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Ramalingam Kalirajan |11054 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 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 25, 2025Hindi

Hi Sir, I'm 36 year old, with a debt of 26 lakh that include 15 lakh home loan and 11 lakh car loan. My take home salary is 2.05 L per month after additional deduction of 10.5K NPS and 10K VPF. My current saving in 27L in PF, 14L in NPS, Managing 2 PPF account with current corpus of 44L, 3 LIC policies with payment of 1.08L annually started 14 years ago and will be matured in 2040, 2 Child education plan with premium of 1 L annually and will be matured on 2035. 8 L in demat account. My wife is house wife and my child is in 4th standard. My monthly expenses approx 61K Loan EMI and 25K tution fees + household expenses. I wanted to make 5 cr corpus in next 10 years. Please guide any saving / investment plan to make it possible.

Ans: You have built a solid foundation already. At age 36, with structured savings and discipline, you are moving in the right direction. But reaching Rs. 5 crore in 10 years needs careful assessment, goal alignment, and efficient capital use.

Let’s work step-by-step to help you build the right path. This response will cover all areas of your finances from a 360-degree view.

Understanding Your Current Financial Position
– Monthly take-home is Rs. 2.05L
– Rs. 10.5K goes to NPS and Rs. 10K to VPF
– Total monthly outgo in loans is Rs. 61K
– Tuition fees and household expense total around Rs. 25K monthly
– Your surplus each month is about Rs. 1.09L
– You are financially stable with good surplus to invest
– That surplus must now be channelled efficiently

Review of Existing Investments
##Provident Fund and NPS
– You have Rs. 27L in PF and Rs. 14L in NPS
– These are safe, long-term tools for retirement
– But returns are moderate and fixed
– Don’t depend on these alone for wealth creation
– Continue contributions, but don't over-allocate here

##PPF Accounts
– Rs. 44L in two PPF accounts is significant
– PPF is safe but locked in till 15 years
– You already reached a sizable corpus here
– No need to add more to PPF now
– Returns are fixed and don’t beat inflation well

##Demat Holdings
– Rs. 8L in demat account shows risk appetite
– Stocks need deep research and time
– Continue with caution
– Avoid adding more if you can’t monitor closely
– Equity mutual funds are better for long-term growth

Analysis of Insurance Products
##LIC Policies
– You have 3 LIC policies with Rs. 1.08L annual premium
– Started 14 years ago and maturing in 2040
– These are likely endowment or money-back types
– Such plans give poor returns of 4% to 5%
– You are losing long-term growth here

– Since these were started long ago, continue them till maturity
– But don’t invest more in such plans going forward
– Avoid renewing or buying similar ones again
– Don’t use LIC for investment purpose
– Use it only for term cover if needed

##Child Education Plans
– Two policies, Rs. 1L annual premium each
– Maturing in 2035, for child education
– These are usually mix of insurance and investment
– They underperform mutual funds in long run
– Since you already invested for several years, you may continue
– But don’t buy new ones going forward

– From now on, use mutual funds for child goals
– Keep these policies until maturity if surrender value is low

Loan Analysis and Debt Strategy
– You have Rs. 15L home loan and Rs. 11L car loan
– EMI is Rs. 61K monthly
– That is reasonable, within 30% of your income
– Try to prepay the car loan in next 1 to 2 years
– It is a depreciating asset with high interest
– Don’t prepay home loan urgently now
– Let that continue for tax benefits

– If you receive bonus or surplus, first reduce car loan
– Then start investing more for wealth building

Monthly Cash Flow and Savings Ability
– Your net monthly income: Rs. 2.05L
– Loan EMI: Rs. 61K
– Tuition and household: Rs. 25K
– Surplus each month: Rs. 1.09L approx

– This is your wealth creation engine
– But it must be used well
– PPF, VPF, LIC, NPS alone will not take you to Rs. 5 crore
– You need aggressive equity investments with professional guidance

Target: Rs. 5 Crore in 10 Years
– This is a steep and ambitious goal
– But possible with right strategy and consistency
– You must invest at least Rs. 1L every month into high-growth tools
– Use only actively managed mutual funds for this goal

– Avoid index funds, they just copy the market
– They don’t protect your investment during market falls
– In contrast, actively managed funds are handled by expert fund managers
– They shift between sectors and opportunities to optimise gains
– This is crucial for a 10-year goal

– Also, avoid direct plans of mutual funds
– They may look cheaper, but they offer no guidance
– When markets fall, many direct investors stop SIPs out of fear
– Regular plans via a Certified Financial Planner offer discipline, reviews, and support
– That gives you peace of mind and better returns

– Build your mutual fund portfolio with guidance
– Use a mix of large-cap, mid-cap, flexi-cap and hybrid categories
– Review it every 6 months with your planner
– Increase SIPs yearly as income rises
– Stick to the plan even during market ups and downs

Optimising Insurance and Risk Coverage
– You didn’t mention your term insurance
– Please ensure you have at least Rs. 1.5 crore term cover
– Your child is dependent on you
– And spouse is a homemaker
– Don’t mix insurance with investment
– Keep pure term insurance separately

– Also, check your health insurance
– You must have at least Rs. 10L family floater
– Relying on corporate insurance alone is risky
– It stops if job changes or retirement happens
– Separate personal health cover is a must

Emergency Fund Planning
– You didn’t mention emergency fund
– You need at least 6 to 9 months’ expenses saved separately
– This should be kept in liquid mutual funds or FD
– Don’t touch it for investment
– Only for true emergencies like job loss or medical need

Step-by-Step Action Plan
– Start SIP of Rs. 1L per month into mutual funds
– Choose actively managed equity funds only
– Avoid index funds, direct plans, and ETFs
– Use regular plan via Certified Financial Planner

– Don’t invest more in PPF, VPF, or NPS
– Don’t take new insurance or child plans
– Shift focus towards wealth creation, not only tax saving

– Clear car loan in 2 years
– Continue home loan for tax benefit
– If you get bonus, use part for SIP top-up, part for loan prepayment

– Review SIP portfolio every 6 months
– Stick to the plan during all market cycles
– Increase SIP by 10–15% yearly as salary grows
– Avoid stopping SIPs for small short-term needs

Tax Implication on Mutual Funds
– Equity fund gains above Rs. 1.25L (after 1 year) taxed at 12.5%
– Equity gains before 1 year taxed at 20%
– Debt fund gains taxed as per your tax slab
– Keep these in mind when you plan redemptions

– Use the help of a Certified Financial Planner to manage tax-efficient withdrawals

Finally
You are financially aware and disciplined. That gives you a clear advantage.

But traditional tools like LIC, PPF, VPF, NPS alone won’t deliver Rs. 5 crore in 10 years. They are safe but too slow.

To reach your goal, the key is this:

Shift your monthly surplus of Rs. 1L to professionally managed mutual funds

Use only regular plans through Certified Financial Planner

Avoid direct or index options

Don’t stop or delay SIPs – let them grow for full 10 years

Keep emotions away from investment. Trust the process and review regularly.

This is a high goal. But you are in a strong position to chase it with right planning and expert help.

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.