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

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 15, 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
Yawar Question by Yawar on Apr 11, 2024Hindi
Listen
Money

I am 25 earning 60 k per alomg with 5k worth of company stocks each month. Already married and wife is earning and independent. Want to buy a car and house as soon as possible without taking a loan. What to do? Currently i am investing 20k per month.

Ans: Building Your Financial Roadmap: Achieving Your Goals without Taking Loans
Congratulations on taking proactive steps towards your financial goals at such a young age! Let's craft a plan to help you buy a car and house without taking a loan, leveraging your current income and investments effectively.

1. Define Your Goals

Clarify your objectives for buying a car and house, including timelines and desired outcomes. Understanding your goals will guide your financial decisions and help prioritize your actions.

2. Assess Your Financial Situation

Evaluate your current income, expenses, and existing investments to determine your financial capacity for purchasing assets. Consider your monthly savings, company stocks, and any other assets you may have.

3. Budgeting and Saving

Create a detailed budget to track your expenses and identify areas where you can reduce discretionary spending. Maximize your monthly savings by cutting unnecessary expenses and directing those funds towards your car and house funds.

4. Increase Investment Contributions

Given your age and income, consider increasing your monthly investment contributions to accelerate your savings for the car and house. Allocate a portion of your 20k monthly investment towards short-term goals, ensuring liquidity for upcoming expenses.

5. Utilize Windfalls and Bonuses

Any windfalls or bonuses you receive should be allocated towards your car and house funds. This includes annual bonuses, tax refunds, or any unexpected income. Utilize these funds wisely to expedite your savings progress.

6. Reevaluate Company Stock Strategy

Continue investing in company stocks, but reassess your strategy to ensure diversification and mitigate risk. Consider periodically liquidating some stocks to fund your short-term goals, while maintaining a balanced portfolio for long-term growth.

7. Explore Additional Income Streams

Consider exploring additional income streams to boost your savings rate further. This could include freelance work, part-time gigs, or passive income opportunities. Every additional rupee earned contributes to your goal attainment.

8. Prioritize Your Purchases

Evaluate whether purchasing a car or a house should take precedence based on your priorities and timelines. Consider factors such as transportation needs, housing market conditions, and long-term financial implications before making a decision.

9. Stay Disciplined and Patient

Achieving significant financial goals like buying a car and house without taking a loan requires discipline and patience. Stay committed to your budget, savings plan, and investment strategy, knowing that your efforts will pay off in the long run.

10. Seek Financial Guidance

Consider consulting with a Certified Financial Planner to fine-tune your financial plan and receive personalized advice tailored to your goals and circumstances. A professional advisor can provide valuable insights and strategies to help you achieve your objectives efficiently.

With careful planning, diligent saving, and strategic investing, you can realize your dreams of owning a car and house without relying on loans. Stay focused on your goals, and you'll soon enjoy the satisfaction of achieving them on your terms.

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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 14, 2024

Asked by Anonymous - May 07, 2024Hindi
Listen
Money
I am 25 years old. Joined an IT company and earning 50k per month. I am a bachelor with monthly expenses of 15k.No liability or asset currently but I want to buy a house in future (in 3 to 4 years possibly taking loan of 30L to 40L) .How much to invest and where to build wealth and save for future & retirement please suggest. Also what else to consider for emergency fund or recession.
Ans: Congratulations on starting your career! That's a great first step towards financial security. You're earning well and have a good savings potential. Let's discuss how to manage your money effectively for your future goals:

1. Building a Strong Foundation:

Save for the Future! With a monthly salary of Rs. 50,000 and expenses of Rs. 15,000, you have a significant amount to save and invest. This is a great opportunity to build wealth for your future.

Emergency Fund! Life throws unexpected curveballs. Set aside 3-6 months' worth of living expenses in an easily accessible savings account like a Liquid Fund. This acts as a safety net in case of emergencies.

2. Investing for Your Goals:

Short Term vs. Long Term: You have both short-term (house purchase in 3-4 years) and long-term (retirement) goals. A good strategy allocates funds for each.

