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Ramalingam

Ramalingam Kalirajan  |9195 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 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 02, 2024Hindi
Money

Hi..I am 27 years old having salary of approx 1 lakh per month. I want to make a corpus of around 10 cr till my retirement. As of now I am having Fd of 2.5 lakh, sip started 2 yrs back for 7.5k with step up of 1.5k invested in index and small cap fund which is 2 lakh. Also started investing in etf for 15k per month as sip. I have also invested in LIC which is around 1.8lakhs per year started 2 years back. As I am in PSB so in NPS around 20k per month gets deposited whose current value is 3.2 lakhs. Kindly guide.

Ans: At 27 years old and with a monthly salary of Rs. 1 lakh, you're on a great path. Let’s explore how you can reach a corpus of Rs. 10 crores by retirement.

Current Financial Overview
Fixed Deposits: You have Rs. 2.5 lakhs in FD. This is good for safety, but the returns are low.

Systematic Investment Plan (SIP): You’ve started a SIP two years back with Rs. 7,500, stepped up by Rs. 1,500. This is invested in index and small cap funds. The current value is Rs. 2 lakhs.

Exchange Traded Funds (ETFs): You invest Rs. 15,000 per month in ETFs.

LIC: You invest Rs. 1.8 lakhs annually in LIC. This started two years ago.

National Pension System (NPS): Rs. 20,000 per month is deposited in NPS. Its current value is Rs. 3.2 lakhs.

SIPs: A Good Start
Your SIP investment shows foresight. However, let’s examine the types of funds:

Disadvantages of Index Funds:
Index funds track market indices. While they offer diversification, they lack flexibility. In volatile markets, actively managed funds can adapt better.

Benefits of Actively Managed Funds:
Actively managed funds have professional fund managers. They aim to outperform the market. These funds can offer better returns with careful management.

Direct Funds vs. Regular Funds
You might be investing directly in mutual funds. Here’s why regular funds through a Certified Financial Planner (CFP) can be better:

Disadvantages of Direct Funds:
Direct funds have lower costs but no guidance. You may miss out on professional advice. This can lead to suboptimal investment choices.

Benefits of Regular Funds:
Regular funds involve a fee but come with professional advice. A CFP can help you choose the right funds, monitor performance, and adjust strategies.

LIC Policies: Reconsideration Needed
Your LIC policy requires Rs. 1.8 lakhs annually. These policies often mix insurance with investment, offering lower returns. Consider surrendering this policy and reinvesting in mutual funds. This can enhance your investment growth.

Maximizing NPS Benefits
Your NPS investment is strong. NPS offers tax benefits and long-term growth. Ensure you choose an aggressive asset allocation to maximize returns. As retirement nears, gradually shift to safer investments.

ETF Investments: Strategic Adjustments
Investing Rs. 15,000 per month in ETFs shows diligence. However, ETFs, like index funds, follow the market. Consider reducing ETF investments and reallocating to actively managed mutual funds for potentially higher returns.

Creating a Robust Investment Strategy
Diversifying Your Portfolio
Equity Funds:
Increase your SIP in equity mutual funds. Focus on a mix of large, mid, and small-cap funds. Actively managed funds can help balance risk and return.

Debt Funds:
Allocate a portion to debt mutual funds. These provide stability and reduce overall portfolio risk.

Gold Funds:
Consider a small allocation to gold funds. They hedge against inflation and market volatility.

Systematic Transfer Plans (STP)
Utilize STPs to transfer funds from debt to equity. This strategy reduces risk and ensures disciplined investing.

Stepping Up SIPs
Continue stepping up your SIPs annually. This ensures your investment grows with your income. Aim to increase your SIP contributions by at least 10-15% every year.

Importance of Financial Planning
Setting Clear Goals
Define your financial goals. Besides the Rs. 10 crore retirement corpus, set short and medium-term goals. This could include buying a house, child’s education, or travel plans.

