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26-Year-Old Married Man with 70 Lakh Debt; Seeking Advice for Business?

Milind

Milind Vadjikar  |874 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 03, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Aug 07, 2024Hindi
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I'm 26 year old married guy. I have my father debt it's around 70 lac rupees. I have a business where now we hardly earning 50k per month. Suggest me what should I do

Ans: Try and see if you can get any moratorium on the loan repayment from the lender.

If this works you get some time to focus and improve your earnings.

Port the loan to another agency if the ROI is higher.

Last option would be sell any unutilized real estate property or other asset to repay the loan.

Maybe you continue to handle business and your spouse decides to take up a job or you both take up jobs till the loan is repaid.

Loan repayment should be the topmost priority of your family.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |7596 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 31, 2024

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My name is mushataq ahmad 47 years of age having solitary daughter aged around 15 years .I have my own ancestral home I have monthly income of 25 thousand rupees and further having a liability of 13 lakh of banks how to get rid of that
Ans: You are 47 years old, with a 15-year-old daughter. You have an ancestral home and a monthly income of Rs 25,000. You also have a bank liability of Rs 13 lakhs.

Evaluating Your Financial Situation
Income Analysis: Your monthly income is Rs 25,000. We need to allocate this wisely.

Debt Concern: The bank liability of Rs 13 lakhs is significant. Reducing this should be a priority.

Future Planning: Planning for your daughter’s education and your retirement is essential.

Steps to Reduce Debt
Budgeting: Create a monthly budget. Track all your expenses and identify areas to cut costs.

Debt Repayment Plan: Allocate a fixed amount each month towards loan repayment. Consistency is key.

Prioritise High-Interest Loans: Focus on repaying loans with the highest interest first. This reduces the overall interest burden.

Boosting Income
Additional Income Sources: Look for additional income opportunities. Part-time jobs or freelancing can help.

Skills Upgrade: Consider learning new skills. This can lead to better job opportunities and higher income.

Investment Strategy
Emergency Fund: Maintain an emergency fund. This should cover 6 months of expenses for unforeseen circumstances.

Systematic Investment Plan (SIP): Start SIPs in actively managed equity mutual funds. These offer potential for higher returns.

Public Provident Fund (PPF): Invest in PPF for long-term savings. It offers tax benefits and guaranteed returns.

Avoiding Index and Direct Funds
Actively Managed Funds: These funds have professional managers. They make strategic decisions to maximise returns.

Regular Funds Through CFP: Investing through a Certified Financial Planner ensures expert advice and better fund selection.

Education Planning for Daughter
Child Education Plan: Start a dedicated fund for your daughter’s education. Regular contributions will grow over time.

Scholarship Opportunities: Explore scholarship options for your daughter. This can reduce future education expenses.

Retirement Planning
Retirement Fund: Start a retirement fund with long-term growth investments. SIPs in equity mutual funds can be effective.

Review Existing Policies: If you have LIC or ULIP policies, evaluate their performance. Consider surrendering underperforming policies and reinvesting in mutual funds.

Managing Expenses
Frugal Living: Adopt a frugal lifestyle. Prioritise needs over wants.

Avoid Unnecessary Debt: Avoid taking on new loans. Focus on clearing existing liabilities first.

Closing Remarks
Reducing debt, increasing income, and strategic investments will improve your financial health. Regular reviews and adjustments are key to staying on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |7596 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 21, 2025Hindi
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I'm 32, with no savings other than my monthly SIP of 5000 which i have been doing since 2022 september. I have no financial backing, could you help me with a break up of how i can start investing and saving.
Ans: At 32, starting with Rs. 5,000 monthly SIP is a good first step. Building wealth requires a structured approach to saving and investing. Here's a step-by-step guide to help you achieve financial stability and growth.

Assessing Your Current Situation
You have no financial backing, so an emergency fund is critical.

Your monthly SIP indicates discipline in investing.

Prioritising goals and systematic planning will strengthen your finances.

Step 1: Establish an Emergency Fund
Save at least 6 months' worth of monthly expenses in a liquid fund or savings account.

Allocate a fixed portion of your income every month for this purpose.

Emergency funds should be easily accessible but not used for routine expenses.

Step 2: Manage Expenses Effectively
Create a monthly budget to track income and expenses.

Identify unnecessary expenses and redirect the savings towards investments.

Follow the 50-30-20 rule:

50% for necessities (rent, food, bills).
30% for discretionary spending (entertainment, hobbies).
20% for savings and investments.
Step 3: Continue and Enhance SIP Contributions
Your Rs. 5,000 SIP in equity mutual funds is a good start.

Gradually increase the SIP amount as your income grows.

