Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |8342 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 25, 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 25, 2024Hindi
Listen
Money

I am 24 yrs old currently earning roughly around 1.09 lakhs per month, I have around 1.4 lakhs in PF, 1 lakh in each stocks and mutual funds. Currently have SIP of 14k ( 2k in Parag Parikh flexi cap, 2k in Groww nifty total market, 2k in icici prudential nifty 50 index, 2k in dsp mukti assert allocation , 2k in sbi contra, 2k in Tata nifty mid cap 150 momentum 50 index, 2k in HDFC mid cap opportunity). I have a HL running with 16k emi and a gold scheme monthly deposit of 20k. Also an RD of 20k for savings and emergency funds FD of 2 lakhs. My monthly expenses are around 10-15k. Should I invest in NPS or not as I am not comfortable with blocking period . Also any suggestions related to MF or investment are welcomed.

Ans: It's impressive to see your proactive approach to financial planning at such a young age. With a healthy income and diverse investments, you're laying a strong foundation for your future. Your current SIPs reflect a balanced approach, diversifying across various market segments.

Regarding NPS, it's understandable that the lock-in period may not align with your comfort level. While NPS offers tax benefits and retirement planning advantages, it's essential to choose investment avenues that resonate with your financial goals and preferences.

Considering your financial situation and goals, a Certified Financial Planner can help streamline your investments and align them more closely with your aspirations. They can guide you on optimizing your portfolio, considering factors like risk tolerance, time horizon, and liquidity needs.

Remember, financial planning is a dynamic process. As you progress in your career and life, your goals and priorities may evolve. Regular reviews and adjustments to your investment strategy can help you stay on track. Keep up the good work, and best wishes for your financial journey ahead!
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8342 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 04, 2024

Asked by Anonymous - May 31, 2024Hindi
Money
I am 48 yrs old. My take home salary is 195000 p/m. I have a PPF corpus of 20 lakhs maturing in 2026(I make minimum contribution of Rs500/year). The present valuation of my mutual fund kitty is 53 lakhs(23.5 lakhs original investment). I am continuing with monthly SIP of 50k. I have one house worth 1.2cr for which 8 lakh more is reqd which I have kept aside. The house that I live in is worth 2.5cr for which I am paying an EMI of 93k. 14 yrs of loan repayment is left with outstanding of 89lakhs. I have been making min 50k investment in NPS since it's inception. My EPF contribution is 8.5k/month with 3 lakhs in kitty. I have 24 lakhs of health insurance and 1.5cr term insurance. Apart from that I have 3 LIC policies out which I will be getting around 15lakhs between 2029 n 2034. I have a son 16yrs old whose education and marriage is to be taken care yet apart from my retirement. Am I on right path of investment?
Ans: Your current financial position reflects thoughtful planning and prudent investment strategies. At 48, you have a solid income, diversified investments, and significant insurance coverage. Let's analyze your financial status in detail and assess if you are on the right path to achieving your goals, including your son's education and marriage, and your retirement.

Income and Savings Overview
Your take-home salary of Rs 1,95,000 per month provides a strong foundation for your financial planning. Your current savings and investments demonstrate a clear commitment to securing your financial future.

PPF Corpus
Your PPF corpus of Rs 20 lakhs maturing in 2026 is a great safety net. The minimum annual contribution of Rs 500 helps keep the account active and continues to earn tax-free interest. Upon maturity, you can use this amount for your son's education or other significant expenses.

Mutual Fund Investments
Your mutual fund investments have grown from an original investment of Rs 23.5 lakhs to Rs 53 lakhs. Continuing with a monthly SIP of Rs 50,000 shows disciplined investing. This strategy helps average out the cost and benefit from market fluctuations over time.

Real Estate Investments
You own a house worth Rs 1.2 crore, for which you have kept aside Rs 8 lakh to complete the payment. Additionally, the house you live in is valued at Rs 2.5 crore, with an EMI of Rs 93,000 and an outstanding loan of Rs 89 lakhs over 14 years. These assets provide significant equity and stability.

