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Roopashree

Roopashree Sharma  | Answer  |Ask -

Yoga, Naturopathy Expert - Answered on Oct 21, 2022

Roopashree Sharma, a qualified yoga trainer and naturopathy enthusiast, is the founder of Atharvanlife.
She has completed her diploma in naturopathic medicine/naturopathy from DY Patil University and her advanced diploma in yoga teacher training/yoga therapy from the university of Mumbai.... more
swati Question by swati on Oct 21, 2022Hindi
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Health

Dear Roopashree,
How do I improve my daily water intake?
Is adding natural flavours to drinking water safe?
Swati

Ans:

Daily water consumption varies as per age, gender and daily routine.

For women, around 2.7 litres of fluids are recommended. Besides water, these can also include juices, soups, etc.

It is totally safe to add natural flavours to water but use fresh fruits and vegetables instead of packaged products.

Depending on the weather, you can add various fruit/vegetable slices to water like lime, sweet lime or orange.

If you want to cool your body, you can add mint leaves and cucumber slices.

 

DISCLAIMER: The answer provided by rediffGURUS is for informational and general awareness purposes only. It is not a substitute for professional medical diagnosis or treatment.
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Ramalingam

Ramalingam Kalirajan  |9607 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Asked by Anonymous - Jun 26, 2025Hindi
Money
Sir, I'm 41 with a 7 year old kid. My husband is currently not working. I have a net monthly income of 2L. We own a flat so there is no rental except for monthly maintenance charges. Apart from that that I save 50k in RD (2L till now). Rest goes for house hold expenses. In savings, I have, 1.5 L in NPS which I don't want to put more anymore. 3.5 L in large cap and mid cap stocks ,1.6 L in mutual fund one time investment, Around 9L worth of investment in SGB (maturing in 2028 and maturity amount will be approx 13 to 15L), 50L in my company stocks And 10 L in bank fixed deposit. I'm thinking whether I should stop my monthly 50K RD and do a SIP in midcap instead for 5 years? With job volatility what would be a best and safe way to get more returns.
Ans: You have shown strong discipline in savings. Your steady income and structured investments are already giving you a good base. At 41, your focus must be on stability, growth, and protection. Let us evaluate your situation in depth and build a 360-degree strategy for you.

Income, Expense and Surplus Evaluation
– Your net monthly income is Rs. 2L
– Household expenses plus maintenance consume about Rs. 1.5L
– You save Rs. 50K in RD monthly, which is structured and disciplined
– Your spouse is not working, so you are the sole earner
– This increases the importance of cash flow and risk cover
– With one child aged 7, you will have education needs in next 10–12 years

– Your savings rate of 25% (Rs. 50K monthly) is good
– But returns from RD are too low for long-term goals
– RD gives safety but not growth
– We need to rebalance towards high-return avenues

Existing Investment Review
##Recurring Deposit
– You have Rs. 2L already saved in RD
– RD offers fixed but low returns, taxable as per your slab
– It is safe but not useful for wealth creation
– Not suitable for medium to long-term goals
– You may stop new RDs now
– Existing RD can be allowed to complete its term
– Use that corpus later for emergencies or as lump-sum

##Mutual Fund One-time Investment
– You have Rs. 1.6L in mutual funds
– It shows good intention to diversify
– You haven’t mentioned the fund type, but equity allocation is useful
– This fund should be reviewed periodically for performance
– You can continue to hold or switch based on planner’s review

##Stocks – Company and Others
– Rs. 3.5L in large-cap and mid-cap stocks shows active investing
– Also Rs. 50L in your company’s stock is significant
– Stocks are risky, especially when concentrated in one company
– If your salary and investment depend on same company, risk is doubled
– This creates vulnerability during market downturn or job change

– Gradually reduce your exposure in company stock
– Redeem in parts when possible and reinvest in diversified funds
– Keep company stock below 10–15% of your total assets
– That protects you from overdependence

– Don’t increase direct stock exposure further unless you track markets regularly
– Use actively managed mutual funds instead

##Sovereign Gold Bonds (SGBs)
– Rs. 9L in SGBs is well-placed for diversification
– Maturity in 2028 will likely fetch Rs. 13–15L
– SGBs are safe, government-backed, and tax-free on maturity
– This gives protection against inflation in gold
– No action needed here. Continue to hold till maturity

##NPS
– You have Rs. 1.5L in NPS but don’t want to invest more
– That is acceptable
– NPS gives long-term retirement income but has lock-in till 60
– Withdrawal is restricted and not fully flexible
– You can keep existing funds but stop new investment
– Direct mutual fund SIPs are better for long-term growth with liquidity

