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Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 14, 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
solomon Question by solomon on Jun 13, 2024Hindi
Money

Sir, I am 43 years old living in UAE, with FD of 10L and current MF accumulation of 1.04 Cr and monthly SIP 50K along. I have a 2BHK apartment in Chennai which yields a rent of 8000 Rs and a 3-bedroom house inherited from my parents as gift where we live currently. Along with this we have 2400 Sq ft of land in Chennai and 3000 Sq ft of land in Madurai. I am contributing 69K yearly for the last 11 years in my name until 2035 (expected returns 30Lakhs), 28K yearly in my daughter’s name until 2034 (expected returns 10Lakhs). Addition to this i have icici pru gift long terms with annual payment of 2L Rs on my name (to pay for another 10 years and the return of 16K per month) icici future perfect 1L Rs (to pay for another 10 years). Will receive a sum of 5L Rs from a LIC policy which is getting matured this year and a Term policy of 2 Cr for which I must pay 47K annually and it must be paid for another 22 years and 20 Lakhs worth of gold. I wish to invest in stocks in the next 7 years with an average risk and stop SIP at the age of 50. I have a 9th grade daughter who wishes to pursue Medicine and a son who is in grade 2. I wish to retire at the age of 50 (7 years from now) and start consulting. Could you please guide me how much corpus I should create in the next 7 years to live a normal lifestyle and ensure to pay the balance ICICI investments and my daughters’ education regards Raj

Ans: Current Financial Situation
Raj, you have done a commendable job in managing your finances and building a diversified portfolio. Let's assess your current financial landscape.

Fixed Deposits and Mutual Funds
You have a fixed deposit (FD) of Rs 10 lakhs and a mutual fund (MF) portfolio worth Rs 1.04 crore. You also contribute Rs 50,000 monthly to SIPs. This shows a disciplined approach towards long-term wealth creation.

Real Estate Holdings
You own a 2BHK apartment in Chennai, which generates a rental income of Rs 8,000 per month, and a 3-bedroom house inherited from your parents. Additionally, you possess 2400 sq ft of land in Chennai and 3000 sq ft of land in Madurai.

Insurance and Investments
You have various insurance and investment plans:

Annual contribution of Rs 69,000 for yourself until 2035 (expected returns Rs 30 lakhs).
Annual contribution of Rs 28,000 for your daughter until 2034 (expected returns Rs 10 lakhs).
ICICI Pru Gift Long Term with an annual payment of Rs 2 lakhs, yielding Rs 16,000 monthly after maturity.
ICICI Future Perfect with an annual payment of Rs 1 lakh for another 10 years.
LIC policy maturing this year with a sum assured of Rs 5 lakhs.
Term policy with a cover of Rs 2 crore, annual premium Rs 47,000 for the next 22 years.
Gold worth Rs 20 lakhs.
Family Commitments
Your daughter, currently in 9th grade, aspires to pursue medicine. Your son is in grade 2. You plan to retire at 50 and transition into consulting.

Financial Goals
To ensure a smooth transition into retirement and meet your financial obligations, let's break down your goals:

Retirement Corpus
Daughter's Education
Continuation of Investments
Living Expenses Post-Retirement
Retirement Corpus
You plan to retire in 7 years. To maintain a comfortable lifestyle post-retirement, you need to determine a retirement corpus. This corpus should cover your monthly expenses, healthcare, and unforeseen emergencies.

Daughter's Education
Medical education is expensive. It is crucial to allocate sufficient funds for your daughter's medical education to avoid financial stress later.

Continuation of Investments
You have ongoing investments that require continued funding. Ensuring these are adequately funded until their maturity is essential for maximizing returns.

Living Expenses Post-Retirement
Post-retirement, you will require a steady income to cover living expenses. Your rental income, SIP returns, and maturity proceeds from insurance plans will contribute to this.

Strategy to Achieve Financial Goals
To meet your financial goals efficiently, consider the following strategies:

Increase SIP Contributions
Currently, you invest Rs 50,000 monthly in SIPs. Increasing this amount will help accumulate a larger corpus. Given your current financial stability, consider increasing your SIP contributions by 10-15% annually. This will compound your wealth significantly over the next 7 years.

Diversify Mutual Fund Investments
Review your mutual fund portfolio and diversify across various sectors and market caps. Actively managed funds tend to outperform index funds in the long run due to professional fund management and active stock selection. This can provide better returns and reduce risks.