Actively Managed Funds: Consider investing in actively managed Debt and Equity Mutual Funds (MFs) through SIPs (Systematic Investment Plans). Actively managed funds have fund managers who try to outperform the market by picking stocks or bonds they believe will grow.

3. Planning for Your House:

Down Payment Ready? For your house purchase, aim to save a good down payment (ideally 20% or more) to minimize your loan amount and interest payments. Debt Funds or Recurring Deposits (RDs) can be suitable for this goal.

Loan Management: Taking a home loan is a big decision. Carefully research interest rates and terms. Remember, a home loan is a long-term commitment, so factor in potential EMI (Equated Monthly Installment) impact on your budget.

4. Retirement Planning:

Start Early! You're young, which is a huge advantage for retirement planning. Starting early allows time for compounding to work its magic. Invest in Equity MFs for long-term wealth creation for retirement.

Review and Rebalance: The market keeps changing. A Certified Financial Planner (CFP) can help you periodically review your portfolio, rebalance if needed, and ensure your investment strategy remains on track for your retirement goals.

5. Recession proofing:

Diversification is Key! Investing across different asset classes like Equity and Debt MFs helps spread risk. This can help you weather economic downturns like recessions.

Discipline is Important! Stick to your SIP contributions and avoid impulsive decisions based on market volatility. A CFP can help you stay disciplined and focused on your long-term goals.

Remember, financial planning is a journey, not a destination. Consulting a CFP can create a personalized plan that considers your goals, risk tolerance, and investment horizon. This will help you achieve your dreams of homeownership, a secure retirement, and overall financial well-being.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Asked by Anonymous - Jun 23, 2024Hindi
Listen
Money
I am 39 years ,want buy a house loan 75 lakhs and car 15. Lakhs and I have policies of 20 lakhs and investment of 5 lakhs and my monthly salary is 1.65lakhs how can I manage it
Ans: Assessing Your Financial Goals
You are 39 years old and aim to buy a house with a Rs 75 lakhs loan and a car worth Rs 15 lakhs. You have insurance policies worth Rs 20 lakhs and investments totaling Rs 5 lakhs. Your monthly salary is Rs 1.65 lakhs. Let’s create a strategy to manage these financial goals.

Understanding Your Financial Situation
Income and Expenses

Your monthly salary is Rs 1.65 lakhs. It's essential to understand your current monthly expenses to allocate funds for loan repayments and other financial commitments.

Existing Investments and Policies

You have Rs 20 lakhs in policies and Rs 5 lakhs in investments. These can serve as a safety net and help in meeting future financial goals.

Financial Planning for House and Car Purchase
House Loan Strategy
Loan Amount and EMI

A Rs 75 lakhs home loan with a tenure of 20 years at an interest rate of around 8% results in an EMI of approximately Rs 62,000.

Down Payment

Typically, you need to make a down payment of 20% of the house value. For a Rs 75 lakhs house, the down payment would be around Rs 15 lakhs. Use your existing investments for this purpose.

Home Loan Eligibility

With a monthly salary of Rs 1.65 lakhs, you are likely eligible for a Rs 75 lakhs home loan. Lenders usually consider up to 50% of your salary for EMI payments. Ensure your EMIs for all loans do not exceed this limit.

Car Loan Strategy
Loan Amount and EMI

A Rs 15 lakhs car loan with a tenure of 5 years at an interest rate of around 9% results in an EMI of approximately Rs 31,000.

Down Payment

You might need to make a down payment of 10-20% for the car loan. For Rs 15 lakhs, this would be Rs 1.5-3 lakhs. This can be managed through your monthly savings.

Monthly Budget and Loan Repayments
Income Allocation

Total Monthly Income: Rs 1.65 lakhs
Home Loan EMI: Rs 62,000
Car Loan EMI: Rs 31,000
Remaining Income: Rs 72,000
Monthly Expenses

Estimate your monthly expenses, including household, utilities, groceries, and other essentials. Let’s assume your monthly expenses are Rs 50,000.

