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Dr Karthiyayini Mahadevan  |1094 Answers  |Ask -

General Physician - Answered on Jan 02, 2024

Dr Karthiyayini Mahadevan has been practising for 30 years.
She specialises in general medicine, child development and senior citizen care.
A graduate from Madurai Medical College, she has DNB training in paediatrics and a postgraduate degree in developmental neurology.
She has trained in Tai chi, eurythmy, Bothmer gymnastics, spacial dynamics and yoga.
She works with children with development difficulties at Sparrc Institute and is the head of wellness for senior citizens at Columbia Pacific Communities.... more
ABRAHAM.C Question by ABRAHAM.C on Oct 12, 2023Hindi
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Dear Madam, My wife suffers fever, or feeling like fever, every month. She is lean and 41+ having asthmatic condition and takes an inhaler when breathing problems come only. She tensions even for small things (over tensioned) due to which her neck and ears get first scratching (NEARLY FOR THE PAST 1.5 YEARS) and recently skin top comes out like scales. She suffers acute constipation and stomach is not clear prone to overall body dryness. Can you direct me to whom we should consult or what kind of medication do we start? ABRAHAM

Ans: Please Consult your family Physician to rule out Hypothyroidism .Also check her out for Respiratory infection if there are underlying
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  |6525 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 07, 2024

Money
I am 56 yrs age receiving sufficient monthly pension. Need to deploy 1 Cr retirement benefits into mutual funds for 5-10 years. Please can you advise on the funds I need to buy. Also please let me know if I can park the entire amount in a liquid etf and sell monthly to my bank for staggering the above deployment in 12-18 SIPs
Ans: You have Rs 1 crore to invest, a sufficient pension, and a 5-10 year investment horizon. Since you do not require immediate income, this allows for a balanced approach. Here’s a structured plan with a focus on stability, growth, and tax efficiency.

Asset Allocation for Stability and Growth
The first step is to divide your Rs 1 crore across different asset classes. Considering your age and financial goals, a balanced approach between equity and debt is suitable. The goal is to provide growth while keeping the risks in check. A 50-60% allocation in equity and 40-50% in debt is ideal for you.

Equity Allocation (50-60%): Equity provides inflation-beating returns over the long term. Since you have a 5-10 year horizon, equity can deliver substantial growth. However, risk needs to be managed.

Debt Allocation (40-50%): This portion brings stability. It ensures capital protection and provides regular interest income. This also helps to reduce volatility in the overall portfolio.

SIP for Staggered Investments: Smart Deployment Strategy
You are considering staggering your investment over 12-18 months. This is an intelligent strategy to reduce the impact of market volatility. Systematic Investment Plans (SIPs) allow you to spread your investments over time, which reduces the risks of market timing.

However, rather than parking your entire Rs 1 crore in a liquid ETF, consider liquid funds. Liquid ETFs are not ideal for regular withdrawals as they can fluctuate, unlike liquid mutual funds that are better suited for such purposes. Here's why:

Liquid Funds for Temporary Parking: Liquid mutual funds offer better stability than liquid ETFs. These funds are used to park money for short periods and provide easy liquidity with relatively better returns than bank savings accounts. You can redeem a fixed amount monthly and use it to stagger your equity SIP investments.

SIP into Actively Managed Funds: Actively managed mutual funds provide better chances of outperformance. Unlike index funds, actively managed funds are carefully curated by fund managers, offering higher returns when managed well.

Avoid Direct Mutual Funds and ETFs
Direct mutual funds may seem appealing due to lower expense ratios. However, unless you have a strong understanding of the market, the expertise of a Certified Financial Planner (CFP) can make a significant difference. Regular funds with the guidance of an MFD (Mutual Fund Distributor) who has CFP credentials offer professional fund management.

Also, avoid parking your entire Rs 1 crore in an ETF. Index funds or ETFs don’t offer flexibility in market conditions. The disadvantages of index funds include no scope for outperformance since they simply track the market. In contrast, actively managed funds have the potential for superior returns as fund managers take active positions in market opportunities.

