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Ramalingam

Ramalingam Kalirajan  |6986 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 15, 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
Chaat Question by Chaat on May 14, 2024Hindi
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Hi Sir, I am 38 year old currently working in an MNC company with income of 1.80 lakhs per month. However, I am having debts close to 1.3cr with most of my monthly income going towards EMI. I have property worth 1.6cr in which I am living in. Off late I am struggling managing my finances. I have 2 kids (10yr/8yr) old. Should I continue to pay EMIs & wait for them to end after 10 years or just sell the property to start off fresh. Your suggestions will be of great help.

Ans: It's understandable to feel overwhelmed by financial burdens, but with careful planning, we can work towards a brighter financial future. Let's evaluate your situation and explore potential solutions.

Acknowledging Your Challenges
Facing a significant debt burden while managing a family and household expenses can indeed be stressful. However, taking proactive steps now can alleviate financial strain in the long run.

Assessing Your Options
Continuing EMIs
Continuing to pay EMIs on your existing loans may seem like a daunting task, especially with a substantial portion of your income allocated towards debt repayment. While it ensures you retain ownership of your property, it prolongs your financial stress and limits your ability to build wealth elsewhere.

Selling the Property
Selling your property to settle debts and start afresh is a viable option worth considering. It provides immediate relief from the burden of EMIs and allows you to redirect funds towards debt reduction and building financial security for your family's future.

Analyzing the Pros and Cons
Continuing EMIs:
Pros: Retain ownership of the property, potentially benefiting from future appreciation.
Cons: Continued financial strain, limited flexibility in managing other financial goals, prolonged debt repayment.
Selling the Property:
Pros: Immediate debt relief, opportunity to start anew with reduced financial obligations, potential to invest surplus funds for wealth creation.
Cons: Loss of ownership of the property, potential impact on family's living arrangements, need for careful planning to maximize proceeds from the sale.
Considering Family Needs
Education and Future Planning
As a parent, securing your children's future education and well-being is paramount. Evaluating how your financial decisions align with their long-term needs is crucial in making informed choices.

Lifestyle and Comfort
Maintaining a comfortable standard of living for your family, especially during their formative years, requires careful financial management. Balancing debt repayment with providing for your family's present needs is essential.

Crafting a Financial Strategy
Consultation with Experts
Seeking guidance from financial professionals, including Certified Financial Planners, can provide valuable insights and personalized recommendations tailored to your specific circumstances.

Creating a Financial Plan
Developing a comprehensive financial plan that prioritizes debt reduction, savings, and investment goals can pave the way towards financial freedom and stability.

Conclusion
In conclusion, whether to continue paying EMIs or sell the property requires a thorough assessment of your financial goals, obligations, and family needs. By weighing the pros and cons and seeking expert advice, you can make an informed decision that sets you on the path towards financial well-being.

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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Ramalingam

Ramalingam Kalirajan  |6986 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 2024

Asked by Anonymous - May 07, 2024Hindi
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Iam 30 years old ,and i have an outstanding home loan of 30 lacs, iam earning 20 lacs a year tax free, I have invested in various mfs and my current value of assets are around 30 lacs, iam getting good returns on my investments (average rate of 18%), my question is should I close my loan or continue paying emi of 30k per month? .I have been advised to let my investments grow and keep paying the emis, i might get get married within 2 years and was thinking of becoming loan free before getting married.
Ans: Financial Decision: Pay Off Home Loan or Continue Investing?

At 30, with a tax-free annual income of 20 lacs and investments valued at 30 lacs, you're in a comfortable financial position. Let's analyze your options regarding your outstanding home loan of 30 lacs and whether to continue paying EMIs or close the loan:

Advantages of Continuing EMIs:

Investment Growth: Your investments are performing well with an average rate of return of 18%. By continuing to pay EMIs and letting your investments grow, you can potentially earn higher returns than the interest rate on your home loan.

Liquidity: By keeping your investments intact, you maintain liquidity and flexibility. This can be beneficial in case of any unforeseen expenses or investment opportunities.

Tax Benefits: Home loan EMIs come with tax benefits on both principal repayment and interest paid. By continuing to pay EMIs, you can avail of these tax deductions, reducing your overall tax liability.

