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Ramalingam

Ramalingam Kalirajan  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 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
Stats Question by Stats on Jul 03, 2024Hindi
Money

Hi, I am 23 years old earning a salary of 108k per month after all deductions. I am doing SIP of 19k per month in these following funds:- 1. Parag Parikh Flexi Cap Fund:- 4000 2. Quant Flexi Cap Fund:- 4000 3. Nippon India Large Cap Fund :- 3000 4. Motilal Oswal Mid Cap Fund:- 3500 5. Bandhan Small Cap Fund:- 2500 6. Axis Small Cap Fund:- 2000. Other than these combined contribution towards EPF (employee+employer) = 12800 per month. Please give a review of my portfolio. My investment horizon is for long terms. I will step up my investment depending on my salary increment.

Ans: t’s fantastic to see someone as young as you already planning for the future and investing wisely. Your SIPs and contributions towards EPF are commendable. Let's dive into your portfolio and see how it aligns with your long-term goals.

Understanding Your Current Investments
Monthly SIPs
Parag Parikh Flexi Cap Fund: Rs 4,000
Quant Flexi Cap Fund: Rs 4,000
Nippon India Large Cap Fund: Rs 3,000
Motilal Oswal Mid Cap Fund: Rs 3,500
Bandhan Small Cap Fund: Rs 2,500
Axis Small Cap Fund: Rs 2,000
EPF Contributions
Combined contribution (employee + employer): Rs 12,800 per month
Portfolio Review
Diversification
You have a good mix of large-cap, mid-cap, and small-cap funds, which is great for diversification. This approach balances risk and return, leveraging the growth potential of different market segments.

Flexi Cap Funds
Flexi Cap Funds are versatile, investing across market capitalizations. Your allocation in Parag Parikh and Quant Flexi Cap Funds is a smart move, providing flexibility to capitalize on market opportunities.

Large Cap Funds
Large Cap Funds like Nippon India Large Cap Fund offer stability with moderate returns. These funds invest in well-established companies with a proven track record.

Mid Cap Funds
Mid Cap Funds, such as Motilal Oswal Mid Cap Fund, strike a balance between risk and return. They invest in companies with high growth potential but are relatively riskier than large caps.

Small Cap Funds
Small Cap Funds, including Bandhan and Axis Small Cap Funds, are high-risk, high-reward investments. They invest in smaller companies with significant growth potential but also higher volatility.

EPF Contributions
Your EPF contributions are excellent for long-term savings and tax benefits. EPF offers a stable, risk-free return, complementing your more aggressive mutual fund investments.

Evaluating Your Portfolio
Advantages
Diversification: Your portfolio is well-diversified across market capitalizations, reducing risk.
Long-Term Horizon: Investing for the long term allows you to ride out market volatility and benefit from compounding.
Regular Investment: SIPs ensure disciplined investing, averaging out market highs and lows.
Areas of Improvement
Overlapping Investments: Flexi Cap Funds may have overlapping stocks with your other funds. Review fund portfolios to avoid redundancy.
Risk Management: High allocation to small and mid-cap funds increases portfolio risk. Ensure it aligns with your risk tolerance.
Certified Financial Planner's Recommendation
Review Fund Performance: Regularly review the performance of your funds. Replace consistently underperforming funds with better options.
Monitor Overlap: Use tools to check for overlapping holdings in your funds. Diversify to reduce concentration risk.
Rebalance Portfolio: Periodically rebalance your portfolio to maintain your desired asset allocation.
Steps to Enhance Your Portfolio
Increase SIPs with Salary Hike
As your salary increases, step up your SIP contributions. This leverages the power of compounding and accelerates wealth creation.

Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses. This provides financial security during unforeseen circumstances.

Tax Planning
Invest in tax-efficient instruments to maximize your returns. Utilize sections like 80C, 80D for tax deductions.

Health and Life Insurance
Ensure adequate health and life insurance coverage. This protects your family and financial goals in case of emergencies.

