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CSE at DCRUST or BTech+MTech ECE at LNMIIT: Which is Best?

Nayagam P P |3777 Answers |Ask -Follow

Career Counsellor - Answered on Sep 30, 2024

Nayagam is a certified career counsellor and the founder of EduJob360.
He started his career as an HR professional and has over 10 years of experience in tutoring and mentoring students from Classes 8 to 12, helping them choose the right stream, course and college/university.
He also counsels students on how to prepare for entrance exams for getting admission into reputed universities /colleges for their graduate/postgraduate courses.
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Nayagam has published an eBook, Professional Resume Writing Without Googling.
He has a postgraduate degree in human resources from Bhartiya Vidya Bhavan, Delhi, a postgraduate diploma in labour law from Madras University, a postgraduate diploma in school counselling from Symbiosis, Pune, and a certification in child psychology from Counsel India.
He has also completed his master’s degree in career counselling from ICCC-Mindler and Counsel, India.
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Asked by Anonymous - Sep 07, 2024Hindi

Career

Sir I have been selected for admission in Btech+Mtech ECE 5year integrated course at LNMIIT Jaipur as well as in Btech CSE at DCRUST govt University Murthal Haryana. I am confused which course should I take for future perspective. Please guide

Ans: Prefer DCRUST-CSE. All the BEST for Your Prosperous Future.

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

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Dr Dipankar Dutta |645 Answers |Ask -Follow

Tech Careers and Skill Development Expert - Answered on Sep 16, 2024

Asked by Anonymous - Sep 07, 2024

Career

Sir i have been selected for admission in Btech+ Mtech ECE 5year integrated course at LNMIIT Jaipur as well as Btech CSE at DCRUST govt University Murthal Haryana. I am confused as which course should I take for future perspective. Please guide

Ans: Go for B.Tech CSE at DCRUST Government University, Murthal, Haryana

Latest Questions

Ramalingam Kalirajan |6457 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Question by Surya - Sep 29, 2024Hindi

Money

Im 55yrs (NRI) and my Portfolio is as: - Rs.5.75/month Tax Free (to be increased to around 6.82 lakhs/pm soon) - Shall be working for another 10yrs atleast - End of Service Benefit Rs.1cr to Rs.1.25cr as minimum - Mutual Funds - Rs.1.5cr - FDs - 25 lakhs - Bajaj Allianz SIP - 17K/pm for 5yrs (just a year left). Maturity after another 5yrs. - ICICI - 2 Lakhs/yr for 7yrs (over). Maturity after another 5yrs - SBI Life - 6 lakhs/yr, for 5yrs (just started). Maturity after 5yrs after payment completed. - Property - Approx 12-15cr (based on real estate and land prices). Including own 2 stiorey, own 6 Bedroom House, 1 Flat, 2 Acres Land, and 700 sq mtrs Real Estate Land, 2 cars. - Gold - 1.5cr Liabalities: 3 Daughters marriage. Expenses around 75 lakhs (25 lakhs each, as all Gold already purchased). How can I retire after 65 with a monthly pension of 1 Lakh/pm

Ans: You are in a strong financial position with a well-diversified portfolio. Your focus on building assets through mutual funds, property, and insurance plans shows long-term planning. As you are 55 and planning to work for another 10 years, this gives you a substantial time frame to further build your retirement corpus. However, to meet your goal of Rs 1 lakh per month post-retirement, strategic adjustments in your financial plan are necessary.

Income and Assets
Current Monthly Tax-Free Income
You currently earn Rs 5.75 lakhs per month, which is tax-free, and this amount is expected to increase to around Rs 6.82 lakhs per month. This provides a healthy surplus for future investments and lifestyle needs.

End-of-Service Benefit (EOSB)
At the end of your employment, you expect a minimum of Rs 1 crore to Rs 1.25 crore as an end-of-service benefit. This lump sum will significantly contribute to your retirement corpus and must be invested wisely to generate income for your post-retirement years.

Mutual Fund Investments
You currently have Rs 1.5 crore invested in mutual funds. This is a good start, but it needs to be structured properly for wealth growth and income generation during your retirement phase.

Fixed Deposits (FDs)
You have Rs 25 lakhs in FDs. While FDs offer safety, their returns are generally lower, especially for NRIs, and may not keep pace with inflation. As you approach retirement, you should evaluate other secure options that can provide better post-tax returns.

Bajaj Allianz SIP and Insurance Plans
Your Bajaj Allianz SIP (Rs 17K/month for 5 years), ICICI plan (Rs 2 lakhs/year for 7 years), and SBI Life plan (Rs 6 lakhs/year for 5 years) are insurance-cum-investment products. These plans will mature in the next few years, adding to your corpus. However, the returns from such plans are generally lower compared to mutual funds. After maturity, you can consider reinvesting these amounts in more productive options.

Property Investments
Your real estate assets, including land, houses, and flats, are valued at approximately Rs 12-15 crores. While this is a significant asset class, liquidity can be an issue. You may not want to rely on these properties for regular income in retirement. Selling some of these assets to invest in more liquid instruments can help meet your retirement income goals.

Gold Holdings
You also have Rs 1.5 crore in gold. Gold is a good hedge against inflation, but it may not provide consistent income for retirement. It can be kept for long-term appreciation or as a safety net for emergencies.