Advantages of Closing the Loan:

Debt-Free Status: Paying off your home loan will give you peace of mind and a sense of financial freedom. Being debt-free can reduce stress and provide a strong financial foundation for future goals, including marriage.

Reduced Interest Burden: By closing the loan early, you save on the interest that would have accrued over the remaining loan tenure. This can result in significant savings in the long run.

Improved Credit Score: Being debt-free can positively impact your credit score, which is essential for future financial endeavors like applying for additional loans or credit cards.

Recommendation:

Considering your financial stability, investment performance, and the possibility of marriage within 2 years, it's advisable to prioritize becoming loan-free before tying the knot. Here's why:

Financial Freedom: Eliminating debt before marriage can reduce financial stress and allow you to focus on building a strong foundation for your future family.

Reduced Financial Obligations: Being debt-free gives you more flexibility in managing joint finances with your future spouse and planning for shared goals like buying a house or starting a family.

Long-Term Benefits: While your investments are performing well, becoming debt-free provides a guaranteed return in the form of interest savings and psychological peace of mind.

Final Thoughts:

Considering the advantages of being debt-free and your stable financial situation, it's recommended to prioritize paying off your home loan before getting married. Review your financial plan with a Certified Financial Planner to ensure it aligns with your goals and aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6986 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 2024

Asked by Anonymous - Jun 16, 2024Hindi
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Money
I am 34 , with a salary of 1.82 lakh take home, I have 7.5 L investment in indian stock market, 3.5 L in US , 1 lakh worth gold coin and digital gold, 30k crypto and 2.5 L in MF , LIC - 27k / year for last 10 year. My problem is emis. I have a home loan emi- 17k(18Lakh remaining ), top up - 6.5k (7 lakhs remaining), personal loan - 21k ( 11 lakhs) , car loan 11 k (5.6 L remaining ). I have a daughter of 8 months and my wife is a govt employee. My household expenses are around 50k. And Health insurance expenses are around 5k ( including my parents) . Kindly suggest should i close my position in any stock market and close the personal or car loans
Ans: Managing your finances with a high income and multiple loans can be challenging. Let's dive into a detailed plan to improve your financial situation, focusing on debt management and better investment strategies.

Assessing Your Current Financial Situation
Income and Investments

You have a good monthly salary of Rs 1.82 lakh take-home. Your investments are diversified in stocks, mutual funds, gold, and cryptocurrency.

Loans and EMIs

Your major concern is the EMI burden. Here are your current liabilities:

Home loan: Rs 17k EMI (Rs 18 lakh remaining)
Top-up loan: Rs 6.5k EMI (Rs 7 lakh remaining)
Personal loan: Rs 21k EMI (Rs 11 lakh remaining)
Car loan: Rs 11k EMI (Rs 5.6 lakh remaining)
Expenses

Your household expenses are Rs 50k monthly. Health insurance expenses are Rs 5k monthly, covering your entire family.

Financial Strategy
Prioritizing Debt Repayment

High-interest loans should be paid off first. Personal loans typically have higher interest rates than home and car loans. Let's focus on reducing your personal loan.

Investment Assessment
Stocks and Cryptocurrency

You have Rs 7.5 lakh in the Indian stock market, Rs 3.5 lakh in US stocks, Rs 30k in crypto, and Rs 1 lakh in gold.

Mutual Funds

You have Rs 2.5 lakh in mutual funds.

Steps to Improve Financial Health
1. Prioritize Debt Repayment

a. Personal Loan

This loan has the highest EMI and possibly the highest interest rate. Use your available funds to reduce or pay off this loan first.

b. Car Loan

Next, focus on your car loan. Paying this off will free up Rs 11k monthly, which can be redirected to other financial goals.

2. Reassess Investments

a. Cryptocurrency

Crypto is highly volatile and unregulated. It’s better to reduce exposure here. Consider reinvesting in safer options like mutual funds.

b. Stocks

If you have high-performing stocks, consider selling a portion to pay off debt. Balance your portfolio with mutual funds for stability.

