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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 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 15, 2025Hindi

I am 37 years old working as a software engineer with take home salary of 1.65 lakhs per month .i have monthly expenses of 25k . and I have opted for new tax slab regime. I have portfolio of 65 lakhs in mutual funds spread across 23 mutual funds assets which I am currently working to rebalance it . how much should I invest in mutual funds through sip . out of 1.65 lakh ,I invest 25k in PPF account for my self and my spouse ,10k in nps account .I have 20 lakhs as a fixed deposit for emergency funds .I health insurance of 5 lakhs . I have term insurance of 75 lakhs for life coverage of 75 years . I have 15 lakhs accumulated in PF account . what shall I consider myself as aggresive investor or moderate aggresive investor ? my goal is to create a wealth of 3 cr for my child's education,3 cr for home purchase and 3 cr for my retirement.I have two kids ,one of aged 1 year and 2nd one is of 3 years old .my wife is house wife . please suggest the investment horizon for achieving my goals with funds allocation strategy so that I become financial freedom .

Ans: – You are on the right track by saving diligently and planning ahead.
– A strong monthly surplus and disciplined investing are your biggest assets now.
– Your clarity on goals and early action deserves appreciation.
– The current surplus and past accumulation offer a powerful launchpad for wealth creation.

? Surplus and Present Cash Flows

– Take-home: Rs. 1.65 lakh/month
– Expenses: Rs. 25K
– Existing Investments:

Rs. 25K/month in PPF (you + spouse)

Rs. 10K/month in NPS

Rs. 65 lakh in mutual funds (across 23 funds)

Rs. 15 lakh in PF

Rs. 20 lakh FD for emergencies

– Remaining Surplus: About Rs. 1.05 lakh/month
– This should be optimised to accelerate wealth building.

? Investor Risk Profile

– You have long-term goals, high surplus, and no current liabilities.
– You also have enough emergency corpus and insurance coverage.
– Based on this, you are well positioned to be an aggressive investor.
– But do review risk appetite every 2 years or during life changes.

? Investment Goals and Timelines

Let’s classify and assign horizon to each goal:

– Child’s Education (Rs. 3 Cr):

Timeframe: 15–17 years

For both kids’ higher education

Goal type: Long-term, needs growth focus

– Home Purchase (Rs. 3 Cr):

Timeframe: Decide if needed in 5 years or after 10+ years

If within 5 years, reduce equity exposure

If after 10 years, treat like long-term goal

– Retirement (Rs. 3 Cr):

Timeframe: 20–23 years

Goal type: Ultra-long term, high equity allocation possible

? Portfolio Consolidation – Key Priority

– 23 mutual funds is over-diversified and difficult to track.
– Ideal number: 6–8 mutual funds from different categories.
– Use this chance to exit underperformers and duplicate funds.
– Retain only consistent, high-quality schemes across large, flexi-cap, mid-cap, and hybrid.
– Consolidated portfolio improves visibility, monitoring, and rebalancing.

? Mutual Fund Allocation Strategy

You already have Rs. 65 lakh in mutual funds. Suggested allocation:

– Flexi-cap funds: 35%
– Mid-cap funds: 25%
– Large & mid-cap or focused equity funds: 20%
– Balanced advantage/dynamic asset funds: 10%
– Hybrid aggressive or equity savings fund: 10%

If home goal is less than 5 years away, consider parking part of MF corpus into short-duration debt funds.

? SIP Strategy with Current Surplus

You have Rs. 1.05 lakh/month in surplus. Use it like this:

– Rs. 80K/month in mutual fund SIPs
– Rs. 10K/month for increasing NPS allocation
– Rs. 15K/month as buffer or for future step-up

SIP allocation can be:

– Flexi-cap: Rs. 25K/month
– Mid-cap: Rs. 20K/month
– Large & Mid-cap: Rs. 15K/month
– Balanced Advantage: Rs. 10K/month
– Small-cap (optional): Rs. 10K/month (only if you can take volatility)

Review SIPs yearly and increase 10–15% as income grows.
You should reach Rs. 1.25–1.5 lakh/month SIP over next 4–5 years.

? Goal Linking and Investment Bucketing

Let’s connect your goals to your investments.

– Child’s Education

From MF + PF + SIP

Prioritise equity-oriented funds

Use PPF as partial backup

– Home Purchase

If in 5–7 years: Start partial allocation to conservative hybrid and short-term debt funds

If >10 years: Keep in mutual funds

– Retirement

NPS + PF + SIP corpus

Add mid-cap and small-cap for long horizon

You are already doing PPF and NPS. Consider increasing NPS slowly.

? Fixed Deposits and Emergency Funds

– Rs. 20 lakh in FD is sufficient for emergency
– Keep 6 months’ expenses in liquid funds or savings
– Shift the remaining FD gradually to debt mutual funds for better tax efficiency
– FD interest is fully taxable, and gives lower post-tax returns

? Health and Term Insurance Adequacy

– Term cover of Rs. 75 lakh is low for your age and goals
– You should aim for at least Rs. 1.5 crore cover till age 60
– Health cover of Rs. 5 lakh is basic
– You may consider increasing to Rs. 10–15 lakh floater for family

Term insurance is cheap at your age. Buy extra cover for 20–25 years.

? Tax Regime and Optimisation

– You are under new tax regime, so avoid investments just for tax-saving
– NPS is still tax-efficient under Section 80CCD(1B)
– MF LTCG taxed at 12.5% after Rs. 1.25 lakh threshold
– STCG taxed at 20%
– Debt fund gains taxed as per slab

Tax planning is not your primary challenge now. Focus on goal-based investing.

? Regular Funds vs Direct Plans

– You should invest in mutual funds through a Certified Financial Planner with MFD registration
– Regular funds through a trusted advisor offer long-term guidance, rebalancing, and behavioural coaching
– Direct plans may seem cheaper, but lead to DIY errors and fund misalignment
– Long-term cost of wrong choices is higher than small commissions
– Portfolio rebalancing, risk control, and goal mapping need professional supervision

Direct plans work only for experts. For others, it may hurt more than help.

? Index Funds – Not the Right Fit

– Index funds don’t suit your need for strategic wealth creation
– They just copy the index and cannot beat it
– Actively managed funds outperform in dynamic Indian markets
– Index funds lack flexibility in corrections and sharp rallies
– They also have no downside protection in volatile markets

Your corpus is large and needs better fund management, not passive tracking.

? Gold as a Diversifier (Optional)

– You may consider adding 5–10% to gold via mutual funds or sovereign gold bonds
– Use only for diversification, not as a primary wealth creator
– Avoid jewellery or physical gold investments

This is optional and not urgent right now.

? Financial Freedom and Roadmap

– You are on the path to financial freedom already
– By age 50–52, you can be work-optional if goals are met
– Key steps are:

Portfolio clean-up

Right fund allocation

SIP scaling over time

Regular review and corrections

Stay consistent for the next 10–15 years. Wealth will follow automatically.

? Finally

– You are in a very strong financial position
– Continue your discipline and optimise what you already have
– Focus on portfolio consolidation and systematic SIPs
– Link every investment to a goal
– Review goals every 2 years
– Ensure you are protected with the right insurance

With right planning and action, Rs. 9 crore across 3 goals is very achievable.

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.