Emergency Fund
Maintain an emergency fund. This should cover 6-12 months of expenses. It ensures financial stability during unforeseen circumstances.

Insurance: Adequate Coverage
Ensure you have adequate life and health insurance. A term plan is a cost-effective option for life insurance. Review your health insurance to cover all medical needs.

Monitoring and Review
Regular Portfolio Review
Review your portfolio every 6 months. Assess performance and make necessary adjustments. A CFP can help with these reviews.

Tax Planning
Utilize tax-saving instruments wisely. Besides NPS, consider ELSS (Equity Linked Savings Scheme) for tax benefits under Section 80C.

Final Insights
You’re on the right path with your current investments. However, a few strategic adjustments can significantly improve your chances of reaching a Rs. 10 crore corpus.

Switch to Actively Managed Funds: Move from index and ETFs to actively managed mutual funds. This can provide higher returns over time.

Reevaluate LIC Policies: Consider surrendering LIC policies and reinvesting in mutual funds.

Step Up SIPs: Regularly increase your SIP contributions. This leverages your growing income for better future returns.

Seek Professional Advice: Regularly consult a Certified Financial Planner. Their expertise can help you navigate market changes and optimize your investments.

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 Kalirajan  |9195 Answers  |Ask -

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

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Dear Sir , I'm now at 53 years ; self employed person . So far managed to make a corpus of 50 L via MF ( 95% equity , 5% debt ) , holding a property of worth 40 L after repaying the loan at Kolkata . I do require a corpus of 2.5 cr after 8 years to maintain my retire life . Presently , I am able to invest much because of my income gone down and dont have spare fund to invest . Only , I am carrying 5000/- pm SIP in Mirae asset Large & mid cap & Axis small cap . I want to understand , how can reach the goal ? Please advice .
Ans: It's admirable how you've diligently built your financial foundation despite the challenges. Your proactive approach to planning is commendable. Considering your current situation, it's essential to reassess your strategy. Have you explored options to optimize your expenses and potentially increase your savings? Additionally, have you considered the impact of inflation on your target corpus?

A Certified Financial Planner can provide personalized guidance tailored to your aspirations and limitations. They can help you recalibrate your investment portfolio, ensuring a balanced approach that aligns with your risk tolerance and long-term goals. While your current SIPs are a step in the right direction, diversifying your investments further could enhance your potential returns.

Remember, financial planning is a journey, not a destination. Stay focused on your objectives, and with careful planning and guidance, you'll navigate through any challenges towards a secure and fulfilling retirement.

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Ramalingam Kalirajan  |9195 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 15, 2024

Asked by Anonymous - Apr 14, 2024Hindi
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Hi Sir Sangayya hear from Karnataka my age is 43 from last 3 years I started my SIP details r as below 1 ELSS - 5 sips each 1k 2. Large & mid cap fund - 3 sips 1k each 3. Thematic fund - Franklin India opp - 5k 4. Multi asset allocator - Tata 5k 5.Flexi cap fund - 2 Sips 1k each 6. Dynamic Asset - Edelweiss balanced Adv fund 1k 7. Small cap - Nippon India 1k Total monthly 22k is my investment kindly suggest I want to build my corpus 1cr in another 10 year
Ans: You've made a good start with your SIP investments across various categories. To achieve a corpus of 1 crore in 10 years, you'll need an average annual return of around 12%, considering your current investment of 22k per month.

Here are some suggestions to optimize your portfolio:

ELSS: Great for tax-saving, but remember the lock-in period. Ensure you're comfortable with the fund's performance and risk profile.

Large & Mid-cap: These funds offer a balanced approach. Monitor the performance and consider consolidating into a top-performing fund if necessary.

Thematic Fund: These are more focused and can be riskier. Ensure it aligns with your investment goals and risk tolerance.

Multi-Asset Allocator: Offers diversification across asset classes. A good choice for balanced growth. Ensure the fund's strategy aligns with your goals.