Choose funds based on your risk tolerance and investment horizon.

Step 4: Diversify Your Investments
Equity Mutual Funds

Continue investing in actively managed funds for long-term growth.
Focus on funds with consistent performance over 5-10 years.
Debt Funds or Fixed Deposits

Allocate a portion to safer instruments for stability.
These options can balance risk in your portfolio.
PPF (Public Provident Fund)

Open a PPF account for tax-saving benefits and long-term compounding.
Invest a fixed amount annually to build a secure retirement corpus.
Gold for Wealth Protection

Allocate a small percentage (5-10%) to gold (SGB or gold mutual funds).
Gold acts as a hedge against inflation.
Step 5: Focus on Insurance and Risk Coverage
Purchase a term insurance policy with adequate coverage (10-15 times your annual income).

Ensure you have comprehensive health insurance to cover medical emergencies.

Avoid investment-cum-insurance policies as they deliver low returns.

Step 6: Plan for Long-Term Goals
Define specific financial goals like buying a house, retirement, or children's education.

Assign timelines and cost estimates to each goal.

Invest in equity for long-term goals (10+ years) and debt for short-term goals (1-3 years).

Step 7: Tax-Saving Investments
Use Section 80C instruments like ELSS, PPF, or NPS to save taxes.

ELSS funds provide equity exposure with tax benefits under Section 80C.

Avoid locking excessive funds in low-return tax-saving options.

Step 8: Automate Savings and Investments
Set up auto-debit for SIPs and savings to maintain consistency.

Automating investments reduces the temptation to spend unnecessarily.

Step 9: Regular Monitoring and Review
Review your portfolio every 6 months to track performance.

Rebalance your portfolio to maintain the right asset allocation.

Avoid frequent fund switching, as it may impact long-term returns.

Final Insights
Starting with limited resources can feel challenging but is achievable with discipline. Build an emergency fund, manage expenses wisely, and grow your investments systematically. Consult a Certified Financial Planner to optimise your portfolio and achieve your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ravi

Ravi Mittal  |514 Answers  |Ask -

Dating, Relationships Expert - Answered on Jan 21, 2025

Ravi

Ravi Mittal  |514 Answers  |Ask -

Dating, Relationships Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 19, 2025Hindi
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I am a divorced working woman , with a daughter 8 yrs. I have been pursued for remarriage with a guy who is 10 yrs older to me and have 2 kids. 11 and 14 yrs respectively living in a small town. Initially it was agreed the elder child who is a boy would be living in hostel , but now since we are approaching near to the marriage, it seems the elder male child is going to stay at home and not hostel. This is making me really uncomfortable as I won't get much privacy also the male child is aggressive.Already handling one kid was difficult before. Also moving to small town was difficult transition from a metropolitan that I stay in. Moving there could mean losing job opportunities in future. I am really worried if I let this match go, I end up alone again. I am not able to make a decision, it's difficult to raise others children. It's just not naturally inbuilt in us.Although I try really hard to mould my thinking and be more generous, but somehow it suffocates me.
Ans: Dear Anonymous,
Let me ask you one thing, if you knew a plane was going to crash, would you still get on it because you are worried you will reach your destination late? No, right? Similarly, if you know this marriage could be really tough on you, with the added responsibilities of a teenager and another soon-to-be teenager, do you still want to go ahead with it, just because you might have to stay alone for a while longer?

I can't really make a decision for you, but I can urge you to rethink this alliance. It's great that you are trying to compromise but do not compromise so much that nothing that you want is given any importance. You cannot ask a father to send his child to a hostel so that you can have some privacy; similarly, no one can force you to raise him as well. The best decision would be to either reconsider the relationship or have an open conversation and come to a middle ground that works for all.

Best Wishes.