Liabilities
Daughters' Marriage Expenses
Your plan to spend Rs 75 lakhs on your daughters' marriages is already well-funded through gold purchases. This removes a significant liability, allowing you to focus entirely on retirement planning.

Retirement Income Goal
Your goal is to retire at 65 with a pension of Rs 1 lakh per month. To achieve this, you will need to create a retirement corpus that generates a stable monthly income without depleting your principal over time. Assuming a 6-7% withdrawal rate after retirement, a corpus of Rs 2 crore to Rs 2.5 crore may be required to comfortably provide Rs 1 lakh per month for the rest of your life.

Steps to Reach Your Retirement Goal
1. Maximize Mutual Fund Investments
Asset Allocation: You should balance your portfolio between equity and debt. As you are 55, a 60:40 ratio of equity to debt may work best. Equity can help grow your corpus over the next 10 years, while debt will provide stability and reduce volatility as you approach retirement.

Growth-Oriented Funds: Continue investing in actively managed mutual funds, especially in the equity segment, to take advantage of market growth. Actively managed funds, unlike index funds, allow fund managers to select high-potential stocks that can outperform the market.

Debt Funds: Consider investing a portion of your corpus into debt mutual funds. These funds provide better tax efficiency compared to FDs, especially for NRIs, and can offer regular payouts post-retirement.

2. Reinvest Insurance Maturities
The Bajaj Allianz SIP and ICICI and SBI Life plans will mature in the next 5 years. These plans typically offer low returns compared to mutual funds. Once they mature, you can consider moving the maturity proceeds into more efficient options like debt mutual funds or balanced advantage funds, which provide growth with moderate risk.

Do not surrender these policies now, but plan on reinvesting the maturity amounts for long-term income generation.

3. Diversify Beyond Real Estate
Real estate is a significant portion of your assets, but it is not liquid. As you near retirement, having too much in illiquid assets can pose a problem. You could consider selling some real estate assets (like land or a flat) and reinvesting in mutual funds or debt instruments that can generate monthly income.

The property you hold can also be a source of rental income, but ensure it is sufficient and reliable. Rental yields in India are often low, so selling underutilized properties for better financial instruments may be more beneficial.

4. Create a Post-Retirement Withdrawal Strategy
Systematic Withdrawal Plan (SWP): After 65, you can convert a portion of your mutual funds into an SWP. This allows you to withdraw a fixed amount monthly while the rest of your portfolio continues to grow. It’s a tax-efficient way of creating a regular income stream without disturbing your overall corpus.

Balanced Advantage Funds: These funds can shift between equity and debt based on market conditions, providing a steady return. You could use these funds as part of your post-retirement strategy to generate consistent returns.

Debt Instruments for Stability: As you approach retirement, you should gradually increase your exposure to safer debt instruments. Long-term debt funds, corporate bonds, or even government bonds can offer regular income with lower risk.

5. Plan for Inflation
Inflation will erode the value of money over time. Rs 1 lakh per month today may not have the same purchasing power after 10 years. Therefore, your retirement corpus must grow at a rate that beats inflation. Equity investments, even during retirement, will help you keep pace with inflation.

Use part of your existing surplus income to further increase your equity investments over the next 10 years. Focus on large-cap and diversified equity funds, as these tend to perform well over the long term with relatively lower risk.

6. Emergency and Health Fund
Ensure you have an emergency fund in place, with 6-12 months of expenses in liquid instruments like debt mutual funds. This will protect your investments from being liquidated prematurely.

Health is a major concern post-retirement. Ensure you have adequate health insurance coverage for you and your family, especially since healthcare costs are rising. Review your health insurance policies to see if they will cover you after 65.

7. End of Service Benefit Investment
Your end-of-service benefit (Rs 1 crore to Rs 1.25 crore) will be a major component of your retirement corpus. Invest this amount strategically in a mix of equity and debt instruments to ensure long-term growth and regular income.

Consider placing a portion in hybrid or balanced funds that offer both stability and growth. These funds are designed to manage risk while giving you decent returns.

Final Insights
Your current financial standing is strong, but it can be further optimized. By making strategic reallocations in mutual funds and liquidating underperforming or illiquid assets, you can achieve your retirement goal.

Focus on building a diversified retirement corpus through a mix of equity and debt investments. Keep sectoral and thematic fund exposure limited to minimize risk.

Plan for inflation by continuing to invest in growth-oriented funds, and ensure your withdrawal strategy includes tax efficiency and regular income.

Reinvest insurance plan maturities into more productive funds, and sell some real estate if needed to enhance liquidity.

Finally, regularly review your portfolio, especially as you near retirement, to make adjustments according to market conditions.