Flexi Cap & Dynamic Asset Allocation: These provide flexibility to invest across market caps and adjust to market conditions. Ensure they complement each other and don't overlap too much.

Small Cap: High growth potential but higher risk. Ensure it fits your risk profile and consider monitoring closely due to higher volatility.

General Recommendations:

Review & Rebalance: Regularly review your portfolio's performance and adjust if necessary. Consider shifting funds to top performers or reallocating based on market conditions.

Risk Assessment: Ensure your portfolio aligns with your risk tolerance and investment horizon.

Costs: Opt for direct plans to reduce costs and improve returns.

Diversification: Ensure your portfolio is well-diversified across asset classes and not overly concentrated in one sector or fund.

Professional Advice: Consider consulting a financial advisor for personalized guidance based on your financial goals and risk profile.

In summary, continue your disciplined approach with SIPs, regularly review and adjust your portfolio, and stay invested for the long term to achieve your goal of 1 crore in 10 years.

..Read more

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Ramalingam Kalirajan  |9195 Answers  |Ask -

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

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Hi Sir Sangayya hear from Karnataka my age is 43 from last 3 years I started my SIP details r as below 1 ELSS - 5 sips each 1k 2. Large & mid cap fund - 3 sips 1k each 3. Thematic fund - Franklin India opp - 5k 4. Multi asset allocator - Tata 5k 5.Flexi cap fund - 2 Sips 1k each 6. Dynamic Asset - Edelweiss balanced Adv fund 1k 7. Small cap - Nippon India 1k Total monthly 22k is my investment kindly suggest I want to build my corpus 1cr in another 10 year & how much I have to invest more to achieve Target
Ans: Hello Sangayya, it's great to see your commitment to building your financial future through SIP investments. Let's break down your goal of reaching a corpus of 1 crore in 10 years and assess your current investment approach:

Review Current Investments: Evaluate the performance of your existing SIPs relative to their benchmarks and peers. This will help you understand if adjustments are needed to optimize your portfolio for growth.
Assess Required Monthly Investment: To reach a corpus of 1 crore in 10 years, you'll need to calculate the required monthly investment based on your expected rate of return. This depends on factors like the type of funds you're investing in and prevailing market conditions.
Consider Increasing SIP Amount: If your current monthly investment of 22k isn't sufficient to reach your goal, you may need to increase your SIP amounts or explore additional investment avenues. A Certified Financial Planner can help you determine the optimal investment strategy based on your risk tolerance and financial goals.
Stay Consistent and Patient: Building a substantial corpus takes time and discipline. Stay committed to your investment plan, continue SIPs regularly, and avoid making emotional decisions based on short-term market fluctuations.
Regular Portfolio Review: Periodically review your portfolio's performance and make adjustments as needed. Rebalancing your investments and exploring new opportunities can help you stay on track towards achieving your financial goals.
Remember, while setting ambitious targets is commendable, it's essential to ensure that your investment strategy is realistic and aligned with your risk tolerance and financial capacity. With careful planning and perseverance, you can work towards building a significant corpus over the next decade.

..Read more

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Ramalingam Kalirajan  |9195 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 10, 2024

Asked by Anonymous - May 05, 2024Hindi
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Hi sir, I am 33.5 years old and want to built a corpus of 5 crore by the age of 40. My current investment are: Mutual funds - 37 lac Fixed deposits of around 50 lac PPF - 25 lac Gold and Gold bonds - 20 lac Indian stocks - 1 lac mainly HDFC US stocks - 7 lac mainly etfs This is my and my wifes combines portfolio For next 6.5 years we will be investing in Sip - 2 lac per month PPF - 25k per month Sovereign Gold - 12g every year Nifty 50 etf niftybees 30k per month only days when market is down. Please guide me.
Ans: It's impressive to see your proactive approach towards building wealth and securing your financial future. With a well-diversified portfolio and a systematic investment plan in place, you're on the right track to achieve your goal of reaching a corpus of 5 crore by the age of 40.

