12th, I began to serious think about what I am going to do after 12th, before that I just watched a lot of science related shows, and some books, so i thought of becoming a research scientist but i was never serious about it. I was never interested in engineering as it is a technical field, so i very recklessly ignored my jee which were during January in 2023. I gave 12th and got 89% . Still, i was in this dilemma what should I purse, i was thinking that there is stable financial life if i take engineering cse, but on the other hand, i had my passion, so I wanted to take pure science. I was really confused and kept over thinking about it, so i messed up my April attempt as well. After that, i had options to do cuet (for du etc) or join a local govt engineering college. But, i thought that I can get iisc( for bs research) through jee advanced next year if i take a drop and prepare for it because iisc has kashmiri migrant cutoff of 8000 crl rank. So thought it was good. Now, i am in my drop year but still the thought are lingering in my mind that i won't be able to have a stable life if i take bs, then ms after PhD, all that takes time and if done from abroad only, they can provide good financial stability. So I am really confused right now what should I do? My father spend 2 lakhs in 11th+12th and now 70K in coaching, i think how can I repay him... that's kinda silly but still....also I don't want a cooperative job. What should I do?? Please guide me mam 😭 please 🙏
Ans: Aryan, please update your status as of now in July 2024 to enable me to answer. All the BEST.

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Ramalingam

Ramalingam Kalirajan  |4605 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

Asked by Anonymous - Jun 08, 2024Hindi
Money
Hi Sir Iam 54 years old with health issues. I have personal debts to a tune of 70 lakhs. I have a small business which gives me an average monthly income of Rs 30000. On an average my monthly requirement is 1.5lakh. I own a property which is worth around 4 to 5 crore. I have a few options: Option 1: Take half the property, develop it into plots and sell it. Here I will initially need to put in money towards project expenses, which means some more borrowing. Else I can wait to pre sell about 4 plots, which will help me to cover the expenses to develop the plots and then later sell the balance plots and repay my existing debts and then put deposit the balance money in the bank and see if the interest will sustain my monthly requirements. This option has the usual risks of delayed sale of plots etc. Option 2: just sell part of the land as it is. I will get around 1.5 cores if I do this. Out of this 1.5 I will use 70 lakhs towards debt repayment. If I deposit the balance 70lakhs in the bank, how much interest will I get monthly? Option 3: Sell the entire property for about 4 to 5 crores. Repay the 70 lakh debt and invest the balance in bank etc. But this means I will not own anything, and will have to rent a house etc. So my monthly requirement will go upto 2 lakhs per month. Here, the down side is I will be giving up all my assets, which I had retained would have grown in value. Please advise. Thanks.
Ans: At 54, with health issues and a substantial personal debt of Rs 70 lakhs, you are managing a small business that brings in Rs 30,000 per month. Your monthly financial requirement is Rs 1.5 lakhs. You own a valuable property worth around Rs 4-5 crores. You have three main options to consider for managing your debt and ensuring a steady income.

Assessing Your Options
Let's explore each option with a detailed analysis:

Option 1: Develop and Sell Plots
Developing your property into plots and selling them could be lucrative. However, this option involves significant upfront costs and the risk of delays in sales.

Advantages:

Higher Potential Returns: Selling plots can yield higher returns compared to selling the property as a whole.

Retain Ownership: You still retain a portion of the property.

Disadvantages:

Initial Investment: You will need to invest money upfront for development costs, leading to more borrowing.

Risk of Delays: There’s a risk of delayed sales, which can affect your ability to repay debts on time.

Project Management: Managing such a project can be stressful and time-consuming, especially given your health issues.

Option 2: Sell Part of the Land
Selling part of the land can provide immediate funds without the need for further borrowing. This option seems less risky than developing plots.

Advantages:

Immediate Funds: You get immediate funds to repay the Rs 70 lakhs debt.

Reduced Risk: Fewer risks compared to developing plots, as it does not involve further borrowing or project delays.

Disadvantages:

Limited Funds: Selling only part of the land may not generate sufficient funds for long-term sustainability.

Interest Income: Interest from Rs 70 lakhs may not cover your monthly requirement of Rs 1.5 lakhs.

Option 3: Sell Entire Property
Selling the entire property can clear your debts and provide a substantial amount for future investments. This option, however, means giving up ownership and potentially increasing your monthly expenses due to rent.