Savings and Investments

After deducting loan EMIs and monthly expenses, you are left with Rs 22,000. This can be allocated towards savings and investments.

Emergency Fund
Ensure you maintain an emergency fund equivalent to at least six months of expenses. This should be kept in a liquid or savings account to cover unforeseen expenses.

Insurance and Investments
Review Insurance Policies

Ensure your insurance policies provide adequate coverage. Consider a term insurance plan for higher coverage at a lower cost. Your existing policies worth Rs 20 lakhs might need to be supplemented for adequate family protection.

Regular Investments

Continue your regular investments. Allocate the remaining Rs 22,000 towards systematic investment plans (SIPs) in mutual funds or other suitable investment avenues. This helps in wealth accumulation and achieving long-term financial goals.

Final Insights
To manage your financial goals of buying a house and car while ensuring stability, follow these steps:

Down Payment: Use existing investments for the house down payment. Save monthly for the car down payment.

Loan Repayments: Ensure EMIs for both loans fit within 50% of your monthly income.

Monthly Budget: Track expenses carefully to maintain a balance between EMIs, expenses, and savings.

Emergency Fund: Maintain an emergency fund for at least six months' expenses.

Insurance Coverage: Review and supplement your insurance policies for adequate coverage.

Investments: Continue regular investments to build wealth and secure your financial future.

By following this strategy, you can effectively manage your financial goals and maintain financial stability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

Asked by Anonymous - Jul 18, 2024Hindi
Listen
Money
Hello Sir, I am 29 yrs old, unmarried in hand salary is around 1.34 lakhs. I am planning to get married to my partner in hand salary around 1.60 lakhs. Luckily we dont have liability /loans. Only have a high housing rents of 23000 and 26500 per month. I have an fd of valutaion around 9 lakhs. My partner has around 13lakhs in stocks fd etc. We both have emergency funds of around 3-3.5 lakhs in liquid. Currently i am investing 30000 in sip each month and he is investing 30000 in elss. Both invest around 10000-15000 in stocks on and off. Could you kindly suggest some investing advise our goals are to buy a house in the next 5 yrs and buy a mid range car. We also want to have some savings for future for kids.
Ans: Your current financial situation is strong. You both have good salaries, no liabilities, and substantial savings. Here’s a comprehensive plan to achieve your goals.

Current Investments and Expenses

High Rent: Rs. 23,000 and Rs. 26,500 per month are high. Consider if there are ways to reduce this.

Emergency Funds: You both have Rs. 3-3.5 lakhs in liquid emergency funds. This is excellent and should be maintained.

Fixed Deposits: You have Rs. 9 lakhs, and your partner has Rs. 13 lakhs in stocks and FDs.

SIP Investments: You invest Rs. 30,000 in SIPs monthly, and your partner invests Rs. 30,000 in ELSS.

Stock Investments: Both invest around Rs. 10,000-15,000 in stocks on and off.

Goals

Buy a House in 5 Years

Buy a Mid-range Car

Save for Future Kids

Investment Strategy

House Purchase Plan

Down Payment Savings: Aim to save for a down payment of at least 20% of the house cost. For a house costing Rs. 1 crore, you’ll need Rs. 20 lakhs.

Increase SIP Allocation: Increase your SIP investments to Rs. 40,000 per month if possible. Focus on large-cap and hybrid funds for stability and growth.

Short-term Debt Funds: Invest some money in short-term debt funds or recurring deposits. These are less volatile and offer better returns than savings accounts.

Car Purchase Plan

Car Fund: Decide on a budget for your mid-range car. For a car costing Rs. 10-15 lakhs, start a dedicated savings plan.

Recurring Deposit: Open a recurring deposit for car savings. Monthly contributions will help build this fund over 3-5 years.

Future Kids Savings

Child Education Fund: Start investing in child education funds or balanced mutual funds. SIPs of Rs. 10,000 per month in diversified equity funds can grow significantly over the long term.

Sukanya Samriddhi Yojana (SSY): If you have a daughter, invest in SSY. It offers attractive returns and tax benefits.

