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Ramalingam

Ramalingam Kalirajan  |8476 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 23, 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 - Mar 13, 2024Hindi
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I have 30 Lakhs in FD should i go for SWP or keep it in FD only

Ans: Evaluating SWP vs. Fixed Deposits for Your 30 Lakhs
Deciding between a Systematic Withdrawal Plan (SWP) and Fixed Deposits (FDs) requires careful consideration. Let's assess both options to determine the best approach for your financial goals.

Understanding SWP and Fixed Deposits
SWP: Involves withdrawing a fixed amount regularly from your investment, typically from mutual funds, to meet financial needs.

Fixed Deposits: Offer a fixed interest rate over a specified period, providing stable returns with minimal risk.

Assessing Your Financial Needs
Before making a decision, consider your financial requirements and risk tolerance:

Income Needs: Determine the amount you require regularly for expenses or other financial goals.

Risk Tolerance: Assess your comfort level with market fluctuations and potential variations in returns.

Advantages of SWP
SWP offers several advantages for investors:

Regular Income: Provides a steady stream of income to meet your financial needs.

Flexibility: Allows customization of withdrawal frequency and amounts based on your requirements.

Potential for Growth: Depending on the underlying investment, SWP offers the potential for capital appreciation over time.

Benefits of Fixed Deposits
Fixed Deposits also have their merits:

Stability: Fixed interest rates offer stability and predictability of returns, suitable for conservative investors.

Capital Preservation: FDs provide capital protection, ensuring the safety of your principal amount.

Guaranteed Returns: Unlike market-linked investments, FDs guarantee fixed returns regardless of market conditions.

Disadvantages of SWP
Despite its benefits, SWP has some drawbacks:

Market Risk: Withdrawals from market-linked investments are subject to market fluctuations, impacting the withdrawal amount.

Tax Implications: Capital gains tax may apply to SWP withdrawals, affecting overall returns.

Complexity: Requires monitoring of investment performance and withdrawal rates, adding complexity to financial planning.

Drawbacks of Fixed Deposits
Fixed Deposits also come with limitations:

Low Returns: Fixed interest rates may not keep pace with inflation, leading to erosion of purchasing power over time.

Liquidity Constraints: Premature withdrawal from FDs may incur penalties, limiting liquidity.

Taxation: Interest income from FDs is taxable, reducing overall returns, especially for investors in higher tax brackets.

Conclusion
Considering your financial needs and risk tolerance, both SWP and Fixed Deposits have their place in a well-diversified portfolio.

SWP is suitable if you seek regular income with the potential for growth and can tolerate market fluctuations.

Fixed Deposits provide stability and capital preservation, ideal for conservative investors prioritizing safety over higher returns.

Ultimately, the decision depends on your specific circumstances and investment objectives. Consulting with a Certified Financial Planner can provide personalized guidance aligned with your goals.

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  |8476 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 23, 2024

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Hi...i have 25lakhs and want to invest for gurenteed monthly income after 5years ....which is better swp or fd ladder... expecting 30000 per month for 15 years ...less risky
Ans: You want a guaranteed monthly income of Rs. 30,000 after five years. With Rs. 25 lakhs to invest, you need a less risky, reliable solution. Your goal is to secure income for 15 years. Balancing safety and returns is crucial.

Evaluating Fixed Deposit Laddering
A Fixed Deposit (FD) ladder involves splitting your investment into multiple FDs with varying maturities. This method offers some advantages:

Safety:
FDs are low-risk and insured by banks.

Predictable Returns:
FD interest rates are fixed. You know what you’ll earn.

However, FDs have limitations:

Lower Returns:
FD rates may not beat inflation. Your purchasing power could decrease.

No Flexibility:
Breaking an FD early leads to penalties. You also lose some interest.

Given these factors, FDs might not meet your income needs. Inflation can erode your returns over 15 years.

Understanding Systematic Withdrawal Plans (SWP)
A Systematic Withdrawal Plan (SWP) in Mutual Funds offers a steady income stream. It allows you to withdraw a fixed amount monthly while your corpus remains invested. This option provides several benefits:

Higher Returns:
SWPs in equity or balanced funds can offer higher returns than FDs.

Tax Efficiency:
Only the gains are taxed, reducing your tax burden.

Flexibility:
You can adjust withdrawal amounts as needed.

Let’s compare the two options:

Returns Potential:
SWPs have higher return potential. Equity exposure over five years can yield better results.

Taxation:
SWPs are more tax-efficient. FDs are taxed as per your income slab.