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

Ramalingam Kalirajan |6457 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Question by Dushyanth - Sep 30, 2024Hindi

Money

Hello MF Guru's....I've just turned 40 years and have just begun my MF journey aswell. I have a 5 year old son and my spouse is a Home Maker. I know i have started late but knew that it was better late than never. Based on my own research i have invested in the below funds with a time horizon of 5-7 years. I need your expertise in reviewing the choice of my funds and suggest. My risk appetite is high. All my investments are focused on my son's education. I also have and FD of 40K and NSC of 1.10L. One Time investments: Quant Elss Tax Saver Fund - 1L Aditya Birla Sun Life PSU Equity Fund-1L Invesco India Infrasructure Fund-1L Tata Infrastructure Direct Plan Growth-50K Quant Small Cap Fund-50K Quant Infrastructure Fund-50K SBI PSU Direct Plan-33K Motilal Oswal Midcap Fund Direct- 1L Parag Parikh Flexi Cap Fund-1L SIP's: HDFC Mid Cap Opportunities- 10K SIP Since June'24 ICICi Prudential Nifty Next 50 -20K SiP Since Jul'24 Nippon India Multi Cap Fund - 2.5K SIP

Ans: First, it’s important to acknowledge that starting your mutual fund journey at 40 is still a good step, especially with a clear focus on your son's education. You have a diverse portfolio with both one-time investments and SIPs. However, based on your stated high-risk appetite and a medium-term horizon of 5-7 years, we can fine-tune your portfolio to ensure it aligns with your goals.

Investment Tenure & Risk Appetite
Your 5-7 year horizon is relatively short for high-risk equity investments. Typically, equity funds are recommended for long-term goals (8+ years) due to market volatility. But since you are focused on your son's education and have a high-risk appetite, it's feasible to continue with a mix of equity and thematic funds, but with strategic adjustments.

Key Points to Consider:

Since your goal is focused on education, consider this as a non-negotiable requirement.
Volatility in the short term can impact returns, so we need a balance between high growth potential and moderate risk management.
In 5-7 years, there may be market corrections, and it’s essential to ensure you're not heavily exposed to sectors that could underperform during downturns.
Analysis of One-Time Investments
Your portfolio has multiple thematic and sectoral funds. These funds often perform well when their specific sector is booming, but they can also lead to underperformance if the sector slows down. Let’s break it down:

Quant ELSS Tax Saver Fund – Rs 1L
An ELSS fund provides tax-saving benefits under Section 80C. It’s a good investment, but keep in mind that the lock-in period is three years. Given your time frame of 5-7 years, this could still fit well in your portfolio as it also offers long-term capital appreciation.

Aditya Birla Sun Life PSU Equity Fund – Rs 1L
Public Sector Undertaking (PSU) funds depend heavily on government policies. While these funds may offer value investing opportunities, they are highly cyclical. PSUs often underperform during economic slowdowns. A high allocation to PSUs could expose you to risk.

Invesco India Infrastructure Fund – Rs 1L and Tata Infrastructure Direct Plan Growth – Rs 50K
Infrastructure is a sector that could see substantial growth in India in the coming years, but it is also vulnerable to policy changes and economic cycles. Having two infrastructure funds in your portfolio might lead to overexposure to this sector. It’s better to keep only one.

Quant Small Cap Fund – Rs 50K
Small-cap funds can provide exceptional returns in a bullish market but are also highly volatile. Given your high-risk appetite, keeping a small portion in small caps is fine. However, be mindful of market corrections, which can hit small-cap stocks harder.

Quant Infrastructure Fund – Rs 50K
As mentioned earlier, infrastructure can offer significant growth, but it's also highly cyclical. Holding three infrastructure-focused funds (including this one) may not provide the diversification you need.

SBI PSU Direct Plan – Rs 33K
Similar to your other PSU investment, this fund can expose you to volatility. It’s advisable to limit exposure to sectoral funds like PSU, as broader diversification can help you mitigate risk.

Motilal Oswal Midcap Fund Direct – Rs 1L
Midcap funds are a good choice for investors with a high-risk appetite and a 5-7 year horizon. They offer a balance between the high-risk small caps and the more stable large caps. However, midcap funds can be volatile in the short term. It’s good to have this in your portfolio, but keep track of market conditions.

Parag Parikh Flexi Cap Fund – Rs 1L
Flexi-cap funds provide the flexibility to invest in companies of various sizes and sectors. This diversification can help reduce risk. Parag Parikh Flexi Cap Fund has a solid track record and fits well with your risk profile.

SIPs
SIP investments help in averaging out market volatility over time. Your SIPs are relatively new, so let’s assess them as well:

HDFC Mid Cap Opportunities – Rs 10K SIP Since June '24
Mid-cap funds are great for high-risk investors, but given the short time frame of 5-7 years, there is a moderate level of risk. Since you started the SIP recently, it’s fine to continue, but monitor it regularly.

ICICI Prudential Nifty Next 50 – Rs 20K SIP Since July '24
Nifty Next 50 funds are often considered for large-cap exposure and can provide relatively stable returns compared to mid and small caps. However, an actively managed large-cap fund might offer better growth potential than this index fund.

Nippon India Multi Cap Fund – Rs 2.5K SIP
Multi-cap funds offer exposure to all market caps, which helps in risk mitigation. The fund can switch between large, mid, and small caps based on market conditions, making it a good fit for a high-risk, medium-term horizon.

Sectoral Fund Exposure
Your portfolio is significantly tilted toward thematic and sectoral funds (PSU, Infrastructure). While these funds can generate high returns during sectoral upswings, they are also susceptible to downturns when their sector underperforms. For a 5-7 year goal like your son’s education, this heavy reliance on specific sectors could expose you to unnecessary risk.