Advantages:

Debt-Free: You can repay the Rs 70 lakhs debt completely.

Large Corpus: You will have a significant corpus to invest for future income.

Disadvantages:

No Ownership: You will lose ownership of the property, which could appreciate in value over time.

Increased Expenses: Renting a house will increase your monthly financial requirement to Rs 2 lakhs.

Evaluating the Best Option
Given your health issues and the need for a stable monthly income, it's crucial to choose an option that minimizes stress and ensures financial security.

Option 1: Feasibility and Risks
Developing and selling plots can be profitable, but the upfront investment and potential delays pose significant risks. At your age and with health concerns, managing such a project might be too demanding.

Option 2: Immediate Debt Relief
Selling part of the land seems like a balanced approach. You can repay the Rs 70 lakhs debt immediately and invest the remaining Rs 70 lakhs. However, you need to evaluate if the interest income from Rs 70 lakhs is enough to meet your monthly requirements.

Bank Interest Income:

Interest Rate: Assume an average bank interest rate of 6% per annum.

Monthly Income: Rs 70 lakhs * 6% / 12 = Rs 35,000 per month.

With Rs 35,000 from interest and Rs 30,000 from your business, your total monthly income would be Rs 65,000, which is insufficient to meet your Rs 1.5 lakhs requirement.

Option 3: Long-Term Security
Selling the entire property provides a substantial amount to invest. Post repayment of the Rs 70 lakhs debt, you will have approximately Rs 3.3-4.3 crores for investment.

Investment Strategy:

Diversified Portfolio: Invest in a mix of fixed deposits, mutual funds, and bonds to generate a steady income.
Recommended Strategy
Considering the analysis, Option 3 seems the most viable for ensuring long-term financial security despite its downsides. Here’s a detailed plan:

Debt Repayment and Initial Investment
Repay Debt: Use Rs 70 lakhs to clear the debt.

Remaining Funds: Invest the remaining Rs 3.3-4.3 crores wisely.

Investment Allocation
Fixed Deposits: Allocate 20% (Rs 66 lakhs to Rs 86 lakhs) to fixed deposits for a stable, risk-free income.

Mutual Funds: Invest 50% (Rs 1.65-2.15 crores) in mutual funds for higher returns.

Bonds and Debentures: Allocate 20% (Rs 66 lakhs to Rs 86 lakhs) to bonds and debentures for moderate risk and steady income.

Emergency Fund: Keep 10% (Rs 33-43 lakhs) in a liquid fund as an emergency reserve.

Monthly Income from Investments
Fixed Deposits: Rs 66 lakhs at 6% annual interest = Rs 3.96 lakhs per year or Rs 33,000 per month.

Mutual Funds: Assuming an average annual return of 10%, Rs 1.65 crores = Rs 16.5 lakhs per year or Rs 1.37 lakhs per month.

Bonds and Debentures: Rs 66 lakhs at 7% annual interest = Rs 4.62 lakhs per year or Rs 38,500 per month.

Total Monthly Income: Rs 33,000 + Rs 1.37 lakhs + Rs 38,500 = Rs 2.08 lakhs.

This income exceeds your monthly requirement of Rs 1.5 lakhs, ensuring a comfortable lifestyle.

Addressing Concerns
Health Issues
Your health issues require careful consideration. A stress-free and secure financial strategy is crucial. Selling the entire property and investing wisely reduces financial stress and ensures a steady income.

Ownership and Future Value
While losing ownership of the property is a concern, investing the proceeds in diversified assets can provide better financial security. Properties can appreciate, but they also come with risks and responsibilities.

Increased Expenses
Renting a house will increase your monthly expenses. However, the proposed investment strategy generates sufficient income to cover this increase.

