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Ramalingam Kalirajan |7290 Answers |Ask -Follow
Mutual Funds, Financial Planning Expert - Answered on May 18, 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
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 doreswamy on May 17, 2024Hindi
Am 34 yr old, I hav 60k income monthly & EPF 4k monthly. Am investing in PPF 2k, maxlife insurance Savings plan - 5k, UTI flexi cap fund - 2k, SBI contra- 0.5k & nippan India small cap- 0.5k since from year. Pls suggest any changes are required or else can i continue
Ans: You are on the right track by investing regularly and diversifying your portfolio. Your disciplined approach to saving and investing is commendable. Let’s assess your current investments and suggest any necessary changes.
Evaluating Your Current Investments
PPF Contribution: Investing ?2,000 monthly in PPF is a good choice for stable, tax-free returns. PPF is a safe investment with government backing.
EPF Contribution: Your EPF contribution of ?4,000 per month is a secure and tax-efficient way to build a retirement corpus.
Max Life Insurance Savings Plan: The ?5,000 investment in a savings plan combines insurance and savings. However, the returns on such plans are often lower compared to pure investment products. Ensure you have adequate life cover through term insurance.
UTI Flexi Cap Fund: Investing ?2,000 in a flexi cap fund offers good diversification across large, mid, and small-cap stocks, providing a balanced risk-reward ratio.
SBI Contra Fund: The ?500 investment in a contra fund can be beneficial as it follows a contrarian investment strategy, buying stocks that are currently out of favour but have growth potential.
Nippon India Small Cap Fund: Small cap funds, though risky, can offer high returns over the long term. Your ?500 investment here adds to your growth potential.
Suggested Changes for Optimal Growth
Review Insurance Plan: Consider whether the Max Life Savings Plan meets your financial goals. Pure term insurance combined with higher returns from mutual funds might be more efficient. Term plans offer high coverage at a lower premium.
Increase SIP in Diversified Funds: You might consider increasing your SIP amount in diversified funds like the UTI Flexi Cap Fund. This fund balances risk and return by investing across different market capitalisations.
Balanced Asset Allocation: Ensure your portfolio has a good mix of equity and debt. You may consider investing in a balanced or hybrid fund, which provides exposure to both equities and debt, offering growth with reduced risk.
Regular Monitoring: Review your portfolio periodically to ensure it aligns with your financial goals. Market conditions and personal circumstances can change, necessitating adjustments.
Emergency Fund: Ensure you have an emergency fund covering 6-12 months of expenses. This fund should be easily accessible and can be kept in a savings account or liquid fund.
Additional Recommendations
Health Insurance: Ensure you have adequate health insurance coverage. This protects your savings from unforeseen medical expenses.
Retirement Planning: Given your age, consider long-term retirement planning. Increase contributions to retirement-specific investments like PPF and EPF. You could also look at the National Pension System (NPS) for additional retirement savings.
Tax Planning: Maximise your tax-saving investments under Section 80C and other relevant sections. This optimises your tax liabilities and increases your disposable income.
Final Thoughts
Your current investment strategy shows a good start, but a few adjustments can optimise your portfolio for better returns and reduced risk. Consider reviewing your insurance plans, increasing SIPs in diversified funds, and maintaining a balanced asset allocation. Regularly monitor your investments and seek professional advice to stay on track with your financial goals. Your disciplined approach will help you achieve financial stability and growth.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
Evaluating Your Current Investments
PPF Contribution: Investing ?2,000 monthly in PPF is a good choice for stable, tax-free returns. PPF is a safe investment with government backing.
EPF Contribution: Your EPF contribution of ?4,000 per month is a secure and tax-efficient way to build a retirement corpus.
Max Life Insurance Savings Plan: The ?5,000 investment in a savings plan combines insurance and savings. However, the returns on such plans are often lower compared to pure investment products. Ensure you have adequate life cover through term insurance.
UTI Flexi Cap Fund: Investing ?2,000 in a flexi cap fund offers good diversification across large, mid, and small-cap stocks, providing a balanced risk-reward ratio.
SBI Contra Fund: The ?500 investment in a contra fund can be beneficial as it follows a contrarian investment strategy, buying stocks that are currently out of favour but have growth potential.
Nippon India Small Cap Fund: Small cap funds, though risky, can offer high returns over the long term. Your ?500 investment here adds to your growth potential.
Suggested Changes for Optimal Growth
Review Insurance Plan: Consider whether the Max Life Savings Plan meets your financial goals. Pure term insurance combined with higher returns from mutual funds might be more efficient. Term plans offer high coverage at a lower premium.
Increase SIP in Diversified Funds: You might consider increasing your SIP amount in diversified funds like the UTI Flexi Cap Fund. This fund balances risk and return by investing across different market capitalisations.
Balanced Asset Allocation: Ensure your portfolio has a good mix of equity and debt. You may consider investing in a balanced or hybrid fund, which provides exposure to both equities and debt, offering growth with reduced risk.
Regular Monitoring: Review your portfolio periodically to ensure it aligns with your financial goals. Market conditions and personal circumstances can change, necessitating adjustments.
Emergency Fund: Ensure you have an emergency fund covering 6-12 months of expenses. This fund should be easily accessible and can be kept in a savings account or liquid fund.
Additional Recommendations
Health Insurance: Ensure you have adequate health insurance coverage. This protects your savings from unforeseen medical expenses.
Retirement Planning: Given your age, consider long-term retirement planning. Increase contributions to retirement-specific investments like PPF and EPF. You could also look at the National Pension System (NPS) for additional retirement savings.
Tax Planning: Maximise your tax-saving investments under Section 80C and other relevant sections. This optimises your tax liabilities and increases your disposable income.
Final Thoughts
Your current investment strategy shows a good start, but a few adjustments can optimise your portfolio for better returns and reduced risk. Consider reviewing your insurance plans, increasing SIPs in diversified funds, and maintaining a balanced asset allocation. Regularly monitor your investments and seek professional advice to stay on track with your financial goals. Your disciplined approach will help you achieve financial stability and growth.
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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