Flexibility:
SWPs offer more flexibility than FDs. You can increase or decrease withdrawals.

Choosing the Right Strategy
Given your requirement for a less risky investment with steady income, here’s why an SWP is preferable:

Growth with Safety:
Opt for a balanced or conservative hybrid fund. These funds have a mix of equity and debt, providing growth with lower risk.

Steady Income:
An SWP allows you to set up a monthly withdrawal plan. Your corpus continues to grow, offering better returns than FDs.

Beating Inflation:
Over 15 years, inflation can erode FD returns. An SWP, with its equity exposure, is better suited to protect your purchasing power.

How to Implement an SWP
To achieve your goal of Rs. 30,000 per month:

Invest Rs. 25 lakhs in a balanced or conservative hybrid fund.
These funds balance risk by investing in both equity and debt.

Start the SWP after five years.
Your corpus will grow during these years. The returns will help sustain the monthly withdrawals.

Adjust withdrawals based on market conditions.
Flexibility is key with SWPs. Increase or decrease the amount based on your needs and market performance.

Final Insights
Investing Rs. 25 lakhs in an SWP through a balanced or hybrid fund is a sound strategy for generating a stable monthly income of Rs. 30,000 after five years. This method is more tax-efficient, flexible, and offers better inflation protection than an FD ladder.

An FD ladder, while safe, might not offer the growth needed to sustain your income for 15 years. Inflation and taxes could further reduce your real returns.

A well-planned SWP, aligned with a balanced fund, provides a balanced approach, offering both security and growth. Work with a Certified Financial Planner to ensure the selected funds meet your risk profile and financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8476 Answers  |Ask -

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

Asked by Anonymous - Feb 06, 2025Hindi
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My age is 40 and I have 40 lakh invest in mutual funds and planning to do swp to get monthly 20 thousand. Please help me is it correct approa
Ans: You have Rs. 40 lakh in mutual funds.

You plan to withdraw Rs. 20,000 monthly.

A systematic withdrawal plan (SWP) can provide steady income.

It should not deplete your corpus too soon.

A balanced strategy is essential.

Checking the Sustainability of SWP
The withdrawal rate should match returns.

High withdrawals can erode capital.

Market performance affects fund growth.

A mix of equity and debt is needed.

Debt funds provide stability.

Equity ensures long-term growth.

Asset Allocation for Stability
Avoid relying only on equity.

Allocate funds for long-term security.

Debt funds can handle short-term needs.

Equity funds grow wealth over time.

A mix of both balances risk and return.

Tax Implications of SWP
SWP in equity funds is tax-efficient.

Long-term capital gains are taxed at 10%.

Short-term gains are taxed at 15%.

Debt fund withdrawals attract slab tax.

Tax planning can reduce liability.

Adjusting SWP for Longevity
Increase withdrawals gradually.

Monitor portfolio performance.

Adjust allocation based on market cycles.

Avoid withdrawing more than growth.

Review plan every year.

Final Insights
SWP can work if planned well.

A balanced allocation is necessary.

Tax-efficient withdrawals save money.

Regular reviews keep the plan effective.

Aim for capital preservation with growth.

Your income should last for decades.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Samraat

Samraat Jadhav  |2287 Answers  |Ask -

Stock Market Expert - Answered on May 19, 2025

Asked by Anonymous - May 17, 2025
Money
Hello Sir, I am working in IT MNC. Details- I have 2 home loans. Outstanding 44.5L (50k EMI)& 12L (10k EMI) 1 loan against FD 4.5L ( 3.5K monthly interest Repay) 1 personal loan 3L (14.5K EMI) Credit Card -70k Monthly income- Salary-95K after deduction ( 18 LPA) House Rent-7k Investment- PF-11L (with active Investment 12K per month) Shares-4.5L( with active investment 10k per month) NPS- 1.5L value till date ( 2.5k monthly investment ) LIC- 25k yearly (since 2018) APY- (Since 2015) Need your valuable advice on how I can reduce the liabilities and create assets.
Ans: You're handling a complex financial situation, balancing multiple loans while actively investing. The key here is optimizing debt repayment while ensuring asset growth. Here’s a structured approach:
Step 1: Prioritize Loan Repayments
- High-Interest Debt First – Your personal loan (?3L at ?14.5K EMI) and credit card (?70K) likely carry the highest interest rates. Aim to clear these fast.
- Use surplus savings to repay the credit card first.
- Consider a personal loan balance transfer to a lower interest rate provider if feasible.
- Fixed Deposit Loan (?4.5L) – You're paying ?3.5K monthly just in interest, which adds up quickly.
- If you don’t urgently need this liquidity, repaying this loan should be a priority.