Avoid Over-Reliance on One Category
Avoid over-relying on one fund category. Maintain a balanced approach with a mix of equity, debt, and other instruments.

Power of Compounding
How Compounding Works
Compounding is earning returns on your returns. The longer you stay invested, the more your investments grow exponentially.

Example
If you invest Rs 10,000 monthly at an annual return of 12%, in 20 years, it could grow to approximately Rs 1 crore. Starting early and staying invested is key.

Benefits of Early Investing
Starting early gives your investments more time to grow. Even small amounts can accumulate significantly over time.

Actively Managed Funds vs. Index Funds
Actively Managed Funds
Professional Management: Actively managed funds are managed by experts who make investment decisions based on market research.
Potential for Outperformance: These funds can outperform the market by selecting high-potential stocks.
Disadvantages of Index Funds
Lack of Flexibility: Index funds simply track a market index, offering no flexibility to capitalize on market opportunities.
Average Returns: Index funds provide market-average returns, which may not meet your financial goals.
Why Choose Actively Managed Funds?
Actively managed funds offer potential for higher returns through expert stock selection and market timing. They provide a dynamic approach to investing.

Regular vs. Direct Funds
Regular Funds
Advisor Support: Investing through a Certified Financial Planner (CFP) provides guidance and expertise.
Convenience: Regular funds offer ease of investment, portfolio reviews, and rebalancing.
Disadvantages of Direct Funds
No Advisory Support: Direct funds require you to make investment decisions without professional guidance.
Time-Consuming: Managing direct funds can be time-consuming, requiring regular monitoring and analysis.
Benefits of Investing Through CFP
A CFP helps you create a personalized investment plan, ensuring your portfolio aligns with your financial goals and risk tolerance. They provide valuable insights and adjustments as needed.

Final Insights
Stay Disciplined
Stick to your investment plan, regardless of market fluctuations. Regular investments and patience are crucial for long-term success.

Educate Yourself
Keep learning about different investment options and market trends. This helps you make informed decisions and optimize your portfolio.

Review Regularly
Regularly review and adjust your portfolio based on performance and changing financial goals. This ensures your investments remain aligned with your objectives.

Seek Professional Advice
Consult a Certified Financial Planner for personalized advice. They provide valuable guidance to optimize your investment strategy and achieve your goals.

By following these steps and staying committed to your financial plan, you’re well on your way to securing a prosperous future. Keep investing, stay informed, and watch your wealth grow!

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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Ramalingam

Ramalingam Kalirajan  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 2024

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Hi, I am 23 years old earning a salary of 108k per month after all deductions. I am doing SIP of 21k per month in these following funds:- 1. Parag Parikh Flexi Cap Fund:- 3500 2. Quant Flexi Cap Fund:- 3500 3. Nippon India Large Cap Fund :- 3000 4. Motilal Oswal Mid Cap Fund:- 3500 5. Bandhan Small Cap Fund:- 2500 6. Axis Small Cap Fund:- 2000. 7. Motilal Oswal Nifty India Defence Index Fund:- 3000 Other than these combined contribution towards EPF (employee+employer) = 12800 per month. Please give a review of my portfolio. My investment horizon is for long terms. I will step up my investment depending on my salary increment
Ans: Your portfolio is well-diversified with a mix of flexi cap, large cap, mid cap, and small cap funds. This strategy spreads your risk across different market segments.

