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Ramalingam

Ramalingam Kalirajan  |8030 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 16, 2024Hindi
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Hi, i am 42 years old 2 children 7 and 11 yrs each. earning currently 2 lakh net. I planning to create a retirement plan. I have done some investments but have never planned with specific goals so far. I intend to grow my money as much possible. And i am willing to take few risks, like i have started doing derivatives in options ( only nifty and I am not doing intra day). Please advice if my investment are reasonable and what are the other options i have to invest. Here are my assets and liability Land at current value : 70 lakhs Gold at current value : 21 lakhs Fixed Deposit : 10 lakhs PF balance : 11 lakhs Sukanya samridhi (annual1.5lakh) : 20 lakh Ppf for son ( annual 1.5 lakh): 14 lakh Direct equity ( 6 lakh invested) : current value : 17 lakhs Mutual Funds Franklin templeton tax saver growth( sip 4000) : 12 lakh Pp flexi cap growth(Sip 2000): 77 thousand Newly started Sip Quant small cap (sip 1000) Edelweiss momemtum (SIP) Liability ( car loan) : 20 lakhs

Ans: Given your age, income, and willingness to take risks, you have a decent mix of assets, but there are areas to focus on for a balanced retirement plan:

Assets:
Your assets are well-diversified with real estate, gold, fixed deposits, and various investment instruments like PF, Sukanya Samriddhi, PPF, direct equity, and mutual funds. However, your direct equity and derivatives trading can be volatile; ensure they align with your risk appetite.

Liabilities:
The car loan is a liability that can impact your monthly cash flow. Consider paying it off sooner to reduce interest costs and free up monthly income.

Suggestions:

Increase Equity Exposure: As you're willing to take risks, consider increasing exposure to equity mutual funds and direct equity investments.

Review Derivatives Trading: Be cautious with options trading due to its speculative nature. Ensure it doesn't dominate your portfolio.

Emergency Fund: Build a separate emergency fund to cover 6-12 months of expenses.

Health and Life Insurance: Ensure you have adequate health and life insurance coverage to protect your family's financial future.

Retirement Corpus: Calculate the required corpus for retirement based on your desired lifestyle post-retirement. Use a retirement calculator to estimate the monthly contributions needed to achieve this goal.

Diversify Investments: Explore other investment avenues like debt funds, international funds, to further diversify your portfolio and manage risks better.
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  |8030 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Feb 29, 2024Hindi
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Hello, I am 43 Years old and earning in-hand 2.2+ lac per month, from this year I have started investment in MF SIP(60K/month), NPS(10% basic + 50k/yrs from past 5 yrs), PPF (12500/month from past 5 yrs), Emergency fund 3lac (FD), EPF(20+lac), No EMI(Debt free - hold 2 property), Term Plan (50 lac) + 1.5 CR (Corporates cover)-> have external plan for 1.5 CR more + minimum external medical insurance plan (Currently corporate medical plan of 15 lac available) Equity investment is 0. My monthly expense is around 50k. I have two kids 5 and 10 yrs old - need to plan for education and my retirement(at 60 age). I can invest more 80-90k/month, Risk capacity is high, please suggest. Requirement - Education 2 CR for (1 CR each Kid appx) and for retirement around 5 CR liquid cash.
Ans: It's wonderful that you have a solid financial foundation and a clear vision for your future. Let's review your current investments and suggest strategies to help you achieve your goals for your children's education and your retirement.

Current Financial Situation
Monthly Income and Expenses
In-hand Income: Rs. 2.2+ lakhs per month
Monthly Expenses: Rs. 50,000
Current Investments
Mutual Fund SIP: Rs. 60,000 per month (started this year)
NPS: 10% of basic salary + Rs. 50,000 annually (contributed for the past 5 years)
PPF: Rs. 12,500 per month (contributed for the past 5 years)
Emergency Fund: Rs. 3 lakhs (in Fixed Deposit)
EPF: Rs. 20+ lakhs
Term Plan: Rs. 50 lakhs + Rs. 1.5 crore (corporate cover) + additional Rs. 1.5 crore
Medical Insurance: Corporate plan of Rs. 15 lakhs + minimum external plan
Assets
Two Properties: Debt-free
Financial Goals
Children's Education: Rs. 2 crores (Rs. 1 crore for each child)
Retirement: Rs. 5 crores liquid cash by age 60
Investment Strategy
1. Enhance Equity Exposure
Given your high-risk capacity and long investment horizon, increasing your equity exposure is prudent. Equity investments can offer higher returns compared to other asset classes.

