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Ramalingam Kalirajan |10893 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2025

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

Question by Sagar on Jul 02, 2025Hindi

Hi I am a 31 year old guy. Come from a very humble background. I have dependent parents and a dependent sister. My monthly salary is 51k at this point. I invest 8k in mutual funds and 1.5k in ppf monthly. I am a compulsive spender. I have just aroung 3.5 lakhs in MF and around 50k in ppf. Not enough obviously. How to manage my investment and expenses. Please suggest.

Ans: ? Appreciate your initiative and current efforts

– You are already saving and investing. That itself is a big positive.
– You invest in mutual funds and PPF. This shows long-term thinking.
– You are aware of your compulsive spending. That’s the first step towards control.
– Your financial awareness is admirable. Many people don’t realise their habits.

? Understanding your financial position

– Monthly income: Rs. 51,000.
– Monthly mutual fund investment: Rs. 8,000.
– Monthly PPF investment: Rs. 1,500.
– Total investments: Rs. 3.5 lakhs in mutual funds, Rs. 50,000 in PPF.
– Family dependency: Parents and sister.
– Challenge: Spending habits and limited corpus.

? Set a clear monthly budget

– Write down all expenses. Include rent, food, travel, mobile, and shopping.
– Classify expenses as ‘Needs’, ‘Wants’, and ‘Waste’.
– Reduce ‘Wants’ and eliminate ‘Waste’.
– Use cash for day-to-day expenses. Avoid UPI and cards for small things.
– Keep Rs. 5,000–6,000 as fixed spending limit per week.

? Create a simple structure for financial discipline

– Open three separate bank accounts.
– First account for salary credit and essential expenses.
– Second account only for investments.
– Third account for leisure or occasional spending.
– Move investment amount to second account on salary day.
– This builds forced discipline.

? Build an emergency reserve

– Emergency fund is your financial cushion.
– You have family responsibilities. So, keep minimum Rs. 1.5 lakhs.
– Don’t use mutual fund for emergencies.
– Park in liquid mutual fund or sweep-in FD.
– Build it slowly. Start with Rs. 1,000 a month. Increase as income grows.

? Avoid insurance-based investment products

– Do not buy ULIPs or endowment plans.
– These give poor returns and have high costs.
– If you already have such policies, consider surrendering.
– Redirect that money into mutual funds through a Certified Financial Planner.

? Improve mutual fund investments

– Continue with mutual fund investing.
– Avoid direct mutual funds if you lack guidance.
– Direct funds don’t offer personalised help or behavioural coaching.
– Many investors in direct funds stop or switch frequently.
– This harms long-term wealth creation.
– Instead, invest through regular plans via a trusted Mutual Fund Distributor with CFP credential.
– This adds long-term strategy and professional hand-holding.

? Understand index funds vs actively managed funds

– Index funds may look cheap, but are passive.
– They copy the index. No fund manager decisions.
– During market corrections, index funds fall equally.
– Actively managed funds may reduce losses using strategy.
– Skilled fund managers can take calls to protect or grow capital.
– You need active management when goal is wealth creation.

? Focus on goal-based investing

– Don't just invest randomly. Attach a goal.
– Write down your goals – emergency fund, sister's marriage, parent's health care, your retirement.
– Assign timelines and approximate cost.
– Match mutual funds to goals based on risk and duration.
– This creates commitment and purpose in investing.

? Use SIPs for long-term goals

– SIPs create saving habit and long-term corpus.
– Even Rs. 500 SIP helps.
– Increase SIP with every salary hike.
– Use goal-based SIPs for different life needs.
– Keep equity mutual funds only for goals more than 5 years away.

? Improve your spending habits slowly

– Start noting every rupee you spend.
– Use a simple app or diary.
– At month end, check wasteful areas.
– Replace shopping triggers with low-cost habits like reading, walking.
– Avoid impulse purchases online. Use 24-hour wait rule.
– Withdraw fixed cash for personal expenses weekly. Stop when finished.
– Discipline takes time. Be patient with yourself.

? Protection and risk management

– You are the only earning member.
– Take a term insurance of Rs. 50 lakhs minimum.
– This gives security to family if something happens to you.
– Premium is low at your age.
– Also take a personal health insurance policy.
– Don’t depend only on company policy.

? Manage your existing mutual fund corpus wisely

– Review the current mutual fund holdings.
– Ensure funds are not overlapping or thematic.
– Stay invested for minimum 5 to 7 years.
– Rebalance once a year with the help of a CFP.
– Keep tax-efficiency in mind.
– Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.
– Short-term capital gains are taxed at 20%.

? Reconsider your PPF allocation

– PPF is safe and tax-free.
– It is good for long-term goals.
– But it has a 15-year lock-in.
– Don't over-allocate here if you need flexibility.
– Maintain Rs. 1,500 monthly or increase to Rs. 2,000 max.

? Don't compare your progress with others

– Your background is humble. That’s your strength.
– Everyone has their own path.
– Focus on improvement, not comparison.
– Every rupee saved is a step ahead.

? Review your financial plan once a year

– Life changes. So should your plan.
– Review income, goals, and investments every 12 months.
– Take professional guidance when needed.
– Avoid doing things based on friends or social media.

? Cultivate financial literacy

– Read simple personal finance books or blogs.
– Watch financial awareness videos in your language.
– Knowledge reduces fear and confusion.
– It also builds confidence to manage money better.

? Manage your sister’s and parents’ needs

– Track their monthly needs and medical expenses.
– Try to get government health card or state schemes for parents.
– See if sister is eligible for any education schemes.
– Involve them in discussions. Share your efforts.
– Keep them informed without worrying them.

? Create a long-term vision

– Think 10–15 years ahead.
– Visualise a stable home, financially secure family, and self-reliance.
– This will keep you motivated to save and invest consistently.
– Delay gratification for bigger rewards in future.

? Finally

– You have made a solid start.
– You are self-aware and action-oriented.
– Continue mutual fund SIPs through regular plan and a certified financial planner.
– Maintain your PPF, but don’t over-focus.
– Build an emergency fund steadily.
– Buy pure term life and health insurance.
– Control compulsive spending through small behavioural shifts.
– Focus on long-term goals, not short-term temptations.
– Your journey may be slow, but it is steady and real.
– With consistent habits, your financial life will transform fully.

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

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