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Ramalingam Kalirajan |10874 Answers |Ask -Follow

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

Question by mahalaxmi on May 30, 2025Hindi

i am 39 years old, i have 25k income from business, how can i plan for future

Ans: I appreciate your initiative in planning for the future. Let’s structure this thoughtfully.

Current Financial Snapshot

Age: 39 years

Monthly income from business: Rs. 25,000

No details given on savings, investments, liabilities, insurance yet

Goal: Long?term financial planning

You’ve taken the first step by seeking help from a Certified Financial Planner. That’s great commitment. Now let’s build a solid plan across all areas.

Income Stability and Business Cash Flow

Business income of Rs.?25,000 is modest and may fluctuate

Determine fixed portion vs variable portion of income

Maintain records of monthly revenue and expenses

This helps us track your real take?home income consistently

Without understanding cash flow, planning becomes guesswork. Let’s start with these questions:

Is your income consistent every month?

Do you keep business expense records separately?

Could income vary seasonally?

We need stable numbers to design your future plan.

Essential Protection: Insurance

Protection is critical before accumulation.

Evaluate term insurance coverage needs

A rule: income?×?10 or family liabilities

Health insurance is mandatory

Choose adequate sum insured

Ensure covers hospitalisation and maternity if applicable

These safeguards protect against sudden financial shocks.

If you hold LIC endowment, ULIP, or investment?cum?insurance:

Those blend insurance and savings poorly

Almost always have high cost and poor returns

You should surrender these only through CFP advice

Use that money to invest properly via mutual funds

Insurance is not investment. Let’s treat them separately.

Emergency Fund: Your Safety Net

Every plan must start with backup savings:

Aim to build 6 months’ living expenses

Keep this fund in liquid mode

Don’t use it except emergencies

Replenish if ever used

This gives space to take wise decisions, not panic ones.

Budgeting and Expense Tracking

To plan future goals, you need clarity on your money habits:

List all monthly personal and business expenses

Identify essential vs discretionary spending

Save first, spend later

Aim for 10–20% savings from take?home income

Businesses often have untracked leaks. Fix them for efficiency.

Debt and Loans: Borrow With Caution

You didn’t mention any liabilities, so that’s good.

Avoid high?cost loans like credit cards or personal loans

If business needs support, explore low?interest options

Keep total EMI obligations under 40% of income

Borrow only when income can support repayments

Debt must be used strategically, not out of desperation.

Investment Strategy Overview

Once basics are in place, start thinking about investments.

You can start small with SIPs of Rs. 2,000–5,000 monthly

Diversify across equity and debt funds

Actively Managed Funds vs Index Funds
You asked about index funds—here’s why they may not suit every case:

They replicate a market index, giving only market returns

No active research or selecting better stocks

In volatile or niche markets, actively managed funds may outperform

They also adapt to changing conditions faster

With guidance from a CFP and authorized distributor, you can choose better quality active funds

Avoid Direct Funds for Now
You may have heard of direct mutual funds, but:

They offer no guidance or ongoing support

You take all decisions alone

Mistakes in fund selection or timing can cost you

With regular plans via a CFP and MFD, you get advice, tracking, and goal alignment

Stay with regular plans for now, until you gain enough experience under guidance.

Asset Allocation Based on Risk Profile

At age 39, you have time but also need balance:

Equity exposure for 60–70% of your investible surplus

Debt or fixed income for 30–40%

As income grows, adjust allocations gradually with CFP help

Regular monitoring ensures you stay on track despite market changes.

Retirement Planning

Retirement at 60 is still two decades away:

Use EPF or NPS via employer if possible

Else start your own systematic contributions

Use equity funds for growth now, then shift to debt later

Regular funds guided by CFP help manage risk

Your current income allows this gradually, but protecting your future is important.

Tax Planning Strategy

Understand your tax positions:

80C can include EPF, ELSS, PPF

Deduction limit up to Rs. 1.5 lakhs

NPS can add tax benefit under section 80CCD

Avoid excess spending on insurance as tax saving

Tight planning reduces tax while building assets.

Child or Family Goals (If Applicable)

If you have or plan children soon:

Estimate future education costs

Create separate investment streams per goal

Use systematic investments to fund these needs

Define each goal clearly and invest accordingly.

Property or Real Estate Consideration

You have not mentioned desire to buy property; that’s good.

Property is illiquid and has hidden charges

Better to build wealth first before locking capital

Wait until income grows and emergency fund is in place

Then take measured steps if you still wish

Stay focused on building financial base.

Business Growth Investments

You are in business, so consider reinvestment:

Improve operations, marketing, or tools

Small reinvestments can boost income

That creates more surplus for financial goals

Keep business and personal finances separate

Business success adds strength to your personal financial future.

Review and Rebalance Regularly

Your plan must adapt as you grow:

Review investment portfolio quarterly

Adjust allocations based on progress

Increase SIPs when income grows

Reassess insurance and estate documents as needed

A good plan is not static. It evolves with life.

Avoid Common Pitfalls

Stay away from:

High?cost endowment or ULIP policies

Over?concentration in one fund or sector

Ignoring inflation or assuming returns are guaranteed

Relying solely on insurance for saving

Each misstep creates long?term opportunity cost.

Securing Estate and Final Wishes

Plan for your family if anything happens:

Write a basic will

Nominate beneficiaries in accounts

Store documents securely and communicate wishes

This gives peace of mind and ensures family protection.

360?Degree Action Plan Summary

Track business and personal income

Build 6?month emergency fund

Acquire term and health insurance

Start small SIPs in regular actively managed funds

Allocate 60:40 equity to debt at start

Reinvent part of business earnings

Keep leverage low and avoid risky loans

Rebalance portfolio regularly

Plan for business, family, retirement goals

Keep estate and legal documents in order

Finally

You are taking a smart, well?timed step.
A Certified Financial Planner will guide you with clarity.
This plan balances today’s needs and tomorrow’s dreams.
Your business income may be small now. But structured growth will change that.
You are not only saving, you are building your future.
Focus on discipline over time. Compounding works with time and clarity.
Your plan is simple, powerful, and purposeful.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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