...Read more

Ravi

Ravi Mittal  |514 Answers  |Ask -

Dating, Relationships Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 16, 2025Hindi
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How do I 32M get over my insecurity with 30F? (Seeking Advice) Met this girl via matrimony exactly 2 months back. We connect well. Our families have met recently and it went well. Somehow we found a lot of connections between our families. That's just a bonus. Her family likes me a lot and they wanted to do Roka when they met us last week. I had told her, that no matter our bond, we should talk a lot and give it 3 months before going for roka. We live in different metro cities and have met twice now. About her: She is 30, well behaved & spoken(most important thing for me), smart, good looking, and is extremely polite. She is an army brat, has had a lot of freedom from family. Due to her father's job, they kept getting posted to different cities so she doesn't really understand family part of things. She's in a IT job. About me: I'm 32, okayish guy, in IT. To take things ahead I need to know my partner's past. I have no judgements at all but need to know stuff. Getting to know things over time bothers me a lot. I've tried to work on it, and have always made sure I don't bother the other person too much. After a month of talking, she told me that she had a casual boyfriend for an year. All her friends were dating in Bangalore and she decided to try it out. Found a guy through bumble and started dating him. So, according to her there were no feelings, just a person for her to go to places with, have drinks, and party. She likes drinking a lot and I have never taken a sip. She said that it was just a phase and she was immature. This happened between 2018(Nov) to 2020(march). So, it's been like 5 years. Never dated anyone after that. Since covid(2020) she's been living with her parents due to wfh. I have been completely ok with that but new things surfaced and they are messing with my head. While snooping around her facebook I figured out who that person was and this guy is super close to a person in my distant family. In fact they both were flatmates until their respective marriages. This distant cousin of mine knows me and knows her really well. These 3 used to hangout a lot and he has seen her come to their flat regularly. Infact, she had a good bond with my cousin as well. There are things that bother me and I really can't shake things and feel super awful in my gut. She mentioned that she and her ex had a common love for drinking and regularly visited pubs, got drunk, and partied. This means that they would be staying at each other's place as well. This is something super old but bothers me a lot. Specifically the fact that she would be drunk partying with someone for an year and sleeping with him, with no feelings. Secondly, I found some posts where she has liked a post about this guy on fb/insta from mid-2021. I have already confronted her twice to share everything and we shall never discuss this again but this bothers me a lot. Secondly, now that I know the timelines I can figure out what photos have been taken by her ex. There's even a photo of her sitting on a messy bed, where she's cutting her bday cake. They celebrated it together. I found my cousins page and some other pages from which I knew it's the guy's room/flat. I know everyone has a past. She has come clean to me but somehow my brain is so split. Sometimes her nature and behaviour with me make me not care about anything. And then I know the bed, flat, and her actions with some guy. Then there is this angle where the ex's flatmate is my distant cousin and knows about her well.
Ans: Dear Anonymous,
I understand that it is important for you to need to know her past and you mentioned that you merely want to know, and would not judge. But judging is exactly what you are doing. A lot of people have exes, a lot of people have occasional drinks- we can't judge people based on their past. She has opened up to you and all you are doing is snooping around. To be honest, it seems like you are really more concerned about her ex and past than about how amazing a person she is. I have only one piece of advice, if you think you can't get past her past, let her go. No one deserves to be judged by their past.

And think of it this way- you asked, and she told you. She was not obliged to, but still understanding your 'need' to know 'everything,' she confided in you. And this is how you are paying her back. Moreover, so what if she had an ex, or dated casually? How does that affect you right now? Ask yourself the same question and I think you will know the answer to your own dilemma.

Having said it all, marriage is a big decision. If you think her past can hamper your future, please rethink this relationship. It is best for both of you.

Best Wishes

...Read more

Ramalingam

Ramalingam Kalirajan  |7596 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 21, 2025

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I am 49 and plan to retire in 2 years time.. I currently have a MF corpus of about 1.8 Cr, a PF of about 1 Cr and properties worth 2 Cr. I have been investing in MF's since 2014 through SIP's and currently have 70K monthly SIP. Please advise if I would be comfortable in 2 years, my estimated monthly expense post retirement would be approx 2 Lakhs per month
Ans: Your current corpus of Rs. 1.8 crore in mutual funds and Rs. 1 crore in PF is significant. The additional Rs. 2 crore in properties adds to your wealth but doesn’t provide immediate liquidity. Let us evaluate if your corpus will sustain your post-retirement expense of Rs. 2 lakh per month.

Estimating Post-Retirement Corpus Requirement
You plan to retire in 2 years, at age 51.

Assuming a life expectancy of 85 years, the corpus needs to last for 34 years.

An expense of Rs. 2 lakh per month means Rs. 24 lakh annually.

Adjust this amount for inflation to calculate future needs.

Current Investment Contributions
Your Rs. 70,000 monthly SIP builds your corpus over the next 2 years.

SIPs offer rupee cost averaging, reducing market volatility impact.

Assess the fund performance regularly to maximise growth.

Diversification of Investments
Your corpus is spread across mutual funds, PF, and properties.

PF provides a stable, fixed return but lacks flexibility.

Properties offer wealth accumulation but are less liquid for immediate needs.

Mutual funds remain a primary source of liquidity and growth post-retirement.

Evaluating Monthly Withdrawals Post-Retirement
Withdrawals should balance your monthly expenses and ensure corpus longevity.

Avoid withdrawing large amounts in the early years of retirement.

Consider a mix of equity and debt mutual funds for withdrawal strategies.

Role of Inflation and Healthcare Costs
Factor in inflation’s effect on expenses over 30+ years.