Your current investment mix demonstrates a balanced approach, encompassing various asset classes like mutual funds, fixed deposits, PPF, gold, and stocks, both domestic and international. Diversification is key to managing risk and maximizing returns over the long term.

Continuing with your SIPs, PPF contributions, and sovereign gold investments will further strengthen your portfolio's foundation. SIPs in equity mutual funds provide exposure to the equity market, offering the potential for higher returns over time. PPF and sovereign gold investments offer stability and act as a hedge against market volatility.

Your strategy of investing in Nifty 50 ETF during market downturns is commendable as it allows you to capitalize on market opportunities and accumulate units at lower prices, potentially enhancing your long-term returns.

Active vs. Passive Management:
While you've included both actively managed mutual funds and index funds (ETFs) in your portfolio, it's important to understand the differences between the two. Actively managed funds aim to outperform the market through active stock selection and portfolio management, while index funds passively track a specific index's performance.

Benefits of Actively Managed Funds:
Actively managed funds offer the potential for higher returns compared to index funds, especially during market inefficiencies or when skilled fund managers can identify lucrative investment opportunities. Additionally, active management allows for flexibility in portfolio construction and adjustments based on market conditions.

Potential Disadvantages of Index Funds:
While index funds offer low expense ratios and broad market exposure, they may lack the potential for outperformance compared to actively managed funds. Additionally, they're subject to tracking error, which occurs when the fund's performance deviates from the index it's designed to replicate.



Regularly review your portfolio's performance and rebalance as needed to ensure alignment with your financial goals and risk tolerance. Consider consulting with a Certified Financial Planner (CFP) to fine-tune your investment strategy and address any specific concerns or objectives you may have.

Stay disciplined with your savings and investment approach, and continue to monitor market trends and economic indicators. With patience, perseverance, and prudent financial management, you're well-positioned to achieve your target corpus by the age of 40.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |9195 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 18, 2024

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Hi I am 36 years old. My monthly income is 80K. I am investing 10000 in PPFCF, 3000 in ICICI psu fund, 2000 in Mirae asset flexi fund & 9000 in RD monthly. My monthly expenses are 50K. I want to build a corpus of 3 Cr by the age of 45 yrs. can you pls review my investments & suggest a plan to reach my goal
Ans: Current Financial Overview
Age: 36 years
Monthly Income: Rs 80,000
Monthly Expenses: Rs 50,000
Current Investments:
Parag Parikh Flexi Cap Fund (PPFCF): Rs 10,000 per month
ICICI PSU Fund: Rs 3,000 per month
Mirae Asset Flexi Cap Fund: Rs 2,000 per month
Recurring Deposit (RD): Rs 9,000 per month
Financial Goal
Goal: Build a corpus of Rs 3 Crores by the age of 45 (9 years from now)
Investment Review
Parag Parikh Flexi Cap Fund (PPFCF)

This fund is known for its good performance and diversification. Continue investing here.
ICICI PSU Fund

PSU funds are sector-specific and can be volatile. Consider reducing exposure to sector-specific funds.
Mirae Asset Flexi Cap Fund

This is another good diversified equity fund. Continue investing here.
Recurring Deposit (RD)

RDs are safe but offer lower returns. Consider redirecting this amount to higher return investments.
Suggested Investment Plan
To achieve your goal of Rs 3 Crores in 9 years, you need a focused and aggressive investment strategy. Here's a revised plan:

Increase Equity Exposure
Equity mutual funds offer higher returns over the long term. Allocate more towards diversified equity funds:

Parag Parikh Flexi Cap Fund: Increase to Rs 15,000 per month.
Mirae Asset Flexi Cap Fund: Increase to Rs 5,000 per month.
Multi Cap Fund: Start with Rs 5,000 per month.
Mid Cap Fund: Start with Rs 5,000 per month for higher growth potential.
Balanced Funds
Balanced funds or hybrid funds provide a mix of equity and debt, offering moderate returns with lower risk:

Balanced Advantage Fund: Start with Rs 5,000 per month.
Reduce Sector-Specific Exposure
ICICI PSU Fund: Reduce or stop investment in this fund. Redirect this amount to diversified or balanced funds.
Systematic Investment Plan (SIP)
SIP in Mutual Funds: Set up SIPs in the suggested funds to ensure disciplined investing.
Debt and Liquid Investments
Recurring Deposit (RD): Consider reducing RD contributions. Redirect Rs 4,000 from RD to equity funds. Keep Rs 5,000 in RD for safety and liquidity.
Emergency Fund
Maintain an emergency fund equivalent to 6 months of expenses (Rs 3 Lakhs) in a high-interest savings account or liquid fund.
Additional Investments
If possible, increase your total monthly investment to Rs 35,000. This will help you reach your goal faster.
Monitoring and Adjusting
Regular Review: Review your portfolio every 6 months. Make adjustments based on market conditions and fund performance.
Rebalancing: Rebalance your portfolio annually to maintain the desired asset allocation.
Tax Efficiency
Tax Planning: Use tax-efficient investment options to minimize tax liability. Consider ELSS funds for tax-saving under Section 80C.
Final Insights
Consistency is Key: Stay consistent with your investments. Avoid making changes based on short-term market movements.
Professional Guidance: Consult a Certified Financial Planner for personalized advice and to ensure your investment strategy aligns with your goals.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |9195 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 24, 2025

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Hello sir Im 34 years old and my monthly take home is 96k and 8500 rental income. have a ongoing home loan with balance amount of around 10.50L and invested around 4L in ppf, 3L in LIC, 1L in NPS, 1L in PF and started investing 40k per month in different SIPs . Can you tell me how can I achive 1cr portfolio
Ans: You are already showing great clarity. At 34 years old, with a monthly income of Rs. 96,000 and Rs. 8,500 rental income, you are taking the right steps. A Rs. 1 crore portfolio is not far from your reach. You are already investing Rs. 40,000 per month in SIPs, which is very powerful. Let us look at how to make your journey to Rs. 1 crore even stronger, more efficient, and stable.

Income and Financial Structure
Monthly salary: Rs. 96,000

Monthly rental income: Rs. 8,500

Total monthly income: Rs. 1,04,500

Home loan balance: Around Rs. 10.50 lakhs

Monthly SIP investment: Rs. 40,000

Existing investments: Rs. 4 lakhs in PPF, Rs. 3 lakhs in LIC, Rs. 1 lakh in NPS, Rs. 1 lakh in PF

You have a strong monthly income and are investing a large share. That is very encouraging.

Investment in LIC
You mentioned Rs. 3 lakhs in LIC.

LIC plans are mainly traditional insurance plans. These are not ideal for wealth creation.

Returns are often 4% to 5% per annum.

There is low flexibility and long lock-in periods.

Insurance coverage is usually very low.

What You Can Do:

If your LIC policies are endowment or money-back types, consider surrendering them.

Only surrender if they are more than 3 years old.

Use the surrendered value to invest in mutual funds.

Purchase a term insurance policy instead for protection.

Separate your insurance and investments. It gives better growth and safety both.

Home Loan Management
You have an outstanding home loan of Rs. 10.50 lakhs.

Loan repayment is a long-term commitment. It needs balance with your investing goals.

What You Should Do:

Keep paying EMIs regularly.

Don’t rush to close the loan early.

Interest on home loans gives tax benefit under Section 24.

Continue building your investment portfolio alongside.

If you get any large bonus or maturity money, partly reduce the principal. This reduces tenure and interest. But do not disturb your SIPs for this.