Suggestion:

Limit exposure to sectoral funds.
Reallocate some of your funds from thematic investments to diversified equity or flexi-cap funds, which offer broader market exposure.
Direct vs Regular Funds
You have invested in direct plans, which save on commissions. While this boosts returns slightly over time, it also requires active tracking and management on your part. A Certified Financial Planner (CFP) can guide you better in selecting and rebalancing funds over time, ensuring your portfolio aligns with changing market conditions and personal goals.

Additional Recommendations
Balanced Allocation

Consider adding a balanced advantage fund or an aggressive hybrid fund to reduce volatility and ensure some level of downside protection. These funds automatically adjust between equity and debt based on market conditions.
Emergency Fund

You mentioned having an FD of Rs 40K and an NSC of Rs 1.10L. Ensure you have an adequate emergency fund in place. Typically, 6-12 months of household expenses should be parked in liquid or ultra-short-term debt funds for easy access.
Monitor Regularly

Given your medium-term horizon, you should regularly review your portfolio. Make sure the funds are performing as expected and align with your evolving goals.
Final Insights
Your portfolio has a good mix of SIPs and one-time investments. However, it’s tilted toward thematic and sectoral funds, which might not be ideal for your medium-term goal of funding your son's education.

Limiting exposure to sectoral funds, particularly PSU and infrastructure, will reduce risk. Consider reallocating to more diversified funds that offer broad market exposure.

Your SIPs are relatively well-chosen, but keep an eye on the performance of the mid-cap and multi-cap funds, as they can be volatile in a 5-7 year time frame.

Rebalancing your portfolio by reducing thematic funds and adding more diversified equity or balanced advantage funds can help provide stability and growth.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Chocko Valliappa |445 Answers |Ask -Follow

Tech Entrepreneur, Educationist - Answered on Sep 30, 2024

Question by Meme - Sep 08, 2024Hindi

Career

Sir im in btech 2nd year mechanical How can I get best cgpa + placement at last year What are the area I have to focus ( both skill and theoretical ) What to do if skill then what type of skill which skill If theoretical too Then how to manage it

Ans: I am glad to are thinking of excelling with high CGPA as also skills. There's only one way to score -- by working hard, applying your mind and staying focused on your studies. Take up complex projects, participate in hackathons, do well in internships, seek help where you need to build your fundamentals. Peer training too is a proven way to master areas in which you are helping your peers, besides developing leadership qualities and helping attitude.

Do also pick softwares that help in Mech Engg design, automation, sustainability beyond your syllabus fron NPTEL, Coursera platforms.

Chocko Valliappa |445 Answers |Ask -Follow

Tech Entrepreneur, Educationist - Answered on Sep 30, 2024

Asked by Anonymous - Sep 29, 2024Hindi

Career

I am a 36-year-old woman with no prior work experience. What employment opportunities are available to me? I hold an undergraduate degree in Commerce and possess a working knowledge of Excel. Any assistance would be greatly appreciated. Furthermore, I have a strong interest in pursuing a career as a software engineer. Although I recognize that I may have missed the initial opportunity, is it still possible for me to secure a full-time position as a software engineer at a MAANG or FAANG company, considering that I am a late bloomer?

Ans: It is good to learn about your ambition. I believe it's never to late and it always helps have high ambition.

For now I would suggest you pick up an accounting, administrative role in HR, Finance or accounting function of a firm, excel in that role and grow. One trio have established your crystals as a sincere and hard worker look for internal training or even Coursera courses in software that help you perform better in your current job. Use your age to your advantage to growing a managerial role. All the best.

Ramalingam Kalirajan |6457 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Asked by Anonymous - Sep 30, 2024Hindi

Money

Hello sir My FIL passed away last year he has invested good amount 10L for my MIL 5 lacks shares and 5 lacks MF My question is where how we need to invest money to get good monthly return for MIL monthly needs without using capital amount

Ans: I understand your concern about ensuring a regular monthly income for your mother-in-law (MIL) without depleting the capital amount. Managing the Rs 10 lakh in shares and mutual funds effectively can help provide a steady income while maintaining the investment value.

Let's look at how you can spread the investment to generate a reliable monthly income for her needs.

Review of Current Investments
Shares (Rs 5 lakh): Shares can provide growth through capital appreciation. However, they are subject to market volatility and may not provide regular, reliable income. If the share portfolio consists of dividend-paying stocks, it may offer periodic income.

Mutual Funds (Rs 5 lakh): Mutual funds, especially equity mutual funds, can offer long-term growth. However, for monthly income, some rebalancing might be necessary. Debt mutual funds or a balanced allocation between equity and debt funds can be more suitable for regular income generation.

Generate Monthly Income from Mutual Funds
A Systematic Withdrawal Plan (SWP) can be an excellent option to generate regular income from mutual funds without depleting the principal. SWP allows you to withdraw a fixed amount every month.

You can set up an SWP from the Rs 5 lakh mutual fund corpus. If the fund generates an average annual return of 8-10%, you can withdraw a fixed amount each month while allowing the corpus to grow.

For example, with a monthly withdrawal of Rs 5,000, the Rs 5 lakh corpus can last for a long time without depleting the principal too much, assuming steady returns. The exact amount will depend on the chosen fund's performance and market conditions.