Review and Adjust Investments

Review Current SIPs

Diversify Portfolio: Ensure your SIPs are diversified across large-cap, mid-cap, and small-cap funds. Add some balanced or hybrid funds for stability.
Regular Stock Investments

Systematic Investment in Stocks: Consider a more systematic approach to stock investments. Regularly invest fixed amounts in strong, fundamentally sound companies.
Utilize Fixed Deposits

Partial Liquidation: Consider partially liquidating FDs and investing in mutual funds for better returns. Keep some FDs for security and liquidity.
Tax Planning

Utilize ELSS Funds: Continue investing in ELSS for tax benefits under Section 80C. Aim to maximize the Rs. 1.5 lakhs limit.
Insurance

Health Insurance: Ensure you both have adequate health insurance coverage. Consider a family floater policy post-marriage.

Life Insurance: Opt for term insurance plans. Ensure the coverage amount is sufficient to cover future liabilities and responsibilities.

Final Insights

Balancing your current savings with your future goals requires disciplined investing. Increase your SIPs, focus on diversified and balanced funds, and ensure regular contributions to short-term and long-term goals. Regularly review your investments and adjust based on performance and changing goals. By following this structured approach, you can achieve your dreams of buying a house, a car, and securing your future family’s needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Listen
Money
I am 29 yr old female , i hv done md in radiology currently earning 12LPA . I have SIP of 1 Lakh, I dont know much about finance. Can anyone help me with investment , buying house and car?
Ans: You earn Rs. 12 lakh per year.

You invest Rs. 1 lakh per month in SIPs.

You want to invest wisely.

You plan to buy a house and a car.

You are new to finance.

A structured plan will help you.

Emergency Fund for Safety
Keep Rs. 3 lakh in a savings account.

Keep another Rs. 3 lakh in a liquid fund.

These funds cover unexpected expenses.

They also provide peace of mind.

You should not invest this amount.

Investments for Growth
Continue Your SIPs
Investing Rs. 1 lakh per month is excellent.

SIPs create wealth over time.

They help handle market ups and downs.

Stay invested for long-term growth.

Choose actively managed funds for better returns.

Add Debt Funds for Stability
Invest Rs. 5 lakh in debt funds.

These offer better returns than FDs.

They are also tax-efficient.

They balance risk in your portfolio.

Choose funds with good performance history.

Gold for Diversification
Invest Rs. 2 lakh in digital gold.

Choose sovereign gold bonds or gold ETFs.

These are better than physical gold.

Gold helps during market volatility.

It protects against inflation.

Buying a House – Key Considerations
A house is a big financial commitment.

Avoid buying too early in your career.

A loan will impact your cash flow.

Renting is better if you plan to move.

If buying, limit EMI to 30% of income.

A 20% down payment is necessary.

Avoid using all savings for a down payment.

Plan for home loan EMIs carefully.

Consider maintenance and property taxes.

Buying a house is not just an investment.

Buying a Car – Smart Planning
A car is a depreciating asset.

Avoid using all savings to buy it.

Consider a loan if needed.

EMI should not exceed 10% of income.

Check resale value before buying.

Choose a fuel-efficient model.

Buy insurance to cover risks.

Tax Planning for Savings
Use Section 80C for tax deductions.

Invest in tax-saving mutual funds if needed.

Use NPS for additional tax benefits.

Plan investments to reduce tax burden.

Final Insights
Your SIPs are a great step.

Keep an emergency fund for safety.

Invest in debt and gold for balance.

Buy a house only if financially ready.

Plan car purchase smartly.

Stay invested for long-term wealth.

Learn basic finance to make informed decisions.

A structured plan will secure your future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Latest Questions
Ashwini

Ashwini Dasgupta  |107 Answers  |Ask -

Personality Development Expert, Career Coach - Answered on May 16, 2025

Ramalingam

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 16, 2025

Money
I have a Home Loan of Rs. 75 lakh outstanding and being a banker I get the Home Loan at concessional rate of 6% on simple interest basis. I have certain disposable income every month. Is it advisable to prepay the loans on monthly basis or utilize the disposable income towards other investment options?
Ans: You have a Rs. 75 lakh home loan.
You pay only 6% simple interest as a banker.
You also have disposable income each month.
Let’s now assess your situation from all angles.