Increase SIP Amount: You can invest an additional Rs. 80,000-90,000 per month. This can be allocated to diversified equity mutual funds, mid-cap funds, and small-cap funds for higher growth potential.
2. Optimize Existing Investments
Mutual Fund SIPs: Continue your existing SIPs. Consider adding funds with a good track record and those that align with your risk appetite.
NPS: This is a good investment for retirement savings due to its tax benefits and long-term growth potential. Ensure your allocation is optimized between equity and debt within NPS.
PPF: Continue your contributions to PPF for tax-free returns and safety. However, PPF has a lower return compared to equities, so balance your investments accordingly.
3. Diversify Investments
Diversification helps manage risk and capture opportunities across different market segments.

Equity Funds: Increase investments in equity mutual funds. Consider large-cap, mid-cap, and small-cap funds for a balanced growth portfolio.
Debt Funds: To balance the portfolio, consider debt mutual funds for stability and predictable returns.
Gold: Small allocation to Sovereign Gold Bonds (SGBs) can act as a hedge against inflation and market volatility.
Education Planning for Children
1. Systematic Investment Plan (SIP) for Education
Start dedicated SIPs in equity mutual funds targeted for your children's education. This will help in accumulating the required corpus systematically over time.

2. Child Plans
Consider investing in child-specific mutual funds or ULIPs that offer long-term growth and benefits tied to education milestones.

Retirement Planning
1. Retirement Corpus Calculation
With a target of Rs. 5 crores by age 60, let's ensure your investments align to meet this goal. A mix of equity and debt will provide growth and stability.

2. Retirement-Specific Funds
Consider investing in retirement-focused mutual funds and increasing your NPS contributions. These funds are designed to grow your savings efficiently over the long term.

3. Review and Rebalance Portfolio
Regularly review and rebalance your portfolio to align with changing market conditions and life stages. This will help in maintaining the desired asset allocation.

Risk Management
1. Adequate Insurance Cover
You already have substantial term insurance and health insurance coverage. Ensure they are sufficient to cover any unforeseen circumstances.

2. Emergency Fund
Maintain or slightly increase your emergency fund to cover 6-12 months of expenses. This provides a safety net for unexpected events.

Consultation with a Certified Financial Planner (CFP)
1. Personalized Financial Advice
A Certified Financial Planner can offer personalized advice, taking into account your specific financial situation, goals, and risk tolerance.

2. Expert Management
CFPs help in managing your investments effectively, optimizing returns while minimizing risks.

3. Comprehensive Planning
CFPs can assist with comprehensive financial planning, including tax planning, estate planning, and more, ensuring all aspects of your financial health are covered.

Example Investment Plan
Here’s a simplified example of how you might allocate your additional Rs. 80,000-90,000 monthly investment:

Equity Mutual Funds: Rs. 50,000 in diversified large-cap, mid-cap, and small-cap funds.
Debt Mutual Funds: Rs. 20,000 for stability and income generation.
Gold/SGB: Rs. 10,000 for diversification and inflation hedge.
Regular Monitoring and Adjustments
1. Annual Review
Conduct an annual review of your investments and financial goals. Adjust your SIP amounts and asset allocation as needed.

2. Stay Informed
Keep yourself informed about market trends and economic changes. Staying updated will help in making informed investment decisions.

Conclusion
Your current investments and financial strategies are commendable and align well with your goals. By increasing your equity exposure, optimizing existing investments, and consulting a Certified Financial Planner, you can confidently work towards securing your children’s education and a comfortable retirement.

Your disciplined approach and willingness to invest more monthly will significantly enhance your financial security. Continue to monitor and adjust your investments regularly to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8030 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Asked by Anonymous - Jun 26, 2024Hindi
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We have invested 3k from last 4 years in Aditya Birla mutual fund equity based. And last year kotak mid cap and small cap of 7k and 3k respectively. Other than this we invest in NPS 50k per year from last 5 years and have two lic policies of 5 lalk sum assured. We have two kids aged 7 and 4. Earning is 1 lakh . Expenses are home loan 31k for 32 lakh loan of 15 years , 3 years are done. Monthly expenses are 31k emi, 30k home, 15 k parents. Please suggest if this is a good way to invest for future of our children or any changes that need to be done we plan to keep investing in mutual funds for long term. Kotak Balanced Advantage Fund Growth (Regular Plan) and Kotak Small Cap Fund - Growth (Regular Plan) (Erstwhile Kotak Mid-Cap). No term insurance and there is company health insurance of my husband. I earn 10k per month.
Ans: Current Financial Situation

You have a combined monthly income of Rs. 1.10 lakh.

