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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 26, 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 - Jun 26, 2024Hindi
Money

I am 29 years old, married with no children. I have 2 houses each valuing 1.5cr. inherited land worth 5cr. Investment in Fd 1cr, equity 70lakh, mf 30lakh, gold 100gms, ppf 51lakh(started by my father) and other investments worth 50 lakh in nsc, kvp etc. I invest 70k per month in sips (balance advantage, elss, top 100, bluechip, small and midcap). I earn monthly 1.5 lakh and household expenses including my mother's medicine is 85k. I have a young sister for whom I need 1cr after 5years. How can I plan my funds to achieve financial independence? All have health insurance and I have a term insurance of 1.75cr which will cover md till 85 years age.

Ans: You’ve built a solid financial foundation. It’s impressive, and you're already ahead in your financial journey. Let's dive into how you can achieve financial independence, secure your sister’s future, and ensure a comfortable life for your family.

Assessing Your Current Financial Position
First, let’s look at where you stand financially. You have a diverse portfolio and multiple income streams, which is fantastic. Your assets include:

Two houses worth Rs. 1.5 crore each.
Inherited land worth Rs. 5 crore.
Fixed Deposits worth Rs. 1 crore.
Equity investments of Rs. 70 lakh.
Mutual funds amounting to Rs. 30 lakh.
100 grams of gold.
PPF account with Rs. 51 lakh.
Other investments (NSC, KVP) worth Rs. 50 lakh.
Your regular investments are also strong with Rs. 70,000 per month in SIPs across balanced advantage, ELSS, top 100, bluechip, and small & midcap funds. You have a stable monthly income of Rs. 1.5 lakh, and household expenses, including your mother’s medication, are Rs. 85,000.

You also have:

Health insurance for the family.
Term insurance of Rs. 1.75 crore.
Setting Financial Goals
Your main goals are:

Achieving financial independence.
Providing Rs. 1 crore for your sister in 5 years.
Ensuring a comfortable lifestyle for your family.
Let’s break down how you can achieve these goals.

Planning for Your Sister's Future
You need Rs. 1 crore for your sister in 5 years. Here’s how you can plan:

Dedicated Investment Fund
Consider a dedicated investment plan for this goal. A mix of debt and equity can provide a balance of safety and growth. Given the 5-year timeframe, a balanced fund or a mix of short-term debt funds and bluechip equity funds could work well.

Regular Contributions
Allocate a portion of your monthly investments towards this goal. Since you already invest Rs. 70,000 per month, you might consider directing part of this to the dedicated fund. Ensure this amount grows steadily to meet the Rs. 1 crore target in 5 years.

Building Towards Financial Independence
Diversified Investment Portfolio
You already have a well-diversified portfolio. Continue to diversify across different asset classes. Your current mix of real estate, equities, mutual funds, fixed deposits, and gold is good. However, regular reviews and rebalancing of your portfolio are essential to align with market conditions and personal goals.

Increase SIP Contributions
If possible, increase your SIP contributions annually. Even a small increase can significantly impact your wealth over time. This helps in capitalizing on the power of compounding.

Emergency Fund
Ensure you have an adequate emergency fund. This should cover at least 6-12 months of your expenses. Given your expenses are Rs. 85,000 per month, aim for an emergency fund of around Rs. 10 lakh. This can be parked in a liquid fund for easy access.

Enhancing Retirement Planning
Review Your PPF and EPF
Your PPF is already substantial at Rs. 51 lakh. Continue contributing to this as it provides tax-free returns and security. If you have an Employee Provident Fund (EPF), ensure regular contributions there as well.

Long-term Equity Investments
Equities are vital for long-term growth. Continue your investments in diversified mutual funds. Focus on funds with a good track record and consistent performance. Avoid direct stocks unless you have the expertise.

Avoid Annuities and Real Estate
Avoid annuities due to lower returns and lack of flexibility. Also, real estate as an investment can be illiquid and involve high transaction costs.

Insurance and Risk Management
Health Insurance
Your family’s health insurance is crucial. Ensure the coverage is adequate to handle any medical emergencies without depleting your savings.

