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Ramalingam Kalirajan |9403 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 24, 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 - May 24, 2025

Sir, i am 38 yrs now. I have PLI of sum assured 20 lac which will be matured in 2038. Our monthly income is 1 lac. I have RD 35000 monthly which started in 6 months ago .and other savings nearly 2lac. We have two kids for them I deposit in sukanya samridhi and sbi smart scholar.We want to buy a home in Delhi with loan. Currently we don't have any loan. We are not aware about mutual funds and other things.

Ans: Let me help you build a well-rounded financial strategy for your goals and responsibilities.

As a Certified Financial Planner, I will provide a detailed and practical review of your situation.

Let’s assess it in different aspects.

Income and Savings Evaluation
Your monthly income of Rs.1 lakh is a strong base.

Monthly RD of Rs.35,000 shows strong saving discipline.

PLI of Rs.20 lakh is a traditional savings policy. Maturity is far in 2038.

Other savings of Rs.2 lakh are useful for short-term needs.

Contributions in Sukanya Samriddhi and SBI Smart Scholar for your kids is a good step.

Currently, you have no loans. That’s a positive financial position.

Now, let’s understand how to better structure everything for long-term results.

About PLI – Postal Life Insurance
PLI is a low-return product, around 5-6% interest per year.

This return may not beat long-term inflation.

But since you already have it, and maturity is in 2038, it can be kept.

You may not need to surrender it now. Treat it as a conservative part of your portfolio.

About RD – Recurring Deposit
RD gives fixed returns. Returns are usually 6 to 7%.

It is useful for short-term savings. Not for long-term growth.

You are investing Rs.35,000 monthly in RD. That’s 35% of income.

Consider if you will need that much liquidity. Or can you invest for growth?

You may reduce RD slowly and divert part of it into higher return products.

About Your Children’s Plans
Sukanya Samriddhi is a good option. It is safe and gives tax-free returns.

Keep investing in it till your daughters reach 14 years of age.

SBI Smart Scholar is an insurance-linked plan. These often have high costs.

If already running, you may continue if surrender leads to loss.

But avoid any more insurance-cum-investment policies in future.

Home Purchase Through Loan
Buying a house is a big financial goal. Needs careful planning.

You have no loans now. So you are eligible for a home loan.

Home loan EMI can be around 30-40% of your monthly income.

That means max EMI of Rs.30,000 to Rs.40,000 is safe for your income.

Include property registration, interiors, moving cost in your budget.

Keep Rs.5-7 lakh ready for down payment and expenses.

Don’t break children’s investments for this purpose.

You can continue your RD for this goal. RD maturity will help in down payment.

Awareness About Mutual Funds
You said you are not aware about mutual funds. Let me explain.

Mutual Funds are managed by expert fund managers.

They invest across shares, bonds, etc., based on the scheme type.

Best way to invest is through Regular Funds via MFD with CFP support.

Certified Financial Planner (CFP) gives right guidance based on your needs.

Regular Funds come with advice, handholding, and portfolio review.

Direct funds don’t offer personal advice. You may end up choosing wrong funds.

With Regular Funds, CFP helps you track, rebalance, and stay goal-focused.

For someone not aware of mutual funds, Regular plans with CFP guidance are safer.

Avoid direct funds if you want personalised support and less risk.

Why Not Index Funds or ETFs?
Index Funds just copy the index. No fund manager selection.

They do not protect your investment during market falls.

Actively Managed Funds are better. They try to beat market returns.

Fund manager uses research to select right companies.

That gives higher chance of long-term growth.

For your profile, actively managed funds with CFP advice are more suitable.

Insurance-Linked Plans and ULIPs
Many people mix insurance and investment. That leads to poor returns.

If you have any ULIP or endowment plans, better to surrender early.

Reinvest that money in mutual funds through a CFP.

Buy simple term insurance separately for life protection.

This keeps your insurance cost low and investment more effective.

Emergency Fund and Liquidity
Keep at least 6 months' income as emergency fund.

That’s around Rs.6 lakh in your case.

You already have Rs.2 lakh. You can add more over time.

Emergency fund can be in liquid mutual funds or bank savings.

Don’t use RD or kids’ savings for this.

Term Insurance and Health Cover
You need term insurance if you don’t already have.

Sum assured should be at least Rs.1 crore at your age.

Premium will be very low if taken early.

Don’t mix insurance with investment.

Also check for health insurance for entire family.

Medical costs are rising. Health cover avoids financial shocks.

Children’s Higher Education Planning
Both your kids need future planning for education.

Sukanya is for girl child and is good for long-term.

But also invest in mutual funds through SIP for both children.

Long-term equity mutual funds give better growth for 10+ year goals.

Use actively managed funds, with help of a CFP.

Plan separately for education and marriage.

Start small SIP now and increase over time.

Tax Efficiency
RDs are taxable as per your income slab.

PLI gives tax-free maturity. So it’s useful from tax angle.

Sukanya is also fully tax-free. Use the full limit if possible.

Mutual funds are more tax efficient than RDs.

Equity mutual funds have 12.5% tax on LTCG above Rs.1.25 lakh.

Short-term gains are taxed at 20%.

Debt mutual funds are taxed as per your tax slab.

But overall, mutual funds help in managing taxation better than RDs or ULIPs.

Step-by-Step Action Plan
Start SIP in mutual funds for long-term goals with CFP support.

Review existing insurance-linked investments. Exit if costly or underperforming.

Maintain emergency fund separately from investment.

Buy term life and family health insurance immediately.

Use RDs for short-term goals like home down payment.

Postpone home purchase if savings are not yet enough.

Track monthly budget to free up more for investments.

Avoid direct mutual funds and index funds.

Focus on customised regular funds guided by CFP.

Plan goals separately for retirement, children, and home.

Do annual reviews of your financial plan with your CFP.

Final Insights
Your savings habits are good. You have no debt. That’s a strong start.

You are serious about family goals. Appreciate your clarity.

But to grow faster, you need better investment choices.

Mutual funds with CFP guidance offer balance of growth and safety.

Avoid direct and passive funds. Stay with actively managed regular plans.

Use insurance only for protection. Not for investing.

Plan every goal step-by-step and review progress yearly.

You are on the right path. You just need expert guidance from here on.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

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