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Ramalingam

Ramalingam Kalirajan  |3744 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 23, 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 - May 21, 2024Hindi
Money

Hi I am 42 year old NRI married with 10 year old kid based in Singapore and plan to retire early around 55 years with a corpus of 35-40 cr in India. Currently am putting in 1.8 lacs INR in MFs and my wife puts in 50k per month. Apart from that we invest 1.5 lakhs in equities and have a current asset of 5 cr in MFs and equities. We also have an endowment plan which has 4 cr guarantee by 2037. We expect my son’s education expense to be somewhere around 4-5 cr. Am on track for my goals or I need to invest more. We also have our term, health and critical illness fully covered

Ans: Assessing Your Current Financial Situation
Firstly, congratulations on your disciplined investment approach and clear financial goals. At 42, you and your wife have done an impressive job accumulating assets and planning for the future. You currently invest Rs. 1.8 lakhs in mutual funds and Rs. 1.5 lakhs in equities monthly. Your wife contributes an additional Rs. 50,000 in mutual funds. Your current assets total Rs. 5 crores in mutual funds and equities, along with a 4 crore endowment plan guaranteed by 2037. With full coverage on term, health, and critical illness insurance, you are well-protected.

Evaluating Your Financial Goals
Retirement Corpus
You aim to retire at 55 with a corpus of Rs. 35-40 crores in India. This goal is ambitious but achievable with disciplined saving and investment strategies. The key is to ensure that your current investments align with this target.

Son’s Education
You estimate your son's education expenses to be around Rs. 4-5 crores. This is a significant future expense that needs to be planned meticulously to avoid impacting your retirement corpus.

Investment Strategy Review
Mutual Funds
Your investment in mutual funds is substantial and diversified. Actively managed mutual funds are preferable over index funds as they can potentially outperform the market during various market cycles. Continue investing in these funds, ensuring a balance between equity and debt based on market conditions and your risk tolerance.

Equities
Investing Rs. 1.5 lakhs monthly in equities indicates a strong inclination towards high-growth potential investments. Ensure that your equity investments are diversified across sectors and geographies to mitigate risks.

Endowment Plan
The endowment plan guarantees Rs. 4 crores by 2037, providing a safety net. However, review the returns periodically to ensure they align with your overall financial goals.

Future Projections and Adjustments
Growth Projections
Assuming a conservative annual growth rate of 10-12% for your mutual funds and equities, your current investment strategy appears robust. Regular reviews and adjustments based on market performance are essential to stay on track.

Education Fund
Set up a dedicated education fund for your son. Consider investing in a mix of equity and debt mutual funds to balance growth and stability. Starting early allows compounding to work in your favor, reducing the financial burden closer to his college years.

Risk Management
Insurance Coverage
Your comprehensive insurance coverage for term, health, and critical illness is commendable. Regularly review these policies to ensure they keep pace with inflation and changing healthcare costs.

Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of your household expenses. This fund should be in liquid assets like savings accounts or liquid mutual funds to handle unforeseen expenses without disrupting your investment strategy.

Investment Review and Rebalancing
Regular Reviews
Conduct an annual review of your portfolio with a Certified Financial Planner. This review should include performance analysis, risk assessment, and alignment with your financial goals. Adjustments based on these reviews will keep your investment strategy on track.

Rebalancing
Periodically rebalance your portfolio to maintain the desired asset allocation. This process involves selling overperforming assets and buying underperforming ones to ensure your portfolio remains aligned with your risk tolerance and investment goals.

Maximizing Tax Efficiency
NRI Tax Benefits
As an NRI, you have specific tax benefits and obligations. Optimize your investments to take advantage of these benefits. Consult a tax expert to ensure compliance with both Indian and Singaporean tax laws.

Tax-efficient Investments
Consider tax-efficient investment options like ELSS funds for mutual funds, which provide tax deductions under Section 80C. This approach helps maximize returns by reducing taxable income.