Term Insurance
Your term insurance of Rs. 1.75 crore is good. It provides a safety net for your family in case of any unforeseen events. Ensure this coverage remains adequate as your financial obligations grow.

Tax Efficiency
Optimize Tax Savings
Make the most of tax-saving instruments. Continue investing in ELSS, which offers tax benefits under Section 80C. Also, consider other tax-saving avenues like NPS for additional benefits.

Tax-efficient Investments
Choose investments that offer tax efficiency. For instance, PPF and ELSS provide tax-free returns. Balanced funds and long-term equity investments are also tax-efficient.

Regular Financial Review
Annual Review
Conduct an annual review of your financial plan. Assess the performance of your investments and make necessary adjustments. This ensures you stay on track to meet your financial goals.

Consult a Certified Financial Planner
Consider consulting a Certified Financial Planner for personalized advice. They can provide insights tailored to your financial situation and goals.

Avoid Common Pitfalls
Disadvantages of Index Funds
Index funds may not always beat inflation or provide superior returns. Actively managed funds, with professional management, can offer better returns and adjust to market changes.

Disadvantages of Direct Funds
Direct funds require active management and market knowledge. Investing through a Mutual Fund Distributor (MFD) with CFP credentials offers professional guidance and better fund selection.

Conclusion
You've done an excellent job building a strong financial base. With a few adjustments and strategic planning, you can achieve financial independence and secure your sister’s future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2024

Asked by Anonymous - Feb 19, 2024Hindi
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I am 53 with 1 cr corpus , invested in MF( lump sum - equity and SIP of 85 k month for last 2 years) PPF, NSC, stocks, FD . I have 2 children one is working and the daughter is in 12 would like to pursue medicine . I want to know the following A. How do I plan my finances ahead ? B. My daughters education ? My pension ? C. A medical policy is there for 26 lakhs for a family of 4 . Is that enough or I need to take another policy ? D. What amount should I have to lead a decent and comfortable life . Without depending on kids .( have a house of my own ) Kindly help / advice .
Ans: Hello Mr. Kumar Shashi Raj,

It's great that you're actively planning for your financial future and your children's education. Let's address your concerns step by step:

A. Planning your finances ahead:

With a corpus of 1 crore and diversified investments like MFs, PPF, NSC, stocks, and FDs, you're on the right track.
Consider reviewing your investment portfolio periodically to ensure alignment with your financial goals and risk tolerance.
Continue your SIPs and monitor the performance of your equity investments.
Explore options for retirement planning to secure a steady income post-retirement. You can consider instruments like NPS or annuities for this purpose.
B. Your daughter's education:

Since your daughter aims to pursue medicine, it's crucial to plan for the substantial expenses associated with her education.
Estimate the cost of her medical education and explore education loans, scholarships, or other funding options to supplement your savings.
Consider investing in instruments like mutual funds or fixed deposits specifically earmarked for her education expenses.
C. Medical insurance:

Your existing medical policy covering 26 lakhs for a family of four is a good start.
However, considering rising healthcare costs and the possibility of unforeseen medical emergencies, it's advisable to assess if this coverage is adequate.
Evaluate the premium versus coverage benefits and consider topping up your existing policy or purchasing an additional policy for enhanced coverage.
D. Retirement planning and leading a comfortable life:

Determine your desired post-retirement lifestyle and estimate your retirement expenses, including healthcare, travel, and other essentials.
Calculate the corpus required to generate a steady income stream post-retirement, considering factors like inflation and life expectancy.
Aim to build a retirement corpus that can sustain your lifestyle without relying on your children's financial support.
Maximize contributions to retirement-oriented schemes like NPS or voluntary provident fund to boost your retirement corpus.
Regularly reassess your financial plan and make adjustments as needed to stay on track towards your financial goals.