Flexi Cap Funds
Parag Parikh Flexi Cap Fund and Quant Flexi Cap Fund: These funds are flexible and invest across various market caps. They provide good diversification and stability.
Large Cap Funds
Nippon India Large Cap Fund: Large cap funds are stable and provide steady returns. They are less volatile compared to mid and small cap funds.
Mid Cap Funds
Motilal Oswal Mid Cap Fund: Mid cap funds offer higher growth potential. They are riskier than large cap funds but can provide better returns over the long term.
Small Cap Funds
Bandhan Small Cap Fund and Axis Small Cap Fund: Small cap funds have high growth potential. They are volatile and should be monitored closely.
Sector Funds
Motilal Oswal Nifty India Defence Index Fund: Sector funds focus on specific industries. They are riskier and should be a smaller part of your portfolio. Consider replacing with an actively managed fund for better returns.
EPF Contribution
EPF Contribution: Your EPF contribution is a good foundation for your retirement savings. It provides stability and tax benefits.
Investment Horizon
Your long-term investment horizon is ideal for your portfolio. It allows you to ride out market volatility and benefit from compounding returns.

Step-up SIP
Step-up SIP: Increasing your SIP amount with salary increments is a smart strategy. It will help you achieve your financial goals faster.
Final Insights
Your portfolio is well-structured for long-term growth. Consider replacing the index fund with an actively managed fund. Regularly review your investments to ensure they align with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Nitin

Nitin Narkhede  |56 Answers  |Ask -

MF, PF Expert - Answered on Jan 21, 2025

Asked by Anonymous - Dec 01, 2024Hindi
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We two brothers have inherited a property on 200 sq yard by registered will of our father in 2020. The property was purchased by our father in 1970 and redeveloped in 1990 into three story building. Ground floor is with my brother and first floor. Third floor without roof rights was sold by our father at the time of redevelopment . Me and my brother have terrace rights as per registered will of our father ( each has 50% roof/ terrace rights). My brother is US citizen and want to sell his share for four crores. The expected rental income from the ground floor will be Rupees 60 thousand per month. The circle rate of the property is Rupees 7 lakh per yard. My interest in the ground floor of the property is mainly to live peacefully without any interference by unknown new buyer. I am 65 and my question is from financial point should I purchase from my brother by paying Rs. 4 crore or keep the amount in bank as fixed deposit/ RBI bonds at around 8 percent per year. Second question is if he sell it to other buyer how he will sell terrace as the terrace is undivided and we both have inherited it by registered will. Thirdly there are many builders who want to redevelop the property into four floor with basement and stilt parking. What will be the right option . I have only son .
Ans: Dear Friend,
If you’re considering whether to purchase your brother’s share of the inherited property for ?4 crore, weigh peace of mind against financial returns. Buying his share gives you full control, eliminates potential disputes with a third-party buyer, and ensures no interference in your peaceful living. However, the rental yield of ?60,000/month (~1.8% annual return) is significantly lower than the ~8% return you could get by investing ?4 crore in fixed deposits or bonds, which would generate ~?2.67 lakh/month.

Regarding the terrace, your brother cannot sell his 50% share independently since it is undivided and jointly inherited. Any sale requires your consent, limiting his ability to transfer full terrace rights to a new buyer.

Redevelopment of the property is an excellent option, offering increased value and rental income. Builders are likely to provide additional floors or cash components in exchange for development rights, enhancing long-term financial benefits and ensuring modern amenities.

