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Ramalingam

Ramalingam Kalirajan  |7363 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 14, 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
Subho Question by Subho on May 09, 2024Hindi
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I am 31 years old. I earn roughly 1lkh per month. My PPF portfolio is around 16lkh(started in 2018) giving 12.5k per month( helps in 80CC) lock in till 2033, I also have SIP of 24k (Axis Index, Axis Midcap& SBI Small cap each 8k) I Invest in mostly blue chip stocks time to time which is round about 8lkh. My monthly spend is around 30k. I can invest max 27k if PPF continues & 39k if PPF doesn't continue after the lock in is over. I have a few questions: 1. Is it wise to continue PPF after 15 years is complete? Or choose another alternative when its complete. 2. Any suggestions to reach 3-4cr goal by the age of 45. Thanks in advance.

Ans: You've laid out a detailed snapshot of your financial landscape, which is a great starting point for planning your future. Let's delve into your queries and strategize for your financial journey ahead.

Assessing the PPF Investment
Your Public Provident Fund (PPF) investment of 16 lakh since 2018 is commendable. It's an excellent tax-saving instrument, providing steady returns. With its lock-in period until 2033, it's been a consistent contributor to your financial stability.

Considering the 80CC benefits it offers, continuing the PPF post-lock-in can still be advantageous. However, it's wise to evaluate other options too, keeping in mind your financial goals and risk appetite.

Exploring Alternatives Post PPF Maturity
Upon PPF maturity, diversification is key. Explore investment avenues aligned with your risk tolerance and objectives. Mutual funds, balanced portfolios, and equity investments could be considered. Consulting with a Certified Financial Planner can provide tailored guidance suiting your needs.

Striving Toward Your 3-4 Crore Goal
To achieve your ambitious 3-4 crore target by age 45, a systematic approach is essential. Firstly, reassess your investment allocation and consider increasing SIP contributions, leveraging the potential of equity markets for higher returns over the long term.

Optimizing Investments for Growth
Your SIPs in Axis Index, Axis Midcap, and SBI Small Cap, along with occasional investments in blue-chip stocks, exhibit a balanced approach. However, actively managed funds offer advantages over index funds and ETFs, providing opportunities for outperformance and risk management.

Addressing Monthly Spend and Investment Potential
With a monthly spend of 30k and the capacity to invest up to 27k (or 39k post-PPF maturity), optimizing expenses further can boost investment potential. Reviewing spending habits and identifying areas for prudent savings can augment your investment corpus.

Encouragement and Advice
Your proactive approach to financial planning is commendable. With disciplined savings, strategic investments, and periodic reviews, your goals are within reach. Remember, financial planning is a journey, not a destination. Stay focused, adaptable, and keep learning along the way.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Asked on - May 15, 2024 | Answered on May 15, 2024
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Thank you sir for taking the time & giving a detailed answers to my curious questions. I have two more queries to your answer so that my approach cam be crystal. Will be highly obliged if you answer them. 1. Post PPF if I give the same amount to ELSS funds(for tax savings) will it outperform PPF after tax deduction in the long run? & 2. To reach my goal of 3-4cr I can adjust the ratio of 24k from previous one to Axis Index-3k, Axis Mid- 3k & Sbi Small- 18k. With 4 to 5% increase in SIP yearly. Will this be apt to reach close to my goal? Regards.
Ans: ELSS vs PPF for Outperformance:
Yes, ELSS has the potential to outperform PPF after tax deduction in the long run, but it comes with higher risk. Here's a breakdown:

ELSS: Equity-linked Mutual Funds. Potentially higher returns due to exposure to the stock market, but also subject to market volatility.
PPF: Public Provident Fund. Offers guaranteed returns set by the government, with lower risk. However, returns are typically lower than equity markets.
Here are some factors to consider:

Investment Horizon: ELSS performs better over longer timeframes (ideally 10+ years) to ride out market fluctuations and benefit from compounding.
Risk Tolerance: ELSS can experience significant ups and downs. Are you comfortable with this volatility?
2. Portfolio for ?3-4 Crore Goal:

It's possible to reach a ?3-4 crore goal with the combination you mentioned (Axis Index, Axis Mid, SBI Small Cap) and increasing SIP by 4-5% yearly. However, there are uncertainties:

Market Performance: Equity markets are inherently unpredictable. Past performance isn't a guarantee of future results.
Time Horizon: The timeframe significantly impacts the possibility of reaching your goal. A longer horizon increases the potential for growth.
Here are some suggestions to consider:

Asset Allocation: Your current allocation leans heavily towards small-cap funds, which are riskier but have higher growth potential. Consider a more balanced approach with some large-cap exposure for stability. A financial advisor can help you determine the right asset allocation based on your risk profile and goals.
Diversification: Consider including other asset classes like debt to mitigate risk. A diversified portfolio helps manage volatility.
Review and Rebalance: Regularly review your portfolio performance and rebalance if needed to maintain your target asset allocation.
Remember: Reaching a ?3-4 crore goal requires a significant investment and a long-term commitment. Consider consulting a registered financial advisor for personalized advice tailored to your specific situation and risk tolerance. They can help you create a comprehensive financial plan to achieve your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Asked on - May 15, 2024 | Answered on May 15, 2024
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Thanks once again sir. Will try to be more diligent with the investments considering your valuable insights in mind. Regards.
Ans: Welcome :)
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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Asked by Anonymous - May 07, 2024Hindi
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I am 29 yrs old. I investing 90k per month in mutual fund and stock market valued approx 34lakh and 11 lakh respectively. I also have 100 units of SGB amd activity investing in it around 10 units per issue. Just started PPF investment this year. I need to retire by age of 45. And want 3 lakh per month for monthly expenses. Please guide am i going in right directions?
Ans: At 29, you're demonstrating a proactive approach towards securing your financial future, which is commendable. Your investments in mutual funds, stocks, Sovereign Gold Bonds (SGBs), and Public Provident Fund (PPF) reflect a diversified portfolio aimed at wealth accumulation.

Investing in mutual funds and the stock market can offer substantial growth potential over the long term, especially when approached with a disciplined strategy and a focus on quality investments. Your current portfolio values of approximately 34 lakh in mutual funds and 11 lakh in stocks indicate a significant commitment to building wealth through equities.

Sovereign Gold Bonds (SGBs) offer a unique avenue for investing in gold, providing the dual benefits of capital appreciation and fixed interest income. Your strategy of actively investing in SGBs, averaging around 10 units per issue, aligns with a long-term wealth accumulation plan.

Additionally, initiating PPF investments this year adds a layer of stability to your portfolio. PPF offers attractive tax benefits and a guaranteed rate of return, making it a suitable option for retirement planning.

However, retiring by the age of 45 and aiming for a monthly expense of 3 lakh rupees necessitates a thorough evaluation of your financial plan. While your current investments show promise, achieving your retirement goal will require careful planning and possibly adjusting your investment strategy.

As a Certified Financial Planner, I recommend the following steps:

Conduct a comprehensive financial assessment to determine your current financial position, retirement goals, and risk tolerance.
Develop a detailed retirement plan, considering factors such as inflation, lifestyle expenses, and investment returns.
Evaluate the adequacy of your current savings and investment strategy in meeting your retirement income needs.
Explore options for increasing your savings rate and optimizing your investment portfolio to maximize returns while managing risk.
Continuously monitor and adjust your financial plan as needed to stay on track towards achieving your retirement goals.
In summary, while you've made significant strides in building your investment portfolio, retiring by the age of 45 and generating a monthly income of 3 lakh rupees will require careful planning and disciplined execution. By working with a Certified Financial Planner and regularly reviewing your financial plan, you can increase the likelihood of achieving your retirement goals.

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Ramalingam Kalirajan  |7363 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - May 09, 2024Hindi
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I am 31 years old. I earn roughly 1lkh per month. My PPF portfolio is around 16lkh(started in 2018) giving 12.5k per month( helps in 80CC) lock in till 2033, I also have SIP of 24k (Axis Index, Axis Midcap& SBI Small cap each 8k) I Invest in mostly blue chip stocks time to time invested value is round about 8lkh in total. My monthly spend is around 30k. I can invest max 27k if PPF continues & 39k if PPF doesn't continue after the lock in is over. I have a few questions: 1. Is it wise to continue PPF after 15 years is complete? Or choose another alternative when its complete. 2. Any suggestions to reach 3-4cr goal by the age of 45. Thanks in advance.
Ans: Building Wealth and Planning for the Future: A Comprehensive Approach
As a Certified Financial Planner, I understand your aspirations to build a substantial corpus for the future while optimizing your current investments. Let's address your questions and strategize for achieving your financial goals.

Continuing PPF after 15 Years: A Wise Move?
Assessing the Pros and Cons

Pros of Continuing PPF: PPF offers tax benefits under Section 80C, a competitive interest rate, and a tax-free maturity amount. Additionally, it provides a stable and secure investment avenue.

Cons of Continuing PPF: While PPF has its advantages, it's essential to consider whether it aligns with your overall financial goals and risk appetite. PPF's lock-in period of 15 years might limit liquidity, and its returns may not outpace inflation significantly.

Evaluating Alternatives

Explore Equity Investments: Given your age and risk tolerance, consider allocating a portion of your investable surplus to equity-oriented investments like mutual funds or direct equity. These avenues have the potential to generate higher returns over the long term, albeit with higher volatility.

Diversification Across Asset Classes: Diversifying your investment portfolio across various asset classes, including equity, debt, and possibly alternative investments like gold or real estate investment trusts (REITs), can mitigate risk and enhance overall returns.