You have two kids aged 7 and 4.

Your monthly expenses include:

Rs. 31k home loan EMI
Rs. 30k home expenses
Rs. 15k for parents
Current Investments

You invest Rs. 3k per month in Aditya Birla mutual fund (equity-based) for the last 4 years.

You invest Rs. 7k per month in Kotak Mid Cap fund and Rs. 3k per month in Kotak Small Cap fund (last year).

You invest Rs. 50k per year in NPS for the last 5 years.

You have two LIC policies with a sum assured of Rs. 5 lakhs each.

Assessment of Current Investments

Your current mutual fund investments are good for long-term growth.

Equity mutual funds, especially mid-cap and small-cap, offer high growth potential.

NPS is a good investment for retirement savings, with tax benefits.

LIC policies provide some security but have lower returns compared to mutual funds.

Recommended Changes

Increase SIP in Mutual Funds

Consider increasing your SIPs in equity mutual funds.

This will help in wealth accumulation for your children's future.

Focus on a mix of large-cap, mid-cap, and small-cap funds.

Balanced Advantage Fund

Balanced Advantage Funds balance equity and debt.

They provide moderate growth with lower risk.

Consider allocating more to these funds for stability.

Avoiding Direct Funds

Direct funds need active management and expertise.

Regular funds, through a Certified Financial Planner, offer professional guidance.

They provide personalized advice and ongoing support.

Health and Term Insurance

You mentioned company health insurance.

Ensure it covers your entire family adequately.

Consider taking a separate term insurance policy for your husband.

Term insurance provides financial security in case of unforeseen events.

Review LIC Policies

LIC policies have lower returns compared to mutual funds.

Consider surrendering or partially surrendering them.

Reinvest the proceeds in high-return mutual funds.

Emergency Fund

Maintain an emergency fund for unforeseen expenses.

This should cover 6-12 months of living expenses.

Keep this fund in a liquid asset like a savings account or liquid mutual fund.

Final Insights

Your current investments are on the right track.

Increasing SIPs and adding balanced advantage funds can provide stability.

Ensure adequate insurance coverage and maintain an emergency fund.

Regular reviews and professional advice will help you stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8030 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

Asked by Anonymous - Jul 05, 2024Hindi
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I have a monthly income of around 8 lacs . Savings are currently 5 CR in equities and MF. Around 2 CR in debt like pf , ppf , etc . No loans. Kids are around 12 year old. I have 2 kids whose study , I need to plan. I m 46 and plan to retire in 7 years . I have adequate medical coverage for all. Please suggest if my investment strategies are good. My wife is working and she has her own savings.
Ans: Assessing Your Current Investment Strategy
Strong Financial Position
Monthly Income: Rs 8 lakhs.
Savings: Rs 5 crore in equities and mutual funds, Rs 2 crore in debt instruments.
No Loans: Debt-free status enhances financial security.
Adequate Medical Coverage: Comprehensive coverage for your family is vital.
Your investment strategy reflects a robust and well-thought-out approach. Let's dive deeper into ensuring it aligns with your future goals.

Planning for Children’s Education
Education Fund
Current Age: Kids are 12 years old.
Target Goal: College education in 6-8 years.
To secure their future, consider the following:

Dedicated Education Fund: Establish a separate fund solely for education.
Balanced Approach: Mix of equities for growth and debt for stability.
Review Annually: Adjust based on market conditions and education costs.
Retirement Planning
Retirement Corpus
Retirement Age: Plan to retire at 53.
Time Horizon: 7 years to build the retirement corpus.
Ensure a smooth transition into retirement:

Aggressive Growth: Continue with equities and mutual funds for higher returns.
Gradual Shift to Debt: As retirement nears, increase debt exposure for safety.
Emergency Fund: Maintain a buffer to cover unexpected expenses.
Diversification and Risk Management
Current Allocation
Equities and Mutual Funds: Rs 5 crore.
Debt Instruments: Rs 2 crore.
Recommended Adjustments
Consistent Review: Regularly evaluate the performance of your investments.
Rebalance Portfolio: Adjust the mix based on changing financial goals and market conditions.
Diversification: Ensure a balanced exposure across various sectors and asset classes.
Actively Managed Funds vs Index Funds
Actively Managed Funds
Professional Management: Expertise of fund managers.
Market Adaptability: Ability to respond to market changes.
Index Funds
Market Performance: Track the market index, limiting potential gains.
Passive Management: Lack flexibility to adapt to market conditions.
Direct vs Regular Funds
Direct Funds
Self-Managed: Requires investor’s active involvement.
Potential Risks: Higher risk of making suboptimal decisions.
Regular Funds
Expert Guidance: Managed by a certified financial planner.
Balanced Strategy: Ensures a well-informed investment approach.
Final Insights
You have a strong financial base with a clear vision for your future. Here are some key takeaways:

Focus on Education Fund: Secure your children’s future with a balanced approach.
Retirement Planning: Continue aggressive growth but gradually shift to safer investments as retirement nears.
Diversification: Regularly review and rebalance your portfolio to manage risks effectively.
Seek Professional Advice: Consider consulting a certified financial planner for tailored guidance and to avoid costly mistakes.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8030 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 11, 2025

Asked by Anonymous - Feb 10, 2025Hindi
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I am 38 male married with 2 kids of age 5 and 1 year. I am earning 5L per month and have a plot worth ~70L, 30L in EPF, 20L in stocks, 50L in FD, I am investing in SIP and ulip plans, Lic and other schemes (~1.2L monthly), have term insurance and no loan. my monthly expense is 50-60k. I want to create a plan where I don't have to worry about my kids education and my retirement. I am also doing some investment in NPS (~10L done till now)
Ans: Your monthly income is Rs. 5 lakh, with expenses of Rs. 50,000–60,000.

You have strong savings and investments in different assets.

Your investments include EPF (Rs. 30 lakh), stocks (Rs. 20 lakh), FD (Rs. 50 lakh), and SIPs.

You are investing Rs. 1.2 lakh per month in SIPs, ULIPs, LIC, and other schemes.

You have a term insurance plan, which is essential for financial security.

You have no loans, which is a great advantage.

You have invested Rs. 10 lakh in NPS, which helps in retirement planning.

Optimizing Your Investments

Your SIPs are the right approach for wealth creation. Increase them by 10% yearly.

ULIPs and LIC policies do not give high returns. Consider surrendering them and reinvesting in mutual funds.

Actively managed funds outperform index funds over the long term. Ensure your SIPs are in well-managed funds.

EPF is a safe retirement asset but has lower growth. Consider balancing with equity.

Stocks require deep knowledge and time. Mutual funds provide professional management and diversification.

FDs offer security but do not beat inflation. Consider debt mutual funds for better tax efficiency.

Planning for Your Children's Education

Your kids are 5 and 1 year old. You have 10-15 years to plan for their education.

Estimate future costs considering inflation. Higher education costs rise rapidly.

Allocate a separate portfolio for education. Equity mutual funds are best for long-term growth.

Continue SIPs in equity funds. Increase contributions every year.

Avoid child-specific insurance plans. They give low returns and high costs.

Debt funds can be used as your child nears higher education. They provide stability.

A mix of large-cap, flexi-cap, and mid-cap funds balances growth and risk.

Building a Strong Retirement Plan

You are 38 years old. You have at least 20 years before retirement.

Retirement planning requires a mix of equity and debt investments.

Your EPF and NPS provide stability, but equity gives higher long-term returns.

Increase equity exposure in your retirement portfolio. It helps in wealth accumulation.

SWP in mutual funds after retirement gives a steady income with tax benefits.

Keep emergency funds separate. At least 12 months of expenses in liquid funds.

Health insurance is essential. Ensure sufficient coverage for you and your family.

Generating Passive Income Before Retirement

Your goal is financial freedom, where investments generate income.

Dividend mutual funds are not tax-efficient in the 30% slab.

Arbitrage funds offer stable returns with low tax impact.

Debt funds can provide a steady cash flow through SWP.

Monthly Income Plans (MIPs) in mutual funds can give periodic payouts.

A mix of equity and debt funds creates a reliable income stream.

Finally

You are on the right track with disciplined investing.

Optimize your portfolio by shifting from low-return ULIPs and LIC policies to high-growth mutual funds.

Increase SIPs yearly to build wealth for retirement and children’s education.

Keep a tax-efficient withdrawal strategy for passive income.

A Certified Financial Planner can help you refine your strategy for long-term success.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

..Read more

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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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