##Fixed Deposit
– Rs. 10L in FD gives you safety and liquidity
– It acts as a good emergency buffer
– You don’t need to increase FD unless job situation changes
– FD returns are also taxed, so not ideal for growth
– Use it mainly for emergencies and temporary parking

Goal Planning for Child and Retirement
– Your child is 7 now
– Higher education cost will come up in 10–12 years
– You need to build a dedicated fund for that

– You should start a SIP for minimum 5–7 years
– Use only actively managed equity mutual funds
– Mid-cap or flexi-cap categories can work best
– Avoid index funds—they only copy markets and don’t adjust in downturn
– Active funds have better flexibility and professional management
– They outperform in long run with the help of fund managers

– Direct plans may look cheaper but offer no help
– In tough markets, direct investors often stop SIPs
– That spoils long-term goals
– Go for regular plans through a Certified Financial Planner
– You get reviews, guidance, portfolio adjustments and goal tracking

– A Rs. 50K SIP for 5 years can create a strong child corpus
– You may increase SIP after 1–2 years if your income allows

– For retirement, continue existing funds in mutual funds and NPS
– Also, slowly shift out of your company stock
– Reinvest in equity and hybrid mutual funds
– This will give more stable growth

Safety and Risk Management
##Job Volatility and Income Protection
– You are the only earning member
– Your child and husband depend on you fully
– So you must protect income and stability

– First, ensure you have 6–9 months’ expenses as emergency fund
– You already have Rs. 10L in FD, which can be used for this
– Don’t touch this FD for investment

– Next, ensure term insurance is active
– You must have at least Rs. 1 crore term insurance
– If not taken yet, buy it urgently
– Avoid LIC or traditional insurance for this
– Buy pure term cover with low premium and high sum assured

##Health Insurance
– You didn’t mention personal health insurance
– Do not rely only on company insurance
– Buy separate Rs. 10L floater policy for yourself and family
– Choose a plan with maternity, child cover, and critical illness options

– Medical inflation is rising every year
– A hospitalisation can wipe out years of savings
– Health cover protects both income and savings

SIP vs RD – What Works Better
– RD is useful only for safety and short goals
– But it gives low returns and is taxable fully
– Mutual funds offer higher growth for medium to long term

– You want to shift Rs. 50K RD to SIP for 5 years
– Yes, that is a wise decision
– SIPs will create more wealth with compounding
– Start with mid-cap or flexi-cap funds via regular plan

– Stay invested for full term
– Don’t stop SIPs during market fall
– Use planner’s help to review every 6 months

– Mutual fund SIP builds discipline, just like RD
– But gives much better returns over time
– Also gives flexibility to increase or reduce

Investment Mistakes to Avoid
– Avoid investing more in company stock
– Don’t invest in index funds—they don’t offer active management
– Don’t go for direct mutual funds—they lack guidance
– Don’t buy ULIPs or traditional child plans—they mix insurance and investment
– Don’t overexpose to FDs beyond emergency needs
– Avoid chasing high-return tips or unknown stocks

– Follow structured asset allocation
– Equity for growth, debt for stability, gold for hedge
– Review and adjust based on market and goals

Finally
You are managing things well with discipline. Your savings are structured. You have diversified investments.

But now, you must shift focus from safety to growth. RD is safe, but too slow. Mutual fund SIPs will help you grow wealth.

Stop RD and start SIP of Rs. 50K for 5 years. Use only actively managed funds. Avoid direct and index options.

Make sure you have term insurance and health cover in place. Use your company stock gains smartly. Reduce holding gradually.

This combination will give you growth, safety, and flexibility. You can achieve all future goals with this balanced strategy.

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

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Ramalingam

Ramalingam Kalirajan  |9607 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Money
I am 43 years old, earning 2L pm, I have a Car Loan of 11L & I m investing 15000 pm in mutual funds. I Have 71k in Mutual Funds, 8.75L in Equities+Gold SGB, Have 1 Home, whose rental income covers car loan emi fully, Have 65 L In VPF & FDR is 30L, I want to retire by 57? How to maxmise my Investment so that i can earn 2.5l pm after 57?
Ans: Income, Loans, and Current Cash Flow Assessment
– Your monthly income is Rs. 2 lakhs.
– Car loan of Rs. 11L is being repaid.
– Home rent fully covers car loan EMI.
– That is a helpful arrangement for cash flow.

