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Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 17, 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 08, 2024Hindi
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Hi. I am 39 year old earning 70k in a month but having 0 bank balance. What should i do to make wealth at least 10lacs till i reach 50.

Ans: Building Wealth with a Monthly Income of 70k
Assessing Your Current Financial Situation
With a monthly income of 70k and no bank balance at 39, it's essential to adopt a proactive approach to wealth creation. Assess your expenses and financial habits to identify areas for improvement and savings.

Setting Achievable Goals
Aiming to accumulate 10 lakhs by the age of 50 is a realistic goal, considering your income level and time horizon. Break down this target into smaller milestones to track your progress and stay motivated.

Creating a Budget and Saving Plan
Start by creating a detailed budget to track your income and expenses. Identify non-essential expenses that can be reduced or eliminated to increase savings. Aim to allocate a portion of your income towards savings consistently.

Exploring Income-Generating Opportunities
Consider supplementing your primary income with additional sources of revenue. Explore part-time job opportunities, freelancing gigs, or side businesses that align with your skills and interests to boost your income.

Investing Wisely
With a focus on wealth creation, consider investing your savings in avenues that offer growth potential. Explore options such as mutual funds, SIPs, or diversified equity portfolios that align with your risk tolerance and investment goals.

Prioritizing Financial Discipline
Maintain discipline in your financial habits by adhering to your budget, avoiding impulsive purchases, and consistently saving and investing a portion of your income. Set up automated transfers to ensure regular contributions to your savings account or investment portfolio.

Seeking Professional Guidance
Consider consulting with a Certified Financial Planner (CFP) to create a personalized financial plan tailored to your goals and circumstances. A CFP can provide valuable insights, investment recommendations, and strategies to help you achieve your wealth accumulation target.

Monitoring and Adjusting Your Plan
Regularly review your financial plan and investment portfolio to track your progress towards your goal of accumulating 10 lakhs by the age of 50. Make necessary adjustments based on changes in your income, expenses, and market conditions to stay on track.

Conclusion
By adopting a disciplined approach to budgeting, saving, and investing, you can work towards accumulating 10 lakhs by the age of 50, despite starting with no bank balance at 39. Stay focused on your goal, explore income-generating opportunities, and seek professional guidance to maximize your wealth-building potential.

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  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2024

Money
HI SIR i am 38 years old , married, with a 10 year old son. we live in Ahmedabad own loan free flat in ahmedabad around 2 cr value . here is a summary of financial assets : 1.15 monthly invest in mf last 5 year value is around 80 lac policy around lic nd other yearly 13 lac invest other silver Nd gold buy around 70k share invest around 1cr can you pls suggest how we create wealth more
Ans: Great to see your dedication to financial growth. You've done an excellent job so far. Here's how you can create more wealth, step-by-step.

Assessing Your Current Financial Situation
You have a strong foundation. Your loan-free flat worth Rs. 2 crore is a significant asset. This gives you stability.

Your monthly investment of Rs. 1.15 lakh in mutual funds for the past five years is impressive. With a value of around Rs. 80 lakh, you're already on a good track.

Additionally, your yearly investment of Rs. 13 lakh in LIC policies and other instruments shows disciplined saving habits.

Investing in silver and gold for around Rs. 70,000 is a good hedge against inflation.

Shares worth around Rs. 1 crore in the stock market display your willingness to take calculated risks.

Enhancing Your Mutual Fund Investments
Mutual funds are excellent for wealth creation. They offer diversification, professional management, and the power of compounding. However, it's crucial to evaluate your fund choices.

Types of Mutual Funds
Equity Funds: These invest in stocks and have the potential for high returns. They're ideal for long-term goals.

Debt Funds: These invest in bonds and are less risky than equity funds. They provide steady returns and are suitable for short-term goals.

Hybrid Funds: These invest in both equity and debt, offering a balanced approach. They can be a good choice for moderate risk-takers.