Surrender Low-Yield Insurance Policies
Your LIC policy maturing this year will yield Rs 5 lakhs. Reinvest this amount in mutual funds for better returns. Assess the ICICI Pru Gift Long Term and ICICI Future Perfect plans. If they are not performing well, consider surrendering them and reinvesting in higher-yield mutual funds. This can maximize returns and provide better growth opportunities for your investments.

Plan for Daughter's Education
Estimate the total cost of your daughter's medical education, including tuition fees, living expenses, and other costs. Create a dedicated education fund using a mix of debt and equity mutual funds. This will ensure safety and growth of the corpus.

Utilize Gold Holdings
Your gold holdings worth Rs 20 lakhs can be a valuable asset. Consider partial liquidation of gold to fund higher-yield investments. Alternatively, keep the gold as a hedge against inflation and as a contingency fund.

Create an Emergency Fund
Ensure you have an emergency fund covering at least 6-12 months of living expenses. This fund should be in a liquid asset class, such as a liquid mutual fund or a high-interest savings account, to access funds readily in case of emergencies.

Investment in Mutual Funds
Instead of investing directly in stocks, mutual funds can provide a balanced approach to achieving your financial goals with moderate risk. Here are the benefits:

Professional Management: Mutual funds are managed by professional fund managers who have the expertise to make informed investment decisions.
Diversification: Mutual funds provide diversification across various sectors and asset classes, reducing overall risk.
Liquidity: Mutual funds offer liquidity, allowing you to redeem your investments as needed.
Tax Efficiency: Equity mutual funds held for more than a year qualify for long-term capital gains tax benefits.
Increase SIP Contributions in Mutual Funds
Currently, you invest Rs 50,000 monthly in SIPs. Increasing this amount will help accumulate a larger corpus. Given your current financial stability, consider increasing your SIP contributions by 10-15% annually. This will compound your wealth significantly over the next 7 years.

Diversify Mutual Fund Investments
Review your mutual fund portfolio and diversify across various sectors and market caps. Actively managed funds tend to outperform index funds in the long run due to professional fund management and active stock selection. This can provide better returns and reduce risks.

Corpus Calculation for Retirement
To estimate the corpus required for retirement, consider the following:

Monthly Living Expenses: Calculate your current monthly expenses and account for inflation.
Healthcare Costs: Factor in healthcare costs, which tend to rise with age.
Contingency Fund: Include a contingency fund for unforeseen expenses.
Desired Lifestyle: Consider the lifestyle you wish to maintain post-retirement.
Monthly Living Expenses
Assume your current monthly expenses are Rs 50,000. Accounting for inflation at 6%, these expenses will rise over the next 7 years.

Healthcare Costs
Healthcare costs can be substantial post-retirement. Ensure you have comprehensive health insurance and allocate a part of your corpus towards healthcare.

Contingency Fund
Set aside at least 10% of your retirement corpus for emergencies. This ensures financial security during unforeseen circumstances.

Desired Lifestyle
Factor in any lifestyle changes you wish to make post-retirement, such as travel, hobbies, or relocation.

Final Insights
Raj, your current financial situation is strong, with a diversified portfolio and substantial assets. To ensure a comfortable retirement and meet your financial goals, focus on increasing SIP contributions, diversifying mutual fund investments, and planning adequately for your daughter's education. Reviewing insurance policies and reallocating funds to higher-yield investments will optimize your returns. Investing in mutual funds can provide balanced growth and reduce risk, ensuring financial security post-retirement.

Building a robust retirement corpus requires careful planning and disciplined investing. With the right strategies, you can achieve your financial goals and enjoy a comfortable retirement while ensuring your family's financial security.

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 Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

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Sir, Myself Rajesh, salaried person, 37 years old. having MF SIP Rs. 36500 per month, current invested amount is about Rs. 14,00,000/- + in Equity stocks- Rs.3,00,000/- have about Rs. 5,00,000/- in hand to invest either in stocks or MF . Have family of 3 people and Monthly expenses are around Rs.25k. Planning to take retirement in another 10 years, looking at the current investment can you help me identify approx. corpus required to invest and take retirement. Thank you.
Ans: Hello Rajesh! It's great to see your commitment to investing for your future, especially with retirement on the horizon. Let's dive into planning for your retirement corpus.

Given your current investments in MF SIPs and equity stocks, you're already on a solid path. However, to estimate the corpus needed for retirement, we need to consider factors such as your desired post-retirement lifestyle, inflation, and expected expenses.

With your monthly expenses at Rs. 25,000 and a family of three, projecting your future expenses accounting for inflation is essential. Additionally, factoring in potential healthcare costs and other unforeseen expenses is prudent.

