Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 14, 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 14, 2025Hindi

I am 36 year old PSB employee I get 90000 in hand after deduction of subsidised car loan (@5.5 percent Simple Interest) and interest free Personal loan EMIs in my account. My wife 35 is also an officer in the same organisation. She gets Rs 53000 in account after deduction of Home loan EMI of(65 lakhs @6percent simple Interest ) and car loan EMI (@5.5 percent simple interest) and interest free Personal loan. We have 2 kids (7 year old daughter and 3 year old son) We are in a transferable job. My wife plans to quit job after 3 years to settle down at one place to take care of my aged pensioner parents and stability in kids education. We have combined PPF of Rs 42 lakhs Sukanya 12 lakhs. Mutual Funds 24 lakhs and stocks of Rs 7.5 lakhs. We are also NPS contributee and have corpus of approx Rs 38 lakhs. We have one ancestral house of Rs 3 cr one plot of Rs 1 cr and one under construction house of Rs 90 lakhs (for which we have availed loan, this property will be let out with monthly rent of Rs 30,000) We also have physical gold (jewellery /coins) of Rs 40 lakhs Long term Future goals Children's education One house in NCR for better access to Medical and educational needs Retirement corpus/monthly pension to sustain lifestyle

Ans: Your current position shows responsibility, planning, and long-term thinking. That itself is a strong foundation for a solid financial plan. You are a dual-income family with government sector security, diversified assets, and a clear roadmap for the next phase of life. Let us now take a comprehensive 360-degree view to help you move forward in a structured manner.

? Income and Loan Profile

– Your combined net monthly income is Rs 1.43 lakh after all deductions.

– Subsidised and interest-free loans are a good benefit. Use it wisely.

– The home loan of Rs 65 lakhs is sizeable but manageable.

– Interest at 6% simple is much lower than market rates.

– Once your wife exits the job in 3 years, cash flow will reduce.

– Planning now for that change is very important.

– Rental income from the new house (Rs 30,000) will help.

– Include this rent in your post-job cash flow forecast.

? Family Responsibilities and Life Goals

– Two young children need long-term financial support.

– Elderly parents will need medical and living care support.

– Your wife’s plan to stop working is thoughtful for stability.

– So, you must now build your finances on a single income base.

– All future plans must be made keeping this in mind.

– You must reduce financial stress by planning early.

? Existing Assets and Savings Assessment

– Combined PPF corpus of Rs 42 lakhs is strong.

– PPF is safe and tax-free. Continue contributions as long as possible.

– Sukanya Samriddhi Yojana corpus of Rs 12 lakhs is very helpful.

– Keep contributing to Sukanya until age 15 for higher compounding.

– Mutual fund corpus of Rs 24 lakhs is a healthy start.

– Stocks worth Rs 7.5 lakhs are acceptable for exposure.

– NPS of Rs 38 lakhs is excellent for long-term retirement needs.

– Gold worth Rs 40 lakhs adds both emotional and monetary value.

– Properties (ancestral, plot, under-construction home) give strong asset base.

– Total asset base is diversified. But you must improve liquidity and allocation.

? Children’s Education Planning

– Your daughter is 7. Your son is 3. Time is right to start.

– Higher education costs in India or abroad are rising fast.

– Estimate Rs 35–50 lakhs per child, depending on goals.

– Use Sukanya for your daughter’s education and marriage.

– For your son, create a dedicated mutual fund SIP.

– Use equity-oriented mutual funds. You have 10–15 years.

– Avoid ULIPs or insurance-based investments. Low return and high charges.

– Build Rs 10,000–12,000 monthly SIP now for each child.

– Use goal-based fund selection with help of a CFP.

– Review growth annually and adjust SIPs accordingly.

? Need for NCR Property

– A property in NCR is a long-term lifestyle goal.

– Avoid buying in a hurry. Don’t use retirement corpus for this.

– If needed, use sale proceeds of plot or ancestral property later.

– Or use surplus income after your financial goals are met.

– Do not divert education or retirement savings towards this.

– Keep this as a future goal, not an immediate one.

