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Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 01, 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 - Apr 26, 2024Hindi
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I'm 48 year old and a housewife. My husband is 52 and working in a restaurant with a salary of 24k p.m. I'm looking into investing with whatever remains out of this salary, approx. 5k (my daughter who is 22 year old is contributing a part of her income for household expenses). Please advise the best schemes/ MFs that we can invest into and also advise the procedure to MF as we have no knowledge about it. Also if my daughter can invest approx 5k-8k, what are the best plans for her to invest in SIP. Please advise. Thankyou.

Ans: It's wonderful to see your proactive approach towards investing and securing your family's financial future. Investing in mutual funds through SIPs can be a great way to start building wealth gradually over time.

For you and your husband, consider starting with SIPs in diversified equity funds or balanced funds that suit your risk appetite and investment goals. As beginners, it's crucial to choose schemes with a track record of consistent performance and managed by reputable fund houses.

For your daughter, she can also opt for SIPs in equity funds aligned with her risk tolerance and long-term financial objectives. Encouraging her to start investing early can help her harness the power of compounding and achieve her financial goals.

To start investing in mutual funds, you can approach a Certified Financial Planner or a mutual fund distributor who can guide you through the process, help you select suitable funds, and assist with the necessary paperwork.

Remember, investing is a journey, and it's essential to stay disciplined, patient, and well-informed along the way. With dedication and the right guidance, you can pave the way towards a financially secure future for 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  |6995 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

Asked by Anonymous - Dec 18, 2023Hindi
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I have two daughters and their age is 16 and 15 and i own 50 lakhs bank FD , 9 lakhs invested in MF me and my wife have invest 60 lakhs in share market and my age 51 year old. Can you plz suggest the best option for investment . for my future education of two kids and my and my wife upcoming old age( My family ) i have 3 lakhs mediclaim and have few LIC policies. I request you to give me the best advice or suggest the best investment for my growth of money and as a monthly income ( Home expenses ) plz reply
Ans: Given your family's financial situation and goals, it's crucial to create a comprehensive investment plan that considers both growth and stability. Here's a suggested approach:

Education Fund for Daughters: Since your daughters are nearing college age, consider setting aside a portion of your investments specifically for their education expenses. You may allocate a portion of your bank FDs and MF investments towards this goal, ensuring it grows over time to meet their educational needs.
Retirement Planning: As you and your wife approach retirement, it's essential to prioritize building a sufficient corpus to support your lifestyle in old age. Consider diversifying your investment portfolio to include a mix of equity, debt, and balanced funds, along with retirement-focused instruments like the National Pension System (NPS) or Senior Citizen Savings Scheme (SCSS).
Health and Insurance: Ensure you have adequate health insurance coverage for your family's medical needs. Additionally, review your existing LIC policies to ensure they align with your current financial goals and provide adequate coverage for your family's future needs.
Monthly Income: To generate regular income for your household expenses during retirement, consider investing in dividend-paying stocks, mutual funds with dividend options, or fixed income instruments like Senior Citizen Savings Scheme (SCSS) or Post Office Monthly Income Scheme (POMIS).
Regular Review and Adjustment: Regularly review your investment portfolio to track its performance, make necessary adjustments, and ensure it remains aligned with your financial goals and risk tolerance.
Consulting with a Certified Financial Planner can provide personalized guidance tailored to your family's specific financial situation and goals. Together, you can create a customized investment plan that addresses your needs for growth, income, and financial security.

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Ramalingam

Ramalingam Kalirajan  |6995 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 01, 2024

Asked by Anonymous - Oct 29, 2024Hindi
Money
Hello Sir I am 36 years old and my wife age is 35 and My daughter is of 8 years I have just started doing Sip of 20000 each Month and i have lic and life cover investment of 2 lakhs each Year since past 4 year I can further add another 5 lakhs a year for Mutual fund or other investment Please suggest mutual fund or other investment idea and Is this investment can get me 3 cr by age of 55 Also share your email id ,to discuss further
Ans: Your commitment to securing your family's future is indeed admirable. At 36, you've already set a strong foundation with your ongoing SIP investments, insurance policies, and future investment plans. With your goal of achieving Rs 3 crore by age 55, let’s take a 360-degree approach to assess your current standing and structure your investments.

Current Investments and Insurance Coverage

You have started SIPs of Rs 20,000 per month, which is a sound choice. SIPs in well-selected, actively managed funds are effective for long-term growth.

Your LIC and life cover policy with an annual premium of Rs 2 lakh over the past four years likely include both investment and insurance components. These policies, however, may offer moderate returns and limited flexibility in adjusting to market dynamics.