– You invest Rs. 15,000 monthly in mutual funds.
– Total mutual fund holding is Rs. 71,000 currently.
– Equities and SGB investment total is Rs. 8.75 lakhs.
– Fixed deposit corpus stands at Rs. 30 lakhs.
– VPF savings have grown to Rs. 65 lakhs.

– You have a property, but it's better not to consider it for investment.
– It is serving well by supporting your EMI obligation.

– With such good assets already built, your base is strong.
– You now need to accelerate and align all investments to retirement.

Retirement Goal: Rs. 2.5 Lakhs Monthly from Age 57
– You want Rs. 2.5 lakhs every month post-retirement.
– That means Rs. 30 lakhs per year as retirement income.
– This income must last for at least 25–30 years.
– So, you will need a sizeable retirement corpus by age 57.

– You have 14 years left to accumulate this corpus.
– Early retirement requires aggressive and disciplined investing.
– Existing assets can be optimised to achieve this.

– Let’s focus on how to grow your wealth till age 57.
– Then how to draw monthly income from it sustainably.

Mutual Funds – Growth Engine for Retirement
– Currently, SIP is Rs. 15,000 per month in mutual funds.
– This needs to be increased in the next 2–3 years.
– From age 43 to 50, try increasing SIPs by 10% yearly.

– Mutual funds should be in diversified equity categories.
– Prefer actively managed multi-cap, large-midcap, and flexi-cap funds.
– These help in growth and flexibility over long term.

– Avoid index funds. They follow the index passively.
– Index funds don’t beat the market in all phases.
– In India, active fund managers can outperform in most cycles.

– Also avoid ETFs. They don’t offer real diversification.
– For wealth creation, direct index investing is not suitable.

– Do not invest in direct mutual fund plans.
– Direct funds give no advice, no tracking, no correction help.
– Invest through regular plans with a Certified Financial Planner.
– You get handholding, guidance and behaviour control.

– Separate your SIPs into two goals: retirement and contingency.
– Keep one folio for each, so goals remain clearly tracked.

VPF and FD – Stability, But Low Growth
– Your VPF corpus is Rs. 65 lakhs now.
– This is good for long-term safety and retirement base.
– VPF offers steady and tax-free interest returns.
– Continue VPF till age 57 for secure retirement core.

– Your FD holding is Rs. 30 lakhs.
– FDs are safe, but offer low post-tax return.
– They don’t beat inflation over long durations.

– Don’t lock all FD amounts in long-term.
– You can slowly shift Rs. 10–15L into hybrid funds.
– Use Systematic Transfer Plan (STP) over 12–15 months.
– This improves return while keeping risk moderate.

– Balance FDs can stay for emergencies or future use.
– Review FD rates every year and reinvest cautiously.

Equities and Gold (SGBs) – Add Power to Wealth
– Your holdings in equities and SGBs total Rs. 8.75L.
– This is a good start for alternative investment pool.
– Keep investing in equities via mutual funds only.
– Direct equity needs time and emotional control.
– Many investors lose by reacting to market news.

– SGBs are fine for long-term passive gold holding.
– But don’t increase allocation to gold beyond 5–8%.
– Gold can protect wealth, but not grow it enough.

– Don’t buy more gold in physical or digital form.
– Existing SGBs can be kept till maturity.
– They provide interest plus capital appreciation.

Optimising Car Loan and Monthly Surplus
– Your home rent fully covers car EMI.
– So, you need not focus on prepaying it fast.
– Just keep a check on total interest outgo.

– If EMI ends before retirement, that’s good enough.
– Any future rental surplus can be redirected to investments.

– Try to increase SIP amount to Rs. 25,000 in next year.
– Plan to grow it to Rs. 40,000–50,000 within 3–4 years.
– Early years matter more due to compounding.

– Review your expenses every 6 months.
– Try to save 30% of your income for investing.
– This will build momentum towards early retirement.

Insurance and Protection Strategy
– You didn’t mention insurance coverage details.
– At your age, term insurance is essential till age 60.
– You should have minimum Rs. 1–1.5 cr term cover.

– Health insurance is also important, minimum Rs. 10L individual or family cover.
– Keep a buffer of Rs. 2–3L in liquid funds for emergencies.

– Do not buy new traditional or endowment plans.
– They mix insurance and investment, and give low return.
– Your retirement goal needs pure investments, not bundled ones.

– If you already hold ULIP or endowment policies, review them.
– If surrender is allowed with low penalty, exit and reinvest in mutual funds.