Rebalancing Share Investments for Regular Income
Shares are not ideal for generating monthly income due to their market-linked nature. To provide consistent monthly income, it is advisable to:

Sell a part of the shares and reinvest them in more stable, income-generating assets such as debt funds or fixed-income mutual funds. This will ensure that the volatility of shares does not affect your MIL's monthly cash flow.

You could consider selling a portion of the shares to move Rs 2-3 lakh into safer instruments like debt mutual funds. These funds provide more predictable returns and can support a SWP for regular monthly income.

Allocation for Safety and Growth
To strike a balance between income generation and preserving capital, here’s a suggested investment strategy for the Rs 10 lakh corpus:

Debt Mutual Funds (Rs 6 lakh total): Move Rs 3 lakh from shares and Rs 3 lakh from existing mutual funds into debt mutual funds. This will create a stable foundation for monthly income via SWP.

Equity Mutual Funds (Rs 4 lakh): Retain some exposure to equity mutual funds to benefit from long-term capital appreciation. This part can grow over time and be used for future needs or emergencies.

Fixed Income Options: If you want more certainty, a portion of the corpus can be allocated to Senior Citizen Savings Schemes (SCSS) or Post Office Monthly Income Schemes (POMIS), which are safe and provide fixed interest.

Plan for Monthly Withdrawals
Let’s assume your MIL needs Rs 15,000 per month for her regular expenses. Based on the suggested asset allocation, here’s how you can plan:

SWP from Debt Mutual Funds: With Rs 6 lakh in debt mutual funds, you can set up an SWP to withdraw Rs 10,000-12,000 per month. This will provide a stable income stream while keeping the principal relatively safe.

Dividend Income from Equity Mutual Funds: Although dividend yields are not guaranteed, the remaining Rs 4 lakh in equity mutual funds can provide capital appreciation and occasional dividend payouts. However, these should be seen as bonus income rather than relied upon for monthly expenses.

Fixed Income for Additional Security: Any surplus can be parked in fixed-income options like SCSS, offering more stability and certainty.

Long-Term Approach
Since you aim to generate income without depleting the capital, it is crucial to monitor the portfolio regularly. Keep an eye on market performance and rebalance as needed. For example:

If equity markets perform well, you may consider moving more funds from equity to debt to lock in gains and increase the SWP.

Alternatively, if the debt market offers better returns, a higher allocation can be made to debt instruments for increased income stability.

Avoiding High-Risk Investments
Since the primary goal is to provide for your MIL’s needs without taking undue risks, it’s important to avoid high-risk or speculative investments. Real estate, gold, or direct stock market exposure can be volatile and are not suitable for generating steady monthly income.

Key Benefits of This Approach
Consistent Monthly Income: SWP from debt mutual funds will provide a reliable, predictable income stream.

Preservation of Capital: By maintaining a balance between equity and debt, you ensure that the principal remains largely intact while still providing growth potential.

Inflation Protection: Equity mutual funds offer long-term capital appreciation, which helps protect against inflation eroding the purchasing power of her income.

Final Insights
By rebalancing the investments and using a Systematic Withdrawal Plan (SWP) with a mix of debt and equity mutual funds, you can achieve your goal of providing your MIL with a reliable monthly income. Ensure regular portfolio reviews and adjust the asset allocation as necessary to meet her needs without compromising on capital safety.

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

Ramalingam Kalirajan |6457 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Asked by Anonymous - Sep 30, 2024Hindi

Money

Hi, In social media, many clips are being published where people are saying if you have 3Cr then you can do SWP and withdraw 1 lac every month, still after 20 years we can have huge sum. How it works ? Will SIP to be continued for 20 years? If I want 5 lac per month via SWP, what should be corpus in MF ?

Ans: In social media, you may have seen people saying that if you have Rs 3 crore invested, you can withdraw Rs 1 lakh per month via a Systematic Withdrawal Plan (SWP) and still retain a large corpus after 20 years. This claim can be appealing, but it’s important to understand the details of how SWP works and how it relates to your goals.

How SWP (Systematic Withdrawal Plan) Works
SWP allows you to withdraw a fixed amount from your mutual fund investments at regular intervals (monthly, quarterly, etc.).

You are withdrawing from your total mutual fund corpus. This withdrawal includes both the returns generated by the investment and a part of your principal.

The performance of the mutual fund over time determines whether the corpus remains substantial or depletes.

If the mutual fund grows at a rate higher than your withdrawals, the remaining corpus can continue to grow.

Why Rs 3 Crore Corpus and Rs 1 Lakh SWP?
The logic behind withdrawing Rs 1 lakh per month from Rs 3 crore is based on an assumed rate of return. Let’s say the mutual fund generates a 10-12% annual return, and you withdraw 4% of the corpus per year (Rs 12 lakh/year = Rs 1 lakh/month). In this scenario, the remaining corpus might still grow despite the withdrawals.

Over 20 years, the compounding effect allows the remaining principal and growth to accumulate, leaving you with a sizeable amount. However, this depends on market conditions, the returns from the fund, and whether the withdrawal amount stays consistent with inflation.

Key Factors That Impact SWP
Rate of Return: If the mutual fund generates higher returns (12%+), your corpus will continue growing even after regular withdrawals.