Understanding the Advantage of Low Interest

Your loan is at just 6% simple interest.

This is a rare and low-cost loan benefit.

The interest amount does not compound yearly.

So your interest cost stays predictable and steady.

You already save more compared to normal borrowers.

Regular loans are at 9% to 11% with compound interest.

Let Your Money Work Harder Through Investing

Good mutual fund investments give 11% to 13% average return long term.

This return is higher than your 6% loan cost.

So your surplus funds can grow faster if invested.

This strategy builds your wealth efficiently over time.

Compounding in mutual funds works in your favour.

Reviewing Tax Savings from Loan Interest

Your loan interest gives you tax benefit under Section 24.

You can claim up to Rs. 2 lakh deduction yearly.

This lowers your income tax burden.

Prepaying the loan reduces future tax savings.

Investments like ELSS and PPF also save taxes separately.

Liquidity Is Key for Financial Confidence

Prepaying a loan reduces your cash flexibility.

But investments offer you liquidity when needed.

Financial emergencies need access to cash fast.

Mutual funds can be redeemed when required.

Don’t put all your surplus in loan prepayment.

Peace of Mind vs. Smart Wealth Building

Some people feel peace when loans are closed early.

It reduces psychological burden and improves sleep.

But low-interest loans are better kept and managed.

You can earn more on surplus money through investing.

Debt is not always bad when it’s manageable.

Balanced Strategy Is the Best Choice

Don’t choose only one route—balance is better.

Split your monthly surplus into two parts.

Use one part to invest in long-term growth plans.

Use the other part for partial prepayments once in a while.

This approach reduces debt and builds wealth together.

What You Should Do Now

Make sure you keep emergency savings of at least 6 months’ expenses.

Review your insurance and make sure your family is protected.

If you have LIC, ULIP or insurance-based investments, assess if they are worth holding.

If they underperform, consider surrendering and reinvesting into mutual funds.

Choose actively managed mutual funds via a Certified Financial Planner.

Avoid direct mutual funds if you are not monitoring regularly.

Regular mutual funds via a qualified CFP give you guidance and support.

Avoiding Common Mistakes

Don’t rush to become loan-free if loan is cheap.

Don’t ignore inflation and real return comparisons.

Don’t ignore wealth-building just to avoid loan.

Don’t stop investing for the sake of loan closure.

Don’t go for low-return instruments only for safety.

Other Pointers to Remember

Make sure your investments match your goals.

Consider children’s education and retirement goals.

Equity mutual funds are good for goals beyond 7 years.

Hybrid mutual funds suit medium-term goals like 3 to 5 years.

For short-term use, opt for liquid or ultra short-term funds.

Track your goals and adjust asset allocation regularly.

Taxation of Mutual Fund Gains

Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.

Short-term gains are taxed at 20%.

For debt funds, both LTCG and STCG are taxed as per your tax slab.

These taxes are payable only when you sell the units.

So your money grows without yearly tax deductions.

Avoid Index Funds and Direct Plans

Index funds don’t give alpha or outperformance.

They follow the market but don’t beat it.

In tough markets, they fall without support.

Active funds are managed by experienced fund managers.

Direct plans lack professional support and review.

With regular plans through a CFP, you get full handholding.

Finally

Your concessional loan is a blessing. Keep using it.

Use your disposable income to create long-term wealth.

A good plan includes both investment and prepayment.

Invest for your future. Don’t just avoid loans.

Stay liquid, stay insured, and invest smartly with professional help.

Review this plan every 6 to 12 months with a Certified Financial Planner.