Post-Retirement Income Planning – 14 Years from Now
– At 57, you will need Rs. 2.5L per month as income.
– This means planning for sustainable withdrawal.
– Total retirement corpus should be around Rs. 4.5–5 cr at least.

– It should come from mutual funds, VPF, and debt funds.
– You should hold at least 30–40% in equity post-retirement too.
– This helps in beating inflation over long time.

– Start shifting equity to hybrid from age 54 slowly.
– Keep 2 years' worth of monthly income in liquid funds.
– Don’t withdraw from equity funds in a bad market.
– Use systematic withdrawal plans (SWP) from mutual funds post-retirement.

– Withdraw from debt and hybrid funds in the first 5 years.
– Allow equity funds to grow for later years.

Taxation Awareness on Mutual Fund Withdrawals
– New mutual fund tax rules are different now.
– Equity fund LTCG above Rs. 1.25L taxed at 12.5%.
– STCG from equity funds taxed at 20%.
– Debt fund gains are taxed as per your income slab.

– Track holding periods carefully before withdrawing.
– Use SWP to manage tax outgo post-retirement smartly.

Goal-Based Reorganisation of Investments
– Divide your current assets and future investments into goals:

Retirement

Emergency

Insurance

Loan obligations

– Keep separate folios or accounts for each goal.
– This gives clarity and control.

– Avoid overlapping uses. Don’t mix emergency funds with investment.
– Maintain an investment diary or use a tracker tool.
– This keeps your targets visible and real.

Finally
– You are financially well-prepared with strong asset base.
– Your discipline and clear goal of retiring at 57 is great.
– You just need to restructure investments for better growth.

– Mutual funds must play a big role from now till age 57.
– Increase SIPs, optimise FDs, and track progress every year.
– Avoid low-return traditional insurance or index funds.
– Stick to actively managed mutual funds through regular mode.
– Plan your withdrawals and taxation well in advance.

– With structured execution, you can retire at 57 comfortably.
– You can enjoy Rs. 2.5L monthly with peace of mind.

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

...Read more

Nayagam P

Nayagam P P  |8419 Answers  |Ask -

Career Counsellor - Answered on Jul 10, 2025

Career
I am now 1st dropper. My percentile is 79(sc) I am planning for 2nd drop.I believe that I will improve my percentile and get a good nit. If I fail in jee in 2nd drop by chance unluckily. and I shall get vit. Any kind of Placement problem in double dropper?? If I shall crack jee and get tier 1 or 2 nit. Is there any kind of problem in placement for double dropper?? Pls reply
Ans: Soumyajit, (LENGTHY ANSWER covering all aspects based on your question. Please go through fully when you are 100% mentally free to read). With a 79 percentile (SC category) as a first dropper and contemplating a second drop for JEE, understanding the placement landscape and potential challenges is crucial for making an informed decision. Contemporary evidence reveals nuanced placement dynamics for droppers in premier engineering institutions, requiring strategic mitigation approaches.

Placement Reality for Droppers in NITs and VIT
Current Placement Trends: Recent Parliamentary data shows concerning placement declines across premier institutions. Between 2021-22 and 2023-24, 22 of 23 IITs recorded placement decreases, with overall B.Tech placements dropping from 90% to 80%. Similarly, 27 of 31 NITs experienced declining average packages, with over 2,000 fewer students placed—representing a 10.77% drop in one year. VIT maintains relatively stable placement momentum with 80-90% placement rates across campuses, though specific dropper statistics remain undisclosed.

Dropper-Specific Challenges: Academic gap policies vary significantly across institutions. VIT categorizes students by academic gaps, with some companies restricting access to students with more than two years of educational breaks. However, most major recruiters focus primarily on academic performance and technical competency rather than gap years. Industry feedback indicates approximately 10% of companies explicitly restrict double droppers, while 90% evaluate candidates based on merit, skills and academic records.

Advantages and Disadvantages of Second Drop
Advantages of Taking Second Drop: Enhanced preparation time allows deeper concept mastery and improved percentile scores, potentially securing admission to Tier 1/Tier 2 NITs. Success stories from Jadavpur University show double droppers securing packages ranging from ?8-16 LPA at companies like Goldman Sachs, Microsoft and Adobe. The additional year enables focused JEE Advanced preparation, skill development in programming and competitive coding, and thorough revision of weak subjects.

Disadvantages and Risks: Age factor becomes significant during recruitment, with some companies implementing maximum gap year criteria. Mental exhaustion and social pressure intensify as peers advance in their academic journeys. Career timeline delays by an additional year, potentially affecting long-term professional trajectory. Financial burden increases with extended preparation costs and delayed earning potential.