? Retirement Corpus and Lifestyle Income

– Your NPS corpus is Rs 38 lakhs already. This is a great start.

– You also have EPF and pension benefits as PSB employees.

– PPF of Rs 42 lakhs will also add to the post-retirement pool.

– You must still build an independent mutual fund retirement corpus.

– Aim to build Rs 2–3 crore over next 15–18 years.

– Target Rs 25,000–30,000 monthly SIP with yearly top-up.

– Increase SIP by 10% every year. This builds power of compounding.

– Equity mutual funds can deliver 10–12% in long term.

– Withdraw post-retirement using SWP route from mutual funds.

– Don’t depend only on pension. Expenses will rise with inflation.

– Rental income from your second house will be a steady source.

? Asset Allocation Strategy

– You have heavy allocation in fixed assets (real estate, gold).

– Need to improve liquid asset portion like mutual funds.

– Property and gold are good, but low in liquidity and returns.

– Focus next 10–12 years on increasing financial assets.

– Ideal split: 60% equity, 30% fixed income, 10% gold.

– You are already heavy on gold and real estate.

– Hence, more SIP in equity mutual funds is needed.

? Mutual Fund Investment Plan

– Increase SIP to Rs 35,000–40,000 monthly between both of you.

– Divide this into 3–4 actively managed diversified equity mutual funds.

– Don’t invest in index funds. They lack flexibility.

– Index funds fall as much as market and rise equally. No outperformance.

– Active funds managed by professionals can reduce downside.

– Fund managers exit bad stocks faster than index funds.

– Actively managed funds adjust to market shifts.

– Choose regular plans through MFD with CFP certification.

– Direct funds lack guidance. Wrong fund choice can hurt returns.

– Regular plan with a certified planner gives better long-term results.

? STP Strategy for Lump Sum

– If you receive any bonus or lump sum in future, use STP route.

– Put amount in liquid fund. Transfer monthly to equity funds.

– This reduces market risk and gives smoother entry.

– Ideal when you receive maturity from PPF, bonus, etc.

? Emergency Fund and Insurance Cover

– Keep Rs 6–9 lakhs in liquid or short-term debt funds.

– Use for emergencies only. Never touch for investments.

– Medical cover must include your parents.

– Ensure Rs 10–15 lakhs family floater health insurance.

– Continue term insurance till children become financially independent.

– Don’t mix insurance with investment.

? Debt Reduction Plan

– You already have subsidised loans. No urgency to prepay.

– But home loan EMI will be on your sole income soon.

– After wife exits job, you must manage this carefully.

– Maintain liquidity to avoid default.

– Rent from the new house can be used to support EMI.

– Avoid emotional pressure to prepay good loans.

– Use surplus cash to invest for growth instead.

? Tax Planning Suggestions

– PPF, NPS and Sukanya offer tax benefits. Continue using them.

– For mutual funds, plan long-term exits to avoid higher tax.

– Long-term capital gains (LTCG) on equity mutual funds above Rs 1.25 lakh are taxed at 12.5%.

– Short-term capital gains are taxed at 20%.

– Debt mutual funds are taxed as per your tax slab.

– Use a Certified Financial Planner for yearly tax-efficient withdrawal plan.

? Need for Will and Nomination

– You have multiple assets – property, gold, funds.

– Ensure nominations are updated in all investments.

– Make a registered Will. Don’t delay this.

– It avoids future family issues and protects your children.

? Monitoring and Rebalancing

– Review portfolio every 6 months.

– Rebalance once a year to maintain asset allocation.

– Track goal progress and adjust SIPs if needed.

– Take help from a CFP for unbiased advice.

– Don’t stop SIPs during market correction.

– Stay invested. Trust the long-term power of compounding.

? Finally

– Your financial base is strong. Your planning mindset is excellent.

– The next 3 years are critical. Your wife’s job exit will reduce income.

– Use these 3 years to build strong mutual fund corpus.

– Focus on children's education fund and retirement corpus now.

– Maintain good liquidity and don’t overinvest in fixed assets.

