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Should I retire early at 43 with 7+ Cr investments and exit 3.5-4 Cr?

Ramalingam Kalirajan |8077 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 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 - Jul 21, 2024Hindi

Hi, I am 43 Years M with wife and 2 Kids (10 yrs. and 7 Yrs.). I am looking to retire in next 7-10 yrs. I worked in private sector for 8 yrs. and now I am in to business. My investments are as follows:- • 4.37 Cr in MFs with minimum 7-10 yrs. investment horizon. • Approx. 32 L in Bank FD's and Saving Ac. • Health insurance with 50 L cover for each hospitalization event and a Term Plan of 1 Cr with 90 L accidental cover against full disability. Assets:- • A Residential plot fully paid and worth 2.5 Cr. • A Flat worth 45 L and fully paid. • Gold jewellery close to 20-25 Lacs • 2 Cars fully paid, and shall serve my needs for another 10 yrs. • An inherited House, which is recently renovated and where I might settle after 15 yrs. • A commercial building worth close to 3 Cr with a monthly rental income of 65K. • A Budget Hotel (1/3rd owner) worth 8-10 Cr app and having a loan of 1.4 Cr. Its EMIs are sorted from inflow and shall be paid fully in the next 7 years. • 2 Land Parcels worth close to 3 Cr with very high commercial potential so intend to hold for possible future development. • Apart from that, I inherited a few land parcels which I intend to pass on to next-gen so not putting value on them. • Apart from the Hotel, I am invested in 3 other businesses which are handsomely giving returns. After expenses, I am left with a reasonable amount which I am investing in MFs and real estate. Liabilities:- • Nil except Hotel Loan. Expenses: - 1.2 to 1.5 L. Income/Inflows • 2-3 L Monthly - 65K from Commercial building and 2-2.5 L from Business. Concern/Issue:- My major earnings are from businesses whom I rate “high risk-high reward” kind of. And they being overseas keeps me away from family for 6 months a year. I am thinking to shift back to India with my family. So, if I take an exit then I shall touch at least 3.5-4 Cr INR. Now assuming that I did exit and none of my Indian Projects materialized. Then I would be left with assets mentioned above and Exit compensation of 3.5 to 4 Cr. How should I strategize my investments to take care of my Monthly expenses and other needs for next 30 -35 yrs?

Ans: Current Financial Position
Investments
Mutual Funds: Rs. 4.37 Cr with a horizon of 7-10 years.
Bank FD's and Savings Account: Approx. Rs. 32 L.
Insurance
Health Insurance: Rs. 50 L cover per hospitalization event.
Term Plan: Rs. 1 Cr with Rs. 90 L accidental cover.
Assets
Residential Plot: Worth Rs. 2.5 Cr, fully paid.
Flat: Worth Rs. 45 L, fully paid.
Gold Jewellery: Worth Rs. 20-25 L.
Cars: Fully paid, will serve for 10 more years.
Inherited House: Recently renovated, will settle in 15 years.
Commercial Building: Worth Rs. 3 Cr, rental income of Rs. 65K/month.
Budget Hotel: 1/3rd owner, worth Rs. 8-10 Cr, loan of Rs. 1.4 Cr with EMIs sorted for 7 years.
Land Parcels: Worth Rs. 3 Cr with high commercial potential.
Inherited Land Parcels: No value assigned, intended for next-gen.
Liabilities
Hotel Loan: Rs. 1.4 Cr.
Monthly Expenses
Monthly Expenses: Rs. 1.2 to 1.5 L.
Income/Inflows
Monthly Income: Rs. 2-3 L (Rs. 65K from commercial building and Rs. 2-2.5 L from business).
Investment Strategy for Early Retirement
Key Considerations
Risk Management

Diversify to mitigate business risk.
Ensure a steady income stream for expenses.
Asset Allocation

Balance between growth, income, and safety.
Optimize existing investments and new funds from exit.
Inflation Protection

Ensure investments grow to outpace inflation.
Plan for long-term expenses and healthcare costs.
Steps to Strategize Investments
Evaluate Existing Investments
Mutual Funds:

Continue with current investments.
Regularly review and rebalance portfolio.
Bank FDs and Savings:

Maintain for liquidity and emergency fund.
Consider high-interest alternatives like debt funds for better returns.
New Investments from Exit Compensation
Debt Allocation:

Allocate a portion to debt instruments for stable returns.
Consider options like debt mutual funds, corporate bonds, and government securities.
Equity Allocation:

Invest in diversified equity mutual funds for growth.
Include large-cap, mid-cap, and multi-cap funds for balanced exposure.
Hybrid Funds:

Invest in hybrid funds for balanced growth and stability.
These funds mix equity and debt components.

SWP Schemes:

Invest in SWPs for regular cash flow.
Explore options in mutual funds.
Commercial Property:

Continue rental income from the commercial building.
Potentially reinvest rental income into mutual funds or other assets.
Gold:

Consider holding gold as a hedge against inflation.
Explore options like Gold ETFs for liquidity.
Real Estate:

Evaluate potential of land parcels for future development.
Avoid further real estate investments to maintain liquidity.
Focus on Contingency Planning
Emergency Fund:

Maintain 6-12 months of expenses in liquid form.
Ensure quick access to funds for unforeseen needs.
Health Insurance:

Ensure adequate health cover for the family.
Review and enhance cover if necessary.
Estate Planning:

Create a will to manage inheritance.
Consider setting up a trust for asset protection.
Final Insights
Shifting back to India with a planned exit strategy can provide stability. Diversify investments to balance growth, income, and safety. Regularly review and adjust the portfolio to align with changing needs and market conditions. Ensure a steady income stream for long-term financial security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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