Strategies to Overcome Placement Challenges
During College Years: Maintain exceptional academic performance (CGPA >8.5) to offset gap year concerns during recruitment. Develop strong technical skills through competitive programming, open-source contributions and industry-relevant projects. Build robust portfolios showcasing practical applications of theoretical knowledge. Participate actively in internships, hackathons and technical competitions to demonstrate hands-on capabilities.

Pre-Placement Preparation: Craft compelling narratives explaining gap years as dedicated JEE preparation periods with valid justification. Develop exceptional communication skills through mock interviews and group discussions. Leverage alumni networks and industry connections for referrals and insider opportunities. Pursue relevant certifications in emerging technologies like AI/ML, cloud computing or data science to enhance marketability.

Alternative Solutions for Placement Challenges
Off-Campus Placement Strategies: If campus recruitment proves challenging, off-campus placements offer substantial opportunities. Research indicates 70% of applicants receive interview invitations for off-campus drives. Utilize job portals like LinkedIn, Indeed and company career pages for direct applications. Participate in hiring challenges on platforms like HackerRank and HackerEarth to demonstrate technical prowess.

Skill Development Focus: Concentrate on in-demand technical skills including full-stack development, data structures and algorithms, system design and cloud technologies. Average starting packages for engineering dropouts in tech roles range from ?3-8 LPA, with data scientists earning ?5-8 LPA and full-stack developers earning ?3.5-6 LPA.

Alternative Career Pathways: Engineering skills transfer effectively to non-traditional roles including technical writing (?3-6 LPA), sales engineering (?4-7 LPA), consulting and project management. Entrepreneurship represents another viable option, with engineering foundations supporting tech startup ventures.

Continuous Learning Approach: Engage in online learning platforms offering industry-recognized certifications. Participate in bootcamps and intensive skill development programs. Contribute to open-source projects and maintain active GitHub profiles demonstrating practical coding abilities.

Institutional Support and Resources
NIT Support Systems: NITs typically provide robust placement support regardless of academic gaps, focusing on merit-based recruitment. Career development centers offer comprehensive training including aptitude preparation, mock interviews and soft skills development. Alumni networks provide mentorship and referral opportunities.

VIT Placement Framework: VIT's centralized placement system categorizes opportunities into Regular (up to ?4.5 LPA), Dream (?4.5-10 LPA) and Super Dream (?10+ LPA) offers. The institution provides extensive pre-placement training and maintains relationships with 900+ recruiting companies annually.

Recent Placement Statistics Context
Three-Year Placement Trends: NIT placement data shows varying performance across institutions. VNIT Nagpur achieved 82% B.Tech placements in 2024-25 with average packages of ?10.13 LPA. IIT Bombay secured 75% placement rates in 2023-24 with 1,475 students placed from 2,414 registered candidates. While specific dropper statistics remain unpublished, academic performance and technical competency consistently outweigh gap year considerations in recruitment decisions.

Market Recovery Indicators: Despite recent challenges, the engineering job market shows resilience with companies adapting to virtual recruitment models and expanding off-campus hiring initiatives. Technology sector growth continues driving demand for skilled engineers, particularly in emerging domains like artificial intelligence, cybersecurity and cloud computing.

Recommendation: Pursue the second drop only if mentally prepared for intensive preparation and confident about significant percentile improvement (targeting 95+ percentile for Tier 1 NITs). Focus on developing exceptional technical skills and maintaining strong academic performance to minimize gap year impact during placements. Prepare comprehensive justification for the additional drop year emphasizing dedicated JEE preparation and skill development. Consider VIT as a viable backup option given its robust placement infrastructure and relatively lenient gap year policies. All the BEST for Admission & a Prosperous Future!

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Ramalingam

Ramalingam Kalirajan  |9607 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Asked by Anonymous - Jun 25, 2025Hindi
Money
Hi, I am 41 years old with a salary of 2.4 lacs per month. Currently I have 40 lacs of home loan outstanding, 13.4 lacs in PF, 9.5 lacs in PPF and 3 lacs in stocks. I have 2 kids 11 and 6 years old. How should I plan for kids education, retirement and future investments
Ans: Understanding Your Current Financial Snapshot
– You are 41 years old.
– Monthly salary is Rs 2.4 lakh after deductions.
– Home loan outstanding is Rs 40 lakh.
– PF balance is Rs 13.4 lakh.
– PPF corpus is Rs 9.5 lakh.
– Stock investments are Rs 3 lakh.
– You have two children aged 11 and 6.

