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Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 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 - Apr 11, 2024Hindi
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I am 39 years old. I wish to build a retirement corpus where I can have 1.5 lakh p.m. post retirement and want to save for my child's marriage and higher studies (he is 9 years old right now). My monthly take home pay is 80k. Presently, my monthly investments are 10k in voluntary EPF, two 10K SIPs in two different small cap funds. Also, have a home loan pending for 4.5 lakh. My EPF a/c has a balnce of 31 lakh and MFs have grown to 12 Lakh. My wife also invest 20k p.m. in a index related fund. Please advise. Further, I would also like to know whether it is advisable to invest in NPS also?

Ans: Given your financial situation and goals, here's a suggested investment and savings plan:

Retirement Corpus:

Voluntary EPF: Continue investing in EPF as it offers tax benefits and a secure return. Aim to maximize your contribution to reach your retirement goal.
Mutual Funds: Maintain and diversify your SIPs across different categories like large-cap, mid-cap, and balanced funds to balance risk and potential returns.
NPS: Investing in NPS can be beneficial as it provides an additional avenue for retirement savings with tax benefits. Consider allocating a portion of your monthly investment to NPS for diversification and potential higher returns.
Child's Education and Marriage:

Child Education Fund: Start a separate SIP or invest in a diversified equity fund with a target maturity date aligned with your child's higher education.
Child Marriage Fund: Open a separate investment account or mutual fund SIP specifically for your child's marriage expenses.
Home Loan:

Home Loan Repayment: Continue paying the EMIs for the home loan to clear the debt as scheduled. Consider making partial prepayments whenever possible to reduce the interest burden.
Additional Investments:

Tax-saving Investments: Utilize tax-saving instruments like PPF, ELSS, and NPS to optimize tax savings and boost your investments.
Emergency Fund: Build an emergency fund equivalent to 6-12 months of your living expenses for financial security.
Financial Planning:

Review and Adjust: Regularly review and adjust your investment plan based on changing financial goals, market conditions, and life circumstances.
Consult a Financial Advisor: Consider consulting a financial advisor to create a comprehensive financial plan tailored to your needs, goals, and risk tolerance.
Optimize Expenses:

Reduce Expenses: Identify and eliminate unnecessary expenses to free up more funds for investments.
Increase Savings: Gradually increase your monthly savings and investments to achieve your financial goals faster.
By following this investment and savings plan, you can work towards building a substantial retirement corpus, securing your child's future education and marriage expenses, and achieving your financial goals. Remember to stay disciplined, invest regularly, and consult a financial advisor to guide you through your financial journey.
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 Kalirajan  |7122 Answers  |Ask -

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Sir, I am 41 years old , state govt. class I officer, will retire in 2040. I have a term insurance plan of Rs. 1 Cr. No health facility after retirement. I am currently making SIP of Rs. 30000/- in various MFs and total amount accumulated till date is Rs. 21 Lacks. I am covered under NPS. Present corpus under my NPS is Rs. 51 Lacks. I own a residential plot . I have 02 daughters aged 11 Y & 9 Y. there is Rs. 4 Lakh in my PPF who will mature in 2026 and i am not continuously making contribution in PPF. My Goals are as under:- 1. To build home with approximate amount of Rs. 80Lacs in 2028. 2. Require 25 Lakh for daughter education in 2028 and another 25 Lakh for 2nd kid education in 2031. 3. Want to retire rich with good corpus in hand. My present monthly expenditure is Rs. 50000/- . How much corpus will require to retire and live peacefully. Please suggest investment philosophy and best investment options.
Ans: Considering your financial goals and current situation, here's a suggested investment philosophy and some investment options:

Short-term Goal - Home Construction (2028):
Continue your SIPs in mutual funds to accumulate funds for the down payment.
Explore additional savings options like recurring deposits or short-term debt funds to supplement your savings.
Medium-term Goals - Children's Education (2028 & 2031):
Allocate a portion of your SIPs towards education-focused mutual funds to build a corpus for your daughters' education.
Consider equity-oriented schemes for higher returns over the long term, but ensure a balanced approach considering the time horizon.
Long-term Goal - Retirement (2040):
Utilize NPS effectively by opting for a diversified portfolio comprising equity and debt to match your risk profile and time horizon.
Continue your SIPs in equity mutual funds for long-term wealth accumulation.
Consider availing voluntary contribution facility in NPS to enhance your retirement corpus.
Healthcare and Insurance:
Since you won't have health facilities post-retirement, consider purchasing a comprehensive health insurance policy to cover medical expenses.
Review your term insurance coverage periodically to ensure it aligns with your family's financial needs.
Real Estate:
Evaluate the potential of your residential plot as an investment asset. Depending on its location and future prospects, it could contribute significantly to your wealth accumulation.
Emergency Fund:
Maintain an emergency fund equivalent to at least 6-12 months' worth of expenses to handle any unforeseen financial challenges.
Financial Planning:
Consult with a Certified Financial Planner to create a personalized financial plan considering your specific goals, risk tolerance, and time horizon.
Regularly review and adjust your investment portfolio based on changing life circumstances and market conditions.
By adopting a disciplined investment approach and diversifying your investments across different asset classes, you can work towards achieving your financial goals and ensure a comfortable retirement.

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Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 25, 2024

Asked by Anonymous - Jun 12, 2024Hindi
Money
Hello sir, I am a 41 year old, have a dependend wife and 10 yr old daughter. I have a monthly income of 2.20 lakh in hand, 1 lakhs in equity stocks, 15 lakhs in MF lumpsum, 10 lakh in FD and 7 lakh in NSC. I pay 35,000 for SIP monthly, pay PPF 10,000 monthly, pay 5,000 monthly for NPS and pay SSY for daughter 12,000 monthly and PPF for wife 12,000 monthly. How should i plan my retirement corpus?? Is it enough or shall i invest more??
Ans: Firstly, I applaud your proactive approach to managing your finances and planning for retirement. Your current savings and investments reflect a disciplined and thoughtful strategy. With a monthly income of Rs. 2.20 lakhs, and commitments to your family's future, you’re on a commendable path. Let’s analyze your current situation and create a roadmap to ensure a secure and comfortable retirement.

Current Financial Snapshot
You have diversified your investments across various assets, which is excellent for risk management. Here’s a detailed breakdown:

Equity Stocks:

Current value: Rs. 1 lakh
Mutual Funds:

Lump sum investments: Rs. 15 lakhs
SIP contributions: Rs. 35,000 per month
Fixed Deposits:

Total: Rs. 10 lakhs
National Savings Certificates (NSC):

Total: Rs. 7 lakhs
Public Provident Fund (PPF):

Personal monthly contribution: Rs. 10,000
Wife’s monthly contribution: Rs. 12,000
National Pension System (NPS):

Monthly contribution: Rs. 5,000
Sukanya Samriddhi Yojana (SSY):

Monthly contribution for daughter: Rs. 12,000
With these diversified investments, you’re setting a strong foundation for retirement and your daughter’s future. Let’s assess your current plan and explore whether you need to invest more for a secure retirement.

Retirement Planning: Assessing Your Needs
Your primary goal is to build a retirement corpus that supports a comfortable lifestyle. Let’s explore how to plan this effectively.

Estimating Your Retirement Corpus
To retire comfortably, you need to estimate the corpus required. Consider these factors:

Desired Monthly Income:

Determine the monthly income you’ll need post-retirement, accounting for inflation and lifestyle changes. Typically, it’s around 70-80% of your current monthly expenses.
Inflation Impact:

Inflation erodes purchasing power over time. Assuming a 6% annual inflation rate, your retirement needs will increase significantly in the future.
Longevity:

Plan for a retirement period of 25-30 years or more. Ensure your corpus can sustain you through these years.
Using these considerations, let’s outline how to build your retirement corpus.

Reviewing and Optimizing Current Investments
Your diverse investment portfolio is a solid start. Here’s how to optimize each component for maximum growth and security.