Sector Funds: These focus on specific sectors like healthcare or technology. They're risky but can offer high returns if the sector performs well.

Advantages of Mutual Funds
Diversification: By investing in mutual funds, you spread your risk across various assets. This reduces the impact of a poor-performing asset.

Professional Management: Fund managers handle your investments, making informed decisions based on market research.

Liquidity: Mutual funds are highly liquid, meaning you can easily buy or sell them.

Tax Efficiency: Certain mutual funds offer tax benefits under Section 80C of the Income Tax Act.

Risks of Mutual Funds
Market Risk: The value of mutual funds fluctuates with the market.

Credit Risk: Debt funds are subject to credit risk, where the issuer might default.

Interest Rate Risk: Changes in interest rates can affect debt funds' returns.

Actively Managed Funds vs. Index Funds
You mentioned direct funds. While they seem appealing due to lower fees, they have drawbacks. Actively managed funds offer several benefits.

Disadvantages of Index Funds
Limited Growth: Index funds track the market and cannot outperform it. Your returns are capped at market performance.

No Downside Protection: During market downturns, index funds fall with the market. They lack the flexibility to avoid losses.

Missed Opportunities: Index funds cannot take advantage of specific investment opportunities or market anomalies.

Benefits of Actively Managed Funds
Potential for Higher Returns: Fund managers actively select stocks, aiming to outperform the market.

Downside Protection: Fund managers can adjust the portfolio to minimize losses during market downturns.

Flexibility: Active funds can seize market opportunities, potentially increasing returns.

Maximizing Returns from Mutual Funds
Regular Reviews
Review your mutual fund portfolio regularly. This ensures your investments align with your goals and market conditions.

Rebalancing
Periodically rebalance your portfolio. This involves selling some assets and buying others to maintain your desired asset allocation.

SIP (Systematic Investment Plan)
Continue with your SIPs. SIPs provide the benefit of rupee cost averaging, reducing the impact of market volatility.

Diversification
Ensure your mutual funds are diversified across sectors and market capitalizations. This spreads risk and enhances potential returns.

Evaluating Your LIC Policies and Other Investments
Your yearly investment of Rs. 13 lakh in LIC and other policies needs evaluation. Often, traditional insurance policies offer lower returns.

Surrendering Policies
If your LIC policies are investment-cum-insurance plans, consider surrendering them. The returns are usually low compared to mutual funds. Reinvest the proceeds in diversified mutual funds for better growth.

Term Insurance
Ensure you have adequate term insurance coverage. It's affordable and provides financial security to your family.

Direct Funds vs. Regular Funds
While direct funds have lower expense ratios, regular funds through a Certified Financial Planner (CFP) offer advantages.

Disadvantages of Direct Funds
No Guidance: Direct funds lack professional advice. You might miss out on valuable insights.

Time-Consuming: Managing your investments requires time and effort.

No Handholding: During market volatility, professional advice can prevent panic decisions.

Benefits of Regular Funds
Professional Advice: CFPs provide tailored advice based on your financial goals.

Market Insights: CFPs stay updated with market trends, helping you make informed decisions.

Convenience: CFPs manage your portfolio, saving you time and effort.

Strategic Asset Allocation
Asset allocation is crucial for wealth creation. It balances risk and reward based on your financial goals.

Equity Allocation
Given your risk appetite and long-term goals, allocate a significant portion to equity. This could be through mutual funds and direct stocks.

Debt Allocation
To balance risk, allocate a portion to debt funds. They provide stability and steady returns.

Gold and Silver
Continue small investments in gold and silver. They act as a hedge against inflation and diversify your portfolio.

Power of Compounding
The power of compounding is a key advantage of mutual funds. Reinvesting returns generates returns on returns, exponentially growing your wealth.

Long-Term Perspective
Investing with a long-term perspective maximizes the benefits of compounding. Avoid withdrawing from your investments prematurely.