As a Certified Financial Planner, I recommend conducting a comprehensive financial review to determine your retirement goals and risk tolerance. This will help in estimating the corpus required to sustain your lifestyle post-retirement comfortably.

With your additional Rs. 5,00,000 in hand, you have an opportunity to further diversify your investments. Whether you choose to invest in stocks or MFs, consider your risk appetite and the need for diversification to mitigate risks.

I suggest consulting with a financial advisor who can create a personalized retirement plan tailored to your specific circumstances and goals. By taking proactive steps now, you're setting yourself up for a financially secure retirement in 10 years. Keep up the good work, and remember, investing is a journey, so stay focused on your long-term objectives.

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Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 03, 2024

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Dear Sir, I am 44 yrs old with wife and 2 kids of age 9&11.I have been investing my money into the following sectors over the last few years back. 1.LIC and SBI money back policies of 8.5L and will be mature in 2034. 2.Life cover for self of 50L has to pay till 2047 annually of 20K. 3.Max life ULIP plan SA 6L mature in 2031. 4.Family floater Health I surance of 5L 4.HDFC life click 2I combo plan invest of 9L 5.SSA till date for both children 1L each 5.SIP of 20K since last 4.5yrs monthly 6.SIP lumpsum of 1L invested in Axis medium cap fund invested 4yrs back My question is to secure my child education and retirement life after 55 yrs , corpus should be 2 Crore what else I have to do
Ans: It's commendable that you've been diligently planning for your family's future. Your commitment to securing your children's education and ensuring a comfortable retirement is truly admirable.

Considering your current investments, it's essential to evaluate if they align with your long-term goals. While your existing plans offer some protection and potential growth, diversifying your portfolio could provide added stability and growth potential. Have you explored avenues beyond traditional insurance policies and mutual funds?

Certified Financial Planners can offer personalized strategies tailored to your aspirations and risk tolerance. They can suggest options that balance growth potential with risk mitigation, guiding you towards achieving your desired corpus. Have you considered consulting one to fine-tune your financial roadmap?

Remember, the journey to financial security is not just about numbers—it's about ensuring peace of mind and enabling your loved ones to pursue their dreams. By proactively seeking guidance and exploring diverse investment avenues, you're laying a robust foundation for a fulfilling future. Keep nurturing your financial garden, and the seeds you sow today will bloom into a prosperous tomorrow.

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Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 11, 2024

Money
Hi my age is 34 earning 1.30l per month, my saving are monthly 26k in different sips, 12.5k monthy ppf, 2 policies total amount of 15-16lakhs paying 30 and 70k premium yearly ( mature in 2035), investing montly in gold - 500 and 50,000 yearly in nps. Rest 5 to 10k in saving account. I have 2 questions 1.Should I need to invest more if i want total corpus of 3 crore? 2. I have 2 daughters so i should have enough amount for their education and their marriage
Ans: Planning for Your Financial Future: Building a Rs 3 Crore Corpus and Securing Your Daughters' Futures

Congratulations on your disciplined saving and investment habits. Your current financial strategy is commendable, and it’s clear you’re committed to securing a prosperous future for yourself and your daughters. Let’s address your questions and develop a comprehensive plan.

Understanding Your Current Financial Situation
To start, let’s review your existing financial commitments and investments:

Monthly Income: Rs 1,30,000
Monthly Savings and Investments:
SIPs: Rs 26,000
PPF: Rs 12,500
Policies: Rs 30,000 and Rs 70,000 annually (equivalent to Rs 8,333 per month)
Gold: Rs 500
NPS: Rs 50,000 annually (equivalent to Rs 4,167 per month)
Savings Account: Rs 5,000 to Rs 10,000
Your total monthly investments sum up to approximately Rs 51,500, excluding the savings account contributions.

Setting Clear Financial Goals
You have two primary goals:

Accumulating a Rs 3 Crore Corpus
Ensuring Funds for Your Daughters’ Education and Marriage
Goal 1: Accumulating a Rs 3 Crore Corpus
Calculating the Future Value of Your Investments
To determine if you need to invest more, we must project the future value of your current investments. Let’s assume an average annual return of 12% for your SIPs, considering they are likely invested in equity mutual funds.