Conclusion
You are on a strong path toward achieving your financial goals. By continuing your disciplined investment strategy and making necessary adjustments, you can reach your target of Rs. 35-40 crores by retirement. Establish a dedicated fund for your son's education to ensure his future expenses do not impact your retirement corpus. Regular reviews with a Certified Financial Planner and adjustments based on market conditions will keep you on track. Your comprehensive insurance coverage and emergency fund further secure your financial stability.

Keep focusing on maintaining a diversified portfolio, and regularly review and adjust your investments. By doing so, you can enjoy a financially secure and comfortable retirement.

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

Ramalingam Kalirajan  |3744 Answers  |Ask -

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

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Hi, I am 36 years old, married & have 1 child (3 year old). Me & wife have combined income from salary of 3.75 lakh post taxes. We are investing in following funds & have investment horizon of more than 15 years. Aditya BSL Pure Value - 2k DSP Value Fund - 4k HDFC Small Cap - 2K Kotak business cycle - 5k Kotak Emerging Equity fund - 2K Motilal Oswal large and Midcap - 10k Bandhan Core Equity - 2k Baroda BNP India Consumption - 3k Franklin India Prima - 4k HDFC Mid Cap Opportunity - 2k HSBC Small Cap - 5k Nippon India Flexi Cap - 7.5 SBI small cap - 4k White Oak capital Large and Mid - 7.5k ICICI prudential India opportunity -10k NPS - 15K Equity Market - 25K SGB - 15K LIC -10K. I'm looking for the same investment till next 15 years. Definitely will increase the MF amount every year. I'm looking for at least 15+ Cr corpus at the age of 55. Please guide me with the existing investment.
Ans: Thank you for providing details about your financial situation and investment goals. It's commendable that you have a long-term investment horizon and are committed to increasing your investment amounts annually. Let's analyze your current portfolio and provide guidance to help you achieve your goal of accumulating a corpus of Rs. 15 crores by the age of 55.

Current Portfolio Analysis
1. Diverse Mutual Fund Investments
You have a well-diversified portfolio across various mutual funds, including large cap, mid cap, small cap, value, and thematic funds. This diversification helps mitigate risk and capture growth across different market segments.

2. Monthly SIP Amount
Your current SIPs in mutual funds amount to Rs. 71,000 per month. This disciplined approach to investing through SIPs ensures regular contributions and benefits from rupee cost averaging.

3. Additional Investments
Besides mutual funds, you also invest in NPS (Rs. 15,000), equity market (Rs. 25,000), Sovereign Gold Bonds (SGB - Rs. 15,000), and LIC (Rs. 10,000). These investments provide further diversification and stability to your portfolio.

Evaluating Your Investment Strategy
1. Investment Horizon
With an investment horizon of over 15 years, you have the advantage of time on your side. Long-term investments in equity mutual funds can help you achieve significant capital appreciation.

2. Portfolio Diversification
Your portfolio includes a mix of large, mid, and small cap funds, as well as value and thematic funds. This diversification is essential to spread risk and capture growth across various sectors and market caps.

3. Regular Increment in SIP Amounts
You plan to increase your SIP amounts every year, which is a wise strategy. This helps in maintaining the purchasing power of your investments and accelerates the growth of your corpus.

Recommendations for Optimization
1. Focus on Quality Funds
While your portfolio is well-diversified, it's essential to focus on quality funds with a consistent track record. Regularly review the performance of your funds and replace underperformers with better alternatives.

2. Reduce Overlapping
Some of your funds may have overlapping investments in similar stocks. Reducing overlapping can enhance the efficiency of your portfolio. For example, having too many small cap funds can lead to redundancy.

3. Maintain Asset Allocation
Regularly rebalance your portfolio to maintain the desired asset allocation. This ensures that your investment strategy remains aligned with your risk tolerance and financial goals.

Projected Growth and Corpus Calculation
1. Expected Returns
Assuming an average annual return of 12% from your equity mutual funds, you can project the growth of your investments over the next 15 years. Historical data suggests that well-diversified equity portfolios can achieve such returns over the long term.

2. Increasing SIP Contributions
Increasing your SIP contributions by 10% annually can significantly boost your corpus. This strategy takes advantage of compounding and helps in accumulating a larger corpus.

