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Milind

Milind Vadjikar  |556 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 02, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Nov 01, 2024Hindi
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Hi I am 43 years old working in corporate sector in Bangalore for last 20 years. I got impacted by job loss due to the economic scenario and I am finding it difficult to get a job now for almost last 1 year. I am living off my savings. My investments are 1.5 Cr in FD, 2.75 Cr direct investment in equity, 80 Lakh in MF, 35 Lakh in PF, 1 Cr in NPS/Pension fund and 50 Lakhs in Gold. I live in the house I own and I have no loan. I also own a piece of Land worth 60 lakhs. I dont have any debts now. I dont have term life insurance, I have health insurance cover of 2 CR for family. My son is in 10th standard and wants to study abroad which will be a major expense in future. My monthly expenditure including school fees is 1.75 lakhs. Please advise me on how to manage the assets and how to move around the investments as getting a job seems to be more difficult.

Ans: Hello;

Following is the sum of investments you currently hold:

1. FDs: 1.5 Cr
2. Direct stocks: 2.75 Cr
3. MF corpus: 0.8 Cr
4. Land property: 0.6 Cr
5. PF corpus: 0.35 Cr
6. NPS corpus: 0.2 Cr
Grand TOTAL: 6.20 Cr

You should apply for premature withdrawal of NPS. Since this being premature withdrawal your corpus of 1 Cr will get divided into two components 0.8 Cr worth annuity you will have to buy while rest 0.2 Cr comes to you which is indicated above.

The gold asset worth 50 L is purposely not considered here. It may be used as a emergency safe reserve.

You may invest 6.2 Cr corpus in ICICI Pru equity savings fund (low to moderate risk) and do an SWP at 3% which may yield you a monthly income of ~1.4 L (post tax).

The 0.8 Cr of NPS used to buy annuity will yield you a monthly income of around 40 K (6% annuity rate considered), therefore your total monthly income will be 1.4+0.4=1.8 L.

The average returns of ICICI Pru equity savings fund are 8-9% but it is relatively less risky and this is more important.

To fund overseas education of your son, you may have to partially deplete the corpus apart from emergency gold reserves.

Hence it makes sound practical sense to have term life cover of ~ 2 Cr with riders for critical care and accident benefit for 15-20 years, apart from the health care cover which you have already.

This will ensure son's education and income for regular household expenses remain more or less unaffected in the unfortunate situation of your demise.

Also please keep searching for assignments, if not possible full time, maybe part time or on consultation basis.

This will keep you focused and busy.

Feel free to revert.

Happy Investing;
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  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 10, 2024

Asked by Anonymous - Apr 23, 2024Hindi
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Iam 41 years earning 32000 pm and after TDS getting 29484 my dad is giving 15000 and interest on fd for 320000 at 7.75 % and personal interest for loan provided for5 lakh is 17500 fd interest and loan interest varies dad's is temporary have rd investment of total 260000 which matures in August ,2024 ppf 230000 sbi pension investment retire smart plan of 500000 I can either avail pension lifelong or lumpsum return before 25 years completion in another 2 years afterwards at 8.1 interest if pension or if lumpsum the fund value gold and silver and residential property which iam currently living in my expenses are about 10000 or so depends I have lic endowment paid till now for about 7.5 years 50000 pa needed to be paid for another 7.5 years if continued maturity amount will be 12 lakh. In commercial property I will get increment upto every 5 years for about 25 years and at 25th year it will be around 57000 at 66 th year which is fixed and then it would be the rent at that point what is prevailing in that area now I want to know what I need to invest and is it sufficient for my retirement and how much more I should make and salary varies as jobs are not permanent so request to guide as iam interested in travelling and need about 30 lakhs or so for all this starting at this age for about another 5 to 6 years taking about 4 lakhs pa to cover up 1 abroad location
Ans: Given your financial situation and aspirations, it's essential to devise a comprehensive retirement plan that addresses your income, expenses, investments, and retirement goals.

Starting with your income, considering your monthly salary of 29,484 after TDS, along with the additional support from your father and interest income from FDs and loans provided, you have a steady income stream.

Your investments, including RD, PPF, SBI pension investment, LIC endowment, and commercial property, provide a diversified portfolio. However, it's crucial to evaluate each investment's performance, risk, and suitability for your retirement goals.

Regarding your expenses, with an estimated monthly expense of 10,000, it's important to factor in inflation and potential lifestyle changes in retirement. Planning for contingencies and unexpected expenses is prudent.

To assess if your current investments are sufficient for retirement, consider your retirement goals, including travel expenses. With a target of 30 lakhs for travel over the next 5-6 years, it's essential to calculate the required investment amount to achieve this goal within the specified timeframe.

Since your salary varies due to the nature of your job, it's advisable to create a buffer or emergency fund to cover any income fluctuations or unforeseen expenses.

Consulting with a Certified Financial Planner can provide personalized insights and recommendations tailored to your financial situation, retirement goals, and risk tolerance. They can help you optimize your investment strategy, identify potential gaps, and create a roadmap for achieving your retirement aspirations.