Formula for Future Value of SIP:

FV = P * [(1 + r/n)^(nt) - 1] / (r/n)

Where:

P = Monthly investment (Rs 26,000)
r = Annual interest rate (0.12)
n = Number of times interest is compounded per year (12)
t = Number of years (26, assuming retirement at age 60)
Future Value Calculation for SIPs
Using the formula above:

FV = 26,000 * [(1 + 0.12/12)^(12 * 26) - 1] / (0.12/12)

FV = 26,000 * [(1 + 0.01)^(312) - 1] / 0.01

FV = 26,000 * [(1.01)^312 - 1] / 0.01

FV = 26,000 * [36.786 - 1] / 0.01

FV = 26,000 * 35.786 / 0.01

FV = 26,000 * 3,578.6

FV = 9,30,43,600

So, the future value of your SIPs after 26 years would be approximately Rs 9.3 crores.

Future Value Calculation for PPF
The PPF has a fixed rate of return. Assuming an average annual return of 7.1%:

Formula for Future Value of PPF:

FV = P * [(1 + r/n)^(nt) - 1] / (r/n)

Where:

P = Monthly investment (Rs 12,500)
r = Annual interest rate (0.071)
n = Number of times interest is compounded per year (1)
t = Number of years (15, due to PPF maturity period)
FV = 12,500 * [(1 + 0.071/1)^(1 * 15) - 1] / (0.071/1)

FV = 12,500 * [(1 + 0.071)^15 - 1] / 0.071

FV = 12,500 * [(1.071)^15 - 1] / 0.071

FV = 12,500 * [2.847 - 1] / 0.071

FV = 12,500 * 1.847 / 0.071

FV = 12,500 * 26.014

FV = 3,25,175

So, the future value of your PPF after 15 years would be approximately Rs 3.25 lakhs.

Future Value Calculation for NPS
NPS investments typically yield around 10% annually. Assuming the annual contribution is Rs 50,000:

Formula for Future Value of NPS:

FV = P * [(1 + r/n)^(nt) - 1] / (r/n)

Where:

P = Monthly investment (Rs 4,167)
r = Annual interest rate (0.10)
n = Number of times interest is compounded per year (1)
t = Number of years (26)
FV = 4,167 * [(1 + 0.10/1)^(1 * 26) - 1] / (0.10/1)

FV = 4,167 * [(1 + 0.10)^26 - 1] / 0.10

FV = 4,167 * [(1.10)^26 - 1] / 0.10

FV = 4,167 * [10.835 - 1] / 0.10

FV = 4,167 * 9.835 / 0.10

FV = 4,167 * 98.35

FV = 4,09,445

So, the future value of your NPS after 26 years would be approximately Rs 4.09 lakhs.

Additional Investments
Your existing policies (LIC, ULIP) may not offer the best returns. Consider surrendering them and redirecting the premiums into mutual funds for potentially higher growth.

Goal 2: Funding Your Daughters’ Education and Marriage
Estimating Future Expenses
Education Costs: Assume a need of Rs 20 lakhs for each daughter’s higher education.
Marriage Costs: Assume Rs 20 lakhs for each daughter’s marriage.
Let’s estimate the inflation-adjusted cost of education and marriage in the future.

Formula for Future Value of Education Costs:

FV = PV * (1 + r)^t

Where:

PV = Present value (Rs 20 lakhs)
r = Inflation rate (0.06)
t = Number of years until the expense (assume 10 years for education)
Future Value Calculation for Education
FV = 20,00,000 * (1 + 0.06)^10

FV = 20,00,000 * (1.06)^10

FV = 20,00,000 * 1.791

FV = 35,82,000

So, the future value of education costs after 10 years would be approximately Rs 35.82 lakhs.

Future Value Calculation for Marriage
Assuming marriages in 20 years:

FV = 20,00,000 * (1 + 0.06)^20

FV = 20,00,000 * (1.06)^20

FV = 20,00,000 * 3.207

FV = 64,14,000

So, the future value of marriage costs after 20 years would be approximately Rs 64.14 lakhs.

Investment Strategy for Daughters’ Future
Child Education Funds: Invest in dedicated mutual funds for child education. These funds typically offer higher returns and are tailored for education expenses.
Systematic Transfer Plan (STP): Use STP to gradually move funds from equity to debt as the expense time nears to minimize risk.
Sukanya Samriddhi Yojana (SSY): Consider SSY for long-term savings for your daughters, offering tax benefits and secure returns.
Monitoring and Adjusting Investments
Regularly review your investments to ensure they align with your goals. Rebalance your portfolio annually to maintain the desired asset allocation.

Periodic Reviews
Annual Performance Review: Evaluate the performance of your investments and adjust as necessary.
Adjusting Asset Allocation: Shift funds between equity and debt based on market conditions and your risk tolerance.
Risk Management
Diversification is crucial to minimize risks. Spread investments across various asset classes to safeguard against market volatility.