Inflation: Rs 1 lakh per month today may not have the same purchasing power after 10 or 20 years. You’ll need to factor in inflation when deciding on your withdrawal rate.

Withdrawal Rate: Withdrawing too much from your SWP may deplete the corpus faster than it can grow, while a lower withdrawal rate allows the corpus to last longer.

Will SIP Need to Be Continued for 20 Years?
When you are using an SWP, there is no requirement to continue SIP (Systematic Investment Plan) contributions. SWP focuses on withdrawing from an existing corpus rather than building it through new contributions like SIP. However, continuing SIP can help grow your wealth, especially if your financial goals change or you want to increase the withdrawal amount later.

If You Want Rs 5 Lakh Per Month via SWP, What Should Be the Corpus?
The corpus needed to generate Rs 5 lakh per month will depend on:

The rate of return expected from the mutual fund.

How long you want the withdrawals to last (e.g., 20 years, 30 years).

Let’s consider the same 10-12% annual return scenario. If you want Rs 5 lakh per month (Rs 60 lakh per year), you might need a much larger corpus. Here's a rough guide:

Rs 12-15 crore corpus: With a withdrawal rate of Rs 60 lakh per year, and assuming the fund grows at 10-12% annually, a corpus of Rs 12-15 crore could sustain Rs 5 lakh withdrawals for 20+ years.
However, the actual required corpus depends on your time horizon, expected returns, and inflation rate. It’s best to consult a Certified Financial Planner (CFP) to customise the workings based on your unique circumstances.

Final Insights
SWP is a flexible tool: It helps create a steady income stream post-retirement or during financial independence.

Corpus size matters: The larger the corpus, the more sustainable and higher your monthly withdrawals can be without depleting the entire investment.

Inflation and return rates are key: Work with a CFP to calculate a personalised plan that takes inflation and realistic return rates into account.

For Rs 5 lakh per month, a rough estimate suggests you need Rs 12-15 crore. But, for detailed and customised calculations based on your goals, consulting a Certified Financial Planner is essential.

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

Ramalingam Kalirajan |6457 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Asked by Anonymous - Sep 29, 2024Hindi

Money

Hi, I'm 48 ..I'm thinking about my retirement now. My son is 13 while we both (wife and self) are employed with a cashflow of 7.5lacs per month including rental (3lacs) income). My current Investment spread is Real Estate (various- 23Crs.)/ PPF 1.10crs./ NPS 10lacs/ MF 10lacs with 70k per month monthly outflow and liabilities of 2crs. My likely expenses are Higher Education/Marriage and Retirement Corpus. How should I spread my investments to cover my Salary loss, post-retirement?

Ans: At 48, you are thinking about retirement, which is an excellent step toward securing your future. You have a combined monthly cash flow of Rs 7.5 lakh, which includes Rs 3 lakh from rental income. Your investment portfolio includes Rs 23 crore in real estate, Rs 1.10 crore in PPF, Rs 10 lakh in NPS, and Rs 10 lakh in mutual funds, with an SIP of Rs 70,000 per month. Additionally, you have liabilities of Rs 2 crore.

Given your current financial standing, let's break down how to optimise your investments for post-retirement expenses, covering your son's higher education, his marriage, and ensuring a comfortable retirement corpus.

Assessing Future Needs
You will likely have significant financial requirements for higher education and marriage, alongside securing a post-retirement lifestyle. Let’s break these down into specific objectives:

Higher Education: Your son is 13, and you will likely need funds for his higher education in the next 4-5 years. Assuming that you will need funds for both domestic and international education, you should plan for a sizeable education fund.

Marriage: You will also want to earmark funds for your son's marriage, possibly 10-15 years from now.

Retirement Corpus: Post-retirement, your current income of Rs 7.5 lakh will no longer be available, except for the Rs 3 lakh in rental income. You will need a retirement corpus that ensures you can maintain your lifestyle comfortably.

Understanding Current Investments
1. Real Estate (Rs 23 crore)
You have substantial assets in real estate, which is excellent for wealth preservation. However, real estate can be illiquid, and income from it may fluctuate based on market conditions.

Real estate should not be the only major asset class for retirement, as it lacks liquidity and is affected by local markets. Diversifying beyond real estate will help balance your portfolio.

2. PPF (Rs 1.10 crore)
Your PPF investment provides safety and tax-free returns. However, PPF has a limited ability to grow aggressively and keep pace with inflation in the long term.

You should continue contributing to PPF, as it offers guaranteed returns with tax benefits, but it may not be enough on its own to meet all your goals.

3. NPS (Rs 10 lakh)
NPS is a good tool for retirement savings as it provides a mix of equity and debt. Given your age and the time left until retirement, you can maximise the equity exposure within your NPS to boost growth.

However, NPS has liquidity constraints, so you cannot rely entirely on it for immediate cash needs.

4. Mutual Funds (Rs 10 lakh and SIP of Rs 70,000 per month)
Your mutual funds provide an avenue for growth. A monthly SIP of Rs 70,000 is a good strategy for long-term wealth creation.

Ensure your mutual fund portfolio is diversified across equity and debt, with a focus on equity for growth. As you approach retirement, gradually increase debt exposure for stability.