Fund Categories to Consider for Equity Allocation
When investing in mutual funds, diversification is key. Here are some categories that should be a part of your equity portfolio. Avoid specific scheme names, but focus on these categories:

Large & Mid-Cap Funds: These funds invest in a combination of large, stable companies and mid-sized, growth-oriented firms. This mix provides a good balance between growth and stability.

Flexi-Cap Funds: These funds invest across large-cap, mid-cap, and small-cap companies, giving flexibility to fund managers to shift allocations depending on market conditions.

Multi-Cap Funds: These funds allocate across market caps, reducing the risk of focusing only on one segment of the market. They provide long-term growth potential.

Thematic or Sectoral Funds: These funds invest in specific sectors like technology, healthcare, or manufacturing. However, these funds should be a smaller portion of your portfolio, given their higher risk.

Fund Categories to Consider for Debt Allocation
Debt mutual funds will help secure your capital while providing steady income. Here's a broad recommendation on debt categories:

Corporate Bond Funds: These funds invest in high-quality corporate bonds, offering better returns than traditional FDs while maintaining a moderate risk profile.

Short-Term Debt Funds: Short-duration debt funds provide better interest than liquid funds and are suitable for short-to-medium-term investments.

Gilt Funds: These funds invest in government securities. Though they come with interest rate risks, they are the safest form of debt investment. They are ideal for conservative investors seeking stability.

Dynamic Bond Funds: These funds can adjust their portfolio based on the interest rate scenario, thus offering flexibility.

Tax Considerations for Mutual Fund Investments
Taxation is an important aspect of your investments. Here’s how mutual fund capital gains are taxed:

Equity Mutual Funds: Long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.

Debt Mutual Funds: Gains from debt mutual funds are taxed according to your income tax slab for both short-term and long-term investments.

Dividends from Mutual Funds: Dividends are taxed as per your income tax slab, so it’s better to go for a growth option instead of dividend payout plans.

Emergency Fund and Liquidity
Ensure you have an emergency fund of 6-12 months' worth of expenses. You already have Rs 2 lakh in Fixed Deposits. You may want to increase this to Rs 6-8 lakh by either adding to your FDs or using liquid funds.

This provides a cushion in case of any unforeseen expenses. Liquidity is crucial in retirement planning.

Review and Rebalance Your Portfolio
Your financial journey does not stop after investing. It’s crucial to periodically review and rebalance your portfolio. Every year, evaluate the performance of your funds and make adjustments if necessary. This will help you stay aligned with your financial goals.

Estate Planning
Since you are approaching retirement, estate planning is important. Consider drafting a will or a trust to ensure the smooth transfer of wealth to your family. This adds a layer of security to your financial planning.

Final Insights
Investing Rs 1 crore into mutual funds can provide both growth and safety if done wisely. By staggering your equity investments through SIPs and allocating to both equity and debt, you can achieve steady returns. Use liquid mutual funds for parking and staggered withdrawals instead of liquid ETFs. The approach will allow you to reduce market risk and capitalize on long-term growth.

Finally, do regular portfolio reviews to ensure that your investments stay on track and are adjusted as needed.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |6525 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 07, 2024

Asked by Anonymous - Oct 07, 2024Hindi
Money
Hello, I am 49 yrs old having wife (homemaker) and one son 13 yrs. I want to retire by age of 55 yrs. I have adequate health Insurance for family also have company health insurance. I have PPF 20 lacs approx., MF 30 lacs, Rental income 25K monthly, Direct Equity 50K, Emergency FD 2 lacs. Have 11 yrs remaining on housing loan EMI 25K. My in hand salary is 1.10K monthly. I want to get 1 lac per month after retirement. Please advice.
Ans: You have done well to build a strong financial base. Your savings and investments are diverse, and you also have rental income to support your retirement. Let's break down your current assets and liabilities:

Public Provident Fund (PPF): Rs 20 lakhs
Mutual Funds: Rs 30 lakhs
Rental Income: Rs 25,000 monthly
Direct Equity: Rs 50,000
Emergency Fixed Deposit: Rs 2 lakhs
Home Loan: 11 years remaining with an EMI of Rs 25,000
Monthly Salary: Rs 1.10 lakhs in hand
You also mentioned having adequate health insurance for your family, which is essential for financial security.