Final Insights
Your situation demands a careful balance of debt repayment, investment, and monthly income generation. Considering your health and financial needs, selling the entire property and investing the proceeds in a diversified portfolio seems the most secure option. This strategy ensures debt repayment, generates sufficient monthly income, and reduces financial stress. Always consult with a certified financial planner to tailor this strategy to your specific needs and ensure optimal results.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |4605 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

Asked by Anonymous - May 29, 2024Hindi
Money
Hello Sir, I am 33 years old. Below is my asset. 1) PPF - 18 LAKH (I DEPOSIT 150000 PER YEAR) 2) STOCK (Invested almost 7 lakh) 3 ) SIP MONTHLY 19K ( INVESTED 13 lakh as of now) 4) Have my own house 5 ) 1.6 crore in post office schemes. 6) My salary almost 90k.but its uncertain. Do not have any NPS account. Want to retire when I am 40 but its uncertain. Do not want to rely on my job. Will that be a good decision? I want to generate a passive income of 1 lakh per month.will that be possible? I am recently married now.
Ans: Your aspirations of retiring by 40 and generating a passive income of Rs. 1 lakh per month are ambitious yet achievable with careful planning. Let’s delve into a detailed plan to help you reach your goals.

Assessing Your Current Financial Situation
Assets Overview
PPF (Public Provident Fund):

You have Rs. 18 lakh invested.
You contribute Rs. 1.5 lakh annually.
Stocks:

Investment of Rs. 7 lakh.
SIP (Systematic Investment Plan):

Monthly investment of Rs. 19,000.
Total investment so far is Rs. 13 lakh.
Own House:

This provides you with stability and reduces rental expenses.
Post Office Schemes:

Investment of Rs. 1.6 crore.
Salary:

Rs. 90,000 per month but it’s uncertain.
Financial Health
Your diversified investments are commendable. Your significant investments in post office schemes provide security. Your contributions to PPF and SIPs show your discipline in saving and investing. Owning your house is a strong financial asset, reducing living expenses.

Setting Goals and Strategies
Passive Income Generation
Generating a passive income of Rs. 1 lakh per month requires strategic planning. Your current investments are strong but may need adjustments for better returns and stability.

Retirement by 40
Retiring by 40 means you need a robust financial cushion. You’ll need enough to cover living expenses and medical costs for the long term.

Investment Strategies
Public Provident Fund (PPF)
PPF is a stable and tax-efficient investment. Continuing your annual contributions is wise. It provides a safe and steady return, which is beneficial for long-term planning.

Stock Market Investments
Your Rs. 7 lakh investment in stocks is good. Diversify your portfolio to mitigate risks. Consider investing in a mix of large-cap, mid-cap, and small-cap stocks. This balance can provide both stability and growth.

Systematic Investment Plan (SIP)
SIPs are an excellent way to invest in mutual funds. Your monthly Rs. 19,000 investment is significant. Focus on actively managed funds rather than index funds. Actively managed funds offer the potential for higher returns due to professional management.

Post Office Schemes
Your Rs. 1.6 crore investment is a solid base. These schemes are safe but often provide lower returns compared to other investments. Consider diversifying a portion of these funds into higher-yield investments.

Diversifying Investments
Mutual Funds:

Consider allocating more to actively managed mutual funds. They can provide better returns than passive funds or post office schemes.
Equity Investments:

Increase your equity exposure for higher returns. This includes direct stocks and equity mutual funds.
Debt Instruments:

Balance your portfolio with some high-quality debt instruments for stability.
Emergency Fund
Ensure you have an emergency fund covering 6-12 months of expenses. This fund should be liquid and easily accessible. It provides a safety net in case of job uncertainty or other emergencies.

Insurance Planning
Health Insurance:

Secure comprehensive health insurance for you and your spouse. This safeguards against unexpected medical expenses.
Life Insurance:

Ensure adequate life insurance coverage to protect your family’s financial future. Avoid investment-linked insurance policies. Pure term insurance offers better coverage at lower premiums.
Tax Efficiency
Maximize your tax savings by utilizing available exemptions and deductions. PPF, life insurance premiums, and health insurance premiums are tax-efficient investments.

Creating a Passive Income Stream
Dividend Stocks
Invest in high dividend-yielding stocks. They provide a regular income stream. Choose companies with a history of stable and increasing dividends.

Rental Income
If possible, consider renting out a part of your property. This can provide a steady passive income.

Interest Income
Invest in bonds or debentures offering regular interest payouts. This provides a predictable income stream.

Systematic Withdrawal Plan (SWP)
Consider SWPs from mutual funds for regular income. This strategy allows you to withdraw a fixed amount periodically from your mutual fund investments.