Addressing Liabilities (Rs 2 crore)
Liabilities of Rs 2 crore need to be addressed systematically to ensure they do not impact your retirement plan. If these are loans or mortgages, you can either work on reducing them or look for ways to generate consistent income from your real estate investments to cover these liabilities. It’s important not to let liabilities grow as you approach retirement, as they can reduce your financial flexibility.

Creating a Strategy for Retirement, Education, and Marriage
1. Retirement Corpus Planning
Since you will continue to receive Rs 3 lakh in rental income, you will only need to replace the remaining Rs 4.5 lakh per month of lost salary post-retirement. Considering inflation, this amount will increase significantly over time.

You may need to build a retirement corpus of Rs 10-12 crore to comfortably replace your current salary and cover inflation-adjusted expenses post-retirement.

Ensure your investment portfolio has a mix of equity, debt, and real estate to manage risks and returns. For retirement, start creating a well-diversified mutual fund portfolio that includes both growth-oriented funds (equity) and safety nets (debt funds).

2. Higher Education Planning
In 4-5 years, you will need funds for your son's higher education. This will likely be a substantial expense, especially if you plan for international education.

Create a separate education fund. This fund can be composed of a mix of equity mutual funds (for growth) and debt funds (for stability). Given the short time horizon, a mix of 60% equity and 40% debt would provide good growth while limiting volatility. You could start with a lump-sum investment now or increase your SIP contributions toward this goal.

3. Marriage Fund
Planning for your son’s marriage 10-15 years down the line will require a separate investment strategy. You can create a long-term marriage fund focused on high-growth equity funds since you have a long time horizon.

Continue investing in equity mutual funds, aiming for a corpus of Rs 50 lakh to Rs 1 crore, depending on your expectations for marriage expenses. Consider step-up SIPs, which will allow you to gradually increase your investment amount over time to keep pace with inflation.

Optimising Your Existing Portfolio
1. Real Estate
Real estate is a large portion of your portfolio, but as you approach retirement, consider reducing your dependency on it. You don’t need to sell immediately, but you can start converting some of your real estate investments into more liquid assets, like mutual funds or bonds, over the next few years. This will give you flexibility in retirement.
2. PPF and NPS
Continue investing in PPF, as it offers guaranteed and tax-free returns. However, it will form a conservative part of your portfolio, so focus on diversifying into other asset classes like mutual funds for growth.

Increase your contributions to NPS if possible, as it’s a tax-efficient way to save for retirement. Maximise the equity portion of your NPS to ensure better returns.

3. Mutual Funds
Your current SIP of Rs 70,000 is a good start, but given your income, you could increase it to Rs 1 lakh or more. This will help accelerate your retirement corpus accumulation. A well-diversified portfolio with a mix of large-cap, mid-cap, and multi-cap funds will ensure balanced growth.

You can also start a separate SIP for your son’s education fund. Focus on a mix of equity and debt to balance growth with safety, especially since you’ll need the funds in 4-5 years.

Managing Liabilities
It’s important to focus on paying down your Rs 2 crore liabilities as you approach retirement. If these are loans or mortgages, plan to clear them over the next few years to reduce the financial burden.

Use a portion of your rental income to service these liabilities without affecting your lifestyle or savings.

Final Insights
Retirement Corpus: Aim for Rs 10-12 crore to comfortably replace your income and cover inflation.

Higher Education: Plan for a corpus of Rs 50 lakh to Rs 1 crore for your son’s education.

Marriage Fund: Start building a long-term marriage fund, aiming for Rs 50 lakh to Rs 1 crore.

SIP Strategy: Increase your SIP to Rs 1 lakh per month or more to meet your goals faster.

Debt Management: Focus on clearing your Rs 2 crore liabilities over the next few years.

By following this approach, you can ensure a comfortable retirement, cover your son's education and marriage expenses, and secure your financial future.

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

Ramalingam Kalirajan |6457 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 30, 2024

Question by Ajitabh - Sep 29, 2024Hindi

Money

Dear Sir, my age is 39 having 2 daughters 8 years and 5 years. my earning is 165000 per month. I have 43Lakh in PF, 5 Lakh in PPF ,12Lakh in NSC, 41 lakhs in mutual fund ,13 Lakh in shares, Term plan of 1 CR , Medical claim of 10 Lakh for family, Own flat, my monthly sip is 80K. I want to retire at the age of 46. How much corpus should I have for retirement, and both daughters' education and how to plan it? considering at present my monthly expenditure is 80 K

Ans: At the age of 39, you have a well-established financial foundation. Your monthly income is Rs 1.65 lakh, and you are already saving Rs 80,000 per month through SIPs. You have Rs 43 lakh in PF, Rs 5 lakh in PPF, Rs 12 lakh in NSC, Rs 41 lakh in mutual funds, and Rs 13 lakh in shares. With a term plan of Rs 1 crore and medical insurance of Rs 10 lakh for your family, you are ensuring both security and growth.

However, planning for retirement in 7 years and your daughters' education will need careful structuring to meet inflationary pressures and long-term needs.

Estimating the Retirement Corpus
To retire at 46, with your current monthly expenditure of Rs 80,000, we need to consider the following:

Inflation Impact: Assuming an inflation rate of around 6%, your expenses will nearly double in the next 7 years. That means at retirement, you will need around Rs 1.2 lakh per month.