Step 2: Optimize Home Loan Repayments
Your home loans (?44.5L & ?12L) have EMIs of ?60K total, but they are long-term and likely at reasonable interest rates.
- Consider making small principal prepayments (?5K-?10K extra per month) on the bigger loan. Even modest prepayments can reduce the interest burden over time.

Step 3: Improve Cash Flow
- House Rent (?7K) – If feasible, consider subletting space or exploring alternative income streams.
- PF & NPS Investments – These are great long-term assets, but if cash flow becomes tight, reducing voluntary PF investment temporarily to ?6K (instead of ?12K) could help.

Step 4: Asset Creation Strategy
- Share Market Investments – Your ?4.5L portfolio with ?10K monthly investment is solid.
- Focus on dividend-paying stocks to generate passive income.
- If markets are volatile, consider SIP in blue-chip funds to reduce risk.
- Real Estate Appreciation – Your home property itself is an asset. Ensure rent or price appreciation aligns with market trends.
- LIC & APY – These provide long-term benefits. Ensure LIC is aligned with your financial goals rather than just traditional savings.

Step 5: Emergency Buffer
Given your existing liabilities, a small emergency fund (?1.5L-?2L) in liquid assets (FD or high-interest savings account) can provide stability.

...Read more

Ramalingam

Ramalingam Kalirajan  |8476 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 19, 2025

Money
I am 31 earning 99K per month with monthly SIP of 7k +insurance premium 2.5k i am sole earner in my family and family of 3 .Car loan EMI of 18 k 6 years left .savings in gold is 10 lakhs Mutual fund is of 5 lakh kindly guide how much additional SIP should i have to do as i think i am not going in right direction . My goal is to purchase a house worth rs. 1cr. Maximum but next year and want to close my CAR loan ASAP too
Ans: You have done well in building some savings and SIPs. Let’s now look at your goals and finances closely.

As a Certified Financial Planner, I will now guide you step-by-step. The goal is to show you a clear path.

This plan will help you buy your house, repay your car loan, and build strong financial health.

Understanding Your Present Situation
You are 31 years old. That is a good age to start disciplined planning.

You earn Rs. 99,000 per month. That is a decent monthly income.

You have a family of 3. You are the only earning member.

Your car EMI is Rs. 18,000. You have 6 more years to pay.

You invest Rs. 7,000 monthly in SIP. That is a good beginning.

Your insurance premium is Rs. 2,500 per month. That is acceptable if it is for pure term life cover.

You have Rs. 10 lakhs in gold. That is high exposure for gold.

You have Rs. 5 lakhs in mutual funds. That is a good step.

You want to buy a house worth Rs. 1 crore next year. That is a very big goal in short time.

You also want to close the car loan early. That is a good mindset.

Key Issues That Need Attention
Your EMIs are high compared to your income.

You are saving less monthly. Your total monthly savings is just Rs. 9,500.

You want to make a big purchase (house) very soon. But not enough cash flow is available.

Gold savings are not liquid and returns are not consistent.

You have pressure of responsibilities as the sole earner. Hence, emergency backup is very important.

First Focus: Emergency Fund
You should have at least 6 months of your expenses saved.

For you, Rs. 3.5 to 4 lakhs should be kept aside as emergency fund.

Do not keep this in gold. Keep this in liquid funds or sweep-in fixed deposits.

This amount should not be used for any other goal.

Review Insurance Coverage
Check if your Rs. 2,500 per month insurance is for pure term plan.

If it is not term plan, then it is not serving your goal.

If it is ULIP or endowment or money back, surrender and reinvest in mutual funds.

You need Rs. 50 lakhs to Rs. 75 lakhs term cover. This is minimum for your current life stage.

Buying the House – Think Twice Before You Rush
You are planning to buy a Rs. 1 crore house in 1 year.

Right now, your cash flow does not support this safely.

Even if you take 80% home loan (Rs. 80 lakhs), EMI will be around Rs. 60,000.

Add your current car EMI (Rs. 18,000). Total EMI = Rs. 78,000 per month.

Your income is Rs. 99,000. So, after EMIs, you will be left with Rs. 21,000 only.

You still have to manage family expenses, SIPs, insurance, lifestyle from this.

This is not practical. It will create financial stress and imbalance.

You should delay house purchase by 2–3 years.

First, build higher down payment and reduce EMI burden.

Till then, increase SIP and build a house fund.

You should target to build at least Rs. 20 lakhs in mutual funds before house purchase.

