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Ramalingam Kalirajan |10872 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 21, 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 - Aug 20, 2025Hindi

I am 42 . My folio is MF 47.00L( motilal Nifty microcap 250, Edelweiss small cap 250 index , zeroda nifty large midcap 250 index, ICICI value discovery fund some of my filunda are giving single digit returns , Please suggest) Stock 9.00L, PPF- 4.5L NPS 2 L FD 4 1 house debt free worth 50L 1 Apartment worth 40L with debt of 31L(EMI 20k) no rental income. No other liability. Health Insurance 10 L for myself and 5 lakh each for parents. I want to retire but not sure when to do that. My net monthly income is 1 L now after paying Home loan installment. Feeling insecure with the rising inflation and age. Please suggest me the strategy to generate regular income of 1.5 L so that I can retire . 1.5 Lakh monthly income would be my targeted income for retirement.

Ans: You have already built Rs.47 lakh in mutual funds.

You also hold Rs.9 lakh in stocks and Rs.4.5 lakh in PPF.

NPS and FD together add Rs.6 lakh safety cushion.

You own a house worth Rs.50 lakh, completely debt free.

You are also investing in an apartment worth Rs.40 lakh.

You have health cover for yourself and your parents.

EMI is affordable at Rs.20,000, showing good control.

Your effort and discipline are very strong till now.

» Understanding Your Retirement Goal

You wish to retire with Rs.1.5 lakh monthly income.

This means Rs.18 lakh income annually.

You are worried about inflation and rising expenses.

You are also unsure when to retire with safety.

The strategy must give income, growth, and safety together.

» Present Income and Expenses

You earn Rs.1 lakh net per month after EMI.

With EMI, savings may feel limited.

You still manage to invest in mutual funds and stocks.

This shows you are serious about future planning.

Your current lifestyle costs need to be mapped with inflation.

» Evaluation of Your Mutual Funds

Rs.47 lakh in mutual funds is a big step.

But most funds are index-based.

Index funds track the market but do not beat it.

They give average returns, not superior growth.

Single digit returns are common in index style funds.

Actively managed funds can do better with expert research.

Actively managed funds give flexibility during market changes.

Index funds cannot adjust when sectors or companies fall.

This limits wealth creation for long-term goals like retirement.

» Disadvantages of Index Funds

Index funds do not protect during market falls.

They follow the market blindly without review.

If some companies underperform, index funds still hold them.

You cannot avoid weak sectors or poor companies.

Actively managed funds allow fund managers to change positions.

Index funds also give the same return to every investor.

That means no scope of higher growth through research.

In long-term retirement planning, this creates lower corpus.

With inflation, average returns may not be enough.

» Shifting From Index to Active Funds

Reduce your exposure to index-based mutual funds.

Move gradually into actively managed diversified funds.

Actively managed funds can beat inflation in the long term.

This shift can improve annual returns over many years.

With professional review by a Certified Financial Planner,
you can maintain balance and safety.

This will help you achieve Rs.1.5 lakh monthly income target.

» Stocks and Direct Equity Risk

Rs.9 lakh in stocks shows you take some market risk.

Direct equity is risky without full-time tracking.

Stocks can give sudden gains but also heavy losses.

For retirement planning, stability is very important.

Consider reducing direct stocks and moving to mutual funds.

This gives expert research support and risk balance.

» Role of PPF and NPS

PPF balance of Rs.4.5 lakh is safe and tax-free.

But growth rate is modest and cannot beat inflation.

Keep PPF only as safety bucket, not growth driver.

NPS of Rs.2 lakh is still small.

NPS locks money till retirement age, so flexibility is low.

Treat NPS as one part of your safety portfolio.

» Fixed Deposit Allocation

FD of Rs.4 lakh gives immediate liquidity.

FD interest is taxable and growth is low.

Use FD only for emergency or short-term needs.

Do not depend on FD for long-term income.

» Real Estate and Loans

One house worth Rs.50 lakh is already debt-free.