Discipline and Patience
Maintain a disciplined approach and stay invested. Market fluctuations are normal; patience is crucial for wealth creation.

Emergency Fund
Ensure you have an emergency fund. It should cover 6-12 months of living expenses. This provides financial security during unexpected events.

Tax Planning
Effective tax planning enhances your net returns.

Tax-Efficient Investments
Invest in tax-saving mutual funds under Section 80C. Consider the tax implications of your investments.

Capital Gains
Understand the tax treatment of capital gains from mutual funds. Long-term capital gains (LTCG) have favorable tax rates compared to short-term capital gains (STCG).

Estate Planning
Proper estate planning ensures your wealth is transferred smoothly to your heirs.

Will
Create a will to clearly outline the distribution of your assets. This prevents legal disputes and ensures your wishes are followed.

Nomination
Ensure all your investments have nominated beneficiaries. This simplifies the transfer process.

Trusts
Consider setting up trusts for wealth management and asset protection.

Continuous Learning
Stay informed about financial markets and investment strategies. This helps you make informed decisions and adapt to changing market conditions.

Professional Guidance
Seek advice from a Certified Financial Planner (CFP). They provide personalized advice and help you achieve your financial goals.

Regular Reviews
Meet your CFP regularly to review your financial plan. This ensures it remains aligned with your goals and market conditions.

Final Insights
You're on the right track with your investments. Your loan-free flat, disciplined savings, and diverse portfolio show commendable financial acumen.

To create more wealth, focus on mutual funds, strategic asset allocation, and regular portfolio reviews.

Consider surrendering low-return insurance policies and reinvesting in high-growth mutual funds.

Maintain a long-term perspective, harness the power of compounding, and stay disciplined.

Seek professional guidance from a CFP to navigate market complexities and optimize your investment strategy.

With these steps, you'll enhance your wealth and secure a financially sound future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Asked by Anonymous - Jul 15, 2024Hindi
Money
I am 31 yrs old no savings around 1lakh rupees stocks,& having 26lakh home loan,it’s a huge mess, what can I do from this negative to positive wealth.
Ans: Thank you for sharing your concerns. It's clear that you are in a challenging situation, and it's commendable that you are seeking help to improve your financial health. At 31 years old, you have plenty of time to turn things around. Let's break down your current financial status and create a plan to move from negative to positive wealth.

Assessing Your Current Position
Home Loan
You have a home loan of Rs 26 lakh. This is a significant liability, but it's manageable with a structured approach.

Savings
Your savings stand at around Rs 1 lakh. This is a modest amount, but it provides a foundation to build upon.

Investments in Stocks
You have some investments in stocks. While stocks can offer good returns, they also carry risks, especially if not managed properly.

Setting Financial Goals
Short-term Goals
Build an emergency fund: Aim for at least six months' worth of expenses. This will provide a cushion against unforeseen events.

Reduce high-interest debt: Focus on paying down any high-interest debts first.

Long-term Goals
Pay off your home loan: This will take time, but having a clear plan will make it achievable.

Build a diversified investment portfolio: This will help grow your wealth over time.

Creating a Budget
Income and Expenses
Track your monthly income and expenses. Categorize them to identify areas where you can cut back. This exercise is crucial to free up more money for savings and investments.

Prioritizing Expenses
Prioritize essential expenses like housing, utilities, and groceries. Reduce discretionary spending where possible. This could mean dining out less, limiting entertainment expenses, or finding more affordable alternatives.

Building an Emergency Fund
Importance of an Emergency Fund
An emergency fund is crucial for financial stability. It ensures that you don't have to rely on high-interest credit in case of unexpected expenses.

How to Build It
Start by saving a small portion of your income each month. Gradually increase this amount as your financial situation improves. Aim to accumulate at least six months' worth of living expenses.

Managing Your Home Loan
Refinancing Options
Explore refinancing options to lower your interest rate. This can reduce your monthly payments and overall interest burden.