Best Regards,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

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

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Hi Iam 42 M, salary 26L, PF 28L. PPF 3.5L, NPS-4L, MF 4.5L, have shares 8L, LIC premium paying 90K per year. House rent 24k per month. Own house no loan, can invest 60K-1L per month. Daughter in 7th, want to have a financial plan for her higher studies (Engineering or Medical) and her Marriage. And also for my retirement with 1 Cr.. Can you suggest how to plan for education, marriage and my retirement ? Shall I put different funds for each goal? Shall I put a single funds to cater to all 3 Goals.
Ans: Understanding Your Financial Situation
Salary: Rs 26 lakh annually
Provident Fund (PF): Rs 28 lakh
Public Provident Fund (PPF): Rs 3.5 lakh
National Pension System (NPS): Rs 4 lakh
Mutual Funds (MF): Rs 4.5 lakh
Shares: Rs 8 lakh
LIC Premium: Rs 90k per year
House Rent: Rs 24k per month
Own House: No loan
Potential Monthly Investment: Rs 60k - 1 lakh
Goals
Daughter’s Higher Education (Engineering or Medical)
Daughter’s Marriage
Your Retirement with Rs 1 crore
Financial Plan for Each Goal
Daughter's Higher Education
Timeline: 5-6 years
Investment Strategy:
Invest Rs 20k per month in equity mutual funds.
Choose a mix of large-cap and diversified funds.
Consider systematic investment plans (SIPs) for disciplined investing.
Utilize education-oriented funds for focused growth.
Daughter's Marriage
Timeline: 10-12 years
Investment Strategy:
Invest Rs 15k per month in a combination of balanced and equity funds.
Allocate a portion to gold investments for diversification.
Utilize SIPs for consistent growth and rupee cost averaging.
Review and adjust the portfolio based on market conditions.
Your Retirement
Timeline: 18 years
Investment Strategy:
Invest Rs 25k per month in diversified equity mutual funds.
Increase contribution to NPS for tax benefits and long-term growth.
Maintain and increase contributions to PPF.
Ensure a balanced portfolio with a mix of equity, debt, and gold.
Consider a systematic withdrawal plan (SWP) for steady post-retirement income.
Portfolio Allocation
Mutual Funds
Equity Funds: For higher returns and long-term growth.
Balanced Funds: For stability and moderate growth.
Debt Funds: For safety and regular income.
Gold Investments: For diversification and inflation hedge.
Provident Fund (PF) and NPS
Provident Fund (PF): Continue contributions for safe, long-term returns.
National Pension System (NPS): Increase yearly contributions for additional tax benefits and retirement corpus growth.
Insurance and Risk Management
Life Insurance: Ensure adequate coverage to protect your family.
Health Insurance: Consider a family floater plan to cover all members.
Creating Separate Funds for Each Goal
Education Fund: Focused on growth with equity investments.
Marriage Fund: Balanced with equity and gold.
Retirement Fund: Diversified with equity, debt, and PPF/NPS.
Additional Tips
Emergency Fund: Keep at least 6 months of expenses in a liquid fund.
Review and Rebalance: Regularly review your portfolio and adjust allocations.
Increase Investments: Gradually increase your SIP amounts as your income grows.
Tax Planning: Utilize tax-saving instruments to optimize your tax liability.
Final Insights
By strategically allocating your investments, you can achieve your goals. Separate funds for each goal provide clarity and focus. Regular reviews and adjustments will keep you on track. Continue disciplined saving and investing to build a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

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

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I have 41yrs old and earning 1.8 lacs per month,, married 14years ago two kids one daughter Nd son,I have home loan,own flat and bought one flat by paid cash flat worth 75lac and another plot 30lacs have 5lacs health insurance,2cr term insurance How do I plan my financial plan please suggest me
Ans: Current Financial Overview
Age: 41 years
Monthly Income: Rs 1.8 lakhs
Family: Married with two children
Assets:
Own flat (home loan)
Flat worth Rs 75 lakhs (paid cash)
Plot worth Rs 30 lakhs
Insurance:
Health Insurance: Rs 5 lakhs
Term Insurance: Rs 2 crores
Appreciating Your Efforts
You have made good progress with property investments and securing your family's future with health and term insurance.