Equity Stocks
Growth Potential:

Equity stocks offer high growth but also carry high risk. With Rs. 1 lakh invested, review your stock choices. Focus on blue-chip and growth stocks with strong fundamentals.
Regular Review:

Monitor your equity portfolio regularly. Adjust based on performance and market conditions to align with your risk tolerance.
Mutual Funds
Lump Sum Investments:

You have Rs. 15 lakhs in mutual funds. Review these funds to ensure they align with your risk profile and financial goals. Choose funds with a consistent performance record.
SIP Contributions:

Investing Rs. 35,000 monthly through SIPs is a smart strategy for wealth building. Consider increasing this amount gradually as your income allows.
Diversification:

Ensure your mutual funds are diversified across sectors and market caps. This reduces risk and enhances growth potential.
Fixed Deposits and NSCs
Stability and Safety:

Your Rs. 10 lakhs in FDs and Rs. 7 lakhs in NSCs provide stability and guaranteed returns. However, their growth is limited compared to equity and mutual funds.
Reassessment:

Consider reallocating a portion of these funds to higher-yielding investments for better long-term growth while keeping some for security.
PPF Contributions
Tax-Free Growth:

PPF offers safe, tax-free returns, which is beneficial. With Rs. 10,000 monthly for you and Rs. 12,000 for your wife, you’re building a secure, long-term corpus.
Consistent Contributions:

Continue these contributions as they provide a balance to your higher-risk investments. PPF is great for long-term stability and tax savings.
NPS Contributions
Retirement Benefits:

NPS is a good addition to your retirement planning. With Rs. 5,000 monthly, it offers tax benefits and a mix of equity and debt for growth.
Increase Contributions:

Consider increasing your NPS contributions over time. This enhances your retirement corpus and provides additional tax benefits.
SSY Contributions
Securing Your Daughter’s Future:

SSY is a great investment for your daughter’s education and marriage. With Rs. 12,000 monthly, it provides tax-free, guaranteed returns.
Long-Term Growth:

Continue these contributions to secure your daughter’s financial future. SSY is one of the best instruments for a girl child’s long-term planning.
Strategic Planning for Retirement
Now, let’s create a strategic plan to ensure you achieve your retirement goals.

Increasing Your Investment Contributions
SIP Increment:

You currently invest Rs. 35,000 monthly in SIPs. Aim to gradually increase this to Rs. 50,000 or more as your income grows. This will accelerate your wealth building.
Additional Savings:

Allocate any surplus income towards your investment portfolio. Consider increasing contributions to PPF, NPS, and mutual funds.
Balancing Growth and Stability
Equity and Debt Mix:

Maintain a balanced mix of equity and debt investments. Equity provides growth, while debt offers stability. Adjust the ratio based on your risk tolerance and time horizon.
Regular Rebalancing:

Periodically review and rebalance your portfolio. This ensures alignment with your goals and market conditions. Consider professional guidance for optimal rebalancing.
Leveraging Professional Management
Actively Managed Funds:

Actively managed mutual funds can provide better returns than index funds through expert management. Choose funds with a proven track record and strong management.
Certified Financial Planner (CFP):

Consult a Certified Financial Planner for personalized advice. They can help optimize your investments and ensure alignment with your retirement goals.
Managing Risks and Ensuring Security
Mitigating risks is crucial for a secure financial future. Here’s how to manage risks effectively:

Insurance Coverage
Adequate Life Insurance:

Ensure you have adequate life insurance coverage for you and your wife. This protects your family’s financial security in case of unforeseen events.
Health Insurance:

Have comprehensive health insurance to cover medical emergencies. This prevents financial strain from unexpected health issues.
Maintaining an Emergency Fund
Liquidity and Accessibility:

Keep an emergency fund of at least 6-12 months of expenses. This should be easily accessible and kept in liquid assets like savings accounts or FDs.
Regular Review:

Periodically review your emergency fund to ensure it meets your needs. Adjust based on changes in your expenses and financial situation.
Planning for a Comfortable Retirement
To ensure a comfortable and worry-free retirement, focus on both growing your corpus and planning for post-retirement income.

Building a Robust Corpus
Targeting a Corpus:

Aim for a retirement corpus that can support your desired lifestyle. Typically, this is 20-25 times your annual expenses at the time of retirement.
Consistent Growth:

Maintain consistent contributions and growth in your investments. Use a mix of equity, debt, and safe instruments to build a robust corpus.
Generating Post-Retirement Income
Systematic Withdrawal Plans (SWPs):

Consider using SWPs from mutual funds for a steady post-retirement income. This allows you to withdraw systematically while keeping your capital invested and growing.
Balancing Safety and Returns:

As you approach retirement, gradually shift to safer investments to protect your corpus. However, keep some exposure to growth assets for continued returns.
Final Insights
You are on a strong path towards achieving a secure and comfortable retirement. Here’s a summary of how to refine your plan and ensure you meet your goals:

Increase Equity Exposure:

Focus on growing your equity investments through increased SIPs and well-chosen stocks. This provides the growth needed for a substantial retirement corpus.
Diversify and Balance:

Maintain a balanced portfolio with a mix of equity, debt, and safe instruments. Diversification reduces risk and enhances returns.
Leverage Professional Guidance:

Utilize the expertise of Certified Financial Planners and actively managed funds. They help in optimizing your investments and staying on track.
Plan for Inflation and Longevity:

Consider the impact of inflation and a long retirement period. Ensure your corpus grows faster than inflation to maintain purchasing power.
Regular Review and Adjustment:

Periodically review your financial plan and investments. Rebalance your portfolio to stay aligned with your goals and risk tolerance.
Your disciplined approach to saving and investing sets a solid foundation. With continued focus and strategic adjustments, you can achieve a secure and fulfilling retirement. Your commitment today will pave the way for a prosperous and worry-free future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Nayagam P

Nayagam P P  |3921 Answers  |Ask -

Career Counsellor - Answered on Nov 25, 2024

Asked by Anonymous - Nov 25, 2024Hindi
Career
My daughter is in 10 th class Maharashtra board She wants to do carrier in mathematics or economics what are the ways for further education
Ans: Your daughter is interested in pursuing a career in Mathematics or Economics, which offer exciting opportunities and a variety of educational pathways. She can choose from the Science Stream (Mathematics Focus) or the Commerce Stream (Economics Focus), depending on her interests and aptitude.

An option for her is to choose Science with Mathematics in 11th and 12th grade, which will provide a strong foundation in math. After completing 12th Science with Mathematics, she can pursue a Bachelor's Degree in Mathematics, such as B.Sc. in Mathematics, B.Tech or B.E. (Engineering), or a B.Tech in Computer Science, Information Technology, or Electronics.

Postgraduate courses in Mathematics can lead to M.Sc. in Mathematics or Applied Mathematics, or M.Tech in Data Science or Computer Science. Other career paths in Mathematics include Actuarial Science, Data Science/Analytics, and pure mathematics/research.

In Economics, she can pursue Commerce with Economics in 11th and 12th grade, followed by a Bachelor's Degree in Economics, a Master of Arts in Economics, or a Master of Science in Economics. Specialized courses in Economics include Econometrics, Public Policy, Finance, and International Organizations/NGOs.

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Pursuing Mathematics through the Science stream is an excellent path for your daughter, while Economics through the Commerce stream is ideal for those interested in understanding economies and global trends. All the BEST for Your Daughter's Prosperous Future.

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Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 25, 2024

Asked by Anonymous - Nov 22, 2024Hindi
Money
I am 32 years of age I have a corpus of 40 lakhs including mutual funds,stocks,pf,insurance.I invest 65000 in sip every month with 84% in equity, 6% in hybrid and 10% in debt funds as of now with 58% in large cap,27% in mid cap and 15 % in small cap with an xirr of 17.2%. how much will my corpus grow in next 20-30 years ?
Ans: Your financial journey so far is impressive. At 32 years, a corpus of Rs. 40 lakhs reflects good planning. Your SIP of Rs. 65,000 per month and asset allocation indicate strong discipline and understanding of investments.

Your current XIRR of 17.2% is exceptional, suggesting an effective fund selection. Maintaining this momentum will help you build substantial wealth.

Growth Potential Over the Next 20-30 Years
Power of Compounding

Compounding over 20-30 years can multiply wealth significantly.
Your disciplined SIP approach amplifies this effect.
Corpus Growth Projections

If your XIRR sustains near 17%, your corpus can grow exponentially.
Over 20 years, it may cross Rs. 10-12 crores.
In 30 years, this could grow beyond Rs. 30-40 crores.
Consideration for Realistic Returns

Sustaining 17% XIRR may be optimistic in the long term.
A realistic expectation of 12-15% still ensures significant growth.
Factors Influencing Your Future Corpus
Market Volatility

Equity-heavy portfolios are prone to short-term fluctuations.
Maintain your long-term perspective to overcome these.
Asset Allocation Discipline

Your 84% equity allocation is ideal for long-term goals.
Rebalance annually to maintain this allocation.
Economic Growth and Inflation

India's economic growth supports equity performance.
High inflation demands better returns to preserve purchasing power.
SIP Increments