Insurance and Retirement Savings
Health and Term Insurance
Your health insurance coverage of Rs 24 lakhs and term insurance of Rs 1.5 crore are prudent measures. These policies ensure financial protection for your family in case of unforeseen events.

NPS Contributions
Your monthly contribution of Rs 50,000 to the NPS since its inception indicates a strong focus on retirement savings. The NPS offers tax benefits and a structured retirement income.

EPF Contributions
Your EPF contributions of Rs 8,500 per month, with a current kitty of Rs 3 lakhs, add another layer of retirement security. The EPF provides a guaranteed return and is a reliable long-term savings option.

LIC Policies
You have three LIC policies, which will yield around Rs 15 lakhs between 2029 and 2034. These policies offer both insurance and savings benefits, providing additional financial support in the future.

Assessing Financial Goals
Son's Education and Marriage
Your son's education and marriage are significant financial milestones. Given his current age of 16, education expenses are imminent. The maturity of your PPF in 2026 and the continued growth of your mutual funds can help cover these costs. For marriage expenses, your disciplined savings in mutual funds and LIC policies will be beneficial.

Retirement Planning
You are on a solid path towards a comfortable retirement. Your investments in NPS, EPF, and mutual funds, along with the real estate assets, create a diversified portfolio. This diversity reduces risk and ensures steady growth.

Evaluating Investment Choices
Public Provident Fund (PPF)
The PPF is a safe and tax-efficient investment. Its long lock-in period ensures disciplined saving. The tax-free interest makes it an attractive option for long-term goals.

Mutual Funds
Your mutual fund investments have performed well, doubling from the original investment. Continuing with monthly SIPs helps in rupee cost averaging and leveraging market volatility. Actively managed funds offer potential for higher returns compared to index funds, which passively track the market. Your approach with actively managed funds, guided by a certified financial planner, is sound.

Real Estate
Your real estate investments provide significant value and stability. The owned house worth Rs 1.2 crore and the residence valued at Rs 2.5 crore are substantial assets. Real estate can offer good returns, but it also requires maintenance and can be less liquid than other investments.

National Pension System (NPS)
The NPS is an excellent retirement savings vehicle, offering market-linked returns and tax benefits. Your consistent contributions show a strong commitment to building a retirement corpus. The structured withdrawal and annuity options at retirement provide a steady income.

Employees' Provident Fund (EPF)
The EPF is a reliable source of retirement savings with guaranteed returns. Your monthly contributions ensure a growing corpus, supplemented by employer contributions. The EPF is also tax-efficient, offering tax-free interest and withdrawal benefits.

Life Insurance Corporation (LIC) Policies
Your LIC policies provide insurance coverage and savings benefits. The guaranteed returns, though modest, offer financial security. The maturity proceeds between 2029 and 2034 will help fund future expenses.

Debt Management
Your EMI of Rs 93,000 for the home loan with an outstanding amount of Rs 89 lakhs needs careful monitoring. Ensure timely payments to maintain a good credit score. Prepayment options should be considered if surplus funds are available, to reduce the loan tenure and interest burden.

Risk Management
Your health and term insurance policies offer substantial coverage. Review these policies periodically to ensure they meet your current needs. Adequate insurance coverage protects your family from financial distress in case of emergencies.

Recommendations for Improvement
Review and Rebalance Portfolio
Periodically review your investment portfolio to ensure it aligns with your financial goals. Rebalancing helps maintain the desired asset allocation and manage risk.

Increase EPF Contributions
Consider increasing your EPF contributions if possible. The EPF offers a secure and tax-efficient way to build your retirement corpus.

Education Planning
Start planning for your son's higher education expenses. Estimate the costs and align your investments accordingly. Consider education loans if necessary, as they can be a low-cost borrowing option.

Marriage Fund
Create a dedicated investment plan for your son's marriage. Mutual funds, especially actively managed ones, can offer good returns over the long term. Regularly invest a portion of your income towards this goal.

