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Ramalingam Kalirajan |8125 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 20, 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

Asked by Anonymous - May 16, 2024Hindi

I am 38 years now. I am earning 1.5 lacs PM. I have around 1.12 crore as MFs, FD, SCSS,EPF, PPF, LIC, SGB and Lent to local village people at 12% roi. Getting Passive income as 8 lacs PA from all above investment. I have physical gold of 15 lacs. I purchase a land of 15 lacs last year. And my father is a pensioner getting 25k PM. Getting 1lacs PA from paddy land and Paddy land value is 50 lacs now. I will never sell this paddy land. My monthly expenses is 50k. I have a personal loan with 9 lacs outstanding. Paying emi 52k PM. I have a daughter of 6 year and planning for one more kid. I am staying at my own native house with parents. I am thinking to retire at 40. Any suggestions?

Ans: Understanding Your Financial Position
First, congratulations on your impressive financial management and planning. You have diversified your investments well across various asset classes. With a good mix of MFs, FD, SCSS, EPF, PPF, LIC, SGB, physical gold, and real estate, you are on a solid financial footing.

Evaluating Your Income and Expenses
Current Income and Passive Earnings
Active Income: Your current salary is ?1.5 lakhs per month.
Passive Income: You earn ?8 lakhs annually from your investments. This shows a well-thought-out strategy for generating passive income.
Monthly Expenses
Monthly Expenses: Your monthly expenses are ?50,000.
Loan EMI: You have an EMI of ?52,000 for a personal loan with an outstanding amount of ?9 lakhs.
Retirement Planning at 40
Financial Independence
Target Age: You plan to retire at 40, which is two years from now.
Passive Income Needs: Your monthly expenses will continue, so you need sufficient passive income to cover these.
Assessing Your Assets
Investments: Your current investments total ?1.12 crore.
Gold and Real Estate: You have ?15 lakhs in physical gold and purchased land worth ?15 lakhs.
Ensuring Sustainable Passive Income
Investment Strategy
Maximize Passive Income: Ensure your investments continue to yield at least the current passive income of ?8 lakhs per annum. This should ideally increase to cover any future inflation and additional expenses.
Diversification: Continue to diversify your investments to manage risks better. Consider consulting a Certified Financial Planner (CFP) for personalized advice.
Debt Management
Loan Repayment: Prioritize paying off your personal loan to reduce your monthly financial obligations. This will free up more of your income for investments or savings.
Emergency Fund: Ensure you maintain an emergency fund equivalent to at least six months of expenses. This provides a safety net for unexpected situations.
Planning for Children's Education
Education Fund
Investment for Education: Start a dedicated investment plan for your daughter's education and future child's education. Education costs will rise, so planning now is crucial.
Education Savings Schemes: Consider investing in child education plans that offer tax benefits and good returns. Mutual funds tailored for long-term growth can be a good option.
Enhancing Retirement Security
Long-Term Investments
Retirement Corpus: Ensure your retirement corpus is sufficient to sustain your lifestyle. You might need to increase your investments in equity funds for long-term growth.
Regular Reviews: Periodically review your investment portfolio to ensure it aligns with your retirement goals and adjust as needed.
Passive Income Strategy
Sustainable Income: Aim for a mix of investments that provide steady passive income. This could include dividend-paying stocks, rental income (if considering in the future), and interest from bonds.
Cost of Living: Account for potential increases in living costs due to inflation and healthcare expenses, especially with aging parents and growing children.
Final Thoughts
Balancing Current and Future Needs
Short-Term vs Long-Term: Balance your current financial needs with future goals. Avoid making impulsive financial decisions that could jeopardize long-term security.
Professional Advice: Regularly consult with a CFP to keep your financial plan on track. Their expertise will help you navigate changes in financial markets and personal circumstances.
Appreciating Your Efforts
Commendable Planning: Your proactive approach to managing your finances is commendable. Few people have such a detailed and diversified portfolio.
Family Security: Your efforts ensure financial security for your family, which is a significant achievement.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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