– Don’t chase exotic investments. Stay with equity mutual funds.

– Avoid ULIPs, endowment plans, and annuities. They are low return.

– Use actively managed funds via regular plans.

– Work with a Certified Financial Planner regularly.

– Track your goals. Rebalance as per plan. Avoid panic.

– With discipline, you will achieve financial freedom and family security.

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.

MoneyReply

Ans: You have explained your income, goals, current assets, and future plans with great clarity. Your early planning spirit is strong. This gives a very good base. You can reach a peaceful retirement with smart steps in the next few years.

» Your Current Position

You are 40 years old. You plan to retire in 3 to 5 years. You earn Rs 2.3 lakh per month. Your wife also works but will stop working soon. You have one daughter aged 10. Your current monthly cost is around Rs 1.1 lakh. This cost will reduce after retirement because you will shift to your parental flat.

Your investment base is already good. You have saved in bonds, stocks, mutual funds, PPF, FD, and SIP. Your wife also has her own savings and rental income from a flat. All these create a good starting point.

This early base helps you plan stronger. It also gives room for more shaping. You are on the right road.

» Your Family Goals

You need Rs 75 lakh for your daughter’s higher education and marriage.

You want Rs 75,000 per month for family living after retirement.

You want to retire in 3 to 5 years.

You will shift to your parental flat after retirement.

You will have rental income of Rs 10,000 from your wife’s flat.

These goals are clear. They give direction. They allow a strong plan.

» Your Present Investments

Your investments include:

Rs 50 lakh in REC bonds maturing in 2029.

Rs 42 lakh in stocks.

Rs 17 lakh in mutual funds.

Rs 16 lakh in fixed deposits.

Rs 15 lakh in PPF.

Rs 1.3 lakh as monthly SIP.

Your wife holds:

Rs 30 lakh corpus.

A flat worth Rs 40 lakh with rent of Rs 10,000 each month.

Your combined net worth is healthy. This gives good power to build your retirement fund in the coming years.

» Understanding Your Expense Need After Retirement

You expect Rs 75,000 per month after retirement. This includes all basic needs. You will not have rent. That reduces cost. This assumption looks fair today.

Your cost will rise with inflation. So you must plan for rising needs. A strong retirement corpus must support rising cost for 40 to 45 years because you are retiring early.

An early retirement needs a large buffer. So you need safety along with growth. Your plan must include growth assets and safety assets.

» How Much Monthly Income You Will Need Later

Rs 75,000 per month is Rs 9 lakh per year. In future years, this cost can rise. If we assume steady rise, your future cost will be much higher.

So the retirement corpus must be designed to:

Give monthly income.

Beat inflation.

Support you for 40 to 45 years.

Protect your family even in market down cycles.

Allow flexibility if your needs change.

A strong retirement fund must support both safety and long-term growth.

» How Much Corpus You Should Target

A safe target is a large and flexible corpus that can support long years without running out of money. For early retirement, the usual thumb rule suggests a very high number. This is because you need income for many decades.

You need a corpus big enough to produce rising income. You also need a cushion for unexpected health costs, lifestyle shocks, and inflation changes.

Your target retirement corpus should be in a strong range. For your needs of Rs 75,000 per month and for goals like daughter’s education and marriage, you should aim for a combined retirement readiness corpus in the higher bracket.

A safe range for your family would be a very large number crossing multiple crores. This large range gives you:

Income safety.

Inflation protection.

Peace during market cycles.

Comfort in long life.

Room for daughter’s future.

Strong backup for health.

You are already on the way due to your existing assets. You will reach close to this range with systematic building over the next 3 to 5 years.

» Why You Need This Larger Corpus

You will retire early. That means more years of living from your corpus. Your corpus must not fall early. It must grow even after retirement. It must give monthly income and long-term family protection.

This is only possible when the corpus is strong and well-structured. A weak corpus creates stress. A strong corpus creates freedom.

Also, your daughter’s future cost must be kept aside. This must be parked in a separate fund. This must not touch your retirement money.

A strong corpus makes these two worlds separate and safe.