Emergency Fund
Ensure you have an adequate emergency fund. It should cover at least six months of expenses. This fund should be easily accessible and kept in a liquid form, such as a savings account or liquid mutual fund.

Long-Term Investment Strategy
Diversification
Maintain a diversified investment portfolio. Diversification reduces risk and enhances potential returns. Spread investments across different asset classes like equities, debt, and real estate.

Actively Managed Funds vs. Index Funds
Actively managed funds, guided by skilled fund managers, aim to outperform the market. They offer higher return potential compared to index funds, which merely track market indices. Actively managed funds are preferable for achieving higher returns, despite their higher expense ratios.

Direct Funds vs. Regular Funds
Investing in direct funds requires significant market knowledge and time. Regular funds, managed through a certified financial planner, offer professional expertise and personalized advice. This approach can help in making informed decisions and achieving better returns.

Conclusion
You are on a commendable path with your current investments and financial planning. Your disciplined approach to savings, investments, and insurance coverage shows a clear commitment to financial security and growth. Regularly review your financial plan, adapt to changes, and consult with a certified financial planner to ensure you stay on track. Your diversified portfolio, combined with prudent financial management, will help you achieve your goals and secure a comfortable future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8342 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 21, 2024

Asked by Anonymous - Oct 20, 2024Hindi
Money
Dear Sir, I am 50yrs old and may have one or two years of job. My investment portfolio is 2.3 cr 11 Lakhs cash, 30 lakhs deposit,11 Lakhs corporate bonds, 2.5 Lakhs LIC, 7 Lakhs PPF,13 Lakhs SSY,72 Lakhs EPF,15 Lakhs SGB (203 units) 6 Lakhs icici health saver with ten lakhs health cover 55 Lakhs mf (11 funds, 22% debt, largecap 33,midcap 21, smallcap 9 ,others 18) with 30% depreciation for tax and market peak, 11 Lakhs shares with 30% depreciation for tax and market peak. My monthly salary is 2Lakhs (1 lakh basic) after tax. Monthly expenses are 60000 Rs. I am residing in own house with another house rented for 6k valued 50Lakhs My kid is in tenth std. I have no active SIP now. My employeer may for NPS next month. Should I start a SIP in an index fund or should I park all my money in NPS. Is my portfolio too scattered. Should I book profits in MF and move to an index fund or deposits?
Ans: You are 50 years old, potentially having 1-2 more years in your job. Your monthly salary is Rs 2 lakh, with Rs 1 lakh as basic income after tax. Your expenses are Rs 60,000, and you reside in your own home. You also rent out another house valued at Rs 50 lakh, generating Rs 6,000 monthly.

Your investment portfolio consists of:

Rs 2.3 crore in investments
Rs 11 lakh cash
Rs 30 lakh fixed deposits
Rs 11 lakh in corporate bonds
Rs 2.5 lakh in LIC
Rs 7 lakh in PPF
Rs 13 lakh in SSY
Rs 72 lakh in EPF
Rs 15 lakh in SGB (203 units)
Rs 55 lakh in mutual funds with 30% depreciation for tax and market peak
Rs 11 lakh in shares with 30% depreciation for tax and market peak
Rs 6 lakh in ICICI Health Saver with Rs 10 lakh health cover
Your employer may contribute to NPS soon, and you are considering starting a SIP in an index fund. You want to know whether your portfolio is too scattered and if you should book profits in mutual funds and move into safer options like deposits.

Let’s go step by step.

Portfolio Analysis

Your portfolio is well-diversified, but there is some room for simplification. Let’s evaluate your current holdings:

Cash and Fixed Deposits: Rs 11 lakh in cash and Rs 30 lakh in deposits are reasonable for liquidity. However, deposits don’t beat inflation over time. Consider shifting a part of these funds to higher-yielding options.