You are at a crucial stage in your financial journey. You have good income and existing savings. But responsibilities like education, home loan, and retirement need structured planning.

Assessing Existing Commitments and Liabilities
– Your home loan is a big financial commitment.
– Ensure your EMIs are not exceeding 35%-40% of your monthly salary.
– Don’t rush to close the loan if your cash flow is smooth.
– But aim to prepay part of it when surplus funds are available.
– This will help reduce your interest burden over the years.

– Check the interest rate on your home loan.
– If rates are above 9%, explore refinancing options.
– But refinance only if there are no big costs involved.

– Protect your family from the home loan risk.
– Have a pure term insurance cover equal to your outstanding home loan plus future goals.

Building a Strong Emergency Fund
– Emergency fund is a must-have for every family.
– Ideally, it should cover 6 to 12 months of expenses.
– You did not mention your emergency fund.
– If you don’t have one, create it immediately.

– Keep it in a liquid mutual fund or sweep-in FD.
– Don’t keep it in stocks or PPF as they are not liquid.

Reviewing Your Insurance Protection
– Life insurance should be a pure term plan.
– It should cover your income till retirement and your liabilities.
– For your profile, at least Rs 1 crore to Rs 1.5 crore cover is needed.

– Health insurance for you, spouse, and kids is also necessary.
– Have a family floater of at least Rs 10 lakh.
– Your employer’s policy alone is not enough.

– If you have any LIC endowment or money-back policies, surrender them.
– Reinvest the proceeds into mutual funds to grow your wealth better.

Setting Education Goals for Your Children
Your first child will go to college in 6 to 7 years.
The second child will follow after 10 to 12 years.
Higher education in India or abroad could cost Rs 30 lakh to Rs 80 lakh per child.

Step 1: Calculate the Target Corpus
– For simplicity, assume Rs 50 lakh target per child.
– This will account for inflation and rising education costs.

Step 2: Start Dedicated Mutual Fund SIPs
– Start separate mutual fund SIPs for each child’s education.
– Prefer actively managed equity funds for long-term growth.
– Don’t opt for index funds.
– Index funds blindly follow the market and underperform in volatility.
– Actively managed funds are guided by expert fund managers.

– Invest regularly through an MFD who holds a CFP credential.
– Regular funds through MFD give you ongoing advice and handholding.
– Direct funds miss out on this personalised guidance.
– In tough markets, guidance from an MFD helps you stay on track.

Step 3: Review and Increase SIP Annually
– As your salary grows, increase SIP every year.
– This will help you reach your education goal faster.

Structuring Your Retirement Planning
Retirement is 17 to 19 years away for you. You already have PF and PPF. But they are conservative instruments.

Step 1: Estimate Retirement Needs
– Consider your lifestyle expenses post-retirement.
– Include healthcare costs and inflation.
– You may need Rs 3 crore to Rs 4 crore in today’s terms.

Step 2: Continue PF and PPF Contributions
– PF and PPF are safe instruments for retirement.
– Don’t withdraw from them for other purposes.

Step 3: Start Additional Retirement Investments
– Start investing in diversified actively managed equity mutual funds.
– Keep this portfolio separate from kids’ education funds.
– SIPs of Rs 25,000 to Rs 35,000 monthly can help create a large corpus.

Step 4: Maintain Balanced Risk
– As you near retirement, shift some funds to debt mutual funds.
– This balances growth and stability in your portfolio.

Reviewing the Stock Investments
– You currently hold Rs 3 lakh in stocks.
– Keep this for high-risk, high-return potential.
– But don’t treat stocks as your retirement or education fund.
– Stocks are volatile and unpredictable.

– Avoid adding more funds directly into stocks unless you have deep knowledge.
– Mutual funds managed by experts are a safer way for long-term wealth creation.

Recommended Monthly Investment Plan
Given your income and goals, allocate like this:

– 25%-30% of income towards children’s education goals.
– 20%-25% of income towards retirement goals.
– 10%-15% towards home loan prepayment over time.
– 5%-8% towards emergency fund until it is complete.

Adjust these numbers depending on your household expenses and lifestyle.

Managing the Home Loan Strategically
– Don’t rush to prepay home loan at the cost of your goals.
– Interest paid on a home loan has tax benefits.
– Prioritise education and retirement over prepayment.

– But don’t ignore the loan completely.
– Aim to part prepay it every year from bonuses or incentives.
– This will help reduce the overall loan tenure.

