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Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 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
Suman Question by Suman on May 13, 2024Hindi
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Hi..I am 41..In case I want to accumulate a corpus of around 4-5crs in next 10-12 yrs..how much amount should I need to invest and in what type of funds?

Ans: Strategic Financial Planning: Achieving a 4-5 Crore Corpus in 10-12 Years

1. Begin with the End in Mind:
Visualize your financial goal of accumulating a corpus of 4-5 crores within the next 10-12 years. Having a clear vision of your desired outcome will guide your actions and decisions throughout the journey.

2. Understand Your Starting Point:
Assess your current financial situation, including income, expenses, assets, and liabilities. Understanding where you stand financially will help you determine the gap between your current position and your desired goal.

3. Determine the Required Investment Amount:
Calculate the amount you need to invest regularly to reach your target corpus of 4-5 crores within the specified timeframe. Consider factors such as expected rate of return, inflation, and risk tolerance in your calculations.

4. Set Realistic Investment Targets:
Break down your investment target into smaller, manageable milestones. Setting achievable targets will keep you motivated and focused on making consistent progress towards your ultimate goal.

5. Choose the Right Investment Vehicles:
Select investment options that align with your financial goals, risk tolerance, and investment horizon. Mutual funds offer a diverse range of investment opportunities across asset classes such as equity, debt, and hybrid funds.

6. Equity Funds for Long-Term Growth:
Allocate a significant portion of your investment portfolio to equity funds for long-term growth potential. Equity funds have historically delivered higher returns compared to other asset classes over extended periods.

7. Debt Funds for Stability and Income:
Include debt funds in your portfolio to provide stability and generate regular income. Debt funds invest in fixed-income securities such as government bonds, corporate bonds, and money market instruments, offering lower volatility compared to equity funds.

8. Consider Hybrid Funds for Balanced Allocation:
Explore hybrid funds that invest in a mix of equity and debt instruments to achieve a balanced allocation. Hybrid funds offer diversification benefits and can help mitigate risk while aiming for consistent returns.

9. Systematic Investment Approach:
Adopt a systematic investment approach by investing regularly through SIPs (Systematic Investment Plans). SIPs allow you to invest smaller amounts at regular intervals, helping you benefit from rupee-cost averaging and mitigate the impact of market volatility.

10. Review and Adjust Your Strategy:
Regularly review your investment portfolio and track your progress towards your financial goal. Make necessary adjustments to your investment strategy based on changing market conditions, personal circumstances, and financial goals.

11. Seek Professional Guidance:
Consider consulting with a Certified Financial Planner to develop a customized investment plan tailored to your specific needs and objectives. A financial advisor can provide valuable insights, guidance, and expertise to help you navigate the complexities of the investment landscape.

12. Stay Disciplined and Patient:
Achieving a significant financial goal like accumulating a corpus of 4-5 crores requires discipline, patience, and consistency. Stay committed to your investment plan, remain focused on your long-term objectives, and trust in the power of compounding to help you reach your financial destination.

13. Embrace the Journey:
View your financial journey as an opportunity for growth, learning, and self-discovery. Embrace challenges, celebrate achievements, and remain resilient in the face of setbacks. Remember that financial freedom is not just about reaching a destination but also about enjoying the journey along the way.

14. Continuously Improve:
Commit to continuous improvement in your financial habits, knowledge, and skills. Educate yourself about investment strategies, market trends, and financial principles to make informed decisions and optimize your investment returns.

15. Express Gratitude:
Express gratitude for the resources, opportunities, and support that enable you to pursue your financial goals. Cultivate an attitude of abundance, generosity, and appreciation for the blessings in your life, both financial and non-financial.

16. 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 Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2024

Asked by Anonymous - May 03, 2024Hindi
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HI I M 40 NOW. I WANT A CORPUS OF MINIMUM 1 CR WITHIN 5 YEARS. PLZ UPDATE WHICH MUTUAL FUND SHALL I TAKE AND HOW MUCH FUND TO INVEST MONTHLY.
Ans: It's great to hear about your financial goals. Let's explore how we can achieve a corpus of 1 crore within 5 years:

Considering your time frame and target corpus, we'll need to adopt an aggressive investment strategy.

Mutual funds offer a range of options suited to different risk profiles and investment horizons.

To maximize growth potential, we can focus on equity mutual funds with a proven track record of delivering consistent returns.