Corporate Bonds and LIC: Your Rs 11 lakh in corporate bonds offer decent returns but carry credit risk. LIC policies offer low returns. It may be worthwhile to evaluate the benefits of continuing LIC, considering the low returns. A Certified Financial Planner can help assess the surrender value and suggest better options.

PPF and SSY: These are safe and tax-free long-term instruments. They serve as a good part of your retirement and child’s education corpus. Continue holding these.

EPF: With Rs 72 lakh, your EPF offers stability and tax benefits. It's a strong foundation for retirement planning.

Sovereign Gold Bonds (SGB): Rs 15 lakh in SGB (203 units) is a solid hedge against inflation. Keep this as part of your portfolio for the long term.

Mutual Funds and Shares: You have Rs 55 lakh in mutual funds across 11 schemes and Rs 11 lakh in shares. With 30% depreciation for tax and market peak, your equity exposure is subject to market volatility. Let's dive into these categories for a detailed understanding.

Mutual Fund Portfolio Assessment

Your mutual fund portfolio is diversified across large-cap (33%), mid-cap (21%), small-cap (9%), debt (22%), and others (18%). Having exposure to large, mid, and small caps is good for growth potential. However, 11 funds can make the portfolio scattered and harder to manage.

Key Insights on Mutual Fund Portfolio:
Actively Managed Funds Over Index Funds: You’re considering starting a SIP in an index fund. However, index funds simply mirror the market and don’t offer the flexibility of active management. In actively managed funds, professional fund managers make strategic decisions to outperform the market. Over time, this approach can offer better returns, especially in volatile markets.

Regular Funds Over Direct Funds: If you're investing in direct mutual funds, you miss out on personalized advice. Regular funds, through an MFD or a Certified Financial Planner, provide ongoing guidance, performance tracking, and portfolio adjustments. This can help you stay on track with your financial goals.

Booking Profits: Considering the market volatility and potential peaks, booking partial profits in your mutual fund portfolio could be wise. However, instead of moving completely into safe options like deposits, consider a mix of debt mutual funds for stability and equity mutual funds for long-term growth. This will balance your risk and reward.

Shares: Managing Depreciation

Your Rs 11 lakh in shares has depreciated by 30%. Rather than panicking, assess whether these stocks still have long-term growth potential. If they are fundamentally strong, holding on to them could allow for a market recovery. If the fundamentals are weak, consider exiting and reallocating those funds into more stable investments like mutual funds or bonds.

Should You Invest in NPS?

Your employer may soon start contributing to the National Pension System (NPS). NPS is a good retirement planning tool as it offers tax benefits and helps accumulate a pension corpus. However, NPS has a long lock-in period until the age of 60, and part of the withdrawal is taxable. Given your existing corpus in EPF and other investments, you could limit NPS contributions and focus more on investments that offer better liquidity and tax efficiency.

SIP Decision: Is an Index Fund Ideal?

While you are contemplating starting a SIP in an index fund, it may not be the most effective strategy for your retirement planning. Here's why:

Disadvantages of Index Funds: Index funds offer market returns, but they cannot beat the market. In volatile or down-trending markets, index funds may underperform. They also lack the flexibility that actively managed funds provide, where fund managers make decisions based on market trends and opportunities.

Benefits of Actively Managed Funds: Actively managed funds have the potential to outperform benchmarks. Fund managers make informed decisions to protect your capital and seek growth opportunities. This is especially important when you are nearing retirement and cannot afford significant market downturns.

You should consider a mix of actively managed funds rather than relying solely on index funds.

Health Cover: Adequacy and Enhancement

Your current health cover is Rs 10 lakh through ICICI Health Saver. This is good, but with rising healthcare costs, you may want to consider enhancing your health cover to at least Rs 25 lakh. Health emergencies can severely impact your retirement corpus if you don’t have adequate coverage.

Emergency Fund

Your Rs 11 lakh cash reserve serves as an emergency fund. This is sufficient for now, given that your monthly expenses are Rs 60,000. Aim to keep at least 6-12 months’ worth of expenses as an emergency fund. Any excess cash can be invested for better returns.