Car Loan – Plan for Early Closure in a Balanced Way
Your car EMI is Rs. 18,000 per month.

Loan has 6 years left. So, this is a long commitment.

Closing this early will improve your cash flow.

But don't use all savings at once to close this.

Instead, create a parallel SIP or RD of Rs. 10,000 monthly for 12–18 months.

After that, use this amount to close part or full car loan.

This will be a smart and stress-free approach.

Do not break mutual fund or gold savings for car loan.

Your Monthly Budget – How to Optimise
Income: Rs. 99,000

Car EMI: Rs. 18,000

Insurance Premium: Rs. 2,500

SIP: Rs. 7,000

Remaining: Rs. 71,500

Family Expenses: Estimate Rs. 50,000 to 55,000

Balance available: Rs. 15,000 to 20,000

You can add Rs. 10,000 more to SIP from this amount.

You can use Rs. 5,000 to Rs. 10,000 for car loan closure fund.

This will bring total SIP to Rs. 17,000.

This is more aligned to your income level.

Ideal SIP Target Based on Income
You should aim to save 30% of your monthly income.

For you, that is around Rs. 30,000 monthly.

Right now, you are at Rs. 7,000 SIP.

After adjustment, increase this to Rs. 17,000 for now.

Over the next 12 months, try to reach Rs. 25,000 monthly SIP.

Use step-up SIP option to increase SIP every year by 10–15%.

This method works well over 5–7 years.

Your goal of house purchase in 2–3 years and financial strength both will benefit.

Gold Savings – Restructure It Properly
You have Rs. 10 lakhs in gold. This is too high.

Ideally, gold should be only 5–10% of your total portfolio.

It is not productive for house purchase or emergencies.

Start switching gold slowly into mutual fund SIPs.

Do not sell all at once. Sell in small amounts over 6–12 months.

This will also help in tax efficiency.

Mutual Fund Portfolio – Keep It Focused
You already have Rs. 5 lakh in mutual funds.

Continue these investments. Monitor growth and performance once in 6 months.

Choose actively managed funds for your SIP.

Avoid index funds. They copy index and lack flexibility in correction periods.

Actively managed funds have better human research and decision making.

Avoid direct plans if not experienced.

Regular plans through Mutual Fund Distributor with CFP credential offer guidance.

This support is helpful when markets are volatile or when rebalancing is needed.

Tax-Saving and Goal Linkage
If you invest more in mutual funds, also use ELSS category.

These will give you 80C benefit and long-term wealth building.

Use short-term funds or liquid funds only for emergency fund and car loan targets.

For house goal (2–3 years away), use hybrid aggressive funds or short duration funds.

Equity mutual funds are suitable only for goals 5 years or more away.

Short term capital gains on equity mutual funds is taxed at 20%.

Long term capital gains above Rs. 1.25 lakhs is taxed at 12.5%.

For debt funds, all gains are taxed as per your tax slab.

Family Protection – Essential Planning
As sole earner, your family depends on you completely.

You must have a valid term life insurance policy.

Add personal accident cover also. Premium is low. Coverage is important.

Add family floater health insurance for Rs. 5 to 10 lakhs.

This keeps savings safe in medical emergencies.

Do not depend only on employer health cover.

Long-Term Wealth Building – Have a 10-Year View
You are still young. You have time to build strong wealth.

Start focusing on Rs. 25,000 to Rs. 30,000 monthly SIP over next 2 years.

Build Rs. 40 to 50 lakh wealth in 10 years through disciplined SIP.

Avoid big purchases like house if they break this flow.

Let your goals be realistic. Let your money work for you.

Mistakes to Avoid
Rushing into home loan without strong cash flow.

Keeping too much in gold and not enough in financial assets.

Not having proper term and health insurance.

Underestimating emergency fund importance.

Following random investment tips without personalised plan.

Finally
You are doing some things right already. Appreciate your efforts so far.

Now you need a sharper and more balanced plan.

Delay house purchase till your cash flow improves.

Close car loan smartly with separate fund.

Increase SIP steadily. Use mutual funds with active management.

Build protection with right insurance and emergency fund.

This 360-degree view will help you become financially stronger and stress-free.

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

...Read more

Dr Dipankar

Dr Dipankar Dutta  |1303 Answers  |Ask -

Tech Careers and Skill Development Expert - Answered on May 19, 2025

Dr Dipankar

Dr Dipankar Dutta  |1303 Answers  |Ask -

Tech Careers and Skill Development Expert - Answered on May 19, 2025

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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