Retirement Goal: Rs 1 Lakh Per Month
You plan to retire at the age of 55, and your goal is to generate Rs 1 lakh per month after retirement. Let's now assess how to achieve that.

Assessment of Income and Expenses Post-Retirement
You will continue to receive Rs 25,000 per month from rental income. Therefore, the remaining Rs 75,000 per month will need to come from your investments.

Your current home loan is an ongoing liability, with an EMI of Rs 25,000. It would be ideal to explore prepayment options or at least ensure that this EMI doesn’t stretch too far into your retirement.

Now let’s focus on optimizing your investments and income sources.

Evaluate Your Investments
Your portfolio is quite diversified, with investments in PPF, mutual funds, direct equity, and a fixed deposit for emergencies. However, some adjustments may be needed to generate a regular income of Rs 75,000 per month after retirement.

Public Provident Fund (PPF)
The current PPF balance of Rs 20 lakhs is a safe and tax-efficient investment.
Continue contributing to PPF, but remember that its lock-in period and lower liquidity make it less ideal for regular income.
Mutual Funds
Your Rs 30 lakhs in mutual funds will play a crucial role in achieving your retirement income goals.
Since mutual funds have the potential for higher returns, maintaining and growing this corpus is important.
You can opt for a Systematic Withdrawal Plan (SWP) post-retirement. This will allow you to withdraw a fixed amount regularly without depleting the principal too fast.
Regularly review the performance of your mutual funds. Focus on actively managed funds rather than index funds, as actively managed funds can potentially outperform in the long term.
Direct Equity
Your Rs 50,000 in direct equity is a small portion of your portfolio.
Direct equity investments can be volatile, and since the amount is relatively small, you might not want to rely on it for regular income.
Consider shifting a portion of this to mutual funds for better risk management through professional fund managers. Regular funds managed by mutual fund distributors (MFDs) who are certified financial planners (CFPs) are often better for long-term growth.
Fixed Deposit for Emergencies
Your Rs 2 lakh fixed deposit is useful as an emergency buffer.
Keep this fund intact and do not use it for income generation. It's always wise to have 6-12 months’ worth of expenses in liquid, easily accessible funds.
Home Loan Strategy
The EMI of Rs 25,000 per month is a significant expense. With 11 years left on the loan, this will continue well into your retirement unless paid off earlier. Here's what you can consider:

Prepaying the loan: If feasible, use some of your current salary or rental income to prepay a portion of the home loan. Reducing this liability before retirement will ease the financial burden later.
If prepaying is not possible, ensure that your post-retirement income can comfortably cover the EMI.
Retirement Corpus Requirement
Assuming you need Rs 75,000 per month from your investments (since Rs 25,000 will come from rent), you will need to build a sufficient corpus by the time you retire. The corpus should be able to generate this amount through systematic withdrawals and interest income.

With inflation and other factors in mind, a rough estimate suggests that you will need a retirement corpus of around Rs 1.5 crore to Rs 2 crore to safely generate Rs 75,000 per month. Let's now explore how to build this corpus over the next six years.

Investment Strategies to Build Your Retirement Corpus
Increase Contributions to Mutual Funds
Currently, you have Rs 30 lakhs in mutual funds. Over the next six years, this can grow significantly, depending on market conditions.
Consider increasing your monthly contributions to mutual funds. This will help you build a larger corpus by the time you retire.
Opt for equity-focused mutual funds for long-term growth. Equities tend to outperform other asset classes over longer periods.
Keep a balance between mid-cap, small-cap, and large-cap funds to optimize your returns. Avoid index funds as they may provide lower returns compared to actively managed funds.
Use Systematic Investment Plans (SIPs)
Systematic Investment Plans (SIPs) will help you build your corpus in a disciplined manner.
By investing regularly, you will also benefit from rupee cost averaging, which helps mitigate the impact of market volatility.
Avoid Direct Equity for Regular Income
Direct equity investments can be unpredictable and volatile. Since your goal is to generate regular income, avoid relying on direct equity.
Shift a portion of your direct equity investments into safer options like mutual funds managed by professionals. Regular mutual funds, managed by MFDs who are certified financial planners (CFPs), provide more stability and better risk management compared to direct equity or index funds.
Rental Income and Real Estate
Your Rs 25,000 rental income will be a steady source of income post-retirement.
Consider increasing the rent periodically to keep up with inflation.
Inflation and Rising Costs
It’s crucial to factor in inflation when planning for retirement. While you might need Rs 1 lakh per month today, the cost of living will rise in the future. Therefore, building a larger corpus than initially expected is always a good strategy.