Child’s Education Planning

Your child is in 10th standard, and you’ll need to start planning for their higher education soon. The Rs 13 lakh in SSY and Rs 7 lakh in PPF are good instruments for this. However, depending on the cost of education, you may need to build a larger corpus. Consider supplementing these investments with child-focused mutual funds or equity funds with a horizon of 5-7 years.

Final Insights

You have built a strong portfolio, but there are areas where you can improve:

Simplify your mutual fund portfolio: Reduce the number of schemes and focus on actively managed funds rather than index funds. Booking some profits may be wise, but don’t move completely into safe assets like deposits.

NPS Contribution: Contribute to NPS but don’t park all your money there. You need liquidity and flexibility, which NPS lacks.

Shares: Hold on to fundamentally strong stocks or exit weak ones. Reallocate those funds into more stable options if needed.

Health Cover: Consider increasing your health insurance to safeguard your retirement corpus against medical emergencies.

Child’s Education: Build a dedicated corpus for your child’s education through long-term investments.

By taking these steps, you can align your portfolio for steady growth, manage risk effectively, and ensure a comfortable retirement in the next few years.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8342 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 26, 2025

Asked by Anonymous - Mar 26, 2025Hindi
Listen
Money
I am 34 Years old. Earning 80k in hand. Till now I have been through loans due to family constraints. Now I have repaid all my loans in advance by prepaying them. I invested in one mutual fund Mirae asset ELSS. But now I have stopped SIP in it. It currently has 2.20 Lacs. I have 3 lacs in bank and given 4 lacs to someone. Has KVP of 2 lacs maturing in 2033. Wife has two LIC policies maturing in 2033 with 15 lacs approx as maturity amount. I have two kids (boys) 1 and 5 years old. As I am in paramilitary so investing in NPS from past 9 years, currently it has 16.5 lacs corpus with 26 years of my job remaining. I want to invest in mutual funds 37k per month. I have no loans, no credit card and no other liability. I have chosen Parag Parikh Flexi cap-10000 SBI Gold Durect Plan Growth-5000 Bharat 22 Index Fund Fund-5000 Nippon India Large Cap-5000 Motilal Oswal Mid Cap-4000 Nippon India Small Cap-4000 Tata small cap-4000 All are direct plans. Want to start them all in Groww app from Apr 2025. I want to buy a house in next 8-10 years of approx 50Lacs current value. My car is ageing and want to replace it in next one year. Please suggest me if my approach is good or do I have to make adjustments.
Ans: Your disciplined approach to finances is impressive. Paying off loans early was a great decision. Now, you can focus on growing wealth and achieving your goals. Below is a detailed analysis of your financial plan.

Emergency Fund and Short-Term Liquidity
You have Rs 3 lakh in the bank and Rs 4 lakh lent out.

Ideally, keep 6 months of expenses as a liquid emergency fund.

Since your salary is Rs 80,000 per month, target Rs 5 lakh as an emergency fund.

If the Rs 4 lakh is not immediately recoverable, consider adding more liquid savings.

Park this money in a mix of a high-interest savings account and liquid mutual funds.

Insurance Protection
Life Insurance: You did not mention a term plan. Ensure you have one with coverage of at least 10-15 times your annual income.

Health Insurance: You did not mention a health plan. Get a Rs 20-30 lakh family floater policy.

Personal Accident Cover: Since you are in the paramilitary, a personal accident cover is essential.

NPS and Retirement Planning
You have Rs 16.5 lakh in NPS after 9 years. With 26 years left, this can grow significantly.

Continue contributing, but do not rely solely on NPS.

Diversify retirement savings with equity mutual funds to give flexibility at retirement.

NPS has withdrawal restrictions, so having non-restricted investments is important.

Investment Portfolio Review
Existing Investments
ELSS Mutual Fund: It is tax-saving but not suitable for long-term wealth building. Consider diversifying.

KVP: A low-return product locked until 2033. Not ideal for long-term wealth creation.