Market Risk
Equity Investments: High returns but subject to market fluctuations. Diversify across sectors and companies.
Debt Investments: Lower returns but more stable. Include high-quality debt instruments for stability.
Tax Considerations
Maximize tax efficiency by leveraging tax-saving instruments under Section 80C. Ensure investments align with your overall financial strategy.

Tax-Efficient Investments
Equity-Linked Savings Scheme (ELSS): Provides tax benefits and good returns. Suitable for long-term goals.
Public Provident Fund (PPF): Safe and tax-efficient. Ideal for conservative investors.
Professional Guidance
Consider consulting a Certified Financial Planner (CFP) for personalized advice. A CFP can help tailor your investment strategy to meet your specific goals.

Advantages of CFP
Expertise in Financial Planning: Offers professional insights and strategies.
Personalized Advice: Tailored to your financial situation and goals.
Final Insights
Achieving a Rs 3 crore corpus and securing funds for your daughters’ education and marriage requires disciplined investing and strategic planning. Your current investments are a strong foundation, but consider increasing contributions for higher returns.

Diversify your investments, monitor performance regularly, and adjust your portfolio as needed. Consulting a Certified Financial Planner can provide valuable guidance and help you stay on track.

Stay committed to your goals, and with careful planning, you can achieve financial security and ensure a bright future for your daughters.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

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

Money
Hello Sir , I am 42 years old . I have one child 3 years old. I have invested in Max Life High Growth fund of one lakh per year which is 5 years now . Amount reflecting is 10 lakhs today. 5 years more to go for completion. I have my own house 62 lakhs just purchased . No loans . I recently purchased one more ulip policy midcap momentum 150 max life yearly one lakh for 10 years.I have invested in 3 Bhk apartment amount 1.7 cr which I will complete payment in next year. I earn around 36 to 40 lakhs per year. At present the expense is 50 thousand per month. How much amount should I invest yearly and where to develop a corpus of 5 cr at the age of 60 after deduction for one .child education. Thanks
Ans: First, let's understand your financial situation. You're 42, have a 3-year-old child, and a substantial annual income of Rs 36-40 lakhs. Your expenses are Rs 50,000 per month. You own a house worth Rs 62 lakhs and a 3BHK apartment for Rs 1.7 crores. No loans exist, and you’ve invested in ULIPs.

Compliments and Understanding
It's commendable that you've built a solid financial base and are debt-free. Your foresight in investing for the future is impressive. Let's plan for a corpus of Rs 5 crore by age 60, covering your child's education expenses too.

Evaluating Your Current Investments
Max Life High Growth Fund
You’ve invested Rs 1 lakh per year in Max Life High Growth Fund for 5 years. It's now worth Rs 10 lakhs. This ULIP has 5 more years to go. Evaluating ULIPs for high charges and lower flexibility, consider other options for higher returns.

New ULIP Policy
You recently bought another ULIP policy (Midcap Momentum 150, Max Life) with Rs 1 lakh annually for 10 years. ULIPs have mixed reviews due to their high charges and lower liquidity compared to mutual funds.

Real Estate Investments
Owning a house and a 3BHK apartment indicates a strong asset base. However, real estate might not yield high liquidity or returns compared to other investments. We'll focus on diversifying your portfolio further.

Creating a Financial Plan
Defining Financial Goals
Your primary goal is accumulating Rs 5 crore by age 60. Secondary goals include funding your child’s education. Let's outline steps to achieve these objectives.

Diversification Strategy
Diversification is key to managing risk and maximizing returns. We'll explore various investment options, ensuring a balanced portfolio.

Mutual Funds: A Preferred Investment Avenue
Equity Mutual Funds
Equity mutual funds offer high growth potential, suitable for long-term wealth accumulation. They invest in stocks, providing inflation-beating returns.

Debt Mutual Funds
Debt mutual funds are less risky, providing stable returns. They invest in fixed-income securities like bonds. They suit investors seeking steady income with lower risk.

Hybrid Mutual Funds
Hybrid funds balance risk and return by investing in both equities and debt. They offer a diversified approach, suitable for moderate risk-takers.

Benefits of Regular Funds
Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential provides personalized advice. MFDs help choose funds aligning with your goals and offer ongoing portfolio management.

Systematic Investment Plan (SIP)
Regular Investments
Investing through SIPs in mutual funds is beneficial. It ensures disciplined investing and rupee cost averaging, reducing the impact of market volatility.