Increasing SIP annually can enhance corpus growth.
A 10% increment every year could add several crores.
Importance of Diversification
Large, Mid, and Small-Cap Allocation

Your 58% large-cap, 27% mid-cap, and 15% small-cap allocation is balanced.
This mix ensures stability and growth potential.
Hybrid and Debt Funds Role

Your 10% debt allocation cushions against market volatility.
Hybrid funds offer consistent returns with lower risk.
Tax Efficiency in Long-Term Investments
Equity Fund Taxation

Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.
Factor this in when planning withdrawals.
Debt Fund Taxation

Gains are taxed as per your income slab.
Plan asset allocation changes with tax efficiency in mind.
Enhancing Your Strategy
Emergency Fund

Maintain 6-12 months of expenses in liquid or ultra-short-term funds.
Insurance Review

Ensure adequate term insurance and health insurance coverage.
Goal-Based Investing

Align specific investments to defined goals like retirement or children's education.
Periodic Review

Review fund performance and portfolio allocation annually.
Replace underperforming funds if needed.
Final Insights
Your current portfolio and discipline promise exceptional long-term results. Continue SIPs, periodically increase investments, and review portfolio performance. A realistic approach with a focus on equity can help you achieve remarkable financial milestones over 20-30 years.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

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Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 25, 2024

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Hi my name is Mani and aged 36 i am drawing a monthly salary of 3.5lakhs. Below are my investments. I want to achieve around 10Cr by 50. Current MF potfolio:50L Shares/ETF: 10L PF: 39L US ESOP: 1.2 Crore Monthly SIP: 1.65Lkhs 2 houses: 95L & 60L I can invest upto 2.5-3lakhs montly. Closed all my loans.
Ans: Your current investments reflect excellent financial discipline and planning. With your income and ability to invest Rs 2.5-3 lakhs monthly, you are in a strong position to achieve your target of Rs 10 crore by 50. However, optimising your portfolio is crucial for achieving this milestone efficiently. Here's an in-depth assessment and strategy to guide you.

Assessment of Current Investments
Mutual Fund Portfolio: Rs 50 Lakh
This portfolio forms a significant part of your wealth.
Equity mutual funds can offer long-term growth.
Regular reviews and diversification will enhance returns.
Shares and ETFs: Rs 10 Lakh
Direct equity and ETFs require active monitoring.
ETFs have limitations, like tracking errors and passive management.
Disadvantages of ETFs:

Lack of flexibility to outperform benchmarks.
Returns are limited to market indices, missing active management benefits.
Provident Fund: Rs 39 Lakh
PF is a safe, tax-efficient retirement tool.
Growth is limited compared to equity investments.
US ESOP: Rs 1.2 Crore
ESOPs provide substantial value, but currency and company risks exist.
Diversification is essential to reduce concentrated risk.
Monthly SIPs: Rs 1.65 Lakh
A high monthly SIP reflects your commitment to wealth creation.
Fund selection and risk balance will determine growth.
Real Estate: Rs 95 Lakh and Rs 60 Lakh
While real estate offers stability, liquidity issues can be a challenge.
Rental income should align with market returns to remain beneficial.
Strategy to Achieve Rs 10 Crore by 50
1. Optimise Mutual Fund Investments
Increase allocation to actively managed equity funds.
Diversify into large-cap, mid-cap, and hybrid funds for balanced growth.
Review the portfolio with a Certified Financial Planner every year.
2. Enhance Monthly SIP Contributions
Increase SIPs to Rs 2.5-3 lakh, matching your investment capacity.
Prioritise equity mutual funds for better compounding over 14 years.
Allocate a small portion to debt funds for stability.
3. Reevaluate Direct Equity and ETFs
Limit ETFs due to their passive nature and tracking errors.
Focus on direct equity only if you have time for active monitoring.
Otherwise, shift to professionally managed equity funds.
4. Diversify US ESOP Holdings
Reduce dependency on your company’s ESOPs.
Gradually liquidate and reinvest in Indian equity and international mutual funds.
Diversification will safeguard against market volatility and currency risks.
5. Leverage Provident Fund Efficiently
PF will act as a stable component of your retirement corpus.
Do not withdraw unless essential.
6. Address Real Estate Investments
Analyse the rental yield and growth potential of your properties.
If returns are below expectations, consider selling one property.
Reinvest proceeds in mutual funds for higher returns and liquidity.
Tax Efficiency and New Rules
Equity Mutual Funds
Long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%.
Short-term capital gains (STCG) are taxed at 20%.
Plan withdrawals strategically to reduce tax liability.
Debt Funds
Gains are taxed as per your income slab.
Use systematic withdrawal plans for efficient taxation.
ESOPs and Real Estate
ESOPs will attract capital gains tax upon sale.
Real estate gains are taxed under capital gains rules.
Invest gains from property sales into mutual funds to save on taxes.
Additional Recommendations
1. Adequate Life and Health Insurance
Ensure you have term insurance covering at least 10 times your annual income.
Maintain comprehensive health insurance for your family.
2. Emergency Fund
Keep six months’ expenses in a liquid fund or savings account.
This ensures liquidity during unforeseen circumstances.
3. Monitor and Rebalance Portfolio
Regularly review asset allocation with a Certified Financial Planner.
Adjust based on market conditions and financial milestones.
Final Insights
You are on the right track with your disciplined investing approach. To ensure you reach Rs 10 crore by 50, optimise your investments, enhance tax efficiency, and diversify risks. Focus on actively managed funds, reduce dependence on real estate, and leverage your high savings potential. Regular monitoring and strategic decisions will make your goal achievable.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 25, 2024