Optimising Tax Efficiency
– Continue claiming Section 80C benefits for PF and PPF contributions.
– Use Section 80D for health insurance premium deduction.
– Claim home loan principal under Section 80C.
– Claim home loan interest under Section 24(b).

– Don’t sell mutual funds frequently to avoid higher taxes.
– For equity mutual funds:

LTCG above Rs 1.25 lakh taxed at 12.5%.

STCG taxed at 20%.

– For debt mutual funds, LTCG and STCG taxed as per your slab.

Reviewing Portfolio Every Year
– Every financial plan needs review.
– Check your SIP progress every year.
– Increase SIP as your income rises.
– Rebalance your portfolio once a year.
– Keep your portfolio aligned with your risk appetite.

Building Financial Discipline in the Family
– Discuss savings and goals with your spouse.
– Ensure both are involved in financial decisions.
– Start teaching basic money habits to your children.

This makes the entire family financially aware and responsible.

Creating a Second Income in the Future
– Once your goals are on track, explore a second income.
– Freelancing, hobby monetisation, or consulting could be options.
– Don’t jump into real estate for rental income.
– Real estate has liquidity risks and legal complexities.

Mutual funds and skill-based side income give better diversification.

Keeping a Contingency Plan Ready
– Job security is uncertain in any sector.
– Your emergency fund should cover job loss for 6 months.
– Also build upskilling plans to remain employable in future.

Diversify your income streams where possible.

Final Insights
– You are at a key stage in your financial journey.
– Children’s education and your retirement are your priority goals.
– Start SIPs in actively managed mutual funds.
– Protect your savings with insurance and an emergency fund.

– Don’t rush to close the home loan. But part-prepay over time.
– Avoid real estate as an investment.
– Focus on financial assets that grow and stay liquid.

– Work with a Certified Financial Planner for ongoing guidance.
– Invest through an MFD holding CFP credentials.
– This ensures continuous monitoring and course correction.

Take small steps consistently. Wealth creation is a marathon, not a sprint.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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Ramalingam

Ramalingam Kalirajan  |9607 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Money
How Mutual fund redemption are taxed in NRO account when person being NRI is using his own NRO acc for MF investment. Pls tell us if LTCG and STCG are applied same as compared to normal indian customer( who use savings account and non NRI) .. appreciate if you can establish with illustrtaed examples , lets say 10L investment , redeemed after 3yrs , total redemption value 13L ( 3 L Long term gain). How indian tax system attract taxes to 3L gain ? Will that long term tax same as for ordinary citizen ?
Ans: This is an important area where many NRIs face confusion. You’ve asked about mutual fund redemption taxation through an NRO account and how it compares with resident investors. I’ll address your concern point by point with complete clarity and a 360-degree perspective.

NRO Account and Mutual Fund Investment
– NRO stands for Non-Resident Ordinary account.
– This account is used by NRIs for income earned in India.
– You can invest in Indian mutual funds using your NRO account.
– But you must complete FATCA and KYC formalities as an NRI.
– AMCs will treat your tax status as “NRI” even if using NRO account.
– Therefore, tax rules applicable to NRIs will be followed.
– Resident investor rules will not apply.

Taxation of Mutual Fund Redemption for NRIs
Tax on mutual funds for NRIs is based on:

– Type of fund (equity or debt)
– Duration of holding
– Capital gain amount
– Your residential status (NRI or Resident Indian)

Even if using NRO account, tax treatment follows NRI status, not the account type.

Equity Mutual Funds – Tax Rules for NRIs
Applies to mutual funds with more than 65% equity exposure.

– Holding less than 1 year = Short-Term Capital Gain (STCG)
– STCG taxed at 20% flat rate for NRIs.
– Holding more than 1 year = Long-Term Capital Gain (LTCG)
– LTCG up to Rs. 1.25 lakh = Tax-Free
– LTCG above Rs. 1.25 lakh = 12.5% flat tax as per new rule.

Note: No indexation benefit available on equity mutual funds.

Debt Mutual Funds – Tax Rules for NRIs
Includes funds with less than 35% equity exposure.

– STCG and LTCG taxed as per your income tax slab.
– No special benefit or lower slab for long-term holding.
– NRIs get no indexation or concessional rate.
– Tax rate depends on total income earned in India.
– This applies irrespective of whether investment is through NRO or NRE.