Calculating SIP Amount
To accumulate Rs 5 crore by age 60, we need to determine the annual investment amount. Given your financial situation, a significant portion of your income can be allocated towards SIPs in equity and hybrid funds.

Public Provident Fund (PPF)
Long-Term Savings
PPF is a government-backed savings scheme offering attractive interest rates and tax benefits under Section 80C. It suits risk-averse investors seeking assured returns.

PPF Strategy
Investing a portion of your savings in PPF can provide a secure and stable return, balancing the overall risk of your portfolio.

National Pension System (NPS)
Retirement Planning
NPS is a government-sponsored pension scheme offering diversified investments in equities, corporate bonds, and government securities. It provides tax benefits and helps build a retirement corpus.

NPS Contributions
Allocating funds to NPS ensures a steady income post-retirement. It complements other investments, ensuring financial security in later years.

Gold: A Traditional and Reliable Asset
Gold ETFs and Sovereign Gold Bonds
Investing in Gold ETFs and Sovereign Gold Bonds offers benefits of gold without storage hassles. Sovereign Gold Bonds also provide periodic interest, enhancing returns.

Health and Term Insurance
Health Insurance
Comprehensive health insurance is crucial to cover medical expenses, protecting your savings and ensuring quality healthcare.

Term Insurance
Term insurance provides high life cover at low premiums. It ensures financial security for your family in case of your untimely demise. Choose a plan with adequate coverage.

Reviewing and Adjusting Investments
Regular Portfolio Review
Regularly reviewing your investment portfolio ensures it aligns with your goals. Make necessary adjustments based on market conditions and personal circumstances.

Avoiding Emotional Investing
Stick to your financial plan and avoid making investment decisions based on emotions. Make informed decisions and seek professional advice when needed.

Benefits of Actively Managed Funds
Professional Management
Actively managed funds are managed by professional fund managers. They conduct extensive research and make informed investment decisions, aiming to outperform the market.

Potential for Higher Returns
Actively managed funds have the potential to deliver higher returns compared to index funds. Fund managers can take advantage of market opportunities and mitigate risks through active management.

Flexibility
Actively managed funds offer flexibility in investment strategies. Fund managers can adjust the portfolio based on market conditions and economic trends, enhancing performance.

Disadvantages of Index Funds
Lack of Flexibility
Index funds are passively managed and track a specific index. They lack flexibility to adjust to market conditions, which can limit returns.

Potential Underperformance
Index funds may underperform actively managed funds during market downturns. They cannot capitalize on market opportunities or mitigate risks effectively.

Limited Scope
Index funds have limited scope for diversification. They invest in a fixed set of securities, which might not align with your investment goals and risk tolerance.

Final Insights
Achieving a corpus of Rs 5 crore by age 60 requires disciplined investing and strategic planning. Diversifying your investments across mutual funds, PPF, NPS, and gold ensures a balanced and robust portfolio. Engaging a Certified Financial Planner ensures personalized advice and disciplined investing, helping you achieve long-term financial success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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A doctorate from IIT Bombay in Metallurgy and masters from NIT in Manufacturing with 5 years of experience including 2 years in academics and currently working from past 3 years in industry where I work mostly on finite element analyst of forging and bulk extrusion process and New product development as manager heading a team of 5 people. I have working knowledge of 3-4 FE software related to metal forming domain along with ANSYS STRUCTURAL. Despite that I am not getting any interview calls as I am currently looking for a job switch and have put up my profile both on NAUKRI AND LINKEDIN. Some calls are coming to me but that are all irrelevant profiles in which my expertise is not there. I have been trying for the past 6 months but have not got any positive response. Despite such a highly educated person from premier institute and not getting any response is highly depressing. Could you suggest how to apply and where to apply and any other website where I shall make my profile to get a positive response ? Thanks. .................
Ans: You have accomplished academic background and work in a very specialised area. You may have to expand your job search to a broader field of Metalurgy, Product Managment, Operations and not be limited to Finite Element analysis. Think through again and look for companies active in the field of metallury and users and producers of Steel, Metals. You may also look at academics. Use your academic contacts in the two IIT--IIT B and NIT, previous employers and seek their help in connecting you with possible openings. You also need to give yourself more time and be optimistic.

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Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

Asked by Anonymous - Jul 21, 2024Hindi
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Meri umar 46 sal hai 60ke bad 2lak rs mahine ka inkam chahta hun sip me ktane investment karu
Ans: Planning for Post-Retirement Income
You are 46 years old and want a monthly income of Rs 2 lakh after 60. Let's create a strategy to achieve this goal through SIP investments.