If your priorities are peace of mind and control over the property, purchase your brother’s share. Otherwise, invest in safer financial instruments and consider redevelopment to maximise the property’s potential. Consult a lawyer and financial advisor to ensure the best decision. Your Financial adviser can deeply evaluate all your assets and liabilities and provide a solution which will give you more leverage.
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Myself and my sister as joint owner of a property enteredvinto joint development agreementvwith a builder for construction of 8 flats in 4800 sq. Ft land. 2400 sq. Ft was retained for us with 4 flats constructed by builder to be given free of cost and 2400 sq. Ft UDS sold to builder thro PGPA for him to sell 4 flats. After selling 3 flats with 1800 sq. ft UDS by builder, we cancelled GPA and registered with SRO for retaing 600 Sq. ft UDS for our use with the consent agreeing to pay compensation for this cancel of GPA. Now I want clarification as to the ownership of the above said cancelled UDS of 600 Sq. ft as Joint owner or myself as per Joint developement agreement with a rider that myself will take possessionof 600 UDS by cancelling GPA later with builder and paying compensation st the mutually ahreed price. Builder says that myself is the owner for the cancelled 600 Sq. ft retained. I want to know whether I hv to register settlement deed for partingvwith 600 Sq. ft UDS by my sister or the statement of builder as myself will be the owner for 600 UDS regisyeted by cancelling GPA signed by the builder and both of us. Pl. Clarify.
Ans: Dear G,
The ownership of the 600 sq. ft. UDS (Undivided Share of Land) depends on the terms of the Joint Development Agreement (JDA) and the GPA cancellation deed. As per the JDA, the builder agreed to transfer the 600 sq. ft. UDS to you after GPA cancellation in return for compensation. If the GPA cancellation deed and subsequent agreements clearly state that this UDS belongs solely to you and these are registered with the Sub-Registrar’s Office (SRO), you are the legal owner. However, if your sister’s name still appears as a co-owner in the original title deed, you will need her to execute a **Settlement Deed** or **Gift Deed** in your favor, which must be registered to confirm your sole ownership and avoid disputes. The builder’s statement that you are the owner is valid only if it aligns with the registered documents. To confirm ownership, verify the SRO records to ensure the transfer has been legally recorded. If any gaps exist, consult a property lawyer to review the JDA, GPA cancellation deed, and builder’s agreement to ensure proper registration of ownership and resolve any ambiguity. This will safeguard your rights and provide clarity regarding the 600 sq. ft. UDS.
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MF, PF Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 14, 2025Hindi
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Hi sir/mam, I'm 32 years old working in a private firm as Manager. I own 9 lacs in FDs, accumulated 17 lacs in Mutual funds through SIP of around 23k pm (currently XIRR at 15-16% in with 75% in equity). I also have 2.5 lacs in PPF and 1.2 lacs in NPS. For tax savings I do yearly investments in PPF and NPS of about 1 lacs and rest I cover with ELSS (part of my SIPs). I want to retire at the age of 50, my current salary is 1.2 lac per month in hand, and receive few incentives of 1.5 lac a yr. I live in Mumbai with my wife and plan to buy a house of 60 lacs (out of which 20 L I'm borrowing from family, and rest of it will be loan with about 35k EMI). I also have a flat in NCR worth 80 L (purchased at 35 lacs), for which I have an EMI of 11k per month which is covered by rent I receive from there. I don't have kids yet, but I plan to have two of them. What should be my plan of investing that I can retire by max between 50 and 55 yrs of age with an upper middle class lifestyle in either Mumbai or NCR. How much should my corpus be? My current expenses are around 60k including rent in Mumbai, and my parents are independent. I have both health and life insurance of 1 cr+ cover.
Ans: Dear Friend,
To retire comfortably at 50-55 with an upper-middle-class lifestyle, you’ll need a retirement corpus of ?5 crore. Currently, your mutual funds, PPF, and NPS are projected to grow to ~?1.82 crore by 50. To bridge the gap of ?2.18 crore, increase your SIPs by ?30,000/month in equity funds, which can grow to ~?2.25 crore at 12% CAGR in 18 years. Prioritize repaying the ?20 lakh family loan after buying the Mumbai house, ensuring the ?35,000 EMI doesn’t hinder your additional investments. Post-retirement, rely on rental income from your NCR property and a 4% systematic withdrawal strategy from your corpus to cover inflation-adjusted expenses. Maintain ?5-6 lakhs in an emergency fund and continue tax-saving investments like ELSS, PPF, and NPS. Regularly review and rebalance your portfolio to stay aligned with your goals. With disciplined savings and investments, you’re on track for a secure retirement.
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Ramalingam Kalirajan  |7593 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 21, 2025

Asked by Anonymous - Jan 20, 2025Hindi
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Hello sir, I am 35yo with 2 (4yo, 1yo) children. Can I retire now, with following corpus: mutual fund and stocks : 3.5 crore, lands: 50 lakh, PF&PPF: 80 lakh, FD: 25 lakh, SGB &Gold:50 lakh. Currently doesn't own any house. Monthly expense is around 1 lakh.
Ans: Your corpus and monthly expenses show a solid foundation. Retirement at 35, however, requires careful assessment. Let’s analyse your situation step by step.