Extra Payments
If possible, make extra payments towards your home loan principal. This will reduce the loan term and the total interest paid.

Reviewing Your Investments
Stock Investments
Evaluate your current stock investments. Diversification is key to managing risk. Consider spreading your investments across different sectors.

Benefits of Actively Managed Funds
While index funds are popular, actively managed funds offer several benefits. They provide professional management, potentially better returns, and flexibility in changing market conditions.

Disadvantages of Direct Funds
Direct funds require significant time and knowledge to manage effectively. Investing through a Certified Financial Planner can provide expert guidance, save you time, and help you make informed decisions.

Surrendering Insurance Policies (if applicable)
If you hold LIC, ULIP, or other investment-cum-insurance policies, consider surrendering them. These often come with high charges and lower returns. Reinvest the proceeds into mutual funds for better growth potential.

Investing in Mutual Funds
Benefits of Mutual Funds
Mutual funds offer diversification, professional management, and ease of investment. They are suitable for various financial goals, whether short-term or long-term.

Choosing the Right Mutual Funds
Select funds based on your risk tolerance, investment horizon, and financial goals. A Certified Financial Planner can help you choose funds that align with your objectives.

Creating a Debt Repayment Plan
Snowball vs. Avalanche Method
Consider two popular debt repayment methods:

Snowball Method: Pay off smaller debts first to build momentum.
Avalanche Method: Focus on debts with the highest interest rates to save on interest payments.
Choose the method that best suits your financial situation and motivates you to stay on track.

Regular Payments
Ensure regular payments towards your debts. Automate these payments to avoid missed deadlines and penalties.

Increasing Your Income
Side Hustles
Consider starting a side hustle or freelance work. This can provide additional income to pay off debts and increase savings.

Career Growth
Invest in your skills and education to advance your career. This can lead to higher earning potential over time.

Tax Planning
Tax-saving Investments
Invest in tax-saving instruments under Section 80C, such as ELSS (Equity Linked Savings Scheme) mutual funds. These help reduce your taxable income while providing growth potential.

Utilizing Tax Deductions
Claim deductions on home loan interest under Section 24(b) and principal repayment under Section 80C. This will reduce your tax liability and increase your savings.

Regular Financial Review
Annual Review
Conduct an annual review of your financial plan. Assess your progress towards goals and make adjustments as needed.

Professional Guidance
Seek the advice of a Certified Financial Planner regularly. They can provide personalized recommendations and help you stay on track.

Staying Disciplined
Consistent Saving and Investing
Maintain a disciplined approach to saving and investing. Automate your savings and investments to ensure consistency.

Avoiding Impulsive Decisions
Avoid impulsive financial decisions. Always assess the long-term impact before making any major financial commitments.

Building a Positive Wealth Mindset
Educating Yourself
Educate yourself about personal finance. Read books, attend workshops, and follow credible financial blogs. Knowledge empowers you to make better financial decisions.

Celebrating Milestones
Celebrate your financial milestones, no matter how small. This will keep you motivated and committed to your financial journey.

Final Insights
Your current financial situation might seem daunting, but with a structured approach, you can turn things around. Prioritize building an emergency fund, manage your debts wisely, and make informed investment decisions. Seek professional guidance when needed and stay disciplined in your financial practices. Remember, financial stability is a journey, not a destination. Celebrate your progress along the way and keep learning to make better financial decisions.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 2024

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Hello,I am 40year old.Monthly income is 1Lac so pl tell me how can I create storing wealth after retirement
Ans: Wealth Creation at Retirement
Assessing Your Financial Position

Your income is Rs 1 lakh per month.
You are currently 40, which means you have 20 years before you attain the age of 60 and retire.
There, you need to plan well to ensure a comfortable retirement.
Setting of Financial Objectives:

As defined, your retirement corpus
Estimation of the living expenses on a monthly basis after retirement
Take inflation and rising health into consideration.
Building of Emergency Fund