A 6% inflation rate doubles your monthly expense in 12 years.

Allocate for increasing healthcare costs with age.

Importance of Emergency and Medical Coverage
Keep at least 6 months' expenses in a liquid fund for emergencies.

Ensure you have comprehensive health insurance for unexpected medical costs.

Tax Efficiency in Withdrawals
Equity mutual funds' LTCG above Rs. 1.25 lakh is taxed at 12.5%.

Debt fund returns are taxed as per your income tax slab.

Plan withdrawals to minimise tax liability on gains.

Active Funds vs. Direct Funds
Actively managed funds optimise returns by responding to market changes.

Direct funds lack professional support, affecting long-term efficiency.

Work with a Certified Financial Planner to select regular funds.

Disadvantages of Relying on Real Estate
Properties are illiquid and may take time to convert to cash.

Rental income may not cover Rs. 2 lakh monthly expenses reliably.

Maintenance and property taxes further reduce returns.

Recommendations for Portfolio Restructuring
Increase Allocation to Growth Assets

Continue SIPs in equity mutual funds for growth potential.

Review funds for consistent performance and portfolio alignment.

Add Balanced and Debt Funds for Stability

Include balanced advantage and debt funds for steady income.

Debt funds reduce overall portfolio risk.

Plan a Withdrawal Strategy

Use the SWP (Systematic Withdrawal Plan) for predictable income.

Withdraw from equity funds after 3 years for tax efficiency.

Avoid Over-reliance on PF and Real Estate

PF offers safety but limited returns.

Use properties strategically for potential downsizing or sale.

Final Insights
You are on track to retire comfortably, provided you optimise your investments. Plan your withdrawals carefully, factoring in inflation and tax efficiency. Work with a Certified Financial Planner to refine your portfolio and achieve your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7596 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 21, 2025Hindi
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I like to know which MF to be selected for investing in a SIP among same types of funds with equal performances and risks but with different NAVs.
Ans: When selecting a mutual fund for SIP among funds with similar types, performances, and risks but different NAVs, consider the following aspects:

1. Net Asset Value (NAV) Does Not Reflect Fund Performance
A lower or higher NAV does not indicate better returns.

NAV reflects the fund's per-unit value and changes daily.

Investment growth depends on percentage returns, not NAV values.

2. Expense Ratio and Fund Costs
A lower expense ratio can improve net returns.

Actively managed funds with skilled fund managers may charge slightly higher fees.

Ensure you evaluate the cost-to-benefit ratio before making a decision.

3. Fund Manager's Track Record
Review the fund manager's expertise and past performances.

A consistent manager with strong market knowledge can add value.

Avoid funds with frequent management changes.

4. Fund House Reputation and AUM
Choose funds from a reputed fund house with a strong track record.

A large Asset Under Management (AUM) ensures better stability and liquidity.

Avoid funds with excessively low AUM, as they may face liquidity issues.

5. Tax Implications of the Fund
Assess how long-term and short-term capital gains will affect returns.

Equity mutual funds have specific tax rates: LTCG above Rs 1.25 lakh is taxed at 12.5%.

Debt funds follow your income tax slab, affecting post-tax returns.

6. Investment Goals and Time Horizon
Align the fund choice with your financial goals.

Longer-term goals may benefit from equity-focused funds.

Short-term goals may require hybrid or debt-focused funds.

7. SIP Benefits in Any NAV
SIPs help average out purchase costs over time, reducing the impact of NAV differences.

Avoid basing decisions solely on NAV, as SIPs work on rupee cost averaging.

8. Focus on Portfolio Composition
Examine the fund's portfolio mix and sector allocation.

Ensure diversification aligns with your risk appetite and goals.

Avoid funds with concentrated exposure to risky sectors.

9. Assess Consistency of Returns
Look at rolling returns and consistency across market cycles.

Funds with stable returns in volatile markets are preferable.

Avoid funds with high volatility in performance.

10. Disadvantages of Index Funds
Index funds passively track benchmarks, lacking flexibility in volatile markets.

Actively managed funds can outperform by leveraging market opportunities.

A Certified Financial Planner can guide you to suitable active funds.

11. Benefits of Regular Funds Over Direct Funds
Regular funds offer ongoing advice and monitoring by a Mutual Fund Distributor (MFD).

Direct funds lack professional support, which is crucial for long-term goals.

Certified Financial Planners provide insights and manage your portfolio efficiently.

Final Insights
Choosing the right mutual fund involves evaluating beyond NAVs. Focus on long-term potential, cost efficiency, and alignment with goals. SIPs, combined with expert advice, will help you achieve financial stability.

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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