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Ramalingam Kalirajan |10902 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 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

Question by Kuldeep on Jul 05, 2025Hindi

I'm 41 years old. I have 20 lacs in savings which includes MF, PPF etc. My net takeaway per month is 1.2L of which 45000 is invested in SIP, 20000 in LIC and rest towards Medical and household expenses. I have an outstanding car loan of 9L towards which 20000 is EMI. I'm planning to retire in the next 10-12 years and aim to generate a corpus of 10Cr. My 1 LIC is maturing after 6 years in which I'll get 20L lump sum and 1.1L annually till death. Another LIC will get matured in 2035 where I'll get 40L. Please advice how to achieve my goals. Thank you.

Ans: – You are consistent with your savings. That is rare and admirable.
– You already have a foundation in place. That helps speed up your goal.
– The early planning at age 41 gives you good time to grow your wealth.
– You also have clarity in your mind about your target corpus and timeline.

» Current Financial Snapshot – An Overview

– You are saving Rs 65,000/month. That’s above 50% of your income. Very disciplined.
– You hold Rs 20 lakh in savings across mutual funds, PPF and other sources.
– You have two LIC policies giving future income and maturity benefits.
– Your current EMI is manageable. But car loan repayment still eats into cashflow.
– Your household expenses are within balance. Not exceeding capacity.

» SIP Strategy – Stay Invested, Stay Aggressive

– Rs 45,000/month SIP is good. You can continue or even step it up.
– Focus more on diversified actively managed equity mutual funds.
– These funds give higher alpha than index funds or passive options.
– They are managed by experienced fund managers. They react better to market changes.
– Equity gives long-term growth. You need that to achieve Rs 10 crore.

» Disadvantage of Index Funds – Why Avoid

– Index funds copy market. They never outperform.
– You get average returns. No scope for expert judgment.
– They underperform during market correction.
– Active funds adjust sectors, weightage and stocks actively.
– They also give better downside protection.

» PPF and Debt Mix – Safe but Limited

– PPF is good for debt exposure and tax savings.
– But growth is slow. It won’t help to reach 10 crore alone.
– Keep PPF but don’t increase allocation heavily.
– Rest of your debt should be short-term debt funds or liquid funds.
– These can be used for contingency and car loan closure.

» Car Loan – Prioritise Closure

– Rs 20,000 EMI is around 17% of your income.
– That money can earn more if invested instead.
– If possible, part-pay or close this loan in next 1–2 years.
– You will free up money to invest or build emergency corpus.

» LIC Policies – Be Realistic About Returns

– LIC policies usually give low returns (around 4-5%).
– Even if they give lump sum and annuity later, the growth is very slow.
– You have two policies: Rs 20 lakh after 6 years and Rs 40 lakh in 2035.
– They are not wealth creators. Just extra safety or income.
– Keep them now as surrender may lead to losses. But don’t buy more.
– Going forward, shift focus to mutual funds.

» Goal Assessment – Targeting Rs 10 Crore in 10–12 Years

– Your target is ambitious. But not impossible.
– You already save Rs 65,000/month. That’s strong.
– With income hikes, you should increase SIPs yearly.
– Aim to reach Rs 1 lakh/month in SIP within 3–4 years.
– Your mutual fund portfolio should be equity tilted.
– Don’t shift fully to debt as you near 50. Do it gradually.
– Don’t depend on LIC maturity alone for retirement income.
– You need portfolio growth, not fixed benefits.

» Portfolio Review – Active Over Direct

– If you are using direct mutual funds, reconsider that.
– Direct plans seem cheaper but may mislead investors.
– You miss fund curation, review, rebalancing and switching advice.
– Wrong fund choice or timing hurts long-term results.
– Regular plans through a certified financial planner offer advisory support.
– The fee gap is small compared to the benefit of strategic management.

» Emergency Corpus – A Must for Peace of Mind

– Keep at least 6 months of expenses in liquid or short-term debt funds.
– That’s around Rs 4–5 lakh minimum.
– This should be separate from SIPs and long-term investments.
– It will help during job change, medical emergencies or car repair.

» Life Insurance – Needs Review

– You have LIC plans. But they are not term plans.
– Make sure you also have separate term insurance.
– Sum assured should be at least 10–12 times your annual income.
– If not already taken, act soon. It’s cheap at your age.
– Don’t mix insurance with investment anymore.

» Health Insurance – Don’t Depend on Employer Only

– Check if you have a family floater outside your job.
– Rs 10 lakh family floater with Rs 20 lakh top-up is ideal.
– Health costs rise faster than inflation.
– Keep health protection separate and strong.

» Child Planning – Set up Education Corpus

– Your kids are young. Use that time to plan education corpus.
– Start SIPs in children’s name through minor’s PAN.
– Allocate some part of mutual funds for this goal only.
– This will avoid dipping into retirement corpus later.

» Retirement Lifestyle – Decide Your Future Income Need

– Calculate post-retirement expenses in today’s value.
– Add inflation and medical costs.
– Don’t include LIC annuity in main plan. Use it as backup.
– Plan to withdraw around 3–4% annually from retirement corpus.
– That will keep money safe for 25–30 years after retirement.

» Passive Income Plan – Mix of Growth and Withdrawal

– Keep 60–70% of retirement corpus in equity funds.
– Rest in hybrid or short-term debt funds.
– Setup SWP (Systematic Withdrawal Plan) from debt funds post-retirement.
– Use dividend option only in hybrid funds if needed.
– This creates stable income with continued growth.

» Taxation – Keep Eyes on New MF Rules

– LTCG above Rs 1.25 lakh/year taxed at 12.5% on equity mutual funds.
– STCG taxed at 20%.
– Debt mutual fund gains taxed as per income slab.
– Plan your withdrawals smartly. Use exemption wisely.
– Don’t redeem everything in one year. Spread it.

» Family Involvement – Financial Clarity for All

– Share your plan with your spouse.
– Involve them in fund choices and insurance decisions.
– Keep nominee details updated.
– Maintain an excel or digital record of all policies, folios, loans.
– Teach your children small basics of saving and investing.

» Final Insights

– You have a disciplined income-investment ratio.
– Just increase SIP amount yearly with salary growth.
– Close car loan early to boost investment flow.
– Don’t expect LIC to create wealth. Use MFs for growth.
– Avoid direct plans unless guided by a certified planner.
– Stick to goal-focused planning. Avoid real estate temptation.
– Stay invested. Keep reviewing yearly with a professional.
– You can reach Rs 10 crore with focus and discipline.

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

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