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Ramalingam Kalirajan |10879 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 08, 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 - Aug 19, 2025Hindi

Sir I am 34 with monthly salary of 133000, additional rental income of 30000, monthly emi of 35000 with outstanding of 16L, surplus income of 90000 left for investment. Current portfolio Mf 550000 Lic 150000 Pf 700000 Fd 1000000 Equity 1000000 I want to retire at 55 with corpus of 6 cr liquid funds

Ans: You have built a very good base at 34. You already have multiple income streams and a strong saving habit. Your goal of Rs 6 crore liquid corpus by 55 is ambitious yet practical if you take disciplined steps. Let us review your entire situation from all sides and create a clear path.

» Income and Surplus Management

You have a monthly salary of Rs 1,33,000.

Rental income adds Rs 30,000.

EMI of Rs 35,000 reduces the strain as your loan balance is only Rs 16 lakh.

You still have Rs 90,000 surplus every month. This is a very strong position.

This surplus is the key engine for wealth building.

» Current Assets Assessment

Mutual Funds: Rs 5.5 lakh. A good start, but needs more growth.

LIC: Rs 1.5 lakh. These policies give very low returns. They also mix insurance and investment.

PF: Rs 7 lakh. This gives steady growth with safety. Keep contributing regularly.

FD: Rs 10 lakh. This is safe but not growth-oriented. Inflation will eat away real value.

Equity: Rs 10 lakh. Good exposure to direct equity. Needs risk control.

» LIC and Traditional Policies

LIC policies or similar investment-cum-insurance plans are inefficient.

Returns are usually 4–5% only, much lower than inflation.

Insurance should only cover risk, not investment.

You may surrender or make these policies paid-up.

Redirect this money into mutual funds with guidance from a Certified Financial Planner.

This will boost long-term growth without locking money in low-yield plans.

» Risk Balance in Portfolio

You already have Rs 10 lakh equity and Rs 5.5 lakh in mutual funds.

This shows comfort with equity exposure.

But direct equity is risky without professional management.

Mutual funds managed by expert fund managers are better for long-term wealth.

It is advisable to shift gradually from direct equity to diversified mutual funds.

Actively managed mutual funds have the advantage of research, risk management, and rebalancing.

Index funds or ETFs look cheap but lack professional guidance. They simply copy the market.

In volatile markets, actively managed funds can protect downside better.

» Debt and Fixed Income Exposure

You have Rs 10 lakh in FD. This is stable but not efficient.

Keep only 6 months of expenses as emergency in FD or liquid funds.

The rest can move into debt mutual funds for better tax efficiency and flexibility.

Debt mutual funds align well with PF for stability.

But don’t rely only on PF and FD, as they will not beat inflation.

» Surplus Deployment Strategy

Your Rs 90,000 monthly surplus is your biggest strength.

Allocate it in a structured way for growth and safety.

Suggested flow:

Rs 70,000 into diversified equity mutual funds (large cap, mid cap, flexi cap, hybrid)

Rs 15,000 into debt mutual funds or recurring deposits for medium-term needs

Rs 5,000 to gold mutual funds or sovereign gold bonds for diversification

This will create balance between growth, stability, and hedge against inflation.

Review this split yearly with a Certified Financial Planner.

» Retirement Goal Assessment

You want Rs 6 crore liquid corpus by 55.

You have 21 years to reach this target.

With disciplined monthly investing, equity-oriented mutual funds can help reach this goal.

Inflation and taxation will reduce real value, but your surplus power gives an edge.

Even moderate returns over 20 years can create a corpus larger than Rs 6 crore.

This makes your goal achievable with the right asset allocation.

» Tax Efficiency Insights

FDs are taxed at your income slab, so they reduce returns.

Debt mutual funds are more tax-efficient. Their taxation aligns with your income slab but offers flexibility in withdrawal.

Equity mutual funds: Short term gains are taxed at 20%, long term above Rs 1.25 lakh at 12.5%.

Actively managed funds can still provide superior after-tax returns compared to direct equity trading.

Optimising tax at every stage helps the corpus grow faster.

» Insurance Protection

Surrender inefficient LIC plans but keep adequate term insurance.

Ensure coverage at least 15–20 times annual income.

Medical insurance should also be strong to protect your corpus.

Protection ensures your goal is not derailed by sudden risks.

» Loan Closure Strategy

Current EMI is Rs 35,000 with Rs 16 lakh outstanding.

Since interest rates are high, early closure can be considered.

But your surplus is very high. You can continue EMI while investing more.

If you are uncomfortable with loan, close it early. But don’t sacrifice investments entirely.

Balanced approach works best: part prepayment and part investment.

» Inflation Protection

Your retirement goal of Rs 6 crore must beat inflation.

At 6% inflation, today’s Rs 6 crore is worth less in 21 years.

This is why equity mutual funds must dominate your investments.

They provide inflation-beating growth with professional management.

Fixed instruments like FD or PF will not protect against long inflation cycles.

» Children and Family Goals

You may also have future needs like education or marriage expenses.

These require separate planning, not from retirement fund.

Allocate small SIPs for such goals so retirement funds remain untouched.

This ensures you don’t compromise your own financial independence.

» Behavioural Discipline

Investing for 21 years needs patience and discipline.

Avoid frequent portfolio churning.

Stick to your allocation and review yearly.

Don’t panic in market corrections. Corrections are normal in long-term equity investing.

Consistency is more powerful than timing.

» Role of Professional Guidance

Investing directly in funds without guidance may create mismatches.

Regular funds through a Mutual Fund Distributor with CFP credentials give ongoing advice.

They help in rebalancing, goal tracking, and tax planning.

Direct plans appear cheaper but lack professional support.

Wrong choices and poor reviews can cost more than saved expense ratio.

For a large corpus target like Rs 6 crore, professional review is critical.

» Estate and Succession Planning

Retirement corpus must also flow smoothly to family after you.

Nomination and will should be updated.

Keep family informed about investments and insurance.

This prevents future disputes and ensures continuity.

» Finally

You have high income, strong surplus, and early start.

Your current portfolio needs reallocation to high-growth instruments.

Surrender LIC, reduce FD exposure, and shift direct equity to mutual funds.

Keep PF for stability, but drive growth with equity-oriented funds.

Rs 90,000 monthly surplus is enough to reach Rs 6 crore corpus.

With discipline and professional guidance, you can even exceed the target.

Your future financial independence is very much within reach.

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

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

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