Assessing Your Current Situation
Current Age: 46 years
Retirement Age: 60 years
Target Monthly Income Post-Retirement: Rs 2 lakh
Time Horizon: 14 years
Estimating Required Corpus
To generate a monthly income of Rs 2 lakh, you need a substantial retirement corpus. Let's estimate the corpus required using a safe withdrawal rate of 4%.

Annual Income Required: Rs 2 lakh x 12 = Rs 24 lakh
Corpus Needed: Rs 24 lakh / 4% = Rs 6 crore
SIP Investment Strategy
To accumulate Rs 6 crore in 14 years, consistent SIP investments are crucial. Let's determine the monthly SIP amount needed.

Calculate Monthly SIP Amount
The calculation involves assumptions about expected returns. Assume an annual return of 12% from equity mutual funds.

Using an online SIP calculator:

Corpus Required: Rs 6 crore
Time Horizon: 14 years
Expected Annual Return: 12%
The estimated monthly SIP amount needed is around Rs 1 lakh.

Recommendations for SIP Investments
Diversify Your Portfolio
Equity Funds: Focus on diversified equity funds for higher growth.
Balanced Funds: Include balanced funds for stability and moderate returns.
Debt Funds: Allocate a portion to debt funds for lower risk.
Regularly Review and Adjust
Monitor Performance: Regularly review your portfolio's performance.
Adjust Allocations: Adjust allocations based on market conditions and goals.
Gradually Increase SIP Amount
Step-Up SIP: Increase your SIP amount annually to boost corpus growth.
Bonus or Increment: Use bonuses or salary increments to increase investments.
Final Insights
To achieve a post-retirement income of Rs 2 lakh per month, you need to accumulate around Rs 6 crore.

Start with a monthly SIP of around Rs 1 lakh.
Diversify your investments across equity, balanced, and debt funds.
Regularly review and adjust your portfolio.
Gradually increase your SIP amount over time.
By following this strategy, you can achieve your retirement income goal. Consult a Certified Financial Planner to tailor the plan to your specific needs and circumstances.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

Asked by Anonymous - Jul 03, 2024Hindi
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Hi My per annum package is around Rs. 21 lacs. I have a home loan EMI of Rs. Rs. 2.28 lacs. I have investment of Rs. 3.6 lacs in various insurance schems. Apart from that I have some investment of Rs. 200000 in MF. Please guide me how much investment I need to do for tax savings ?
Ans: Income and Existing Investments
Annual Package: Rs 21 lakhs
Home Loan EMI: Rs 2.28 lakhs per annum
Insurance Investments: Rs 3.6 lakhs
Mutual Fund Investments: Rs 2 lakhs
Tax Saving Investments Under Section 80C
To maximize tax savings under Section 80C, you can invest up to Rs 1.5 lakhs per annum. Here’s a breakdown:

Existing Eligible Investments
Home Loan Principal Repayment: Part of your home loan EMI goes towards principal repayment, which qualifies under Section 80C.
Insurance Premiums: The Rs 3.6 lakhs in insurance schemes might include premium payments that are eligible under Section 80C.
Additional Investments Required
Calculate Existing Deductions: First, identify the portion of your EMI and insurance premiums that qualify for Section 80C. Let's assume your home loan principal repayment is Rs 1 lakh per annum and the insurance premiums are Rs 50,000 per annum.
Investment Suggestions for Additional Tax Savings
To fully utilize the Rs 1.5 lakhs limit, you need to invest an additional Rs 50,000.