Asked by Anonymous - Nov 22, 2024Hindi
Money
Hello Ramalingam Ji, I am 44 years old, working in IT and live in Bengaluru. I am unmarried at this moment. I live in a rented house. Here are my investments breakups - 1.45 Cr in Equity Shares, 5 Lakhs in MF, 27 Lakhs in PPF, 20 Lakhs in EPF, 7 Lakhs in NPS, and 14 Lakhs in FD as an Emergency Fund. I have a health insurance of 30L apart from the office provided one. My monthly in hand salary about 2.2 Lakhs. And my monthly expenses including rent, insurances, sports/gym subscription, food and others comes about 75 - 80 Thousands a month. I invest 1.1 Lakhs in equity shares, 18 Thousands in RDs to meet my certain onetime expenditures in a years such as insurances, internet payments etc. I do not have any loans. How do you think I should go about so I could purchase a house/flat as well as have enough investments using which I could live comfortably. I also want to know if at all possible to retire by 50 or 55 years? will it even makes sense purchasing a house/flat since I have no one after me. Thanking you in advanced.
Ans: You are in a strong financial position. You have diverse investments and stable income. Your disciplined approach reflects a clear financial vision.

This response provides detailed insights into buying a house, early retirement, and optimising your investments.

Understanding Your Current Financial Health
1. Investments and Emergency Funds

Rs 1.45 crore in equity is a significant achievement.

Your Rs 14 lakh emergency fund is well-planned. It ensures liquidity during emergencies.

 

2. Monthly Income and Expenses

You save and invest a substantial portion of your Rs 2.2 lakh monthly salary.

Expenses are well-balanced, leaving you with Rs 1.1 lakh for investments.

 

3. Health Insurance Coverage

You have Rs 30 lakh health insurance, which safeguards against medical emergencies.

Office-provided insurance adds additional security.

House Purchase Consideration
1. Evaluate the Need for a House

A house is not necessary unless it enhances your quality of life.

With no dependents, consider renting for flexibility.

 

2. Financial Implications of Buying a House

Buying a house requires a long-term financial commitment.

EMIs will reduce your ability to save and invest aggressively.

 

3. Alternative Options

Continue renting if the cost is reasonable and suits your lifestyle.

Investing the funds earmarked for a house can yield better returns over time.

Early Retirement by 50 or 55
1. Analyse Monthly Expenses Post-Retirement

Estimate future monthly expenses, considering inflation.

Rs 75,000 today could become Rs 1.5 lakh in 15 years.

 

2. Calculate the Required Corpus

To withdraw Rs 1.5 lakh monthly, you need Rs 4.5 crore.

This corpus ensures financial independence throughout retirement.

 

3. Utilise Current Investments for Growth

Your investments in equity, MF, PPF, EPF, and NPS must compound consistently.

Diversify your portfolio to balance growth and stability.

Investment Optimisation
1. Focus on Equity Mutual Funds

Increase your MF investments for long-term growth.

Actively managed funds offer higher returns compared to index funds.

