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Ramalingam Kalirajan |10870 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 09, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jun 26, 2025Hindi

I'm 27 years old. My in-hand monthly salary is around 2.15 lakh. I've around 29lakh of housing loan pending for next 15 years. My housing emi is around 31000 per month. I've around 7 lakh of debt in personal loan and credit card. I've around 2 lakhs in SIPs , around 2 lakhs in stocks . I've been doing around 20K per month in SIPs. I've also 2 LIC policies around 60000 per year. In my PF account I've around 6lakhs. My first goal is to build a portfolio of around 1 cr by 35. Is it a realistic goal. If yes how can I achieve this.

Ans: At 27, your focus on wealth creation is very good.
You have a stable salary and have started early.
Let us study your finances from every angle and give a complete plan.

Your Current Financial Picture
Let us first understand what you own and what you owe.

Age: 27 years

Monthly Income (Net): Rs. 2.15 lakh

Home Loan Outstanding: Rs. 29 lakh

Home Loan EMI: Rs. 31,000

Other Loans: Rs. 7 lakh (personal and credit card)

SIP Corpus: Rs. 2 lakh

Stock Investment: Rs. 2 lakh

Monthly SIP: Rs. 20,000

PF Corpus: Rs. 6 lakh

LIC Premium: Rs. 60,000 per year

Goal: Rs. 1 crore corpus by age 35

You have 8 years to reach the goal.

Key Positives in Your Profile
High income at a young age
This gives a strong base to build wealth.

Already investing via SIP
This shows financial maturity.

No delay in retirement saving
PF contributions have started early.

Housing EMI is manageable
You pay only about 15% of your income as EMI.

Areas That Need Attention
Your financial picture shows a few leakages:

High-interest personal loans
This will slow wealth creation.

Credit card dues are risky
These attract very high interest. Avoid them always.

LIC policies are costly
Premium is high with poor returns.

SIP investment is low compared to income
With Rs. 2.15 lakh salary, only Rs. 20K SIP is low.

Let us now give you a 360-degree strategy.

Debt Clean-Up Comes First
Before building wealth, clear high-interest debt.

Target credit card and personal loan
These usually have interest above 13% to 36%.

Don’t make fresh investments
Instead, use excess savings to repay these loans faster.

Create a debt closure plan
Use bonuses or incentives towards this first.

Do not take fresh loans
This slows down your compounding journey.

Home loan is okay
Since the EMI is affordable, keep that going.

Once bad debt is cleared, cash flow improves quickly.

LIC Policy Assessment
You pay Rs. 60,000 yearly towards LIC.

This is likely an investment cum insurance plan.

These offer poor returns
Usually between 4% and 5% only.

They are not suitable for wealth creation
They neither offer enough life cover nor good returns.

If these policies are less than 5 years old:

Consider surrendering the policy

Reinvest the proceeds in mutual funds

Use term insurance instead

This one step can save years of delay in wealth building.

Term Insurance – A Must-Have
You haven’t mentioned term insurance.

This is important, especially if you have dependents or loans.

Take a term cover of at least Rs. 1 crore

Prefer term-only, not return plans

Buy separately, not bundled with investment

Review coverage every 5 years

Premiums are very low at your age.

Emergency Fund – Build It Soon
You didn’t mention an emergency fund.

This is needed to avoid taking loans again.

Set aside at least Rs. 3 lakhs as emergency money

Keep it in liquid funds or sweep-in FDs

This is not for investing

This protects your SIPs from getting stopped

Without emergency buffer, every expense becomes a crisis.

Review of Existing SIPs and Equity
You have:

Rs. 2 lakh in SIP portfolio

Rs. 2 lakh in stocks

Rs. 20,000 monthly SIP going on

Let’s now analyse this based on your goal.

Is Rs. 1 Crore Corpus by Age 35 Possible?
You have 8 years to reach Rs. 1 crore.

It is not easy, but it is achievable if:

You increase your SIP amount every year

You clear all high-interest loans in 1 year

You invest with discipline for 8 full years

You do not withdraw midway

You invest in the right fund categories

But at current SIP of Rs. 20,000, it is not enough.

You must step up your SIPs to Rs. 40,000+ monthly after clearing debt.

And increase SIPs by 10% yearly.

SIP Category Suggestions
Let us optimise your SIP categories once debts are cleared.

Use this allocation:

Large Cap Funds – Rs. 12,000

Flexi/Multi Cap Funds – Rs. 14,000

Mid Cap Funds – Rs. 10,000

Small Cap Funds – Rs. 4,000

Avoid sector and thematic funds

You can add hybrid funds later as you reach 35.

Do Not Invest in Index Funds
Index funds only copy the index.

They don’t adjust to market cycles.

They invest in poor sectors if those are in index.

They don’t generate extra returns over market.

Actively managed funds:

Beat inflation better

Take advantage of market timing

Avoid risk-heavy stocks

Are adjusted by professional fund managers

Use regular plans through a CFP-backed MFD.
They help choose better funds.
They guide when to switch.
Direct plans don’t provide guidance or support.
You may lose more in mistakes than saved in expense ratio.

PF Corpus – Long Term Support
You already have Rs. 6 lakh in PF.

This is a good long-term foundation.

Do not withdraw this before retirement.

It acts as your safety for old age.

Equity Stocks – Handle With Caution
You have Rs. 2 lakh in stocks.

This is fine if you can track them regularly.

But for most people, mutual funds give better results.

Diversified exposure

Lower emotional bias

Professionally managed

Don’t increase equity stocks unless you have strong knowledge.

Step-by-Step Action Plan
Step 1:
Pay off all personal loans and credit cards in 12 months.

Step 2:
Surrender LIC policies if less than 5 years old.

Step 3:
Create emergency fund of Rs. 3 lakh.

Step 4:
Start Rs. 40,000 monthly SIP after loans are cleared.

Step 5:
Increase SIP every year by Rs. 5,000 to Rs. 7,000.

Step 6:
Don’t stop SIPs during market falls.
Keep investing.

Step 7:
Take term insurance of Rs. 1 crore.
Add health insurance if not covered by employer.

Step 8:
Do yearly review with Certified Financial Planner.

Taxation Angle You Must Know
Equity mutual fund taxation has changed.

LTCG (Long Term Capital Gain) above Rs. 1.25 lakh is taxed at 12.5%.

STCG (Short Term Capital Gain) is taxed at 20%.

For debt mutual funds, all gains are taxed as per your slab.

Plan redemptions accordingly.
Avoid unnecessary switches.
Track holding period to reduce tax outgo.

Finally
You can reach Rs. 1 crore corpus in 8 years.
But only if you increase savings after clearing loans.
At your age, even a delay of 2 years can cost big.
Focus first on becoming debt-free.
Then automate your investments.
Avoid poor products like LIC combos.
Invest in mutual funds via regular plans.
Choose quality funds managed by professionals.
Review progress every year with a trusted CFP.

Discipline is more important than returns.

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

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.