A systematic investment plan (SIP) would be ideal for you, allowing you to invest a fixed amount monthly.

By investing regularly in mutual funds, you can benefit from the power of compounding and market appreciation over time.

It's crucial to select funds that align with your risk tolerance and financial objectives.

As a Certified Financial Planner, I recommend conducting thorough research or seeking professional advice to identify suitable mutual funds.

Additionally, consider diversifying your investments across multiple funds to spread risk and optimize returns.

Regularly reviewing your portfolio's performance and adjusting your investment strategy as needed is essential to stay on track towards your goal.

Remember, investing involves risks, and it's essential to remain disciplined and patient, especially during market fluctuations.

With determination and strategic planning, achieving your target corpus of 1 crore within 5 years is definitely attainable.

Stay focused on your goal, and don't hesitate to reach out if you need further assistance along the way.

You're taking a proactive step towards securing your financial future, and I'm here to support you in your journey.

..Read more

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

Asked by Anonymous - Aug 03, 2024Hindi
Money
I want a corpus of 5 cr in next 8 years. I have a monthly savings around 60k and will start investing the money next year. So how should I invest as I am a beginner
Ans: You aim to build a corpus of Rs. 5 crore in 8 years. This is a substantial target, but with consistent savings and smart investments, it is achievable. You have Rs. 60,000 in monthly savings, which gives you a good base to start with.

Assessing Your Investment Horizon
You have 8 years to reach your goal. This time frame is relatively short for such a large corpus, so your investments need to be aggressive yet balanced.

Since you are starting next year, time is crucial. The earlier you start, the better your chances of reaching Rs. 5 crore.

Consider that investments in equities generally perform better over longer periods, so an 8-year horizon requires a focused strategy.

Building a Strong Investment Plan
Start with SIPs in Mutual Funds

As a beginner, Systematic Investment Plans (SIPs) are an excellent way to start investing.

SIPs allow you to invest regularly without worrying about market timing. This helps in averaging out the cost over time.

Given your savings of Rs. 60,000 per month, start with a significant portion in equity mutual funds. These funds have the potential to generate higher returns.

Include a mix of large-cap, mid-cap, and small-cap funds. This will diversify your portfolio and balance risk and return.

Focus on Actively Managed Funds

Avoid index funds, as they typically track the market and may not deliver the higher returns needed for your goal.

Actively managed funds have the potential to outperform the market, especially when guided by skilled fund managers.

Regular funds, through a Certified Financial Planner (CFP) or a Mutual Fund Distributor (MFD), are preferable over direct funds. They offer professional advice and better fund selection, which is crucial for a beginner.

Debt Funds for Stability

While equity should form the bulk of your portfolio, adding some debt funds can provide stability.

Debt funds are less volatile and can offer modest returns, which can act as a cushion during market downturns.

A small percentage of your portfolio in debt funds is advisable to reduce overall risk.

Increase Investments Gradually

As your understanding of investments grows, increase your SIPs.

Start with Rs. 60,000 monthly and gradually increase it with any salary increments or bonuses. This approach will help you inch closer to your Rs. 5 crore goal.

Regularly review your investments and consider increasing your contributions if your savings allow.

Risk Management
Insurance Coverage

Ensure you have adequate life and health insurance before investing.

A term insurance plan is essential to protect your family's financial future in case of any unforeseen events.

Comprehensive health insurance is also necessary to cover medical expenses, preventing the need to dip into your investments.

Emergency Fund

Before investing, set aside an emergency fund.

This fund should cover at least 6 months of your living expenses. It ensures that you don’t have to liquidate your investments for sudden needs.
Tax Planning and Efficiency
Tax-Saving Investments

Opt for tax-saving mutual funds under Section 80C to maximize your tax savings.

These funds offer tax deductions while helping you build your corpus.

Ensure your investments are tax-efficient to maximize your net returns.

Monitoring and Adjusting Your Portfolio
Regular Portfolio Review

Markets are dynamic, and your portfolio needs regular reviews.

Set aside time annually to review your investments. Assess the performance of your funds and make necessary adjustments.

Rebalance your portfolio if required, especially if there’s a significant market shift or if your personal circumstances change.

Seek Guidance

Since you are a beginner, seeking guidance from a Certified Financial Planner is advisable.

A CFP can help tailor your investment strategy to your specific needs and goals.