PPF, NPS, and PF Investments
These are all long-term and low-risk instruments. They offer safety but lower growth.

PPF: Rs. 4 lakhs invested

NPS: Rs. 1 lakh invested

PF: Rs. 1 lakh (probably EPF)

Suggestions:

Continue small amounts in PPF for debt allocation.

Don’t increase PPF limit aggressively.

Keep NPS contribution small. It has strict withdrawal rules.

Consider NPS only for tax-saving if you are using Section 80CCD(1B).

PPF and PF offer stability. But they are not enough for big wealth creation like Rs. 1 crore. For that, equity mutual funds are the core.

Mutual Fund SIP Strategy
You are investing Rs. 40,000 monthly in SIPs. This is your biggest strength.

Review the Fund Choices:

Include large cap and mid cap funds.

Add some allocation to small cap for growth.

Choose only actively managed funds.

Avoid index funds. They follow market returns only.

Actively managed funds can outperform with skilled fund managers.

Avoid direct plans if you are not professionally trained.

Direct plans save commission, but lack guidance.

You may miss underperformance or wrong fund selections.

With regular plans through a Certified Financial Planner, you get tracking and advice.

For wealth creation, direction is more important than cost saving.

How to Reach Rs. 1 Crore Portfolio
Let us now talk about building your Rs. 1 crore goal. You are already investing Rs. 40,000 per month.

This alone can help you reach Rs. 1 crore in 10–12 years. But to ensure it happens faster and more smoothly, follow the below:

What You Should Do:

Review and rebalance funds every 12 months.

Don’t stop SIPs during market fall.

Increase SIPs by 10% each year as income grows.

Keep at least 3 SIPs: one large cap, one flexi-cap, one mid/small cap.

Allocate higher amount to large and mid cap funds.

If you stick to this process, you will reach Rs. 1 crore easily in less than 12 years.

If you increase SIPs yearly, the journey becomes even shorter.

Emergency Fund Planning
You did not mention an emergency fund.

This is very important before aggressive investing.

What You Should Do:

Keep at least 4–6 months of expenses in a liquid mutual fund.

Don’t use fixed deposits or savings account for this.

This gives fast access in times of illness or job loss.

Without this fund, you may be forced to stop SIPs or redeem investments in emergency.

Life Insurance and Term Plan
You mentioned LIC, but no term plan.

A pure term plan is must for financial protection of your family.

Steps to Take:

Take a term plan of at least 15–20 times your annual income.

Keep a single term plan with good claim record.

Pay premium yearly. Choose online or offline with help of CFP.

Avoid any plan that gives maturity or money-back.

Buy term plan separately and invest separately. This gives you full benefits.

Health Insurance for Family
You did not mention health insurance.

Depending only on employer health cover is risky.

What You Should Do:

Buy a family floater health policy of Rs. 10–15 lakhs.

Add top-up cover if needed.

Check features like day-care, no-claim bonus, and room rent limit.

Medical expenses can wipe out savings. Protect your investment journey with good cover.

Tax Saving Suggestions
Let us also look at your tax-saving investments.

You are investing in PPF, LIC, NPS, PF.

These together cover Section 80C and 80CCD.

Suggestions:

Use ELSS mutual funds instead of LIC or NPS.

ELSS gives tax saving and better return.

Lock-in is only 3 years.

LIC and NPS have low returns and long lock-in. ELSS gives better flexibility and growth.

Behaviour and Discipline
Wealth building is not just about picking funds. It is about habits.

Good Practices to Follow:

Never stop SIPs due to market fall.

Don’t chase past performance only.

Review every 12 months.

Stick to the process, not emotions.

Invest with clear goals.

Behavioural discipline is the true power behind achieving Rs. 1 crore.

Asset Allocation Strategy
Keep your portfolio balanced.

Don’t put everything in equity. Don’t put everything in fixed income.

