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Ramalingam Kalirajan |9752 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Oct 26, 2024

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 - Oct 25, 2024Hindi

Sir, I'm 43 years old and have 10k sip in parag flexi cap, canara large cap, quant active and axis mid cap.5k sip in motilal midcap, ICICI mid and large cap. Current mutual fund corpus 16 lakhs and have another corpus of 1.5 lakh which is mostly in debt instruments like FD. I have a 14 year old son and a passive income of 30k which I expect to continue for next 10 years. My monthly expenses is around 70k. I would like to understand the corpus required for my retirement if I want to retire now and also corpus for my son's education. Expecting your valuable suggestion and advice. I don't expect expenses to grow higher and have a decent medical insurance. I had asked this question but haven't got any response

Ans: You are 43 years old with an SIP allocation in both large-cap and mid-cap funds. You have a total mutual fund corpus of Rs 16 lakhs and an additional Rs 1.5 lakh in debt instruments. Your passive income is Rs 30k per month and expenses are Rs 70k per month.

Passive Income and Expenses
Your passive income covers part of your monthly expenses. This is good but not sufficient for your monthly needs. You might need to draw from your investments to cover the gap.

Retirement Corpus Calculation
Retiring now requires careful planning. To sustain your lifestyle, you need to account for 70k monthly expenses.

Let's assume:

Your retirement age is 60

Life expectancy is 85

Monthly expenses remain the same

You will need a significant corpus to cover 25 years of expenses post-retirement.

Educational Corpus for Your Son
Your son is 14 years old, and college expenses will kick in within the next 4-5 years. Assuming a conservative approach:

Consider the cost of education, including tuition and other expenses

Account for inflation

Investment Strategy
Continuing Current SIPs
Parag Flexi Cap

Canara Large Cap

Quant Active

Axis Mid Cap

Motilal Midcap

ICICI Mid and Large Cap

Potential Changes
Evaluate the performance of your current funds. If they are consistently underperforming, consider switching to better-performing funds. However, ensure these align with your risk profile.

Diversification
Balance your portfolio with a mix of large, mid, and small caps

Consider international exposure for broader diversification

Debt Instruments
With Rs 1.5 lakh in debt instruments, ensure they align with your risk tolerance. Debt instruments provide stability but lower returns.

Tax Efficiency
Be mindful of the new mutual fund capital gains tax rules:

LTCG above Rs 1.25 lakh is taxed at 12.5%

STCG is taxed at 20%

Regular Reviews
Regularly review and rebalance your portfolio. This keeps your investments aligned with your goals and market conditions.

Insurance
Ensure you have adequate health and life insurance. This protects your family's financial future.

Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of expenses. This covers unforeseen situations.

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

Asked on - Oct 27, 2024 | Answered on Oct 28, 2024

Sir, there was a small mistake in my question. The debt amount I have with me is 1.5 cr and not lakhs. Will that enable me to take a retirement now

Ans: With Rs 1.5 crore in debt instruments, Rs 16 lakh in mutual funds, and passive income of Rs 30,000 for 10 years, retiring now is possible but needs careful planning.

Your monthly expenses are Rs 70,000. Once the passive income stops, your investments must cover this entirely. Assuming 6% inflation, your expenses will double every 12 years, requiring a significant retirement corpus. You’ll need Rs 8-9 crore to comfortably sustain your lifestyle for 42 years.

For your son’s education, set aside a portion of the Rs 1.5 crore in safe debt instruments or debt mutual funds to cover his college expenses in 4-5 years.

Action Plan:

Continue SIPs and regularly review fund performance.
Maintain emergency funds (6-12 months of expenses).
Ensure your health insurance is sufficient to avoid medical liabilities.
Periodically rebalance your equity and debt investments.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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