Financial Goals
Children’s Education and Marriage
Retirement Planning
Loan Repayment
Emergency Fund
Investment Strategy
Children's Education and Marriage
Systematic Investment Plans (SIPs):

Start SIPs in diversified mutual funds.
Allocate specific SIPs for education and marriage goals.
Recurring Deposits:

Open RDs for medium-term goals.
Ensure liquidity for urgent needs.
Retirement Planning
Public Provident Fund (PPF):

Maximize annual contribution to PPF for tax benefits and long-term savings.
National Pension System (NPS):

Invest in NPS for an additional retirement corpus and tax benefits.
Mutual Funds:

Invest in a mix of equity and debt funds.
Consider balanced advantage funds for stability and growth.
Loan Repayment
Home Loan:
Prioritize paying off the home loan.
Increase EMI payments if possible to reduce tenure and interest.
Emergency Fund
Maintain Liquidity:
Keep at least 6 months of expenses in a savings account or liquid fund.
Asset Allocation
Equity:

Invest 60% in diversified mutual funds.
Allocate towards large-cap, mid-cap, and small-cap funds.
Debt:

Invest 30% in PPF, NPS, and debt mutual funds.
Ensure stable returns with minimal risk.
Gold and Bonds:

Allocate 10% to gold bonds and other safe instruments.
Hedge against inflation and market volatility.
Insurance Review
Health Insurance:

Consider increasing coverage for comprehensive protection.
Include family members under the same plan.
Term Insurance:

Ensure the term insurance amount is adequate.
Review periodically to match with life stage changes.
Financial Discipline
Budgeting:

Track monthly expenses diligently.
Cut down on unnecessary expenditures.
Regular Review:

Review portfolio quarterly.
Rebalance based on performance and goals.
Final Insights
You are on a solid financial footing. Prioritize children’s future, retirement, and loan repayment. Ensure a balanced portfolio for growth and stability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
T S Khurana

T S Khurana   |197 Answers  |Ask -

Tax Expert - Answered on Nov 23, 2024

Asked by Anonymous - May 11, 2024Hindi
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Can you please suggest on capital gains as per Indian taxation laws arising in the below two queries : 1) property purchased with joint ownership, me and my wife’s name in 2015 at a cost of 64,80,000, housing improvements done for the cost of 1000000 and brokerages of 200000 paid and sold the same property at 10000000 in Dec 2023? 2) 87% of the proceeds got from the deal i.e 8700000, have been reinvested to pay 25% amount in purchasing another joint ownership property in Dec 2023, 3) I have invested in another under construction property in Nov 2023 by taking housing loan, which is on me and my wife’s name worth 1.4 cr, here the primary applicant is me only while wife is just made a Co applicant in the builder buyer agreement and also on the housing loan . So what are the LTCG tax liabilities arising from the above 3 scenarios for FY 2023-2024 and FY 2024-2025. I intend to sale off the property acquired in (2) by Dec 2024 and use that proceeds to close the housing loan for the property acquired in (3), will this sale of property be inviting any tax liabilities if the complete proceeds received from the sale of the property in (2) would be utilised to close the housing loan taken in Nov 2023 for the property in (3) ? Since in FY 23-24, I would be claiming the LTCG from the sale proceeds of 1) invested in the purchase of property in 2), and I intend to sale off this property in Dec 2024, will the LTCG claim be forfeited on the property sale in (1), should I hold this property at least for further 1 year so that sale of this property in 2) will not invite STCG?
Ans: (A). Let's first talk about F/Y 2023-24 :
You jointly sold a Property during the year for Rs.76.80 lakhs (64.80+10.00+2.00), & sold the same for Rs.100.00 lakhs.
You have jointly also purchased Property No.3 (I suppose it is Residential only), for Rs.140.00 lakhs.
You should avail exemption u/s-54 & file your ITR accordingly. Please disclose all details about sale & purchase in your ITR.
02. Now coming to the F/Y 2024-25 :
You intend to Sell Property No.2, which was acquired in 2023-24. Any Gain on Sale of it would be Short Term capital Gains & taxed accordingly.
Alternatively, you may hold this sale of property no.2 (for 2 years from its purchase) & avoid STCG
You are free to utilize the sale proceeds in a way you like, including paying off your housing Loan.
Please note to avail exemption u/s 54 only from investment in property no.3 & not 2.
Most welcome for any further clarifications. Thanks.

...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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