Peer-to-Peer Lending
Explore peer-to-peer lending platforms. They offer higher interest rates than traditional savings. However, assess the risks before investing.

Retirement Planning
Calculate Retirement Corpus
Estimate the corpus needed to retire comfortably. Consider your current expenses, inflation, and life expectancy.

Investment Allocation
Equities:

Continue investing in equities for growth. Over time, reduce exposure to manage risk.
Debt:

Increase debt investments as you approach retirement. This ensures stability and reduces risk.
Regular Reviews
Review your portfolio regularly. Adjust based on market conditions and life changes. Stay informed and proactive in managing your investments.

Financial Discipline
Maintain financial discipline and avoid unnecessary expenses. Save and invest diligently. Avoid relying solely on your job for financial security.

Budgeting
Create a budget to track income and expenses. This helps in managing finances effectively and identifying areas to save.

Avoid Debt
Minimize debt and avoid high-interest loans. Debt can erode your savings and affect financial stability.

Continuous Learning
Stay informed about financial markets and investment options. Continuous learning helps in making informed decisions.

Final Insights
Your financial journey is commendable. With your diversified investments and disciplined saving, you're on a solid path. Retiring at 40 is ambitious but achievable with strategic planning. Focus on creating a passive income stream through diverse investments. Regularly review and adjust your portfolio to align with your goals.

Your goal of generating Rs. 1 lakh per month in passive income is attainable. It requires careful planning and disciplined investing. By diversifying your portfolio and focusing on higher-yield investments, you can achieve financial independence.

Congratulations on your recent marriage! Planning your finances together ensures a secure future. Stay committed to your financial goals and maintain discipline in your investments. Best of luck in your journey towards early retirement and financial independence.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |4605 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

Asked by Anonymous - May 29, 2024Hindi
Money
Hi, am close to reaching 30. Married. And my daughter is 2.5 years old. I am currently doing an monthly SIP of 6500 rupees. 1500 rupees to quant tax plan, 2000 rupees to parag parikh flexi cap, 2000 rupees to quant small cap, 1000 rupees to tata digital India fund. I had few other sips earlier. My current Mutual fund portfolio value is at 390000. I have earlier bought few stocks directly for long-term investment. but since am almost great at stock analysis I stopped purchasing stocks. My stock portfolio value is at 165000. Apart from this I deposit 1.5 lakh to ssy for my daughter's account for past 3 years. So far deposited 450000. After tds my monthly income is about 80000. I am staying in a metro city in a rental flat for 14500. And I have an active car loan and emi is 15000. I am planning to close this by this year end. And contribute more towards future saving and investment. I have company paid health insurance for my immediate family along with parents(I pay 25% for my parents) I have a term plan, took this after my daughter's birth. Whether am I in the right path or need any corrections.
Ans: First, congratulations on your dedication to financial planning at a young age. At almost 30, you have already taken significant steps to secure your family's future. Let's break down your current situation and evaluate your financial health.

Income and Expenses
Your monthly income after tax deductions is Rs 80,000. You're staying in a metro city and paying Rs 14,500 for rent, which is reasonable given the high cost of living in metro areas.

You also have an active car loan with an EMI of Rs 15,000. You plan to close this loan by the end of the year, which is a wise decision. It will free up Rs 15,000 monthly, allowing you to channel more funds into savings and investments.

Current Investments
Mutual Funds
You are currently investing Rs 6,500 monthly through SIPs in various mutual funds. Your mutual fund portfolio is valued at Rs 3,90,000. This indicates consistent investing and a disciplined approach.

Stock Portfolio
You have a stock portfolio worth Rs 1,65,000. Despite your earlier interest in direct stock investments, you stopped purchasing stocks, which shows self-awareness about your strengths and limitations in stock analysis. This is commendable.

Sukanya Samriddhi Yojana (SSY)
You've been depositing Rs 1,50,000 annually into the SSY account for your daughter for the past three years. This is an excellent step for securing your daughter's future, with Rs 4,50,000 already invested.

Current Insurance Coverage
You have a company-paid health insurance plan covering your immediate family and parents, with you paying 25% for your parents. Additionally, you took a term plan after your daughter's birth, which is crucial for ensuring your family's financial security in case of any unforeseen events.