Managing Investments
1. Diversify and Secure Investments

a. Mutual Funds

Mutual funds provide diversified exposure and professional management. Invest in funds through a certified financial planner (CFP) for better guidance.

b. Gold

Gold is a good hedge against inflation. Keep your investment but avoid adding more.

Financial Planning for Future
1. Emergency Fund

Ensure you have 6-12 months of expenses in a liquid account. This will cover any unforeseen expenses.

2. Child's Future

Start an investment plan for your daughter's education and future needs. Systematic Investment Plans (SIPs) in mutual funds are ideal.

Detailed Plan
1. Liquidate Non-Essential Investments

Sell off cryptocurrency and a portion of stocks to raise funds.

2. Pay Off High-Interest Loans

Use the raised funds to pay off the personal loan first. This will reduce your EMI burden significantly.

3. Reduce EMI Burden

After paying off the personal loan, focus on the car loan. This will further free up your monthly cash flow.

4. Rebalance Investments

Invest the remaining funds in mutual funds. This will provide a balanced portfolio and steady returns.

Professional Guidance
1. Certified Financial Planner (CFP)

Consulting a CFP will help you create a detailed financial plan. They can guide you on the best mutual funds and investment strategies.

2. Regular Reviews

Regularly review your financial plan with your CFP. Adjust investments based on market conditions and financial goals.

Financial Discipline
1. Budgeting

Create a monthly budget to track expenses and savings. Stick to it to avoid unnecessary expenditures.

2. Saving

Aim to save at least 20-30% of your income. Automate savings to ensure consistency.

Final Insights
Managing loans and investments simultaneously can be challenging but achievable. Focus on reducing high-interest loans first. Rebalance your investments to ensure safety and growth. Consult a Certified Financial Planner for personalized advice and regular reviews.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6986 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 16, 2024

Money
hi, i am 46 year old central government employee in Pune, I had several bad financial decision in my life. i have two daughters aged 11 and 17 i have no saving left, i have a flat in pune with liability of 38lac on home loan and 10 lac on personal society loan at 9% interest i have a ancestral property of 50 lac in Tamil nadu where my mom lives per month iam paying 550000 as home loan and personal loan EMI, My income is around 86000 how can I come out of this EMI burden and improve financial stability
Ans: Understanding Your Financial Situation
First, let me commend you for reaching out for guidance. It's never too late to improve your financial situation. You have two daughters to support and considerable loan burdens, which makes it essential to adopt a well-structured plan to regain financial stability.

Current Income and Expenses
Your current income is Rs. 86,000 per month. However, a significant portion of this income goes towards EMI payments. You are paying Rs. 5,50,000 annually towards home loan and personal loan EMIs, which is a heavy burden. This leaves limited room for savings and other expenses.

Loan Burden Analysis
The home loan liability is Rs. 38 lakh, and the personal society loan stands at Rs. 10 lakh. The home loan EMI is likely a major part of your monthly expense. Given the 9% interest rate on the personal loan, it is essential to address this first due to its higher interest rate compared to many other debt forms.

Asset Overview
You have an ancestral property worth Rs. 50 lakh in Tamil Nadu, where your mother lives. While this property holds significant value, it is tied to emotional and familial considerations.

Steps to Improve Financial Stability
Reassess and Prioritise Debts
Prioritise High-Interest Debts: Focus on reducing high-interest debts first. The personal loan at 9% interest is more expensive than typical home loans. Prioritising its repayment can save you significant interest over time.

Consider Debt Consolidation: Look into consolidating your personal and home loans. Consolidating at a lower interest rate can reduce the overall EMI burden. Discuss with your bank for possible consolidation or refinancing options.

Utilising Assets
Evaluate Ancestral Property: While the ancestral property is valuable, it might be worth considering its role in your financial recovery. You might explore options like renting out a portion of the property for additional income.

Downsize or Rent: If possible, you might consider downsizing your living space in Pune or renting out a portion of your flat to generate extra income. These steps can help manage EMIs more comfortably.

Budgeting and Expense Management
Create a Detailed Budget: Track all your income and expenses meticulously. Identify areas where you can cut down unnecessary costs. Budgeting helps in allocating resources more efficiently and finding ways to save money.

Emergency Fund: Establish a small emergency fund to cover unexpected expenses. Even a modest fund can prevent you from taking on more debt during emergencies.