Build a clear plan for family goals and retirement readiness.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8459 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 16, 2025

Asked by Anonymous - May 16, 2025
Money
Hi Sir, I am 47 year old with 3 kids aged 11 yr dayghter and twin sons aged 6 years. I have around. I want to retire in 3 years due to health issues. After retirement me and wife will work part time and around monthly 1 lakh combined. I have monthly expenses if around 2 lakhs now. Please advise what corpus i should have to able to retire in 3 years
Ans: You are 47 years old. You have a daughter aged 11 and twin sons aged 6. You plan to retire in 3 years due to health issues. After retirement, you and your wife will earn around Rs. 1 lakh per month from part-time work. Your current family monthly expense is around Rs. 2 lakhs.

Your situation is serious and needs careful planning. I appreciate that you are thinking well in advance. Let us look at your situation in full detail now.

Assessing Your Retirement Timeline
You want to retire at 50. That’s 3 years from now.

That gives limited time to build a full retirement corpus.

After that, you and your wife plan to earn Rs. 1 lakh per month together.

Your expenses are Rs. 2 lakh per month now. This will rise with inflation.

So, you need to fill the gap of at least Rs. 1 lakh per month post-retirement.

That gap will also grow each year due to inflation.

You also have three children. Their education and future needs must be planned.

With three young kids, your financial responsibility will last for the next 15 to 20 years.

Understanding the Expense Gap
Your expenses are Rs. 2 lakh monthly now. This is Rs. 24 lakh annually.

After retirement, part-time income will cover Rs. 1 lakh monthly.

You need Rs. 1 lakh more every month from your savings.

That’s Rs. 12 lakh per year. But this amount will grow with inflation.

In 10 years, this could easily be around Rs. 20 lakh a year or more.

In 20 years, it can be around Rs. 35 lakh or more annually.

So, your retirement corpus must be big enough to cover this rising gap.

It should also last at least 30 years, as both you and your wife may live till 80 or more.

What Should Be Your Retirement Corpus
To cover Rs. 1 lakh monthly shortfall, you need a strong investment base.

That base should grow and generate income for 30 years.

You also need to plan for children’s schooling, college, and marriage.

So, your total retirement corpus should be built with multiple goals in mind.

You may need at least Rs. 6 crore to Rs. 7 crore total corpus by age 50.

This will help you cover your lifestyle gap and also children’s future needs.

The final amount will depend on inflation, market returns, and disciplined investing.

Breaking Down Your Future Expenses
1. Lifestyle Needs

You need Rs. 2 lakh monthly today. This will rise.

After retirement, inflation will push this to Rs. 3.5 lakh to Rs. 4 lakh in 15 years.

That means higher withdrawals every year.

2. Children’s Education

Your daughter will go to college in 6 years.

Your twin sons will go to college in 11 to 12 years.

Education inflation is very high, around 8% to 10% yearly.

Private college and higher studies can cost Rs. 50 lakh to Rs. 1 crore in future.

3. Health and Medical Needs

Health issues are already a concern. Medical costs rise fast.

A single hospitalisation in the future can cost Rs. 15 lakh or more.

You must keep a separate medical emergency fund.

4. Travel, Leisure, and Emergencies

Retirement is not just about needs. It should also include wants.

You may want to travel or support family in emergencies.

Keep a buffer for these lifestyle goals.

Creating a 3-Bucket Investment Strategy
Bucket 1: Emergency and Medical Fund

Keep 12 to 18 months of expenses in this bucket.

That means Rs. 25 lakh to Rs. 30 lakh in liquid funds.

This bucket should not be touched for regular income.

Use it for medical, health, and sudden family needs.

Bucket 2: Income and Safety Bucket

This gives regular income after retirement.

Invest here in low-risk and balanced funds.

This bucket must cover 8 to 10 years of shortfall.

It must be reviewed every year and rebalanced.

Withdraw monthly through SWP (Systematic Withdrawal Plan).

Bucket 3: Growth Bucket

This is for long-term income.

It must stay invested for the next 10 to 15 years.

Use only actively managed equity mutual funds.

Don’t invest in index funds. They follow the market and offer no safety in a fall.

Actively managed funds are better for retirement. They reduce risk and give better return with guidance.