Future Plans and Financial Goals
Closing the Car Loan
Your plan to close the car loan by the end of the year is sound. This will increase your disposable income and give you more flexibility in your financial planning.

Increasing Investments
Once the car loan is paid off, redirecting the Rs 15,000 EMI towards future savings and investments will significantly boost your financial growth. This strategy will help you achieve your long-term financial goals more efficiently.

Evaluating Your Investment Choices
Mutual Funds
Your current SIPs in mutual funds are diversified across various categories, including tax-saving, flexi cap, small cap, and sectoral funds. This diversification is a good strategy to balance risk and returns.

However, it's essential to review and rebalance your portfolio periodically. Ensure your investments align with your risk tolerance, investment horizon, and financial goals. Consulting a Certified Financial Planner (CFP) can provide personalized guidance and optimize your portfolio.

Direct Stock Investments
Although you have stopped purchasing individual stocks, it's important to monitor your existing stock portfolio. Ensure these stocks align with your long-term goals and risk tolerance. You might consider reallocating some funds from direct stocks to mutual funds for better diversification and professional management.

Disadvantages of Direct Funds
Direct funds often seem attractive due to lower expense ratios. However, they require active monitoring and management, which can be time-consuming and complex for an individual investor. Regular funds, managed by a CFP, offer professional management, periodic reviews, and rebalancing, ensuring your investments stay on track towards your financial goals.

Benefits of Investing Through a CFP
A Certified Financial Planner can offer comprehensive financial advice, tailored to your specific needs and goals. They provide regular fund management, periodic reviews, and strategic rebalancing, which are crucial for optimizing returns and minimizing risks. Investing through a CFP ensures a disciplined and structured approach to wealth creation.

Health Insurance Considerations
Your company-paid health insurance is a valuable benefit. However, it's wise to consider additional health insurance to cover any gaps and ensure comprehensive coverage for your family. Evaluating the coverage limits, inclusions, and exclusions of your current policy will help you make an informed decision about supplementary health insurance.

Term Insurance Coverage
Having a term insurance plan is essential for protecting your family's financial future. Ensure the coverage amount is adequate to meet your family's needs in your absence. Periodically reviewing and updating your term insurance policy will ensure it remains aligned with your financial responsibilities and goals.

Sukanya Samriddhi Yojana (SSY)
Your consistent investments in the SSY account for your daughter are commendable. This scheme offers attractive interest rates and tax benefits, making it an excellent choice for her future education and marriage expenses. Continue to invest the maximum permissible amount annually to fully leverage the benefits of this scheme.

Future Savings and Investments
With the anticipated closure of your car loan, you'll have an additional Rs 15,000 per month. Consider the following strategies to optimize your future savings and investments:

Increase SIP Contributions: Boost your monthly SIP contributions to accelerate wealth creation. Diversify across different mutual fund categories based on your risk tolerance and investment horizon.

Emergency Fund: Ensure you have an adequate emergency fund to cover at least 6-12 months of living expenses. This will provide financial security in case of unexpected events.

Child's Education Fund: Start a dedicated investment plan for your daughter's higher education. Consider long-term investment options like mutual funds to build a substantial corpus.

Retirement Planning: Focus on building a robust retirement corpus. Assess your retirement goals and invest in suitable instruments to ensure a comfortable and financially secure retirement.


Balancing financial responsibilities with family needs is challenging. Your proactive approach to financial planning, securing your family's future, and investing for long-term growth is commendable. Your dedication to your daughter's future and your awareness of your financial strengths and limitations reflect your commitment to your family's well-being.

You have demonstrated commendable financial discipline and foresight. Your investments in mutual funds, SSY, and term insurance show a strategic approach to wealth creation and financial security. Your plan to close the car loan and redirect funds towards future savings is a wise decision that will enhance your financial growth.

Final Insights
Your current financial path is well-structured and promising. By closing your car loan and increasing investments, you will further strengthen your financial position. Regularly reviewing and rebalancing your investment portfolio, consulting a Certified Financial Planner, and maintaining adequate insurance coverage will ensure you stay on track to achieve your financial goals.

Your dedication to securing your family's future and your disciplined approach to investing are highly commendable. Continue to build on this strong foundation, and you will achieve financial success and security for your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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