Life Expectancy: Assuming a life expectancy of 85, your retirement could last 40 years. Therefore, the retirement corpus should be able to provide Rs 1.2 lakh (inflated expenses) for 40 years.

Considering all factors like inflation, withdrawal rates, and market growth, you may need around Rs 7-8 crore to retire comfortably at 46.

Education Planning for Both Daughters
For your daughters' education, considering the rising cost of education, you should plan for a significant amount:

Higher Education Costs: For your 8-year-old daughter, you will need funds in around 10 years. For your 5-year-old, you will need funds in around 13 years. Assuming a 10% inflation in education costs, you should target a corpus of Rs 40-50 lakh per child.
This means you may need around Rs 80 lakh to Rs 1 crore for both daughters’ education by the time they need to pursue higher studies.

Reviewing Your Current Investments
You already have a well-diversified portfolio across Provident Fund, PPF, NSC, mutual funds, and shares. Let's assess each component to see if any adjustments are necessary:

1. Provident Fund (PF), PPF, and NSC
These are safe investments that will help preserve capital. However, they may not grow aggressively enough to meet your retirement goals in 7 years.
PF and PPF are tax-efficient and low-risk, but their returns may not match inflation in the long run.
Consider continuing contributions but not overly relying on them for wealth creation.
2. Mutual Funds
You have Rs 41 lakh in mutual funds, which is a positive aspect of your portfolio. With your SIP of Rs 80,000 per month, you are already aggressively investing.
Ensure your mutual fund portfolio is well-diversified across equity and debt funds. Since you are aiming for retirement in 7 years, a mix of mid-cap and large-cap equity funds with some debt exposure would be ideal.
Avoid over-exposure to small-cap funds as they are more volatile, especially since your retirement horizon is short.
3. Shares
Rs 13 lakh in shares indicates a risk-taking approach, which is good for wealth creation but can be volatile.
If you are comfortable with the volatility, you can continue holding a portion of your portfolio in shares. However, ensure you do not rely too much on individual stocks for your retirement corpus.
Planning for Retirement in 7 Years
Given your SIP of Rs 80,000 per month, let’s assume an average return of 12% per annum from equity mutual funds. Over the next 7 years, this will accumulate to a significant corpus. However, it may not reach Rs 7-8 crore, which is the required amount for retirement.

Step-Up SIP: Consider increasing your SIP amount by 10% every year. This will significantly boost your retirement corpus.
Balanced Allocation: Maintain a balance between high-growth equity funds and safer debt instruments. As you approach retirement, gradually shift more of your investments into debt to reduce risk.
Education Fund Strategy
To meet your daughters' educational needs, consider creating a separate portfolio with a mix of equity mutual funds and PPF:

Equity Funds: Continue investing for the long term in mutual funds that offer higher growth potential.
Debt Funds: You may also consider debt funds for a portion of this portfolio to reduce risk as the need for funds approaches.
PPF Contributions: Since PPF offers tax benefits and stable returns, continue contributing to this for education as well.
Clearing Debt and Emergency Planning
You mentioned a home loan EMI of Rs 25,000 and a car loan EMI of Rs 16,200. Here’s how you can approach these:

Clearing Car Loan: Using Rs 4 lakh to clear your car loan makes sense. This will free up Rs 16,200 per month, improving your cash flow and liquidity.
Home Loan: Retaining your home loan for tax benefits is a wise strategy, especially since home loan interest rates are generally low.
Once you clear the car loan, build an emergency fund. A minimum of 6-12 months of expenses should be set aside. You plan to keep Rs 1 lakh for emergencies, which is a good start, but increase it as your liquidity improves.

Health Insurance Plans
You have a Rs 10 lakh medical claim for your family. Additionally, you are planning to take health insurance for yourself and your parents.

Family Health Insurance: Opting for an external policy like HDFC Ergo, with your wife covering the premiums, is a good step. Ensure that the sum insured is adequate, especially for critical illnesses.
Parents' Health Insurance: Your plan to take separate coverage for your parents with a Rs 5,000 premium is advisable. Ensure that it covers pre-existing diseases and offers lifetime renewability.
Final Insights
Retirement Corpus: Aim for Rs 7-8 crore to retire comfortably at 46, considering inflation.
Daughters’ Education: Plan for Rs 80 lakh to Rs 1 crore for both daughters' higher education.
SIP Strategy: Continue with your Rs 80,000 SIP but step it up by 10% annually to reach your goals faster.
Debt Management: Clearing your car loan is a good move, but retain your home loan for tax benefits.
Insurance Planning: Ensure your health insurance coverage is adequate for your entire family, including parents.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Vivek Lala |288 Answers |Ask -Follow

Tax, MF Expert - Answered on Sep 30, 2024

Asked by Anonymous - Jun 26, 2024Hindi

Money

I have joint savings bank account with my wife. Who should be showing the interest income in ITR for saving interest, me or my wife?

Ans: The first holder will have to show the interest

Vivek Lala |288 Answers |Ask -Follow

Tax, MF Expert - Answered on Sep 30, 2024

Question by BHARAT - Jul 25, 2024Hindi

Money

Hello Vivek, I would like to confirm whether there is any exemption in STCG on sale of equity shares? Like 1.25 Lacs in LTCG

Ans: It depends on if you have any other income apart from STCG

See more questions »

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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