This bucket will support your income in the later years of retirement.

Additional Planning Tips for a Complete Strategy
1. Insurance Review

Check your health insurance. Buy a super top-up if possible.

If you have any traditional policies like LIC endowments or ULIPs, evaluate surrendering them.

Reinvest that money in mutual funds via Certified Financial Planner.

2. Avoid Index and Direct Funds

Index funds are unmanaged. They don’t protect you in a downturn.

Direct funds have no advisor support. You may exit at the wrong time.

Invest through regular mutual funds with Certified Financial Planner.

You get discipline, emotional support, and regular reviews.

3. Tax Planning

After retirement, plan all withdrawals smartly.

Equity mutual fund LTCG above Rs. 1.25 lakh is taxed at 12.5%.

STCG is taxed at 20%.

Debt mutual fund gains are taxed as per your income tax slab.

Plan withdrawals in phases to manage tax.

Use SWP instead of lump sum withdrawal.

4. Estate Planning

Write a clear Will. Register it if possible.

Add nominations to all financial accounts and investments.

Discuss with your wife about all assets and accounts.

Educate your children slowly about financial basics.

5. Spending Discipline

After retirement, control lifestyle inflation.

Avoid overspending in early years.

Keep budgets for kids' education, personal care, and travel.

Review expenses every quarter.

Talk to your wife and plan joint financial goals.

How to Reach Rs. 6–7 Crore in 3 Years
This is a very short time.

You must save aggressively now.

Cut all unwanted expenses.

Increase monthly investments to the maximum.

Invest only in actively managed equity mutual funds through regular route.

Don’t keep too much in savings or FDs.

Avoid real estate as it is illiquid and low-return.

Rebalance investments every year with the help of Certified Financial Planner.

Finally
You have only 3 years to build your corpus.

You also have a big responsibility of three children.

You will work part time after retirement, which gives some cash flow.

But you must plan very carefully and very thoroughly.

Create three investment buckets to manage needs properly.

Use only actively managed mutual funds, not index or direct funds.

Avoid risky shortcuts and always review plans every year.

With health concerns and young kids, long-term planning is critical.

Your retirement is not the end of income. It is the beginning of financial wisdom.

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

...Read more

Milind

Milind Vadjikar  |1236 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on May 16, 2025

Asked by Anonymous - May 15, 2025
Money
Sir , i am 29 year old male currently earning 1.4 lakh per month in hand salary and 60 thousands per month (side income which is temporary for few more years may be 2 years). I have 31.5 lakhs home loan with 9.5 % floating interest for 18 years. Personal loan of 1.4 lakh with 11% interest 7 months remaining. Gold loan of 2 lakh with due date in 10 months. Every month i am paying emis of 31000 home loan 21000 personal loan (7 more months) 23000 chit fund(6 more months) I have 4.5 lakh mutual/stocks investments. Gold worth 1 lakh and no Fixed deposits. I have Chit fund ( with friends ) which expires in 6 months with 5 lakhs amount. I have an Term policy of 1 crore for which i pay premium of 35k annually for 5 more years. I had planned a wedding in one year with 10 lakh expenditure. I have zero emergency fund like fd or any other savings Please guide me best option for better investment ,emergency fund and to have a comfortable corpus till i retire by the year 2040. Till now i have no savings in whatever form it is Iam unmarried
Ans: Hello;

You need to put aside amount worth 6-8 months regular expense coverage and keep it aside in a liquid fund or a savings account.

Do invest in NPS for your retirement planning. It is the best tool available from cost, returns, tax point of view.

Only thing to be borne in mind is NPS allows very restricted withdrawals over its entire span, subject to T&C, because it's a product meant for retirement.

Except home loan all your loans are getting settled in less than a year so it's okay but never ever use loan as source of funds for personal needs.

Also avoid investing in chit funds because they have a high risk and hence promise of higher returns.

Also start systematic investments in mutual funds through monthly sip's as per your goals and risk appetite.

The MF/stock holding and chit fund money return(5 L) will take care of your marital expenses.

Happy Investing;

...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