Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Partha on Jul 31, 2025Hindi

Hi I am 41 years old. My monthly income 1.5 lakhs. I save around 60k after all expense. I invest 25k in MF & 35k through VPF. MF- Mirae large cap-8k Pagar parikh flexi cap-9k Kotak flexi cap-8k Planning to increase 15% every year in MF. and 10% in VPF. Please advise if my financial planning are in right track. Looking for 8 crore after retirement.

Ans: You are already on a very solid path. Saving Rs 60,000 monthly at 41 is impressive. Investing Rs 25,000 in mutual funds and Rs 35,000 via VPF shows discipline. You’ve made smart choices, and increasing contributions annually reflects long-term thinking. The Rs 8 crore retirement target is realistic if you continue with consistent planning.

Your Income and Savings Efficiency

– Your income of Rs 1.5 lakhs and savings of Rs 60,000 is a 40% savings rate.
– That is a strong start. Most people struggle to save even 20%.
– This gives you good control over your financial habits.
– Saving more than you spend is the first winning step.

Your Monthly Investments

– You are investing Rs 25,000 in mutual funds every month.
– Rs 35,000 goes to VPF, which is risk-free and tax-efficient.
– Total investments = Rs 60,000 per month. This is 40% of income.
– That is excellent. You have a disciplined structure in place.
– Your goal of 15% annual increase in mutual fund SIPs is a great move.
– Similarly, 10% increase in VPF is wise.
– This gives your money a growing edge over inflation.

Mutual Fund Choices and Structure

– You have chosen three actively managed diversified funds.
– Good allocation between large cap and flexi cap.
– Avoid putting all in one type. Your mix is balanced.
– Avoid index funds. They mirror the market and lack flexibility.
– Index funds don’t adapt to market changes.
– Actively managed funds have a fund manager watching performance.
– This helps take smart decisions when markets shift.
– Index funds also fall as much as the market.
– There is no protective strategy in down times.

Why Regular Mutual Fund Plans through MFD + CFP is Better

– Direct plans may seem to save costs.
– But they lack guidance, handholding, and review.
– A qualified MFD with CFP adds strong strategy.
– Regular reviews and goal corrections are important.
– Regular plans give access to advice and emotional discipline.
– Many DIY investors stop SIPs during market falls.
– That mistake kills long-term wealth.
– A good MFD with CFP will keep you on course.
– They help in portfolio rebalancing and tax planning too.

VPF Investment – Safe and Strong Pillar

– VPF is giving you assured, tax-free returns.
– It's an excellent risk-free option.
– VPF builds corpus slowly but safely.
– Government backs it. There’s zero default risk.
– Contribution grows tax-free under current rules.
– Long-term VPF investment supports stable retirement income.

Future Increases – A Powerful Strategy

– Your plan to raise MF SIPs by 15% yearly is perfect.
– Similarly, 10% rise in VPF will build compounding power.
– Your future income growth is being used wisely.
– Many people spend income increases. You are saving it.
– This disciplined step will create exponential results.
– Even modest increases build wealth in long run.

Your Retirement Goal of Rs 8 Crore

– Rs 8 crore goal is realistic by retirement if contributions continue.
– Your current investment mix is aligned with that goal.
– Long horizon allows equity funds to grow.
– VPF balances the equity risk by giving stability.
– Regular hikes in SIP and VPF will bridge any gap.
– You also need to avoid big lifestyle inflations.
– Keep saving ratio above 35% even when income rises.

Important Retirement Planning Considerations

– Your investments should be mapped to financial goals.
– Rs 8 crore should cover retirement lifestyle, healthcare, and inflation.
– Start estimating retirement expenses in today’s terms.
– Then factor 6% inflation for future costs.
– Avoid one-time risky investments in midlife.
– Instead, stay consistent with SIPs and VPF.
– Closer to retirement, slowly reduce equity exposure.
– Use hybrid funds or debt to protect capital.
– Don’t wait till last 2 years to switch.
– Do gradual shifting from 55 years onwards.

Emergency Fund and Insurance Planning

– Ensure you have at least 6 months expenses as emergency fund.
– This can be in liquid mutual funds or bank FD.
– Don’t use long-term investments for short-term needs.
– Health insurance should cover at least Rs 10–15 lakhs.
– This will protect your retirement corpus from medical expenses.
– Term insurance is a must if dependents exist.
– Choose only pure term plan with no savings attached.
– Don’t mix investment with insurance.

Income Tax and Capital Gains Planning

– Mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
– Short-term gains are taxed at 20%.
– Debt fund gains are taxed as per your income slab.
– Plan redemptions in tax-friendly manner post retirement.
– Use annual exemptions smartly. Don’t redeem all at once.
– A Certified Financial Planner can plan this in detail.

Estate Planning and Nomination

– Add nominees to all MF, VPF, and bank accounts.
– Review them once in 2 years.
– Draft a simple will to avoid legal hassles.
– Will should cover assets and digital holdings.
– Inform family about documents and access steps.

Don’t Make These Common Mistakes

– Don’t pause SIPs during market dips.
– Don’t try to time market exits.
– Avoid frequent fund switching for returns.
– Don’t chase hot funds or high returns.
– Stick to your plan with patience.
– Don’t ignore inflation in future expenses.
– Don’t rely on children for financial support.

Checklist for a 360-Degree Plan

– Keep 6 months emergency fund in liquid form.
– Invest regularly through SIP in diversified equity funds.
– Use VPF or PPF for fixed income exposure.
– Review portfolio every year with a CFP.
– Increase SIP and VPF each year.
– Take health and term insurance separately.
– Use nomination and draft a will.
– Plan capital gains tax wisely during withdrawal.
– Gradually reduce equity risk near retirement.
– Avoid direct investing without expert help.

Other Financial Areas to Strengthen

– Track monthly spending and reduce unnecessary items.
– Avoid personal loans or credit card dues.
– Automate SIPs and VPF for discipline.
– Educate your spouse about finances.
– Maintain simple Excel sheet of assets and goals.
– Keep KYC, PAN and Aadhaar details updated.
– File ITR every year to avoid penalty or scrutiny.

Finally

– You are already doing many things right.
– Continue with your current strategy and discipline.
– Increase your SIPs and VPF annually without fail.
– Avoid index funds and direct plans.
– Take guidance from a Certified Financial Planner regularly.
– Stay invested long term and don’t get distracted.
– With this mindset, Rs 8 crore is very much achievable.
– Stay on this path with patience and focus.

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.