Save 6 months' worth of expenses in a savings bank account.
It would provide financial security in case of emergency
Division of Your Income

Savings and investments should be 30% to 40%.
That would work out to about Rs 30,000 to Rs 40,000 per month.
Systematic Investment Plan (SIP)

Invest Rs 20,000 to Rs 30,000 per month in mutual funds.
Junk diversified equity funds for growth.
Balanced funds invest in a mix of equity and debt.
Public Provident Fund (PPF)

Invest in PPF for tax-free gains.
Try and invest the maximum every year.
National Pension System (NPS)

Invest in NPS for a regular income post-retirement.
It provides tax benefits under Section 80C and 80CCD.
Health Insurance

Ensure adequate health insurance coverage.
This safeguards your savings from medical emergencies.
Term Insurance

Secure your family's future with term insurance.
Ensure that the sum assured is sufficient to cover your liabilities and family needs.
Diversification of Investments

Invest in a mix of equity, debt, and gold.
Diversification reduces risk and enhances returns.
Regular Review and Adjustments

Review your investments annually.
Adjust based on market performance and life changes.
Increasing SIP Contributions

Increase SIP amount by 10% every year.
This also leads to a larger corpus getting built over some time.
Avoiding Real Estate

The real estate investments can be illiquid.
Financial assets are much better in terms of liquidity, as well as growth.
Avoiding Index Funds and Direct Funds

Index funds may not be able to perform better than actively managed funds.
Direct funds need to be actively managed; regular funds provide for professional management through MFDs with CFP credentials.
Final Insights
Set clear financial goals. Start investing a majority of your income in diversified investments. Periodically review and rebalance your portfolio. Get adequate insurance coverage. Let not life drift by without disciplined investing and periodic reviews. Retire comfortably.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 2024

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hello, my age is 31 year old married. wife is house wife and we have 1 year old daughter alo, i am freelance interior designer, architect from mumbai and earning aprroximate 1.25 lac per month and monthly expenses are approc 30000. i dont have any loan/ dept to pay. currently i have 15 lac in equity market, 10 lac in mutual funds monthly SIP 25000, 2lac in FD, 5lac of gold jewellary, 20 lac of health insurance and 20 lac of Life insurance. please send good planning to make wealth by the age of 50.
Ans: Current Financial Overview
Age: 31 years

Family: Married with a homemaker wife and a 1-year-old daughter

Profession: Freelance interior designer and architect

Location: Mumbai

Monthly Income: Rs 1.25 lakh

Monthly Expenses: Rs 30,000

Savings: Rs 95,000 per month

Existing Investments:

Rs 15 lakh in equity market
Rs 10 lakh in mutual funds
Rs 2 lakh in fixed deposits
Rs 5 lakh in gold jewellery
Rs 20 lakh health insurance
Rs 20 lakh life insurance
Financial Goals
Corpus Goal: Rs 5 crore in the next 12-15 years
Wealth Accumulation Goal: By age 50
Financial Strategy
Evaluation of Existing Investments
Equity Market: Rs 15 lakh

Equity investments earn high returns over a long period.
Invest in different sectors to minimize risk.
Mutual Funds: Rs 10 lakh with Rs 25,000 SIP on a monthly basis

One can continue investing through SIP in actively managed funds.
These funds would perform better than index funds as it is expertly managed funds.
Get the services of a CFP to select funds periodically.
Fixed Deposits: Rs 2 lakh

Fixed deposits offer safety but only ordinary returns.
Some of the money could be shifted to betterperforming instruments.
Gold Jewellery: Rs 5 lakh
Gold is an excellent hedge against inflation.
No more money needs to be put into gold as the returns are only good.
Health and Life Insurance: Rs 20 lakh each
Adequate coverage ensures financial security.
Review periodically to check on adequacy of coverage.
Optimising Investments
Increase SIP Amount:

The monthly SIP should be increased from Rs 25,000 to Rs 50,000.
Now, invest in a mix of large-cap, mid-cap and multi-cap funds.
Since actively managed funds have an added advantage in terms of the possibility of higher returns.
Diversify Equity Investments:

Sectors in which you can diversify your Rs 15 lakh equity investments.
You can add in blue-chip stocks for stability.
Invest in sectors that will grow significantly for better returns.
Emergency Fund:

Maintain emergency funding equivalent to 6 months to 12 months of expenditure.
Consider keeping Rs 3-5 lakh in liquid funds or saving bank accounts.
Regular Review:

Review your investment portfolio regularly.
Flow with the market and adjust by financial goals.
Shun Index Funds:

Index funds closely follow the market index and tend to be inferior to active funds
Active funds can adjust to changes in the market and deliver superior returns
Take the help of a Certified Financial Planner
Engage a CFP for customized investment plans
He helps with the right fund choices and portfolio management
Investment Planning for the Long-term
Systematic Transfer Plan (STP):

Get the help of STP to transfer money from low-risk to high return investments.
This will ensure gradual exposure to equity markets.
Child's Education and Future Needs:

Open a separate fund for the education of your daughter.
You can look at some mutual funds that are specifically for children or PPF.
Retirement Planning:

Start retirement planning through targeted investments.
Diversify into retirement-specific mutual funds with steady growth expectations.
Tax Planning:

Invest in tax-saving products such as ELSS mutual funds.
Save on taxes through deductions available under Section 80C.
Final Words
Monitoring Regularly: Track your financial goals and performance of your investments regularly.

Discipline in Savings: Save and invest Rs 95,000 every month regularly.

Avoid Low-Yield Investments: Avoid investing in low-return instruments like excessive fixed deposits.

Professional Guidance: Consult a Certified Financial Planner to optimize your investment strategy.

With these steps, you will be able to achieve your aim of creating a corpus of Rs 5 crore in a span of 12-15 years. A disciplined approach and expert guidance will ensure steady growth.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Milind

Milind Vadjikar  |1006 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Feb 12, 2025

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Hi Gurus, I am 35 yesr old, working in a private sector. Till Dec'24 I was getting the salary of 77k, which statisfied my monthly expenditure including the multiple loans, life insurance policies. My loans are: plot loan pending priciple 2.9 Lakhs (11.4% interest). 1st Personal loan 3 Lakh outstanding principle (14% interest) & I used this to buy gold jwellery, 2nd personal loan 5.5 lakh (12.5% interest) used for the finctions at home. The policies are : TATA AIA fortune pro policy 2800/month ( Market linked - started from Aug 2021, payment term 7 years and policy term 15yeras). TATA AIA smart income plus Guaranteed return 5600/month (7L on maturity. Started from Aug 2021, payment term 7 years and policy term 15yeras). Max life online saving plan policy 8500/month (Market linked - started from Aug 2023 for payment terms 5 years and policy term is 19 years) From the month of Jan-25 my monthly income is 1.18 Lakh. I want to know finanacial position as of now. And need guidance on going forward with new salary aim is to retire by 45 with 3cr corpus. As of now i stay in the house owned by my parents in bangalore. So i do not pay rent.
Ans: Hello;

Some observations on the information provided;

1. One should never buy gold jewellery on loan.

2. Investment in gold jewellery is an inefficient way of investing in gold as an asset. Best way is SGBs, ETF/Funds.

If the gold jewellery is bought as gift to your near and dear ones then it is absolutely fine but then it shouldn't be counted as an asset. Also this should be funded through own accruals and not loans.

3. Taking personal loan for family function will also not be considered financially prudent.

4. Mixing insurance with investment is a painful mistake. You may share current fund value of your ulips to know your overall investment value.

5. Any update on your investment in EPF, PPF, SSY, NPS, MFs?

6. You will need a monthly sip of around 75 K in balanced advantage funds to reach 3 Cr goal in 15 years. 10% return considered.