Strategies to Achieve 3-4 Crore Goal by Age 45
Setting Realistic Targets

Evaluate Current Savings Rate: Assess your current savings rate and determine if there's room to increase it further to accelerate wealth accumulation. Since you can invest a maximum of Rs. 39,000 monthly post-PPF lock-in, utilize this capacity effectively.

Optimizing Investment Allocation: Review your existing investment portfolio to ensure alignment with your financial goals and risk tolerance. Consider rebalancing periodically to maintain an optimal asset allocation mix.

Maximizing Returns

Focus on Equity Investments: Given your relatively young age and long investment horizon, prioritize equity-oriented investments that have historically delivered superior returns over the long term. However, ensure proper diversification and risk management.

Systematic Investment Plans (SIPs): Continue your SIPs in diversified equity mutual funds, preferably across large-cap, mid-cap, and small-cap segments, to benefit from rupee cost averaging and compounding over time.

Monitoring and Reviewing

Regular Portfolio Review: Schedule periodic portfolio reviews to track the performance of your investments and make necessary adjustments based on changes in market conditions, financial goals, and risk appetite.

Risk Management: Stay abreast of economic and market developments to proactively manage risks associated with your investment portfolio. Consider consulting with a Certified Financial Planner periodically to ensure your financial plan remains on track.

Conclusion
By strategically balancing your investment portfolio, optimizing savings, and adopting a disciplined approach to wealth accumulation, you can work towards achieving your ambitious financial goal of 3-4 crores by the age of 45. Remember to stay committed to your financial plan, remain patient during market fluctuations, and seek professional guidance when needed to navigate your financial journey effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Mutual Funds, Financial Planning Expert - Answered on Dec 27, 2024

Asked by Anonymous - Oct 22, 2024Hindi
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I have lost money around 8 lakhs in gambling now i want to restart my life fresh i need to settle my debts and loan with bank and NBFCs is it possible to settle money at 70 percent waived off
Ans: Restarting your life after financial setbacks is possible with a disciplined approach. Settling your debts with banks and NBFCs requires a strategic plan, negotiation, and commitment. Here's a 360-degree approach to help you resolve your situation:

Assess Your Current Financial Position
List All Debts: Create a detailed list of all outstanding loans and debts, including principal, interest, and penalties.

Identify Income Sources: Calculate your monthly income and any other sources of funds.

Evaluate Essential Expenses: Identify non-negotiable expenses such as rent, food, utilities, and transport.

Determine Negotiable Debts: Focus on debts with higher interest rates or legal implications.

Negotiating with Lenders
Possibility of Settling at 70% Waiver
Banks and NBFCs Are Open to Negotiation: They prefer recovering some amount rather than declaring a loan as non-performing.

Settlement Terms Vary: Each lender may have unique policies. Some might agree to 70% waiver, but others may not.

Present Your Case Transparently: Show proof of your financial hardship. Explain your inability to pay in full.

Request a One-Time Settlement (OTS): Offer to pay a lump sum of the waived-off amount to close the debt.

Steps to Negotiate Effectively
Reach Out to the Right Department: Contact the collections or recovery department of your lender.

Seek Professional Help: A certified financial planner or debt resolution expert can negotiate on your behalf.

Prepare a Settlement Plan: Propose a realistic amount you can pay. Mention the sources for this payment.

Ask for Written Confirmation: Ensure the lender provides a formal agreement on the waived-off amount.

Negotiate for Reduced Interest and Penalties: Request removal of penalties and reduction of interest rates.

Managing Your Financial Obligations
Repayment Strategy
Prioritise High-Interest Loans: Focus on clearing loans with higher interest rates first.

Consolidate Debts: Consider consolidating multiple loans into one with a lower interest rate.

Use Liquid Assets Wisely: If you have savings or assets, use them to reduce your debt burden.

Building a Fresh Financial Foundation
Avoid Gambling and High-Risk Activities
Adopt Healthy Habits: Seek professional help if gambling is an addiction. Join support groups like Gamblers Anonymous.

Focus on Financial Literacy: Learn to manage your money effectively through courses or books.

Create a Budget and Emergency Fund
Track Income and Expenses: Use apps or spreadsheets to monitor your financial activity.

Save for Emergencies: Set aside 3–6 months of expenses as a safety net.

Restart Investments Gradually
Start with SIPs: Begin investing small amounts in mutual funds. Avoid direct stock trading initially.

Build a Retirement Corpus: Plan for long-term financial security systematically.

Final Insights
Rebuilding your life after a financial setback takes effort but is achievable. Focus on negotiating your debts transparently and settling them systematically. Learn from past mistakes and adopt disciplined financial habits. Restart your journey with renewed confidence and a commitment to avoid risky behaviours. Seek professional guidance when needed to make informed decisions.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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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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