 

2. Avoid Direct Mutual Funds

Direct funds lack professional guidance and may lead to errors.

Regular funds through a Certified Financial Planner ensure optimised returns.

 

3. Maximise NPS Contributions

NPS provides additional tax benefits under Section 80CCD(1B).

It supports your retirement corpus with equity exposure and lower risk.

 

4. Reassess Fixed Deposits

Rs 14 lakh in FDs offers safety but lower returns.

Shift a portion to debt funds or balanced funds for better inflation protection.

Emergency Fund and Risk Management
1. Maintain Adequate Liquidity

Keep six months' expenses in liquid investments like FDs or short-term funds.

This ensures quick access to funds during emergencies.

 

2. Evaluate Insurance Adequacy

Your current health cover of Rs 30 lakh is sufficient.

Ensure critical illness or personal accident cover if not already included.

Retirement Income Planning
1. Generate Passive Income

Explore dividend-paying funds for steady income during retirement.

Consider systematic withdrawal plans (SWPs) post-retirement for tax efficiency.

 

2. Ladder Your Investments

Align investments to meet milestones like early retirement and healthcare needs.

Staggered withdrawals reduce risks during market downturns.

Tax Planning
1. Optimise Tax Benefits

Maximise contributions to tax-saving instruments like PPF and NPS.

Consider tax-efficient mutual fund categories to reduce liability.

 

2. Understand Capital Gains Taxation

Equity mutual funds' LTCG above Rs 1.25 lakh is taxed at 12.5%.

Short-term gains attract 20% tax, so plan redemptions wisely.

Final Insights
Early retirement and comfortable living are achievable for you. Focus on growing your corpus with equity and balanced investments. Renting a house is practical if buying doesn't align with your goals. Work with a Certified Financial Planner to optimise your investments and ensure a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7122 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 25, 2024

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Money
Hello Sir, I want to invest 5k per month in mutuals fund. Am targeting 15acs in next 16years. Can you pls suggest me good fund?
Ans: Investing Rs. 5,000 per month for 16 years to achieve Rs. 15 lakhs is a commendable goal. A systematic investment plan (SIP) in mutual funds can help achieve this. Your focus should be on selecting funds that align with your risk appetite and long-term horizon.

Understanding Your Target
Your target is Rs. 15 lakhs in 16 years.
This requires consistent returns from equity mutual funds.
Equity funds are ideal for long-term goals due to their growth potential.
Investment Strategy
Focus on Equity-Dominated Funds

Equity funds have the potential for higher long-term growth.
Diversify across large-cap, flexi-cap, and mid-cap funds.
Actively Managed Funds Preferred

Actively managed funds outperform index funds over long durations.
A good fund manager can provide better returns than passive funds.
Avoid Direct Funds

Investing through a Certified Financial Planner ensures professional advice.
Regular funds with guidance offer better portfolio tracking and rebalancing.
Monitor and Review Regularly

Review your investments yearly to stay aligned with your goal.
Make changes based on performance and market conditions.
Suggested Fund Categories
Large-Cap Funds

These funds provide stability and moderate growth.
They invest in well-established companies with strong performance records.
Flexi-Cap Funds

These funds invest across large, mid, and small-cap companies.
They offer flexibility and diversification.
Mid-Cap Funds

Mid-cap funds offer higher growth potential but come with moderate risk.
Suitable for long-term wealth creation.
Hybrid Funds

These funds balance equity and debt exposure.
They provide moderate risk with consistent returns.
Tax Considerations
Equity Fund Taxation

Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.
Short-term capital gains are taxed at 20%.
Tax-Efficient Withdrawals

Plan withdrawals strategically to minimise tax liability.
Hold funds for the long term to benefit from favourable tax rates.
Other Recommendations
Build an Emergency Fund

Set aside at least six months’ expenses in a liquid fund.
This provides financial security during emergencies.
Stay Invested for the Entire Duration

Equity investments need time to grow and overcome volatility.
Avoid premature withdrawals to maximise returns.
Disciplined Investing

Continue SIPs without interruption to achieve your goal.
Market fluctuations should not deter your commitment.
Final Insights
With disciplined investing and the right fund selection, achieving Rs. 15 lakhs in 16 years is possible. Focus on equity funds for long-term growth and consult a Certified Financial Planner for professional guidance.

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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