Your rental income and systematic withdrawals from your mutual funds should help mitigate the impact of inflation, but do review your plan every few years to ensure you're on track.

Additional Considerations for Retirement Planning
Emergency Fund
You have an emergency FD of Rs 2 lakhs, which is a good start. However, as you get closer to retirement, it may be worth increasing this to cover at least 6-12 months of living expenses. This way, you won’t need to dip into your retirement savings for any urgent needs.

Health Insurance
You mentioned having adequate health insurance, including company-provided coverage. After retirement, you won’t have employer-provided coverage. Therefore, consider enhancing your health insurance coverage before you retire. This will protect you and your family from any unexpected medical expenses post-retirement.

Taxation of Investments
Your post-retirement income will be subject to taxation. Here’s a quick overview of how your investments will be taxed:

Rental Income: Taxed as per your income tax slab.
Mutual Funds (Equity): Long-term capital gains (LTCG) above Rs 1.25 lakh will be taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.
PPF: Interest earned is tax-free.
Fixed Deposit Interest: Taxed as per your income tax slab.
Ensure that your withdrawals and income sources are tax-efficient. A certified financial planner can help you optimize your tax liability in retirement.

Finally
You are on the right path toward a comfortable retirement. With a few strategic adjustments, you can achieve your goal of Rs 1 lakh per month after retirement. Focus on growing your mutual fund investments and paying down your home loan, while also keeping a strong emergency fund in place.

By maintaining a well-diversified portfolio and periodically reviewing your plan, you will be well-prepared for your retirement at 55.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

Milind

Milind Vadjikar  |342 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 07, 2024

Ramalingam

Ramalingam Kalirajan  |6525 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 07, 2024

Money
sir i am 37 years old i have my savings till date of 600000 inr....i am doing sip of 5k every month just started in october......i want a corpus of 1 cr at the age of 53 years old
Ans: 1. Goal Setting for Corpus Building

You have set a goal to accumulate Rs 1 crore by the age of 53, which gives you a 16-year investment horizon. Having started your SIP in October, you're already on the right path. Consistent investments over the long term can lead to significant wealth creation.

However, accumulating Rs 1 crore requires a well-planned strategy. Let’s break down how you can approach this goal in a systematic way.

2. Current Savings and SIP Contribution

You currently have Rs 6 lakh in savings and are contributing Rs 5,000 per month towards your SIP. While this is a good start, it may not be enough to reach your goal of Rs 1 crore in 16 years. You may need to increase your SIP contributions over time or look into additional options that fit your risk tolerance and time horizon.

3. Incremental SIP Growth

To build a Rs 1 crore corpus, increasing your SIP contribution over time will be important. Consider stepping up your SIP amount annually by a small percentage (e.g., 10%). This allows your investments to grow in line with inflation and your income, giving your corpus a significant boost. By increasing your SIP every year, you can leverage the power of compounding more effectively.

4. Choosing the Right Type of Mutual Funds

Instead of focusing on index funds, which offer lower potential returns, actively managed funds may suit your goal better. Actively managed funds are handled by experienced fund managers who aim to outperform the market. These funds have the potential to generate higher returns compared to passively managed index funds.

In your case, focusing on mid-cap and small-cap funds could provide higher returns over a long-term horizon. These funds tend to be more volatile but have historically outperformed large-cap funds over extended periods. Balanced funds can also help manage risk while providing reasonable returns.

5. SIP through Regular Funds with a Certified Financial Planner (CFP)

It is advisable to invest in regular funds rather than direct funds. Direct funds require you to actively track and manage your portfolio, which may be time-consuming and difficult without expert guidance. By going through regular funds with a Certified Financial Planner, you receive expert advice, periodic portfolio reviews, and better fund management. The small additional cost of regular funds is justified by the value a CFP brings in terms of fund selection and ongoing support.