Best wishes;

...Read more

Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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investing 10 lakhs in Mutual Funds: what fund option should I consider for 3 Years?
Ans: Investing for three years requires balancing returns and safety. Your choice should depend on risk tolerance, taxation, and liquidity needs.

Key Factors to Consider
A three-year horizon is short for equity investments.
Volatility in equities can impact returns if markets decline near redemption.
Debt funds provide stability but may have lower returns than equity funds.
Hybrid funds balance risk and returns better than pure equity or debt funds.
Taxation on mutual funds should be considered before making a choice.
Investment Options Based on Risk Profile
For Conservative Investors
Capital safety is a priority for conservative investors.
Debt mutual funds are suitable due to lower risk.
Short-duration and corporate bond funds offer better returns than fixed deposits.
Dynamic bond funds can work if comfortable with some interest rate risk.
Returns may be lower, but capital protection is higher.
For Moderate Investors
A mix of debt and equity is ideal.
Hybrid funds help balance stability and growth.
Aggressive hybrid funds invest around 65% in equity and 35% in debt.
Conservative hybrid funds invest more in debt and less in equity.
These funds can generate better returns than pure debt funds.
For Aggressive Investors
Equity funds can provide higher returns but come with risk.
Large-cap or flexi-cap funds are better than mid-cap or small-cap for three years.
Equity savings funds reduce risk by holding debt and arbitrage components.
Investors should be ready for short-term volatility in equity investments.
A systematic withdrawal plan (SWP) after three years can help manage risks.
Mutual Fund Taxation for 3-Year Investment
Equity fund LTCG above Rs. 1.25 lakh is taxed at 12.5%.
Equity STCG is taxed at 20%.
Debt funds are taxed as per the investor’s income tax slab.
Hybrid funds taxation depends on their equity component.
Investors in high tax brackets may prefer equity-oriented funds for tax efficiency.
Regular Funds vs Direct Funds
Regular funds provide Certified Financial Planner (CFP) support and expert guidance.
Direct funds may appear cheaper but lack personalized financial advice.
Market conditions change, and professional guidance helps navigate investments.
Investors often make emotional decisions, which a CFP helps avoid.
Long-term returns may be higher with proper advisory support.
Actively Managed Funds vs Index Funds
Actively managed funds aim to beat market returns.
Fund managers adjust portfolios based on market conditions.
Index funds simply follow market indices and lack flexibility.
Actively managed funds can protect during market downturns.
A three-year horizon does not favor passive investing due to short-term volatility.
When to Choose a Systematic Investment Plan (SIP)
A lump sum investment is ideal when markets are low.
SIP helps reduce risk in volatile markets.
If investing in equity or hybrid funds, staggered investment through SIP can help.
Debt funds are better suited for lump sum investments.
SWP can be used for gradual withdrawal after three years.
Liquidity and Exit Strategy
Some funds have exit loads if redeemed before a certain period.
Hybrid and debt funds often have lower exit loads than equity funds.
Ensure liquidity by choosing funds with flexible redemption options.
Plan redemptions at least 3-6 months before the end of the investment period.
Final Insights
Debt funds are safer for conservative investors.
Hybrid funds offer a balance of risk and reward.
Equity funds suit aggressive investors but require risk tolerance.
Mutual fund taxation should be considered before investing.
Regular funds with CFP guidance provide better long-term benefits.
Would you like help in selecting specific categories within these options?

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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Hi Team, I have been investing 5percent of my sip in Nasdaq but now unable to do sip. Could you please let me know whichother mf house are accepting sip for global investment
Ans: It seems you were investing in Nasdaq through a mutual fund SIP but are now unable to continue. You are looking for mutual fund houses that still accept SIPs for global investments.

There are multiple factors to consider before continuing with global investments.