Suggested Allocation:

70% equity mutual funds

20% in PPF + PF

10% in liquid funds as emergency

Rebalance once every year with help of a Certified Financial Planner.

This keeps your risk low and return stable.

Future Increase in Income
Your income will grow every few years.

How to Use That:

Increase SIPs by Rs. 2,000–3,000 every year.

Avoid increasing lifestyle spending unnecessarily.

Invest bonuses or increments wisely.

This small step reduces time to reach Rs. 1 crore.

Common Mistakes to Avoid
Don’t stop SIPs mid-way

Don’t rely on index funds or direct plans

Don’t mix insurance and investment

Don’t keep money idle in savings account

Don’t skip financial reviews

Avoiding mistakes is as important as choosing the right investments.

Finally
You are on the right path with Rs. 40,000 SIP.

Surrender LIC if possible and reinvest that money.

Don’t touch SIPs during home loan repayment.

Create emergency fund and buy term plan.

Use ELSS for tax saving, not traditional policies.

Review with a Certified Financial Planner every year.

Your Rs. 1 crore goal is possible. You already have the base. Now you need a structure.

Stay consistent, review regularly, and keep investing with purpose.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9195 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 24, 2025

Asked by Anonymous - Jun 23, 2025Hindi
Money
I am 33 yr old my salary is 94000 per month I have 2 children ,younger one is studying in 1st STD and elder starts going to school, at present I m paying 9k house rent, and for the needs and all around total 30 k I spends, at present I am paying ULIP 1Lpa , and I started SIP in various in mid cap, small cap,large cap fund about of 9 k , could you pls help further for my savings plan for future
Ans: ou are doing a great job already by focusing on key financial goals. Managing a family of four, educating two children, investing via SIPs, and maintaining insurance shows your commitment. Let us now look at how you can further strengthen your financial planning from all angles.

Monthly Income and Expense Snapshot
Your monthly income is Rs. 94,000.

You are paying Rs. 9,000 as house rent.

Around Rs. 30,000 is your household and living expenses.

That leaves about Rs. 55,000 as monthly surplus.

This healthy surplus is your strength. This can help you build long-term wealth and provide for your children’s future.

Review of Existing Insurance (ULIP)
You mentioned paying Rs. 1 lakh annually for a ULIP.

ULIPs mix insurance and investment.

Returns are often low due to charges.

They do not offer the best coverage or flexibility.

Action Plan:

Surrender the ULIP only if lock-in is over.

Reinvest the amount into term insurance and mutual funds.

Buy a term insurance plan of at least 15–20 times your yearly income.

Term insurance is low-cost and provides pure risk cover.

By separating insurance and investment, you get better value and control.

Review of SIPs
You are investing Rs. 9,000 monthly in mutual fund SIPs across large cap, mid cap, and small cap funds.

That is a very good step. This builds long-term wealth in a disciplined manner.

Assessment of SIP Strategy:

Equity mutual funds are good for goals 5+ years away.

Small and mid cap funds have high growth potential.

But they also carry more risk than large cap funds.

Suggestions:

Continue SIPs in a mix of large, mid, and small cap actively managed funds.

Give higher weight to large and mid caps.

Small caps should have lesser allocation.

Review the performance every year.

Rebalance if needed with the help of a Certified Financial Planner.

Avoid index funds as they do not beat market returns. Their passive nature limits potential. Actively managed funds by experienced fund managers have better growth chances over long term.

Also, if you are investing in direct plans, consider this:

Direct plans may look cheaper but miss personal guidance.

You may not know when to switch or redeem.

Regular plans via a CFP offer personalised support, fund analysis, and monitoring.

Better to go with regular plans via a Certified Financial Planner. This keeps your investments aligned with your life goals.

Child Education Planning
You have two children. The younger one is in 1st Standard. The elder has just started school.

Children’s higher education is a major future expense. It needs early planning.

What You Should Do:

Create separate SIPs for each child’s education.

