Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 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 - Jul 07, 2025Hindi

I am 40 years old. I have 50 lacs in PF and 30lacs in PPF. I have a mutual fund portfolio of 65 lacs, a HL with 50 lac outstanding, a PL with 13 lacs outstanding and annual income of 50 lacs. daughter in primary school. How to plan for my retirement and daughter's future. MF portfolio is equally divided in flexicap, smallcap, midcap, large &midcap funds. I think I will need 15cr corpus to maintain lifestyle post retirement.

Ans: It reflects clarity, maturity, and a forward-thinking approach.
At 40, you have built strong assets already. That gives you a solid head start.

Now, let’s structure a full 360-degree plan.
We will cover retirement, daughter’s future, and loan handling – all in detail.

? Analysing your current financial base

– You have Rs. 50 lakh in Provident Fund (PF)
– Rs. 30 lakh in Public Provident Fund (PPF)
– Rs. 65 lakh in Mutual Funds spread across various categories
– Total investable assets = Rs. 1.45 crore

– You also have two active loans:
– Rs. 50 lakh outstanding home loan
– Rs. 13 lakh personal loan

– Annual income is Rs. 50 lakh, which is strong
– Your daughter is in primary school, so education goals are long-term

– You are aiming for Rs. 15 crore retirement corpus
– That is a realistic goal, considering inflation and lifestyle

? Understanding your cashflow and affordability

– With Rs. 50 lakh yearly income, monthly take-home can be estimated around Rs. 3 lakh+
– EMI for personal loan and home loan will be a big part of this
– Let's assume EMI for home loan is around Rs. 45,000–50,000
– Personal loan EMI can be approx. Rs. 30,000–40,000 depending on tenure

– You must aim to keep EMIs below 35% of your take-home
– That way, you maintain liquidity and continue investing

– Your net surplus after EMIs and expenses will define future investments
– This surplus needs smart planning with discipline

? Optimising your debt strategy for better efficiency

– The personal loan is unsecured and has high interest
– First target should be to prepay or close this loan soon
– Use bonuses or windfall income to bring down this loan

– Do not rush to close home loan now
– It has tax benefits on both interest and principal
– Continue claiming those till retirement planning demands closure

– Home loan EMI is usually manageable with your income level
– But personal loan must not stay beyond next 12–18 months

? Reviewing and strengthening your mutual fund portfolio

– You have invested well in mutual funds
– Rs. 65 lakh corpus across five fund types is well-distributed

– However, equal allocation may not suit all phases of life
– Smallcap and midcap funds carry more risk
– In your 40s, you should slightly reduce smallcap share

– Flexicap and large & midcap can offer good balance
– They adjust better in market ups and downs

– At this stage, consider 40% in flexicap and large-midcap
– 30% in midcap
– 20% in smallcap
– 10% in conservative hybrid or equity savings type

– This helps reduce downside risk and improves stability

– Stay with actively managed funds only
– Do not move to index funds at this stage

– Index funds do not provide downside protection
– They mirror markets and fall deep during crashes
– Active funds manage risks better and offer long-term consistency

? Direct funds vs Regular funds – the real truth

– Many people chase direct plans to save commission
– But that comes with risk of wrong fund selection

– Direct funds give no personal advice or guidance
– In case of market crash, you’re alone with no direction

– With regular plans through a Certified Financial Planner, you get many benefits
– Proper asset allocation, timely rebalancing, emotional guidance during volatility

– In long run, this help brings better wealth outcomes than saved commissions

– Direct plan mistakes often cost more than what you save

– At this stage of wealth building, choose safety over cost-cutting
– Stick to regular plans via trusted MFD backed by CFP

? Retirement corpus goal – building a Rs. 15 crore base

– You aim to build Rs. 15 crore for retirement
– That’s about 15–20 years away depending on target age

– With Rs. 1.45 crore base and high income, the goal is very possible

– You must consistently invest 30–40% of annual income
– Increase SIPs by 10–15% each year
– Avoid premature withdrawals from mutual funds

– Do not disturb PF or PPF unless very urgent
– Let them continue compounding safely for 15–20 years

– PF and PPF will form the stable part of your retirement
– Mutual funds will give the high-growth component

– Avoid overexposure to smallcap during pre-retirement years
– Gradually shift towards hybrid and largecap after 50

– Review portfolio every year with your Certified Financial Planner

– Stay invested through market cycles
– Market falls are temporary, but long-term returns are real

? Tax planning along with investment planning

– Use mutual funds’ new tax rules to plan exits wisely
– Equity mutual funds:
– LTCG above Rs. 1.25 lakh per year taxed at 12.5%
– STCG taxed at 20%

– Debt mutual funds:
– Both STCG and LTCG taxed as per income tax slab

– Avoid frequent switching between equity and debt
– Let your CFP plan the withdrawals in tax-efficient manner

– PPF interest is tax-free
– PF is also tax-free if withdrawn after retirement

– Make use of 80C, 80D, and other deductions fully
– Avoid tax-saving ULIPs or insurance products for investment

– Focus only on mutual funds, PF, and PPF for long-term goals

? Planning your daughter’s future smartly

– You still have 10–12 years for higher education expenses
– That gives you a good compounding runway

– Allocate part of mutual fund corpus for this goal
– Create a separate SIP for her education

– Choose diversified equity and hybrid funds for this
– Avoid locking funds in insurance-linked education plans

– ULIPs or endowment plans give poor returns
– They do not offer enough growth for future costs

– Mutual funds give better flexibility and liquidity
– After 5–6 years, you may shift from equity to balanced fund

– This will protect the fund from sudden market fall closer to goal

– Also plan for hostel, coaching, and other costs
– Keep a small emergency reserve for her education too

– Always track the goal corpus once in 6 months

? Do not mix insurance and investment

– If you hold LIC, ULIP, or endowment plans for investment
– Review their returns and surrender if returns are below 6%
– Shift the surrender value to mutual funds for better performance

– Term insurance is the only insurance you need
– Take enough term cover to protect your family in your absence

– Do not mix long-term goals with traditional policies
– They block liquidity and give poor returns

? Emergency fund and health protection

– Maintain 6–9 months of household expenses in a liquid mutual fund
– This will protect your SIPs in case of job loss or health issue

– Also take good family health insurance policy
– Do not depend only on employer-provided policy

– Medical inflation is rising fast
– Private insurance gives flexibility and better control

– Add critical illness cover for more protection

? Wealth transfer and nomination planning

– Update nominations on PF, PPF, mutual funds, and bank accounts
– Add joint holders where possible

– Create a Will to ensure smooth transfer of wealth
– Add a letter of instruction for your spouse and daughter

– These small steps protect your family in unexpected situations

? Finally

– You are in a powerful financial position
– Your income, assets, and vision are aligned

– Stay consistent with investments
– Prioritise goals with clear buckets: retirement, education, and safety

– Do not overcomplicate your strategy
– Stay invested, review yearly, and rebalance when needed

– Avoid index funds and direct funds
– They look cheap but carry hidden risks

– Trust a Certified Financial Planner for long-term wealth peace
– You have built the foundation. Now is the time to build the structure

– Stay disciplined. Future will take care of itself

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

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.