LIC Policies (Wife): If they are traditional endowment plans, they may have low returns. Consider surrendering and reinvesting if feasible.

Planned SIPs (From April 2025)
Your planned SIPs total Rs 37,000 per month. Below is an evaluation:

Parag Parikh Flexi Cap - Rs 10,000: Good choice for diversification and stability.

SBI Gold - Rs 5,000: Gold should not be a core investment. Reduce allocation to 5-10% of your portfolio.

Bharat 22 Index Fund - Rs 5,000: Index funds have limitations. Actively managed funds can offer better returns.

Nippon India Large Cap - Rs 5,000: Large-cap is important for stability. Keep allocation.

Motilal Oswal Mid Cap - Rs 4,000: Mid-cap funds offer growth but can be volatile. Moderate allocation is fine.

Nippon India Small Cap - Rs 4,000 & Tata Small Cap - Rs 4,000: Small-cap exposure is high. Consider reducing to avoid excessive risk.

Suggested Portfolio Adjustments
Reduce allocation to gold and index funds.

Maintain a mix of large, flexi-cap, mid, and small-cap funds.

Instead of direct funds, invest through an MFD with CFP credentials for better tracking and advice.

House Purchase Plan (8-10 Years)
The house is estimated at Rs 50 lakh in today’s value. Future value may increase.

Start a dedicated SIP in a hybrid or multi-asset fund for this goal.

Avoid real estate investment as a wealth-building tool. Buy a house only for personal use.

Car Purchase Plan (Next Year)
Since this is a short-term goal, avoid equity investment.

Use bank savings and allocate part of your upcoming savings for the purchase.

If needed, opt for a car loan but repay it quickly.

Final Insights
Keep an emergency fund of Rs 5 lakh.

Ensure you have term life and health insurance.

Continue investing in NPS but also in mutual funds for flexibility.

Review and rebalance your SIP choices.

Plan separately for house and car goals with appropriate investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8342 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 2025

Asked by Anonymous - May 13, 2025
Money
Greetings!!!! I am 43 years Old, I had started 10k per month TATA AIA SIP in previous year for total 7years Plan. I want to education plan for my 1 kid who is 6 years old now. Please advice and guide me about more investments plan, as i am still confused about future growth and any plan for my wife age 38years.
Ans: You're at a critical financial stage. Planning for your child’s education and securing your family’s future are both top priorities. You've already started a ULIP, which is a start. But let’s take a deeper 360-degree view of your situation.

Below is a detailed plan, broken into simple sections for better clarity.



Assessment of Your Current ULIP Investment

You're investing Rs. 10,000 per month in a 7-year ULIP.



ULIPs mix insurance with investment. That reduces the growth power of your money.



Charges like premium allocation, fund management, and mortality charges reduce returns.



Your actual invested amount is much lower in the first few years.



ULIPs have limited flexibility in fund switching and partial withdrawal rules.



Maturity benefits are taxed if the annual premium exceeds Rs. 2.5 lakh. Be cautious of this.



A ULIP is not ideal for education goals or long-term wealth building.



As a Certified Financial Planner, I suggest surrendering this policy and moving funds to mutual funds.



You can continue till 5 years to avoid surrender charges if already started.



But do not renew after the 7-year term. Don't increase contributions in this ULIP.



Planning for Your Child’s Higher Education

Your child is 6 years old. You have around 11-12 years.



College education in India or abroad can cost Rs. 30–60 lakhs or more.



Instead of ULIPs, invest in diversified mutual funds. This will give better inflation-adjusted returns.



Use a mix of large cap, flexi cap and small cap mutual funds.



Start SIPs in these funds with a long-term horizon of 10-12 years.



You may also consider goal-based child education funds that are actively managed.



Don't invest in direct funds. They look cheaper, but don’t offer guidance.



Always invest through a Certified Financial Planner via a regular plan.



Your investment will stay aligned with your goal as the planner will guide with rebalancing.



Use a dedicated SIP only for child’s education goal. Don’t merge it with retirement planning.