Regular check-ins with a professional ensure you stay on track and adjust your strategy as needed.

Staying Disciplined
Consistent Investing

The key to achieving your Rs. 5 crore goal is consistency.

Stick to your SIPs and avoid the temptation to withdraw or stop investments during market fluctuations.

Maintain discipline in your savings and investments. Regular contributions will help you reach your target.

Avoiding Debt

Avoid taking on unnecessary debt during this period.

High-interest loans can eat into your savings and reduce the amount available for investments.

Focus on managing your expenses and avoiding lifestyle inflation that can disrupt your financial planning.

Final Insights
Building a Rs. 5 crore corpus in 8 years is ambitious but possible with a well-planned strategy.

Start early, invest consistently, and keep a balanced portfolio.

Review your investments regularly and adjust as needed.

Seek professional guidance to optimize your investment choices and stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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my Son has done BTech in computer Science in 2023 from NIT Jalandhar and campus placed in Indian Fintech and earning 15CTC. He is gaining experience there for more than one year for now. What is advisable for future course go for Masters in USA or any other country or continue with job in India by switching companies. Due to job market crunch he is also preparing for upto Group B level Govt jobs as Plan B. What would be best advice for long term and settling after marriage.
Ans: Please have one directional goal. No dual policy. Let him go for MS from some good American University and after that he can get a good job in USA. No point in switching companies in India. A rolling stone gathers no moss. Forget about Govt. job in India. His talent won't be utilized and there will be routine transfers. So hit the bull's eye. Have a decent GRE and TOEFL score, have three good recommendation from his professors, one good SOP (statement of purpose) and after seeing the GRE score I will suggest the universities. Mostly in all the reputed universities of USA at least one student of mine is there sas a Professor and half of the year I stay in USA. No worries. I am there to counsel him. Only he must fix one aim. No ambiguity. Have unique aim, work hard with proper decision, rest the guidance will be given by me. Recommended more than hundred students to different reputed universities of US right from Princeton to Texas A&M, Clemson to Vermont. Never forget that I AM THERE BY THE SIDE OF YOUR SON LIKE AN INVISIBLE SHADOW TO PROTECT HIM AND GUIDE HIM.

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Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 05, 2024

Asked by Anonymous - Nov 05, 2024Hindi
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Hi I am 39 years old working professional with take home salary of Rs. 2.25 lacs/month. I have taken home loan in last month for Rs. 30 lacs with monthly EMI of Rs. 60k. My monthly House hold expenses are Rs. 50k. From 2022 I am investing Rs. 35k in MF via monthly SIP in ratio of 40:30:20:10 in Large:Mid:small:Debt. I have 2 Sons for 8 years and 3 years respectively. My Goal is to have sufficient corpus for their higher education and to achieve financial independence ASAP. Pl guide..
Ans: Your proactive approach towards securing financial independence and planning for your children’s education is commendable. At 39, you have a robust salary, structured expenses, and disciplined investments. Let's examine your financial standing, assess your goals, and outline strategies for optimal growth and security.

Current Financial Overview
Monthly Income: Rs 2.25 lakh

Home Loan EMI: Rs 60,000 (new loan of Rs 30 lakh)

Household Expenses: Rs 50,000

Monthly SIP in Mutual Funds: Rs 35,000 (split across large, mid, small-cap, and debt funds)

You have taken significant steps with a home purchase and ongoing SIPs. Let’s optimise these resources to achieve financial independence and build a corpus for your children’s education.

Goal-Based Financial Planning
1. Higher Education Corpus for Children
Education expenses rise significantly due to inflation, particularly for quality higher education.

With your sons aged 8 and 3, plan for their higher education in 10-15 years.

To achieve this, increase your SIPs in equity-focused funds. Equities provide inflation-beating returns over the long term.

Maintain a systematic approach, with SIPs focused on growth-oriented funds (large and mid-cap funds are ideal).

Regularly review this corpus every 2-3 years to ensure it aligns with educational costs.

2. Financial Independence
Early financial independence requires strategic savings and investment growth.

Aim to build a corpus that covers at least 25 times your annual expenses.

At present, Rs 50,000 monthly expenses indicate a future goal corpus of Rs 1.5-2 crore, adjusting for inflation.

Your current SIPs are a great start, but gradually increase SIPs to achieve a sizeable retirement fund.