» Your Existing Assets and Their Strength

You already have good diversification:

Bonds give safety.

Stocks give growth.

Mutual funds give managed growth.

FD gives stability.

PPF gives tax-free long-term savings.

This blend is already a good start. But you need to make the blend more structured for early retirement.

Your Rs 1.3 lakh monthly SIP is also strong. It builds your future fast. You should continue.

Your wife’s rental income is small but steady. This adds strength.

Your combined financial base can reach your retirement target if you refine your allocation now.

» Your Daughter’s Future Fund Need

You need Rs 75 lakh for your daughter’s education and marriage. You should keep this goal separate from your retirement goal.

Your current SIP and future allocations should create a dedicated fund for this goal. A long-term fund can grow well when managed actively.

Do not mix this fund with your retirement needs. Mixing leads to shortage in old age. Always keep this corpus ring-fenced.

» A Strong Asset Mix For Your Retirement Path

A balanced mix is needed. You need growth assets to beat inflation. You also need stable assets for income.

You must avoid index funds because they do not give flexibility. Index funds follow a fixed index. They cannot make active changes in different markets. They cannot move to better stocks when markets change. They force you to stay in weak sectors for long. They also do not help you in down cycles because they cannot protect you by shifting to safer options. This can hurt retirement planning.

Actively managed funds are better because:

They give active asset selection.

They give scope for better returns.

They give flexibility to change sectors.

They give downside management.

They give access to a skilled fund manager.

They support long-term planning more safely.

Direct plans also carry risk. Direct plans do not give guidance. They do not give behavioural support. They do not give market timing help. They do not give portfolio shaping. They leave all the judgement to you. One mistake can cost years of wealth.

Regular plans with guidance from a Certified Financial Planner help you shape decisions. They help you remain disciplined. They help you avoid panic. They help you decide allocation changes at the right time. This saves wealth in long-term.

» How Your Investment Journey Should Grow in the Next 3–5 Years

Continue your SIP.

Increase SIP when your income rises.

Shift part of your stock holding into planned long-term mutual funds to reduce concentration risk.

Build a defined daughter’s education fund.

Keep a part of your REC bond maturity amount for long-term.

Avoid locking too much into fixed deposits for long periods.

Build a safety fund for one year of expenses.

This will create a full structure.

» Your Rental Income Role

Your rental income of Rs 10,000 per month is small but steady. Over time it will rise. This income will support your monthly cash flow after retirement.

You can use this for utilities or health insurance premiums. This gives a cushion.

» Your Emergency Buffer

You should keep at least one year of essential cost in a safe place. This can be in a liquid account or short-term fund. This protects you in shocks.

Since you plan early retirement, a strong buffer is important. It gives peace even in low months.

» A Structured Retirement Approach

A complete retirement plan for you should include:

A clear monthly income plan after retirement.

A corpus that can grow and protect.

A rising income system that matches inflation.

A separate daughter’s future fund.

A health cover plan for your family.

A tax-efficient withdrawal plan.

A market cycle plan to protect you in tough times.

This holistic approach keeps your family strong for decades.

» What You Should Build by Retirement Year

Your aim should be to reach a strong multi-crore range in investments before retirement. You already hold a large amount. You will add more in the next 3 to 5 years through SIP, stock growth, bond maturity, and disciplined saving.

Once you reach your target range, you can start the shifting process:

Move a part to stable assets.

Keep a part in long-term growth assets.

Create a monthly income strategy.

Keep a reserve bucket.

Keep a child future bucket.

Keep a long-term growth bucket.

This structure protects you in all market conditions.

» Final Insights

Your financial journey is already strong. You have a good income. You have saved well. You have multiple asset types. You have a clear timeline. And you have clear goals. This foundation is solid.

In the next 3 to 5 years, your focus should be on growing your combined corpus to a strong multi-crore range, keeping a separate fund for your daughter, reducing risk in unplanned assets, and building a stable long-term structure.

With the present path and a disciplined structure, you can retire peacefully and support your family with confidence for many decades.

Best Regards,

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

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