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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 20, 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 43 years old. Earning 1.7 lakh per month after deduction of tax. Married and two daughters. 1st daughter studying 9th and 2nd studying at 4th. Wife is housewife. Homeloan outstanding at 56 lakhs and yet to continue for 15 years. EMI home loan 55K. One LiC jeevan anand for wife and it will mature 8lakhs at 2026. 1st daughter LIC policy of 8 laksh will mature at her age of 21 and then 50K will get each year till her life time. 2nd daughter no investments so far. I have a bad debt of around 1.2 crore. PL 12lakhs and CC-8lakhs. Got the money from relatives and friends with 1 & 2 rupees interest for 25 lakhs. Gold loan of 10 laks. I have a savings PPF 2 lakhs and asset in my native house would be around 15 lakhs till date. Wife jewel asset would be 50 sovereign. Wife is having 2 lakhs in deposit. I can work till my age of 60 years. Too much of loan getting stressed. Need a corpus for my daughter marriage and plan my future and retirement life. Kindly advise

Ans: You are showing courage by sharing your complete financial picture. Your income of Rs.1.7 lakh per month is good. You are supporting your wife and two daughters. You are paying a high EMI of Rs.55,000 towards home loan. You also carry a heavy burden of bad debts and other loans. Still, you are determined to create a corpus for your daughters and plan your retirement. That is a positive mindset. With structured action, you can come out of debt and secure your family’s future. Let me guide you step by step.

» Present Position Assessment
– Monthly income after tax is Rs.1.7 lakh.
– Home loan outstanding is Rs.56 lakhs, EMI Rs.55,000.
– Other debts total Rs.1.2 crore including personal loans, credit card, gold loan, and borrowings from friends and relatives.
– Assets include Rs.2 lakhs in PPF, Rs.2 lakhs in wife’s deposit, Rs.15 lakhs worth of native house, and around 50 sovereigns of jewellery.
– Insurance includes one LIC Jeevan Anand for wife maturing Rs.8 lakhs in 2026 and a LIC child plan for first daughter.
– No investments yet for second daughter.
– You have financial commitments for daughters’ education, marriages, and your retirement.
– Your stress is understandable because debt burden is very high compared to assets.

» Priority Setting is Key
– Not all goals can be handled together now.
– First priority should be debt management.
– Without reducing debt, wealth creation will not progress.
– Second priority should be protecting family through proper insurance cover.
– Third priority is creating savings and investments for future goals like daughters’ education, marriage, and retirement.
– Right order of priority will give you control and reduce stress gradually.

» Debt Analysis and Strategy
– Home loan of Rs.56 lakhs is long term and secured. Keep paying EMI regularly.
– Unsecured loans like credit card and personal loan carry very high interest.
– Borrowings from relatives at 1 to 2 rupees interest are extremely costly.
– These must be cleared at the earliest.
– Gold loan is also high cost and should be closed faster.
– Priority: Clear high-interest loans first, while maintaining EMI for home loan.
– For this, you need to generate extra cash flow and possibly restructure.

» Asset Reallocation for Debt Clearance
– You have 50 sovereigns of gold. Approximate value is Rs.25 to 30 lakhs.
– Instead of keeping as idle asset, sell part of this gold.
– Use it to clear costly borrowings like credit card and personal loans.
– Clearing 20 to 25 lakhs of high-cost debt will reduce monthly pressure drastically.
– Native house worth Rs.15 lakhs can also be considered for sale.
– Sentimental attachment is natural, but reducing stress is more important.
– Once debts are under control, you can build new assets in future.

» Expense Control and Cash Flow Discipline
– Review monthly expenses in detail.
– Cut all non-essential spends.
– Even Rs.10,000 reduction per month makes a difference in debt clearance.
– Create a monthly budget and track every rupee.
– Involve your wife in this plan to ensure family support.
– Direct all surplus to debt repayment in next 3 to 5 years.
– Avoid new loans and credit card usage completely.

» Insurance Review and Action
– Current LIC policies are low-return endowment types.
– Jeevan Anand maturity of Rs.8 lakhs in 2026 is small compared to needs.
– Child LIC plan gives small annual benefit but not enough for higher education.
– For debt-heavy families, term insurance is must.
– Take a term insurance with high coverage to protect wife and children.
– Coverage should be at least 15 to 20 times your annual income.
– Do not buy new ULIP or endowment policies.
– Keep insurance and investment separate.

» Building Emergency Fund
– Even while clearing debt, you need some buffer.
– Emergency fund should cover at least 3 months expenses initially.
– With EMI and household, your monthly outflow is around Rs.1 lakh.
– So, emergency fund target is Rs.3 lakhs minimum.
– Build this slowly after selling gold and reducing debt.
– Keep it in liquid mutual funds or sweep deposit for easy access.

» Education and Marriage Planning for Daughters
– Elder daughter is in 9th standard. In 3 to 4 years, higher education expenses will rise.
– Younger daughter is in 4th standard, so you have more time.
– LIC maturity of Rs.8 lakhs in 2026 can be used for elder daughter’s graduation.
– Start a systematic investment plan in actively managed equity mutual funds for both daughters.
– For elder daughter, investment horizon is shorter. Use balanced funds with some debt allocation.
– For younger daughter, horizon is longer. Allocate more to equity for growth.
– Avoid index funds, because they only give market average returns.
– Actively managed funds can outperform and are better when goals are specific.
– Do not choose direct funds, because they need regular monitoring.
– Regular funds through a CFP ensure proper review and guidance.

» Retirement Planning for Yourself
– You have 17 years until 60.
– Once debt is reduced, focus must shift to retirement corpus.
– Use equity mutual funds actively managed for wealth creation.
– Alongside, contribute to PPF or EPF for safe debt component.
– Retirement should be a mix of equity growth and debt stability.
– Delay in retirement planning reduces compounding.
– But with disciplined approach post debt, you can still build sizeable corpus.

» Handling Stress and Family Support
– Debt pressure is not just financial, but emotional.
– Share your plan with your wife and involve her in decisions.
– Selling gold or native house may feel difficult, but family understanding will help.
– Explain to daughters in simple terms about controlling expenses.
– Reducing lifestyle temporarily will bring peace and better future.

» Career and Income Growth
– Explore chances of career growth or side income.
– Any increment or bonus should directly go to debt repayment.
– Avoid lifestyle inflation when income rises.
– Extra income is your tool to come out of debt faster.

» Review and Monitoring
– Create a written plan for debt reduction, insurance, and investments.
– Review progress every six months with a Certified Financial Planner.
– Adjust allocation based on loan clearance and income growth.
– Do not take fresh loans for lifestyle needs.
– This review discipline ensures you remain on track.

» Tax Awareness on Investments
– Be aware of new mutual fund tax rules.
– Equity mutual funds: LTCG above Rs.1.25 lakh taxed at 12.5%.
– STCG taxed at 20%.
– Debt mutual funds taxed as per income slab.
– Plan redemptions smartly to reduce tax impact.
– Use annual review to align tax with goals.

» Finally
– Sell part of gold and native house to clear costly loans.
– Keep home loan running, but close unsecured loans fast.
– Take adequate term insurance for family protection.
– Build small emergency fund after reducing debt.
– Use LIC maturities for daughters’ education.
– Start SIPs in active mutual funds for daughters’ future and your retirement.
– Avoid index funds and direct funds.
– Follow regular plans with CFP support for proper review.
– Control expenses strictly and use every surplus for repayment.
– Involve family for emotional strength and support.
– With strong action, you can reduce stress and still create wealth for your family.

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.