Current Financial Assets and Allocations

Mutual Funds and Stocks: Rs 3.5 crore

This is a significant part of your corpus. Equity investments offer high growth potential.

Lands: Rs 50 lakh

Real estate investments are illiquid. Consider them only for long-term growth or inheritance.

PF and PPF: Rs 80 lakh

These provide stability and assured returns. These are good for meeting long-term goals.

Fixed Deposit: Rs 25 lakh

FDs are low-risk and ensure liquidity. This is beneficial for emergencies.

SGB and Gold: Rs 50 lakh

Gold is a strong hedge against inflation. It also offers diversification.

Monthly Expense Analysis

Your monthly expense of Rs 1 lakh equates to Rs 12 lakh annually.

Accounting for inflation, this expense will grow over time. Planning for this is crucial.

Core Observations

Your total corpus is Rs 5.55 crore. This is substantial for your age.

Inflation and rising expenses over time will impact your corpus.

Without a house, rent becomes a recurring expense. Factor this into your calculations.

You have no guaranteed income sources post-retirement.

Key Areas of Improvement

Housing

Consider buying a house if feasible. Owning a house ensures stability and reduces rent.

Do not invest excessively in real estate as it is illiquid.

Corpus Utilisation

Avoid over-reliance on equity investments for withdrawals. Equity is volatile in the short term.

Use a mix of debt and equity for regular withdrawals.

Children’s Education and Marriage

Both are major financial goals. Plan dedicated investments for these.

Use long-term instruments for education and marriage funds.

Emergency Fund

Maintain an emergency fund of at least 12 months of expenses.

Keep it in liquid funds or high-yield savings accounts.

Recommended Financial Strategies

Asset Allocation

Diversify your portfolio across equity, debt, and gold.

Maintain 60% equity, 30% debt, and 10% gold as a starting point. Adjust as needed.

Mutual Fund Investments

Continue with actively managed funds. These can outperform index funds in emerging markets like India.

Avoid direct funds if you lack time or expertise. Regular funds offer advisor support and insights.

Debt Investments

Increase debt allocation for stability. Consider high-quality debt mutual funds.

Ensure these align with your withdrawal needs.

Tax Planning

Monitor tax implications of mutual fund withdrawals.

LTCG from equity funds above Rs 1.25 lakh is taxed at 12.5%.

Plan withdrawals to minimise tax liabilities.

Insurance Needs

Ensure adequate health insurance for your family. Cover at least Rs 25 lakh for each member.

Check if you have term insurance. Secure Rs 2-3 crore coverage for your family’s financial safety.

Inflation and Lifestyle Adjustments

Inflation can erode your purchasing power. Plan investments to counter inflation.

Avoid lifestyle inflation. Stick to essential expenses wherever possible.

Income Generation Options

Systematic Withdrawal Plans (SWP)

Use SWP from mutual funds for regular income.

Choose hybrid funds for better stability and returns.

Rental Income

Invest part of your corpus in commercial properties.

Ensure this aligns with your liquidity needs and risk profile.

Freelance or Part-Time Work

Consider light work for additional income. It can extend your corpus.

Use your skills to generate flexible income streams.

Monitoring and Review

Review your portfolio annually. Adjust allocations as goals evolve.

Work with a Certified Financial Planner for periodic checks.

Final Insights

Retirement at 35 is ambitious but achievable with meticulous planning. Your current corpus is strong, but consider the following:

Plan for inflation, children’s needs, and healthcare costs.

Diversify investments and secure guaranteed income sources.

Avoid premature decisions. Evaluate thoroughly before retiring.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

...Read more

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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