Increasing Income Streams
Leveraging Skills and Opportunities
Freelancing or Part-Time Work: Explore opportunities to leverage your skills through freelancing or part-time work. Additional income from side gigs can significantly help in managing loan repayments.

Utilise Government Benefits: As a central government employee, explore any available benefits, allowances, or grants that might assist in your financial situation.

Investments and Savings
Start Small Investments: Begin with small, regular investments in safe, growth-oriented funds. Consult a Certified Financial Planner to select funds that align with your risk tolerance and financial goals.

Employer-Provided Benefits: Maximise contributions to government-provided savings schemes and benefits. These can provide tax advantages and enhance your financial security.

Reviewing and Adjusting Insurance
Insurance Policies
Evaluate Existing Policies: If you have LIC, ULIP, or investment-cum-insurance policies, consider their current value and benefits. These policies might not be the most efficient use of your funds.

Surrendering Underperforming Policies: If your policies are underperforming, you might consider surrendering them and redirecting those funds into more effective investments, such as mutual funds managed by certified professionals.

Adequate Coverage
Health Insurance: Ensure you have adequate health insurance coverage. Medical emergencies can drain savings and push you further into debt.

Life Insurance: Maintain sufficient life insurance to protect your family’s financial future in case of unforeseen events.

Planning for Children's Education
Education Fund
Separate Fund for Education: Create a separate education fund for your daughters. Even small, regular contributions can grow significantly over time.

Scholarships and Grants: Research scholarships, grants, and educational loans that can help fund your daughters' education without straining your finances.

Long-Term Education Planning
Invest in Education Plans: Consider education-specific investment plans. These can offer returns aligned with the timeframes of your daughters' educational needs.

Consult a CFP: A Certified Financial Planner can help tailor an education savings plan that suits your financial situation and goals.

Building a Sustainable Financial Plan
Setting Financial Goals
Short-Term Goals: Focus on immediate goals like reducing debt and creating an emergency fund. These are crucial for stabilising your financial situation.

Long-Term Goals: Set long-term goals for retirement, children's education, and eventual financial independence. A CFP can help you set realistic and achievable goals.

Monitoring and Reviewing
Regular Financial Check-Ups: Conduct regular reviews of your financial situation. Adjust your plans as needed to stay on track towards your goals.

Professional Guidance: Regular consultations with a Certified Financial Planner can provide ongoing support and adjustments to your financial strategy.

Final Insights
Improving your financial situation requires a multi-faceted approach. Prioritise paying off high-interest debts and consider refinancing options to reduce your EMI burden. Utilise your assets effectively, and explore additional income opportunities. Establish a disciplined budgeting and savings strategy to build financial stability.

Consider the future needs of your family, particularly your daughters' education, by creating dedicated funds and exploring scholarships. Regularly review your financial plan and adjust as necessary to stay on track. Engaging a Certified Financial Planner can provide personalised advice and support throughout your financial journey.

Your determination and willingness to improve your financial situation are commendable. By taking these steps, you can work towards a more stable and secure financial future for yourself and your family.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Help me!!! 1.I'm starting new "work" on my own(challenging for me) but my mind says quit it, be quite & do nothing. I myself don't know that wether the result of work will be +ive or uncompleted like alws. 2. My mind has become like order seeker type, when someone orders me, I do those things with dedicated(but sad from inside) manner. But when myself will try something different(which i fear, but necessary) then. "I QUITS IT" & sometimes I don't even start. 3. I'm like stuck no clue what/whom I want to do in life, I'm in cllg(1 yr) doing (CSE) ,. 4. I want to do/try (sports,talking girls,study,stocks,coding..) many things, but myself, my thoughts(overthinker), R like just be in the place where u are[confused,po*n,think about past/future(being billio..re,olympics..), girl (that u liked & never talked), abusive/beating self,.. sometimes feels like end life, but don't hv courage for that also.. 5. I tried self help books, spirituality, god, self affirmation, writing... & thay affected me(sometimes) but for only some time, then again that devil me comes up &these things never get completed. As no one in my family knows about all these, so that's Y ,I hv to fight/loose/try again, the battles with myself.
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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