This gives you security and place to live.

The apartment worth Rs.40 lakh carries Rs.31 lakh loan.

EMI of Rs.20,000 reduces monthly investible surplus.

Apartment is not generating rent currently.

This means loan burden is not getting covered by income.

Carrying debt during retirement creates risk.

Try to close this loan before planning early retirement.

If not possible, at least create an offset fund for EMI.

» Health Insurance Coverage

You hold Rs.10 lakh cover for yourself.

Parents have Rs.5 lakh cover each.

Health insurance is critical with rising medical costs.

You may increase your own cover for future safety.

Medical buffer reduces shocks during retirement.

» Creating a Corpus for Rs.1.5 Lakh Income

You want Rs.18 lakh income per year in retirement.

This needs a large, well-structured retirement corpus.

Mutual funds must be your main driver for this.

Actively managed equity funds can grow your corpus strongly.

Debt funds will give steady cash flow for monthly needs.

PPF, NPS, and FD will support the safety bucket.

With right mix, regular income can be created.

» Systematic Withdrawal Plan Strategy

Use mutual funds to create SWP after retirement.

SWP gives monthly flow like a salary.

Equity portion grows wealth against inflation.

Debt portion gives stability and liquidity.

You can plan Rs.1.5 lakh income through SWP in phases.

CFP will design safe withdrawal rate to keep corpus alive.

SWP also has tax advantage compared to FD interest.

» Tax Planning Awareness

Long-term capital gains above Rs.1.25 lakh taxed at 12.5%.

Short-term capital gains taxed at 20%.

Debt mutual fund gains taxed as per your slab.

Withdrawal planning must be tax efficient.

CFP can spread gains between family members for savings.

Tax-smart strategy increases net income in hand.

» Closing Loan Before Retirement

EMI of Rs.20,000 per month is a heavy outflow.

If loan continues in retirement, pressure will rise.

Try to close apartment loan before retiring.

This will reduce risk and improve free cash flow.

If property is not rented or used, question its purpose.

Illiquid property with debt is not useful in retirement.

» Inflation Challenge for Future

Today you need Rs.1.5 lakh monthly income.

In 12 to 15 years, you may need double that.

Inflation eats into every fixed income source.

Equity mutual funds are the best hedge.

Relying only on FD, PPF, or rent is not enough.

So, keep equity allocation strong for long-term needs.

» Role of Certified Financial Planner

A CFP will help restructure mutual fund portfolio.

They will guide you to move out of index funds.

They will balance equity and debt to suit your age.

CFP will also plan SWP strategy for monthly income.

They will guide on tax planning and family wealth.

This gives you confidence and removes retirement fear.

» Emotional Side of Retirement Planning

Feeling insecure at 42 is natural.

Inflation and age pressure create anxiety.

But you have already built a strong base.

By restructuring funds, you can grow faster.

By reducing debt, you can free cash flows.

By using SWP, you can create regular salary-like income.

This will give you peace and clarity.

» Step-by-Step Action Plan

Step 1: Reduce direct equity, move into mutual funds.

Step 2: Exit index funds gradually, shift to active funds.

Step 3: Surrender poor policies if any and reinvest in funds.

Step 4: Close apartment loan before retirement.

Step 5: Increase health cover for self and family.

Step 6: Build emergency reserve of 1 year expenses in FD or liquid funds.

Step 7: Structure portfolio with CFP guidance for SWP.

Step 8: Review annually and rebalance equity-debt mix.

» Finally

You already have a strong platform for retirement planning.

By shifting from index funds to active funds, you will boost growth.

By reducing direct equity and debt, you will create stability.

By using SWP from mutual funds, you will get steady income.

By closing loan, you will free more cash flow.

With a CFP’s guidance, you can aim for Rs.1.5 lakh monthly income.

Your insecurity can turn into confidence with proper structure.

Retirement at the right time will then be safe and enjoyable.

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.