Consider adding more equity exposure for growth and inflation protection, while adding debt as retirement nears.

Debt Management and EMI Strategy
Home loan EMI is Rs 60,000, a significant commitment for 20 years. This can limit cash flow for other investments.

Aim to prepay your loan when possible to reduce interest outflow and loan tenure.

You may consider setting aside a small portion of bonuses or salary hikes for periodic prepayments.

Reducing debt earlier will provide more cash flow to focus on investments.

Optimising Your SIP Strategy
Equity Allocation: Your SIP allocation is split 40:30:20:10 across large, mid, small, and debt categories.

Large-cap funds offer stability, while mid and small caps drive growth. The debt allocation provides balance but may be increased as you approach retirement.

Avoid Index Funds: Index funds, while popular, lack active management, which can be limiting. Actively managed funds adjust to market conditions, providing a higher potential for returns. Certified Financial Planners (CFP) can guide you on the best funds for your goals, particularly with growth in mind.

Consider Regular Funds Over Direct: Regular funds provide personalised guidance, performance reviews, and rebalancing through Certified Financial Planners, which direct funds lack. Regular investments managed by certified experts offer better long-term growth.

Building Contingency and Protection
1. Emergency Fund
Ensure an emergency fund covering 6-12 months of expenses (about Rs 4-6 lakh), kept in easily accessible accounts like liquid funds.

This fund will protect your long-term investments in case of unexpected expenses.

2. Insurance Needs
Adequate life and health insurance are essential, especially with dependents and ongoing liabilities.

Life insurance should cover at least 10 times your annual income, which could be achieved with a simple term insurance policy.

Health insurance for the family is essential to avoid dipping into savings during medical emergencies. Ensure coverage is comprehensive to handle inflation in healthcare.

Tax Efficiency in Investments
New tax rules affect mutual fund capital gains. For equity funds, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%, while short-term capital gains (STCG) are taxed at 20%.

Debt mutual funds are taxed as per your income slab. Plan to withdraw strategically to minimise tax impact.

Periodic portfolio reviews and structured withdrawals can help reduce your tax liability.

Nurturing Long-Term Wealth Growth
PPF and Debt Instruments: PPF and debt mutual funds provide stability but may fall short on inflation-adjusted growth. Maintain debt instruments as a smaller part of your portfolio until retirement nears.

Equities for Wealth Accumulation: Equities remain ideal for long-term goals like retirement and education due to their inflation-beating growth.

Review your mutual fund choices periodically to ensure they are high-performing and aligned with your growth goals.

Final Insights
Achieving financial independence and funding your children’s education are achievable with disciplined investments, a focus on growth, and debt management. Regular monitoring, along with a Certified Financial Planner’s advice, will ensure you stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner

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

...Read more

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Ans: I am really very happy to see the positive mind frame of yours. I do think teaching ( i.e. College Teaching) will be the best job for you. At a time you and teach and counsel. Please don't be unsure about your capacity, from your writing it is crystal clear that you do have the required capacity to do M.Phil and Ph.D. Only your age is a bit high, because if you do M.Phil and Ph.D then it will take at least six years time and by that time you will be 35. If you are ready you can apply to some Universities of Germany for doing Ph.D directly. There M.Phil is not required. In Germany for ladies education is free. Only you need to have knowledge of primary German language for a smooth sailing. In school there is little bit use of Psychology, because the subject of Psychology is not there.
Your next step will be having a permanent job. Unless the basic needs are assured you can't concentrate. In India very few persons get job satisfaction. So if you appear for the state PSC exam, you may crack it, but Psychology won't be there, you may be a Deputy Collector or Sales Tax Officer with periodic transfer and lot of respect cum status. But don't be morose. Even being in other job you can give free counselling of Psychology online free of cost just to pursue your hobby. My basic answer is that first grab a full time job and then pursue your passion. Right now don't go for M.Phil and Ph.D.Higher degrees and age are proportional to each other. In last five years you must have completed M.Phil and started Ph.D. But no point in lamenting over the spilt milk. So two option 1) Do Ph.D from Germany 2) Grab a Govt or Private job which is not contractual. Take proper decision. That is the most important thing in career building. Never go for split mind and never try for true option. Make your aim fix and target it and I am sure you will achieve it.
Now just procure a permanent job and pursue your hobby of Psychology.Best of Luck. Prof. Mukhopadhyay

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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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