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Ramalingam Kalirajan |10879 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 04, 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

Asked by Anonymous - Jul 07, 2025Hindi

Hi, I am 33 yrs old male. I earn Rs2.1 lakhs per month. My spouse is working, she earns around Rs2.5 lakhs per month. I have a plot, taken on loan, the emi for which is Rs1.2L per month. I have an LIC policy which is Rs30k per year roughly. My wife has 3 term insurance policies which amount to Rs1lakh per year. We have a single male child of age 3 years. I invest in 2 SIPs of Rs10K each from past 5 months. Our life style expenses amount to around Rs60000 per month. Can you suggest a proper financial approach and goals. I would like to buy a house and may be retire between 50-60 years of age.

Ans: It shows that you are serious about planning. Starting young gives you a long runway to build lasting wealth. Below is a detailed 360-degree financial planning guide for your goals.

» Current Financial Snapshot and Observations

– You are 33 years old with high combined income.
– Combined income of Rs4.6 lakh/month gives solid saving potential.
– Plot EMI of Rs1.2 lakh/month is quite large.
– Lifestyle expenses are well-controlled at Rs60,000/month.
– Current SIPs are Rs20,000/month, which is a good start.
– LIC premium is only Rs30,000/year, manageable but worth reviewing.
– Your spouse holds 3 term policies, with Rs1 lakh annual premium.

» Cash Flow and Surplus Evaluation

– Net take-home income: Rs4.6 lakh/month.
– EMI: Rs1.2 lakh/month.
– Household expenses: Rs60,000/month.
– Insurance premium (monthly average): Rs10,000 approx.
– SIPs: Rs20,000/month.

Estimated surplus = Rs2.9 lakh/month.

High potential to build wealth over time.

However, plot EMI is a large component, should be monitored.

» Insurance Review and Correction

Your spouse has multiple term policies.

Ensure the combined cover is 10x to 15x her annual income.

You haven’t mentioned your own term insurance.

Please buy a term policy for yourself of at least Rs2 crore.

Choose only a plain term policy, avoid investment-linked plans.

Health insurance for the family is not mentioned.

Buy a Rs20 lakh floater for family with maternity, OPD if possible.

Also include a Rs10 lakh super top-up for long-term safety.

» Investment cum Insurance Policies Review

– You are paying Rs30,000/year for LIC.
– LIC policies usually offer low returns and poor liquidity.
– If it is a traditional or endowment plan, better to surrender.
– Redeploy proceeds into mutual funds via SIPs.
– Avoid ULIPs and any investment-linked policies in future.
– Keep insurance and investment separate always.

» SIP and Mutual Fund Strategy Review

– Currently investing Rs20,000/month in SIPs.
– Only 5 months old, still early stage.
– Gradually increase SIP amount by 10-15% every year.
– Focus on diversified equity mutual funds.
– Avoid direct funds. Go via regular plans through a trusted MFD.
– A good MFD with CFP credentials will guide and monitor.
– Direct funds lack advisory support.
– Mismanagement risk is high in direct plans.
– Stay invested long-term to benefit from compounding.
– Avoid index funds. They lack flexibility.
– Index funds mirror market blindly without risk control.
– Actively managed funds are better for risk-adjusted returns.
– Stay consistent in SIPs, regardless of market conditions.

» Emergency Fund and Liquidity

– You haven’t mentioned your emergency fund.
– Set aside 6 months of expenses in liquid instruments.
– Target Rs4 lakh in an FD or liquid mutual fund.
– Keep this fund untouched unless for emergencies.
– Avoid using credit card or loans for short-term cash needs.

» House Purchase Planning

– Buying a house is one of your major goals.
– First assess how long you plan to live in one place.
– Home loan EMI should not exceed 30-35% of your income.
– You already pay Rs1.2 lakh EMI for plot.
– Avoid over-leveraging through another home loan immediately.
– First reduce or close the current plot loan partially.
– Use bonuses or surplus to prepay plot loan in chunks.
– Save for 20% down payment for new house in next 4-5 years.
– Meanwhile, continue renting if needed.

» Child Education Planning

– Your son is 3 years old.
– School education needs will rise in next 2-3 years.
– Start SIPs separately for his education.
– Target Rs10,000 to Rs15,000/month towards education goal.
– Use child-named mutual fund folios to track separately.
– Avoid child ULIP or endowment policies.
– They have poor growth and high costs.
– Equity mutual funds offer better growth over 10+ years.
– Review plan every year and increase SIP if surplus rises.

» Retirement Planning Strategy

– Retirement timeline is 50 to 60 years, which gives 17 to 27 years.
– Create a dedicated SIP for retirement corpus building.
– Currently you may start with Rs15,000/month.
– Increase by 10% every year.
– Avoid NPS and annuities as primary retirement instruments.
– Equity mutual funds offer better control and liquidity.
– Rebalance portfolio to hybrid or debt funds as retirement nears.
– Don’t delay starting your retirement SIPs. Time is your best friend.

» Tax Efficiency and Planning

– Income of Rs4.6 lakh/month puts you in highest tax slab.
– Use 80C: PPF, ELSS, life insurance, EPF if available.
– Avoid locking large funds in PPF if liquidity is a concern.
– Use ELSS only if advised by a CFP through regular plans.
– Claim 80D for health insurance.
– HRA exemption if you stay in rented home.
– Use 80CCD(1B) if you still choose NPS.

» Goal-Based Investment Buckets

– Categorise your savings into goal buckets.
– Short term (1-3 years): Emergency fund, vacation, short goals.
– Use liquid and short-term debt funds.
– Medium term (3-7 years): House down payment, car purchase.
– Use hybrid mutual funds.
– Long term (7+ years): Retirement, child education.
– Use equity mutual funds.
– Avoid mixing goals. Keep investments separate.

» Debt Management Insights

– Your plot EMI of Rs1.2 lakh is very high.
– Try to reduce this burden before taking new loan.
– Any surplus beyond SIP and emergency fund should reduce this EMI.
– Keep debt-to-income ratio below 40% for financial safety.
– Avoid personal loans and credit card EMI traps.

» Spouse Income and Joint Planning

– Your spouse earns more than you, which is a big strength.
– Plan finances jointly. Assign goals to each one.
– She can handle education or retirement goals fully.
– Her surplus must also go into SIPs and emergency fund.
– She should also have a separate term policy, health cover.

» Will and Nomination Planning

– Prepare a simple will for asset clarity.
– Keep proper nomination in mutual funds, insurance, bank accounts.
– This ensures smooth transmission without legal hassles.
– Teach spouse about all your accounts and investments.
– Keep a joint investment tracker and update it monthly.

» Final Insights

– You have a strong income base and young age advantage.
– Your current liabilities need monitoring.
– Investments are still in early stage, but can be scaled.
– Avoid insurance products for investing.
– Build goal-specific mutual fund portfolios.
– Work with a Certified Financial Planner and MFD.
– Keep reviewing your progress every 6 months.
– Secure family through proper health and life cover.
– Maintain discipline, simplicity, and consistency in savings.

You have the perfect base to create lasting wealth. Proper guidance, consistent savings, and clarity in goals will help you build financial freedom.

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

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.