Understanding Restrictions on Global SIPs
Many mutual funds had to pause fresh investments in international schemes.
This was due to regulatory restrictions on overseas investment limits.
Some fund houses have reopened investments, but availability changes frequently.
The acceptance of SIPs depends on whether they have room within the limits.
Mutual Fund Houses Offering Global Investments
Some Indian fund houses continue to accept SIPs for international funds.
They may invest in US markets, European markets, or emerging economies.
Some focus on technology stocks, while others cover broader sectors.
The availability of SIPs can change based on fund house policies.
You should check with the fund house or an expert before investing.
Should You Continue Global Investments?
The US market has given strong returns in the long term.
However, global investing comes with risks like currency fluctuations.
The rupee’s movement against the dollar impacts your returns.
The US market is expensive compared to Indian equities.
Diversification is good, but overexposure to a single market is risky.
Actively Managed Funds vs Index Funds
Many global funds track indices like Nasdaq or S&P 500.
Index funds may seem cost-effective, but they lack flexibility.
Actively managed global funds adjust portfolios based on market conditions.
Professional fund managers help manage risks in different economies.
Actively managed funds can outperform during market downturns.
Evaluating Your Investment Strategy
If you were investing 5% in Nasdaq, consider how it fits your overall plan.
Stopping SIPs should not disrupt your long-term goals.
If you cannot continue, ensure other investments balance your portfolio.
Look for options that align with your risk appetite and investment horizon.
Taxation of Global Mutual Funds
Global equity funds are taxed like debt funds.
There is no benefit of lower taxation like domestic equity funds.
Gains are taxed based on your income tax slab.
If you hold for more than three years, taxation remains the same.
Keep tax efficiency in mind while choosing investment options.
What Should You Do Next?
Check with mutual fund houses about SIP availability in global schemes.
If SIP is unavailable, you can still invest through lump sum when the window opens.
Consider balancing global and Indian investments for better diversification.
Review your financial plan to ensure your goals stay on track.
Finally
Investing in global markets can be beneficial, but not without risks.
Active management is preferable over index-based global funds.
Ensure you are aware of taxation before investing.
Focus on a diversified portfolio instead of chasing one market.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7947 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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I HAVE RECIEVED A SUM OF RS 10 LACS FROM FRIEND TO PURCHASE A HOUSE - HE HAS STATED I CAN RETURN MONEY AFTER MY DAUGHTER IS EARNING ENOUGH MONEY TO REPAY . I HAVE NOT BEEN FILING RETURNS SINCE I DONT HAVE TAXABLE INCOME . SHOULD I FILE I T RETURN FOR THIS AMOUNT - UNDER WHICH HEAD OF INCOME WILL I HAVE TO SHOW - SHOULD I MENTION IT AS GIFT OR LOAN
Ans: You have received Rs. 10 lakh from a friend for purchasing a house. The friend has stated that you can return it when your daughter starts earning. Since you have not been filing tax returns, let’s assess whether you should file a return and how to declare this amount.

Is Filing an ITR Necessary?
You don’t have taxable income, so filing is usually not required.
However, Rs. 10 lakh in your account can attract scrutiny.
To avoid future issues, filing an ITR is advisable.
It helps maintain transparency with the tax department.
How to Declare This Amount?
This is not a gift because a gift from a friend is taxable if above Rs. 50,000.
It is best to treat this as a loan.
Loans from friends do not attract tax but should be documented.
Declaring It Under the Right Income Head
A personal loan is not income, so it does not fall under "Income from Other Sources."
It is not taxable, but should be disclosed as "Loan Taken" in the balance sheet section of ITR.
If interest is paid on the loan, that interest will be taxable for the lender.
Steps to Ensure No Future Tax Issues
Keep a written agreement mentioning the loan terms.
The agreement should mention that repayment will be made after your daughter starts earning.
Ideally, the friend should transfer funds through a bank and not in cash.
If the tax department questions the transaction, you can show this agreement.
Final Insights
Filing an ITR is recommended for clarity.
Declare the amount as a loan, not a gift.
Maintain proper documentation to avoid future issues.
Ensure transactions happen through a bank for transparency.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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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