TDS Deduction on Mutual Fund Redemptions for NRIs
– TDS is mandatory at the time of redemption for NRIs.
– AMCs deduct TDS before crediting the amount.
– For equity mutual funds:
– STCG: 20% TDS
– LTCG: 12.5% TDS (after Rs. 1.25 lakh exemption)
– For debt mutual funds:
– Entire gain taxed as per your slab
– TDS generally deducted at maximum applicable rate

Note: You may still need to file ITR in India to claim refund or clarify tax liability.

TDS vs Final Tax Liability
– TDS is not the final tax in all cases.
– You may get a refund if your final tax is less.
– You may have to pay more if TDS was less than actual.
– Filing tax return helps in adjusting this mismatch.

Whether Resident Tax Rules Apply for NRO Investment
– Resident tax benefits will not apply.
– Even if investment is made through NRO account.
– Your residential status decides the tax rule, not account type.
– Hence, NRI taxation applies fully.
– Resident investor is taxed differently in many cases.
– NRIs face TDS and flat rates in most scenarios.
– Residents don’t face TDS for mutual fund redemptions.
– Also, residents can use indexation on some investments.
– NRIs don’t enjoy that facility.

Illustrated Example – Equity Mutual Fund Redemption
Let’s take your example for clarity:

– Investment = Rs. 10 lakhs
– Holding period = 3 years
– Redemption amount = Rs. 13 lakhs
– Capital gain = Rs. 3 lakhs
– Type = Equity Mutual Fund

Tax Calculation:
– Holding more than 1 year = LTCG
– First Rs. 1.25 lakh of gain is tax-free
– Remaining Rs. 1.75 lakh is taxable at 12.5%
– Tax = 12.5% of Rs. 1.75 lakh = Rs. 21,875

Additional Note:
– AMC will deduct TDS of Rs. 21,875 at source
– You will get Rs. 13,00,000 – Rs. 21,875 = Rs. 12,78,125 in bank
– If actual tax due is lower or higher, ITR needs to be filed

What if the Fund Was Debt-Oriented?
– Then the full Rs. 3 lakh gain is taxed as normal income
– No LTCG or STCG concept for NRIs
– Tax will be as per slab, but TDS may be at higher rate
– Assume 30% tax slab, tax = Rs. 90,000
– AMC will deduct TDS based on applicable slab or 30%

Should NRIs Invest from NRO or NRE?
– Both NRO and NRE can be used for mutual funds
– But NRE-linked investments are repatriable
– NRO-linked investments are not freely repatriable
– Up to Rs. 1 million per financial year can be repatriated from NRO
– NRE investments enjoy better liquidity for repatriation

But taxation is based on your status as NRI – not based on NRO or NRE.

NRO Mutual Fund Investment – Final Thoughts
– Yes, you can invest through NRO account
– But tax will be as per NRI status
– No benefit of resident taxation even if account is NRO
– STCG and LTCG rules for NRIs will apply
– TDS is deducted even if you are not liable to final tax

Always declare correct residential status. Avoid investing as resident if you are NRI.

Importance of Fund Type – Equity vs Debt
– Always understand whether the fund is equity or debt
– It changes the tax rules significantly
– Equity funds are more tax-efficient for NRIs
– Debt funds can lead to higher TDS and tax outgo
– Choose actively managed equity funds for long term
– Avoid passive index funds – they offer no downside protection
– An experienced fund manager adds value during market cycles

Direct Plans – Not Suitable for NRIs
– You haven’t mentioned whether your investment is direct
– If direct plan is used:
– You get no service or advice
– No help in KYC, tax filing or TDS tracking
– No alert for rebalancing or fund underperformance
– Regular plan through MFD with CFP is more suitable
– Offers guidance, monitoring and goal alignment
– Mistakes in NRI investments can be costly

Avoid direct route, especially for NRO/NRI accounts.

Tax Filing for NRIs
– If TDS was deducted more than needed, file ITR in India
– Helps claim refund and update details
– If actual tax is more than TDS, you must pay balance
– Filing ITR ensures compliance and avoids notices
– Keep documents of investment proof and TDS deduction

Final Insights
– NRO account can be used by NRIs for mutual fund investment
– But taxation depends on NRI status, not account type
– LTCG on equity above Rs. 1.25 lakh is taxed at 12.5%
– STCG on equity taxed at flat 20%
– Debt funds are taxed as per slab with higher TDS
– TDS is compulsory for NRIs on all capital gains
– No resident tax benefit applies to NRIs even if investing from NRO
– Filing tax return helps in refund or balance tax
– Prefer actively managed regular funds with CFP-backed MFD
– Avoid direct, index, or sectoral funds
– Don’t overlock funds with long lock-in structures

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

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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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