Allocate 8–10 years for building corpus for elder child.

Allocate 13–15 years for younger one.

Use a combination of large and mid cap funds.

Review progress every year.

This approach ensures you don’t break your investments midway. You can meet your children’s education costs without taking loans.

Emergency Fund and Risk Coverage
This area is often ignored but is the backbone of strong planning.

Emergency Fund:

Set aside 5–6 months of expenses in a liquid mutual fund.

This gives quick access in times of job loss, illness, or unexpected needs.

Health Insurance:

Check if you have health insurance for self and family.

Don’t depend only on employer cover.

Take a family floater plan of minimum Rs. 10 lakhs.

Add top-up cover if your budget permits.

Medical inflation is very high. A proper health cover protects your savings.

Retirement Planning
You are 33 now. You have about 25 years to retire. This is your wealth creation window.

Steps You Can Take:

Start SIP in a retirement-focused mutual fund.

Begin with even Rs. 3,000 to 5,000 per month.

Increase every year as income grows.

Stay invested for long term.

Retirement may look far. But planning now reduces stress later. Many people delay this and end up with shortfalls.

Do not depend on pension or children later. Create your own retirement fund.

Tax Planning
Let’s look at how you can save taxes smartly:

Use Section 80C fully (Rs. 1.5 lakhs per year).

Term insurance premium qualifies under this.

SIPs in ELSS mutual funds also give deduction.

ULIP was earlier taking this space. Reallocate wisely.

Invest in tax-saving mutual funds (ELSS) with 3-year lock-in.

Avoid tax-saving plans that mix insurance and investment. They give poor returns and lack flexibility.

Also, be aware of mutual fund taxation:

Equity mutual funds held for more than 1 year are taxed at 12.5% if LTCG exceeds Rs. 1.25 lakh.

Short-term gains (less than 1 year) are taxed at 20%.

Debt funds are taxed as per your income slab.

Plan your redemptions smartly to reduce tax impact.

Goal-based Investing
Divide your financial goals into 3 types:

Short-term (0–3 years):

Emergency fund

House down payment

School fees

Use liquid or ultra-short-term mutual funds.

Medium-term (3–7 years):

Car purchase

Child’s school/college expenses

Use balanced advantage funds or large cap funds.

Long-term (7+ years):

Higher education

Retirement

Wealth creation

Use a diversified mix of equity mutual funds. Rebalance once a year.

Goal-wise investing keeps you disciplined. You also get clarity and motivation.

Behavioural Discipline
Wealth creation is not about high returns alone. Behavioural habits matter more.

Practices to Follow:

Don’t stop SIPs in market correction.

Avoid frequent fund switches.

Don’t check NAVs daily.

Follow a planner-based investment approach.

The more consistent you are, the better results you get. SIPs work best with time and discipline.

Financial Progress Tracking
Just like health checkups, do financial reviews every year.

Review SIPs performance

Review goals and time left

Check insurance coverage

Check emergency fund balance

Rebalance if required

Take help from a Certified Financial Planner once a year. This gives direction and professional insights.

Lifestyle and Expense Management
You mentioned Rs. 30,000 on household and needs.

That is reasonable given your income and family size. Continue tracking and controlling discretionary spending.

Avoid lifestyle inflation as income grows. Instead, increase SIPs as income rises.

Use surplus for wealth creation. Not luxury.

Educate and Involve Spouse
If your spouse is not aware of your investments, include them.

Keep them informed about SIPs, insurance, goals, etc.

Involve your spouse in yearly reviews. This adds a second layer of financial safety for your family.

Final Insights
You are already doing well with SIPs and budgeting.

Shift from ULIP to term insurance and mutual funds.

Create specific goal-based SIPs for your children.

Build emergency fund and health insurance today.

Start retirement SIP early, even if small.

Track, review, and improve regularly.

These steps build your financial life step-by-step. You can create wealth and peace of mind over time.

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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