Evaluating the Feasibility of Your Rs 3 Crore Goal

Given your investment horizon (approximately 19 years) and commitment to invest an additional Rs 5 lakh yearly, achieving your Rs 3 crore target is quite feasible.

A diversified, well-balanced portfolio can potentially yield the required growth. However, you’ll need a blend of equity mutual funds, debt instruments, and life insurance policies for sufficient cover.

Strategies to Maximise Your Investment Growth

1. Increase Equity Exposure through Actively Managed Funds

Since you have a long-term horizon, equity mutual funds offer better growth potential than traditional policies. Actively managed equity funds have the advantage of being adaptable to market changes, unlike index funds that mirror the broader market.

Equity mutual funds have historically outperformed traditional instruments, especially when selected under the guidance of a Certified Financial Planner (CFP).

Avoid index funds as they are passive investments and may lack the flexibility that actively managed funds provide. Index funds do not benefit from market opportunities as actively managed funds do, which could reduce potential gains.

2. Regular SIPs in Balanced and Diversified Equity Mutual Funds

To achieve your financial goal, allocate part of your Rs 5 lakh yearly investment in equity mutual funds, balancing it across large-cap, flexi-cap, and mid-cap categories. These funds generally provide the growth required to build a substantial corpus over the years.

A diversified portfolio provides balanced risk, ensuring stability during market fluctuations.

Invest through a Mutual Fund Distributor (MFD) certified in CFP to gain access to well-analyzed fund options and professional expertise. They can help you navigate changes and align your investments with your financial goals.

3. Increase SIP Amount with a Step-Up Approach

Start with your current SIP of Rs 20,000 monthly, but consider increasing the SIP amount every year, ideally by 10-15%. This strategy, known as a step-up SIP, can significantly boost your corpus.

As your income grows, reinvest any surplus towards SIPs, adding further momentum to reach your Rs 3 crore goal.

4. Opt for Debt Mutual Funds for Stability

For the Rs 5 lakh annual investment, dedicate a small percentage to debt funds. Debt mutual funds provide stability and a safety net, balancing the risks associated with equity funds.

Debt funds are also tax-efficient and are ideal for capital preservation, especially as you approach your goal.

5. Consider Redeeming LIC Policies if Needed

LIC policies offer life cover but may not deliver high returns. If suitable for your financial situation, evaluate surrendering these policies and reinvesting in higher-return avenues such as mutual funds.

Traditional life insurance policies often carry limited growth, so if this aligns with your goals, a shift to mutual funds could enhance your investment returns.

Taxation and Capital Gains Consideration

Be mindful of the taxation on mutual funds: Long-term capital gains (LTCG) on equity funds above Rs 1.25 lakh attract a 12.5% tax, while short-term gains are taxed at 20%.

For debt funds, both LTCG and STCG will be taxed according to your income slab. Understanding these tax implications is crucial in managing net returns effectively.

Additional Recommendations for Financial Growth and Security

1. Maintain a Sufficient Emergency Fund

Build and maintain an emergency fund equivalent to at least six months’ expenses. This ensures financial stability during unforeseen events, reducing dependency on long-term investments for emergencies.
2. Health and Life Insurance

Ensure adequate health insurance coverage for you and your family. This will protect your investments from medical emergencies.

Maintain a term life insurance policy to provide financial security for your family in your absence. This is more cost-effective and keeps your investments separate from insurance.

3. Plan for Your Daughter’s Future

Your daughter, being 8, will likely require funds for education in the next 10-12 years. Consider a separate SIP in child education-focused mutual funds, which allow flexible withdrawals and are designed to meet education costs.
4. Retirement Planning for a Stable Future

Though you are focused on building a corpus for the next 19 years, start laying the groundwork for retirement. Your NPS contributions, coupled with a diversified mutual fund portfolio, will act as your retirement corpus, providing steady returns post-retirement.
Monitoring and Regular Review of Your Portfolio

Review your investments every 6 to 12 months with the guidance of a CFP. This helps ensure your portfolio aligns with market dynamics, risk tolerance, and financial goals.

Regular assessment allows for timely adjustments, helping your portfolio stay on track to achieve the Rs 3 crore target.

Finally

With disciplined investing, increased SIP contributions, and professional guidance, reaching your Rs 3 crore goal is achievable. Prioritise a balanced approach with equity and debt mutual funds, insurance, and an emergency fund to ensure steady growth and security for you and your family.

For further queries or personalised guidance, feel free to reach out.

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

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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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