Equity-Linked Savings Schemes (ELSS)
Benefits: ELSS funds offer tax savings and have the potential for high returns.
Lock-in Period: They come with a 3-year lock-in period, the shortest among all tax-saving options under Section 80C.
Public Provident Fund (PPF)
Benefits: PPF offers tax-free returns and is a safe investment option.
Lock-in Period: 15-year lock-in, but partial withdrawals are allowed after the 7th year.
Sukanya Samriddhi Yojana (SSY)
Benefits: If you have a daughter, SSY is a good option with attractive interest rates and tax benefits.
Lock-in Period: Till the daughter turns 21 or gets married after the age of 18.
National Savings Certificate (NSC)
Benefits: NSC is a safe investment option with a fixed interest rate.
Lock-in Period: 5 years.
Voluntary Provident Fund (VPF)
Benefits: You can contribute more than your mandatory EPF contribution.
Returns: Similar to EPF returns and safe.
Other Tax-Saving Sections
Section 80D - Health Insurance Premium
Benefits: Deduction up to Rs 25,000 for self, spouse, and children. Additional Rs 25,000 for parents under 60 and Rs 50,000 if they are over 60.
Section 80E - Education Loan Interest
Benefits: Deduction on interest paid on education loans for higher studies.
Section 24 - Home Loan Interest
Benefits: Deduction up to Rs 2 lakhs on interest paid on home loan.
Review and Reallocate Existing Investments
Insurance Policies
Evaluation: Assess if your insurance policies are purely for investment or provide adequate life cover.
Reallocation: Consider surrendering or reducing investment-cum-insurance policies and reallocating to mutual funds.
Mutual Funds
Focus on Growth: Since your goal is wealth creation, consider allocating more to equity funds for higher growth potential.
Final Insights
Maximize Section 80C: Utilize the full Rs 1.5 lakh limit under Section 80C with a mix of ELSS, PPF, and SSY.
Diversify: Ensure your portfolio is diversified across different asset classes for balanced growth and risk management.
Regular Monitoring: Periodically review and adjust your investments to stay aligned with your financial goals.
Certified Financial Planner: Consider consulting a Certified Financial Planner for personalized advice and strategy.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

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I have invested 10L in Mutual Fund through Lumpsum mode. The 4 schemes which I have invested in are PPFAS FLEXI CAP REG-G (2.5L), ICICI PRU equity & Debt-G (2.2L), ICICI PRU Large & Mid Cap-G (2.2L), SBI long term Equity Reg-G (2L), SBI contra -G (1.10L). Investment objective is long term wealth creation and time frame is 15 years. Kindly Suggest if choice of funds is good and what could be potential return.
Ans: Let's review your mutual fund choices and assess their suitability for your long-term wealth creation goal.

Current Investment Overview
Total Investment: Rs 10 lakhs
Investment Mode: Lumpsum
Time Frame: 15 years
Fund Allocation
PPFAS Flexi Cap Reg-G: Rs 2.5 lakhs
ICICI Pru Equity & Debt-G: Rs 2.2 lakhs
ICICI Pru Large & Mid Cap-G: Rs 2.2 lakhs
SBI Long Term Equity Reg-G: Rs 2 lakhs
SBI Contra-G: Rs 1.1 lakhs
Evaluation of Fund Choices
PPFAS Flexi Cap Reg-G
Flexibility: Invests across market capitalizations and sectors.
Potential: Good for capturing diverse market opportunities.
Long-Term Suitability: Suitable for long-term wealth creation.
ICICI Pru Equity & Debt-G
Balanced Approach: Mix of equity and debt.
Stability: Provides a cushion against market volatility.
Long-Term Suitability: Suitable for balancing risk and returns.
ICICI Pru Large & Mid Cap-G
Growth Potential: Invests in large and mid-cap companies.
Risk-Return Balance: Good for capturing growth in established and growing companies.
Long-Term Suitability: Suitable for long-term capital appreciation.
SBI Long Term Equity Reg-G
ELSS Fund: Offers tax benefits under Section 80C.
Equity Focus: High equity exposure for potential high returns.
Long-Term Suitability: Suitable for long-term wealth creation with tax benefits.
SBI Contra-G
Contrarian Strategy: Invests in undervalued stocks.
Potential: Can yield high returns if the strategy pays off.
Long-Term Suitability: Suitable for long-term investors willing to take higher risks.
Potential Returns
Assuming an average conservative annual return of 10-12% for a diversified portfolio, your potential return over 15 years could be significant. However, mutual funds are subject to market risks, and actual returns may vary.

Recommendations
Diversification: Your portfolio is well-diversified across different fund types and strategies, which is good for risk management.

Fund Performance Review: Regularly review the performance of your funds. Consider reallocating if any fund consistently underperforms its benchmark.

Stay Invested: For long-term wealth creation, stay invested for the entire 15-year period to benefit from compounding.

Avoid Index Funds: Actively managed funds like yours can potentially offer better returns than index funds.

Additional Considerations
Regular Monitoring: Keep an eye on your portfolio and the market trends.
Certified Financial Planner: Consult a Certified Financial Planner for personalized advice and adjustments.
Final Insights
Balanced Portfolio: Your fund choices provide a good mix of growth, stability, and potential tax benefits.
Long-Term Focus: Stay focused on your long-term goal and avoid frequent changes based on short-term market fluctuations.
Potential for Growth: With disciplined investing and regular monitoring, your portfolio has the potential to achieve significant growth over 15 years.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

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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