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Should a 50-year-old earning Rs.40,000 per month invest in mutual funds?

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 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 - Jul 07, 2024Hindi
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1 am 50 year old with income of 40000 pm. I want to invest in mutual funds.kindly suggest

Ans: At 50 years old, it’s essential to align your investments with your goals. Consider what you want to achieve with your investments.

Is it retirement planning, creating a safety net, or another goal? Knowing this will guide your investment strategy.

Current Financial Situation

With a monthly income of Rs. 40,000, it’s important to budget wisely. Ensure your monthly expenses, savings, and investments are well balanced.

Allocate a portion of your income to mutual funds after covering essential expenses and an emergency fund.

Choosing the Right Mutual Funds

Mutual funds offer various options, each with different risk levels and returns. It’s crucial to choose funds that match your risk tolerance and investment horizon.

Here are some general categories to consider:

Equity Funds: These are suitable for long-term goals. They have higher returns but come with higher risk.

Debt Funds: These are less risky and provide stable returns. Suitable for short to medium-term goals.

Hybrid Funds: These offer a mix of equity and debt. They balance risk and return.

Benefits of Actively Managed Funds

Actively managed funds are handled by professional managers. These managers make strategic decisions to outperform the market.

This can lead to higher returns compared to index funds. They adapt to market changes and identify opportunities.

Disadvantages of Direct Funds

Direct funds require constant monitoring. They need you to actively manage and rebalance your portfolio.

This can be time-consuming and may not be suitable for everyone. Regular funds, through a Certified Financial Planner (CFP), offer professional management and advice.

Investment Strategy

Diversify: Spread your investments across different types of funds. This reduces risk and enhances returns.

Regular Investment: Consider a Systematic Investment Plan (SIP). This allows you to invest a fixed amount regularly, reducing the impact of market volatility.

Review and Rebalance: Regularly review your portfolio. Ensure it aligns with your goals and risk tolerance. Rebalance if necessary.

Steps to Start Investing

Consult a CFP: A Certified Financial Planner can help you create a tailored investment plan. They provide professional advice and manage your portfolio.

Set Up an SIP: Choose the amount you can invest monthly. An SIP ensures disciplined investing.

Monitor Your Investments: Keep track of your investments. Regularly review their performance and make adjustments.

Creating a Balanced Portfolio

Your portfolio should reflect your goals and risk tolerance. At 50, you might prefer a conservative approach.

Consider a mix of equity and debt funds. This ensures growth while protecting your capital.

Emergency Fund

Ensure you have an emergency fund. This should cover at least 6 months of expenses. It protects you from financial setbacks.

Insurance Coverage

Review your insurance coverage. Adequate health and life insurance are crucial. They protect you and your family from unforeseen events.

Final Insights

Investing in mutual funds can be a great way to grow your wealth. Choose funds that match your goals and risk tolerance.

Consult a Certified Financial Planner for professional advice. Regularly review and adjust your portfolio.

This ensures your investments remain aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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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Asked by Anonymous - Oct 12, 2024Hindi
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Hi, age 40 years, monthly net salary Rs 85k, married , 1 kid. Recently have constructed new house. Ground floor commercial shops, and 1st floor residential 2bhk flat were we stay. Home loan 1.05 cr with monthly EMI of 85k for next 30 years & All current savings exhausted due to new construction. Commercial shops have potential for monthly rental income of 60k to 70k.please guide on below for strategy: 1) how to close home loan in next 10 years 2) considering 60 as retirement age, need corpus of 8 cr to fund kid education, marriage and for rest of livelihood.
Ans: Hello;

1. Immediately let out the commercial shops on long lease with yearly rent hikes. This is crucial to fund your loan EMI.

Assuming this to yield rental income of 70 K per month.

You will still need to shell out 15 K for the EMI amount from your income.

2. So after deducting EMI cut from your monthly pay we are left with
70 K.
Earmarking 30 K for your regular expenses, I suggest you start a monthly SIP of 40 K in a pure equity mutual fund with yearly top-up of 11% minimum.

This may grow into a corpus of 1.47 Cr after 10 years part of which you may utilise to settle off the overdue loan amount.

3. The balance corpus left after settling the loan is expected to be around 54 L. At this stage you will need enhance monthly sip to 1.5 L with 13 % yearly top-up for the next 10 years.

4. The corpus from SIP after the next 10 years may be 6.3 Cr. The balance corpus of 54 L may grow into a sum of 1.83 Cr. Both added will give you a comprehensive corpus of 8.13 Cr, as desired. ( A modest return of 13% from pure equity mutual funds is considered).

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

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Nayagam P P  |3811 Answers  |Ask -

Career Counsellor - Answered on Oct 13, 2024

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Sir the median package at ssnce for cse core is less than rvce ise .So does it make more viable option considering placement in mind .I have a dream of becoming software engineer from my childhood. But my seniors are advising for rvce ise.what to do should I follow my dream or placement.I am a Bangalore resident and Tamil is my mother tongue.
Ans: Ashwin, my son, graduated from RVCE in 2023 and secured employment through campus placement with a reputable software company. Despite being among the highest achievers in COMEDK, he opted for ECE instead of the more accessible CSE. We did not compel him to join CSE. Following his second year, he progressively shown an interest in software and obtained several certifications through NPTEL, Internshala, and similar platforms. Regarding his experience, while ISE is commendable, CSE is the superior option. Simply enter 'RV placement statistics 2024'. Select the initial result to get the Placement Statistics of RV directly. The top placements are for Computer Science Engineering, followed by Electronics and Communication Engineering, and then Information Science Engineering. The recommendations of your seniors, your personal interests, and the branch with the highest placement statistics are distinct considerations. Kindly review the Course Curriculum for both CSE and ISE and make a decision. Kindly review one of my detailed responses below, in which I have explicitly outlined the stages, recommendations, and methods that a first-year engineering student should adhere to till their fourth year for campus placement. All the BEST for Your Prosperous Future.

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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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