Suggested Action Plan for Child’s Education

Shift future contributions from ULIP to SIPs in active funds.



Start with Rs. 20,000 per month SIP only for education.



Review this SIP every year and increase it by 10%-15% annually.



Add lump sums like bonuses or yearly increments into the same goal fund.



In the last 2 years before the education goal, shift to debt funds slowly.



This will protect your accumulated amount from equity volatility.



Investment Plan for Your Wife (Age 38)

She has a long horizon. She can invest for both retirement and her independent needs.



Open a separate mutual fund folio in her name.



Start SIPs in flexi cap, large & midcap, and hybrid funds in regular plans.



You can start with Rs. 10,000 per month and increase gradually.



You may also use her PPF account for additional tax-free corpus.



Avoid investing in gold, insurance policies, or real estate for her.



Ensure she has her own health insurance and a term insurance if she’s working.



If she’s not working, then create an emergency fund in her name.



That gives her independence and safety if she needs cash.



Family Protection with Insurance

You did not mention your term cover. You must have it if not already.



Ideal cover should be 15–20 times your yearly income.



ULIPs or LIC endowment policies should not be considered for protection.



Avoid investment-linked insurance plans. Keep insurance and investment separate.



Review your existing insurance covers. Add riders like critical illness and accident if needed.



Tax Efficient Planning

Use Section 80C wisely. Don’t just rely on ULIP or LIC plans.



Max out PPF, ELSS mutual funds, and children tuition for tax saving.



Invest in actively managed ELSS funds for better returns than ULIPs.



Avoid index funds for tax planning. They may underperform in volatile markets.



Debt funds are taxed as per slab now. Use carefully if short horizon.



Track capital gains if you sell mutual funds. Use new tax rules for equity funds:



  - LTCG above Rs. 1.25 lakh taxed at 12.5%

  

  - STCG taxed at 20%



Plan redemptions well in advance to manage taxes efficiently.



Retirement Planning (For You and Wife)

Start a separate SIP for your retirement corpus. Do not merge with other goals.



You have 17 years for retirement. That’s good for wealth accumulation.



Invest in a mix of actively managed flexi-cap and large-cap funds.



Add hybrid funds to reduce volatility as you near retirement.



Continue EPF, and increase VPF if possible. It is tax-free and safe.



Don't consider NPS if liquidity is important. Maturity rules are rigid.



Use mutual funds with regular advice to stay on track till age 60.



Exit ULIPs and Poor Insurance Products

You mentioned TATA AIA ULIP. Continue for 5 years to avoid penalty.



After that, exit and move funds to SIP in mutual funds.



If you or wife have LIC endowment, Jeevan Saral, or ULIPs, surrender them.



Reinvest maturity amount into SIPs in regular mutual fund plans.



Do not fall for insurance agents who pitch plans as tax saving or guaranteed.



Emergency Fund and Liquidity

Keep at least 6 months of family expenses in a liquid mutual fund.



Don’t use your SIP or education fund as emergency source.



You may open a separate savings bank linked sweep account for this.



This fund will help if there is any job loss, health issue, or urgent need.



What Not to Do

Don’t invest in new ULIPs or insurance-linked plans.



Avoid direct mutual fund investments. You won’t get guided rebalancing.



Do not use your child’s education fund for house down payment.



Don’t pick index funds. They underperform in sideways or bear markets.



Don’t buy land or gold as an investment for your goals.



Final Insights

You are at a very strategic life stage. You have time and income strength.



ULIPs will not help you grow wealth. Shift to goal-based mutual fund SIPs.



Separate goals: child education, your retirement, wife’s security, and emergencies.



Invest only through a Certified Financial Planner for customised long-term support.



Review all goals every year. Increase SIPs with income.



Protect family with pure term insurance and health insurance.



Focus on building wealth in regular mutual funds, not through insurance products.



Real financial freedom comes when goals are funded without stress.



You have a clear head start. Use it with discipline and right guidance.



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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x