6. Tax Efficiency of Mutual Funds

It’s crucial to consider the tax implications of your mutual fund investments. For equity mutual funds, long-term capital gains (LTCG) above Rs 1.25 lakh per year are taxed at 12.5%, while short-term capital gains (STCG) are taxed at 20%. This means that holding your investments for more than one year not only gives you the benefit of compounding but also reduces your tax liability.

Debt mutual funds, on the other hand, are taxed according to your income tax slab. Since your goal is long-term wealth creation, equity mutual funds should form a larger part of your portfolio, as they offer better tax efficiency.

7. Emergency Fund

While building your corpus is a priority, don’t forget to maintain an emergency fund. This should be at least six months’ worth of your expenses. Your current savings of Rs 6 lakh can partially serve as this buffer. Having an emergency fund ensures that you won’t have to dip into your investments during unforeseen circumstances.

8. Avoid Investment-cum-Insurance Policies

If you hold LIC, ULIP, or other investment-cum-insurance policies, you may want to reconsider these investments. These products often come with high charges and lower returns compared to mutual funds. It is more beneficial to separate insurance and investments. You can surrender such policies and reinvest the amount in mutual funds, which are likely to give you better long-term returns.

9. Focus on Equity Exposure

Equity investments tend to outperform other asset classes over the long term. To build a Rs 1 crore corpus, your portfolio should have a substantial equity exposure, especially in the early years. As you get closer to your goal, you can gradually shift a portion of your portfolio to safer debt instruments to protect your accumulated wealth.

A diversified portfolio that includes a mix of large-cap, mid-cap, and small-cap funds would help balance risk and reward. Since you are in the accumulation phase, consider having a higher allocation to mid-cap and small-cap funds, as they have the potential to provide higher returns over the long term.

10. Review Your Portfolio Regularly

A critical part of building your Rs 1 crore corpus is to review your portfolio regularly. This does not mean you need to check your portfolio daily or weekly. A quarterly or half-yearly review with your Certified Financial Planner is ideal. This will help you ensure that your portfolio is on track, and any underperforming funds can be replaced or adjusted accordingly.

Regular reviews will also help you stay updated on changes in market conditions, tax regulations, and your personal financial situation. You can rebalance your portfolio as needed to maintain the right asset allocation and risk profile.

11. Consider Additional Investments

Apart from SIPs, you can consider making lump sum investments whenever you have extra funds available. If you receive a bonus, tax refund, or any other windfall income, investing it in your mutual funds can significantly boost your corpus. Since you’re still early in your investment journey, making lump sum contributions can take advantage of market fluctuations, enhancing your returns over time.

12. Keep Your Investment Horizon in Mind

While the goal is to accumulate Rs 1 crore by age 53, it’s essential to remember that markets can be volatile in the short term. Don’t get discouraged by short-term fluctuations. The longer you stay invested, the more you benefit from compounding. Stay focused on your long-term goal, and avoid reacting to market volatility by making premature withdrawals or stopping your SIPs.

13. Importance of Financial Discipline

Achieving your financial goals requires discipline and commitment. Continue your SIPs consistently, even during periods of market downturns. This ensures you are buying more units when prices are low, which can boost your returns when markets recover. Your goal of Rs 1 crore is attainable with disciplined investing and by periodically increasing your SIP contributions.

14. Protect Your Investments with Insurance

While building your investment corpus, don’t forget about protecting your family and your investments. Ensure you have adequate life insurance and health insurance. A term insurance policy is a good way to provide financial security to your family. Avoid mixing insurance with investments, as it dilutes the benefits of both.

Having sufficient health insurance will also ensure that medical emergencies do not force you to dip into your savings or investments.

15. Final Insights

You are on the right track by starting your SIPs early and having a clear financial goal. With consistent investing, proper fund selection, and incremental SIP growth, achieving your Rs 1 crore target by 53 is possible. Focus on increasing your SIP contributions over time, review your portfolio regularly, and maintain financial discipline.

Always remember the importance of equity exposure for long-term goals, and avoid investment products that mix insurance with returns. Protect your investments by having adequate life and health insurance.

Stay committed to your goal, and consult with a Certified Financial Planner to ensure you are on the right path at every stage of your financial journey.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...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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