3. Additional Contributions
Your investments in NPS, equity market, SGB, and LIC also contribute to your overall corpus. Ensure these investments are aligned with your risk tolerance and financial goals.

Example Calculation
Let's consider a simplified example to project your corpus:

Initial Monthly SIP: Rs. 71,000
Annual Increase in SIP: 10%
Annual Return on Mutual Funds: 12%
Over 15 years, this strategy can help you accumulate a significant corpus. Please note that actual returns can vary, and it's essential to review and adjust your strategy regularly.

Importance of Consulting a Certified Financial Planner
1. Personalized Advice
A Certified Financial Planner (CFP) provides personalized advice based on your financial situation, goals, and risk tolerance. They help you make informed decisions tailored to your needs.

2. Expert Management
A CFP continuously monitors your investments and market conditions. They make necessary adjustments to your portfolio, ensuring it remains on track to achieve your financial objectives.

3. Risk Management
A CFP employs strategies to manage risk and optimize returns. Their expertise helps in navigating market volatility and safeguarding your investments.

Conclusion
Your disciplined investment approach, diversified portfolio, and long-term horizon put you on a strong path toward achieving your goal of accumulating Rs. 15 crores. By focusing on quality funds, reducing overlap, and maintaining a balanced asset allocation, you can optimize your investment strategy.

Regularly consulting with a Certified Financial Planner (CFP) will provide you with personalized advice and expert management to keep your investments on track. Your commitment to increasing your SIP contributions annually further enhances your potential to achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3744 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 2024

Asked by Anonymous - Apr 11, 2024Hindi
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Money
Hi Vivek, We are 43 y/o couple without kids, and plan to retire by 55. I want to aggressively invest for our retirement. I earn 4.5L p/m and our expenses are 75K. We have 9L in shares, 10L in Gold Bonds, 20L in corporate FDs, 40L in EPF, a paidup house and 10L in NPS. We have 1.2Cr in bank account earning 7% interest. Can you help us invest better, we can aggressively invest aroud 2L, which MF should we further invest in to comfortably retire?
Ans: Hi Vivek,
It's fantastic to see your proactive approach to retirement planning. With a clear goal of retiring by 55 and a solid financial foundation, you're well-positioned to achieve your aspirations. Let's explore how we can optimize your investments to support your retirement plans:
1. Assessing Your Current Portfolio: You've built a diverse portfolio with investments in shares, gold bonds, corporate FDs, EPF, NPS, and bank deposits. This demonstrates a prudent approach to wealth accumulation and risk management.
2. Identifying Investment Opportunities: Given your goal of aggressive investing, we can consider allocating a portion of your investable surplus to equity mutual funds. Equity funds have the potential for higher returns over the long term, although they come with higher volatility.
3. Choosing Suitable Mutual Funds: When selecting mutual funds, it's essential to consider factors such as your risk tolerance, investment horizon, and financial goals. We can explore options across different categories like large-cap, mid-cap, and multi-cap funds to diversify your portfolio effectively.
4. Setting Realistic Expectations: While investing aggressively can potentially accelerate wealth accumulation, it's crucial to remain mindful of market risks and volatility. A disciplined approach to investing and periodic portfolio reviews are key to staying on track towards your retirement goals.
5. Monitoring and Reviewing: Regularly monitor the performance of your investments and reassess your financial plan as needed. Adjustments may be necessary based on changes in market conditions, economic outlook, or personal circumstances.
Remember, achieving financial independence requires patience, discipline, and a long-term perspective. By working together to craft a tailored investment strategy, we can help you navigate towards a comfortable retirement.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3744 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

Asked by Anonymous - Apr 15, 2024Hindi
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Money
Hi Dev, We are 43 y/o couple without kids, and plan to retire by 55. I want to aggressively invest for our retirement. I earn 4.5L p/m and our expenses are 75K. We have 9L in shares, 10L in Gold Bonds, 20L in corporate FDs, 40L in EPF, a paidup house and 10L in NPS. We have 1.2Cr in bank account earning 7% interest. Can you help us invest better, we can aggressively invest aroud 2L, which MF should we further invest in to comfortably retire?
Ans: Given your aggressive retirement goal, let's optimize your investment strategy:

Asset Allocation: Review your current asset allocation to ensure it aligns with your retirement timeline and risk tolerance. Since retirement is your primary goal, consider gradually shifting towards a more conservative allocation as you approach retirement age.
Equity Investments: With a 12-year horizon until retirement, you can afford to have a significant allocation to equity mutual funds. Focus on diversified equity funds across large-cap, mid-cap, and small-cap segments to maximize growth potential.
Debt Investments: While equity provides growth potential, consider debt funds for stability and regular income. Short to medium-term debt funds or dynamic asset allocation funds can be suitable for this purpose.
Systematic Investment Plans (SIPs): Since you have a monthly surplus of 2L, consider starting SIPs in mutual funds to harness the power of compounding. Allocate a portion of this surplus to equity SIPs and another portion to debt SIPs based on your risk appetite.
Tax Planning: Evaluate tax-saving investment options like Equity Linked Savings Schemes (ELSS) to optimize tax efficiency while also contributing towards your retirement corpus.
Regular Review: Periodically review your investment portfolio to ensure it remains aligned with your retirement goals, risk tolerance, and market conditions. Adjust your asset allocation and investment strategy as needed.
Professional Advice: Consider consulting with a Certified Financial Planner to develop a personalized retirement plan tailored to your specific financial situation, goals, and risk profile.
Remember, achieving your retirement goal requires disciplined investing, regular review, and staying focused on your long-term objectives. By making informed investment decisions and staying committed to your financial plan, you can work towards a comfortable retirement.

..Read more

Ramalingam

Ramalingam Kalirajan  |3744 Answers  |Ask -

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

Asked by Anonymous - May 07, 2024Hindi
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Money
Hi, I am a 35y old single Male. My target is to retire at 50 with a corpus of 25 Crores. Currently, the worth of my portfolio is 1.25 Crore with 75 lakhs in MFs, 25 lakhs in NPS, 10 lakh in PPF, 10 lakh in SGB and about 5 lakhs in Cash and Stocks. My monthly investment is 90k in MFs and annual investment in PPF and SGB is 1.5 lakhs each. I have a 2Bhk house in Pune and my after-tax salary is 2 lakhs/month. My company takes care of my accommodation and my regular monthly expenses are about 50k/month. Do you want to suggest any other plans or am I doing alright keeping my goal in mind? Currently, the MFs are weighted about 50% Small cap, 25% Mid and flexi cap and 25% Large cap.
Ans: Your dedication to financial planning is commendable, especially with a clear retirement goal in mind. Let's delve into your current situation and discuss potential adjustments:

Your current portfolio allocation seems well-diversified, with a significant portion invested in mutual funds, NPS, PPF, SGB, and some cash and stocks. This mix offers a balance of growth and stability.

Your monthly investments and annual contributions to PPF and SGB reflect a disciplined savings approach. It's crucial to maintain this consistency to achieve your retirement target.

Your 2BHK house in Pune is an asset that adds to your net worth and provides security. It's great that your company covers your accommodation expenses, easing your financial burden.

With your after-tax salary and monthly expenses, you have a surplus for investments, which is a positive sign. It's essential to ensure that this surplus is utilized efficiently towards your retirement goal.

Considering your goal of accumulating a corpus of 25 Crores by the age of 50, it might be beneficial to reassess your asset allocation strategy. While your current allocation is diversified, you may want to tilt it slightly towards more conservative options as you approach retirement age.

Given your aggressive investment approach, you might consider gradually shifting towards a more balanced portfolio with a higher allocation to large-cap and balanced funds, which are comparatively less volatile.

Additionally, exploring other investment avenues such as direct equity, debt funds, or alternative investments could further diversify your portfolio and potentially enhance returns.

Regularly reviewing your portfolio's performance and rebalancing it as needed is crucial to stay on track towards your retirement goal.

Overall, you're on the right track with your financial planning efforts. Continue with your disciplined approach, stay informed about market trends, and seek professional advice if needed to optimize your portfolio further.

Keep up the excellent work, and with persistence and smart decision-making, you're well-positioned to achieve your retirement target!

..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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