Remember, retirement planning is a dynamic process that requires periodic review and adjustments. Stay proactive, monitor your investments, and make informed decisions to ensure a secure and fulfilling retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 2024

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Hello i am a homeopathic doctor aged 27 still doing my MD( final year) I have a evening clinic started newly i earn about 45-50k per month and as get stipend i nearly get 40k per month i have a 6 months old daughter and i have 14 lakhs savings of own 10 lakhs in equity 60k gold bonds ,1.2lakhs in US equity and 50k in corporate bonds and 2.5lakhs in savings account apart from this i have 24 lakhs in hybrid mutual fund ( this i got after my fathers death)may be in couple of months i will be getting another 90 lakhs by selling a property my future biggest expense will be my daughters education as i have a desire to send her to abroad for her UG itself my biggest question how to manage 90 lakhs for my secured future
Ans: Strategic Financial Planning for a Secure Future
Congratulations on your career progress and the new addition to your family! At 27, with a good income and a mix of investments, you're in a strong position to plan for a secure financial future and your daughter's education. Let’s delve into how to manage the upcoming Rs. 90 lakhs from the property sale effectively.

Assessing Your Current Financial Position
Existing Investments and Savings
Equity Investments: Rs. 10 lakhs
Gold Bonds: Rs. 60,000
US Equity: Rs. 1.2 lakhs
Corporate Bonds: Rs. 50,000
Savings Account: Rs. 2.5 lakhs
Hybrid Mutual Fund: Rs. 24 lakhs
Monthly Income
Evening Clinic: Rs. 45-50k
Stipend: Rs. 40k
You have a diversified portfolio, which is a good start. Your biggest future expense is your daughter’s education, especially if she studies abroad.

Managing the Rs. 90 Lakhs Property Sale
Prioritizing Financial Goals
Daughter’s Education Fund
Emergency Fund
Retirement Planning
Wealth Growth and Diversification
Detailed Financial Strategy
1. Establish an Emergency Fund
An emergency fund is crucial for unforeseen circumstances. Aim to save 6-12 months of your living expenses in a liquid and safe account.

2. Education Fund for Your Daughter
Given your desire to send your daughter abroad for her UG, start a dedicated investment plan.

Child Education Mutual Funds: These funds are tailored for long-term educational goals. They offer potential for significant growth over time.
SIPs (Systematic Investment Plans): Invest monthly in mutual funds. This will average out market volatility and provide disciplined savings.
Debt Funds: For the portion of funds needed in the short term (next 5-8 years), consider debt funds for lower risk and stable returns.
3. Retirement Planning
It’s never too early to plan for retirement. Diversify your investments to ensure a comfortable retirement.

Equity Mutual Funds: Continue investing in equity mutual funds for long-term growth. Choose funds that suit your risk profile.
PPF (Public Provident Fund): PPF is a safe, tax-saving investment option with a decent interest rate.
NPS (National Pension System): Consider NPS for additional retirement savings with tax benefits.
4. Wealth Growth and Diversification
Diversified Portfolio: Maintain a diversified portfolio across different asset classes – equity, debt, gold, and international funds.
Avoid Over-reliance on One Asset: Avoid putting all your money into one type of investment. Diversification reduces risk.
Monitoring and Adjusting Your Investments
Regular Reviews
Annual Reviews: Review your portfolio annually to ensure it aligns with your goals.
Adjust Allocations: Rebalance your portfolio based on performance and changing goals.
Professional Guidance
Certified Financial Planner (CFP): A CFP can provide personalized advice and help you stay on track with your financial goals.
Regular Consultations: Meet with your CFP regularly to adjust your strategy as needed.
Avoid Common Pitfalls
Over-Reliance on High-Risk Investments
Avoid putting too much money into high-risk investments like stocks or volatile mutual funds. Balance risk with stable options.

Ignoring Inflation
Ensure your investments outpace inflation, especially for long-term goals like education and retirement.

Not Having a Clear Plan
Having a clear, well-structured financial plan is crucial. Stick to your plan and make adjustments as needed.

Conclusion
With a clear financial strategy and disciplined approach, you can secure a prosperous future for yourself and your daughter. Start by setting up an emergency fund, then focus on dedicated investments for education and retirement. Regularly review and adjust your portfolio with the help of a Certified Financial Planner to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 18, 2024

Asked by Anonymous - Jun 11, 2024Hindi
Money
I am 43 years old, have 13 yrs son in 9th std, 8yrs daughter in 3rd std. Both in India. Currently i am NRI monthly 5lacs salary. But soon coming back to india my salary will be 2.3lac per month. I have 1plot size 30x40 in bangalore. Around 5acres of active agricultural in native tier 3 city. I have epf balance 30lacs(not performing last 2.5yrs) . Current bank balance is 10lacs. Have sukanya samruthi for my daughter 10k per month (around 4lacs in account) Around 500gm gold jewel, wife(home maker, not nri) having 250gm gold, 1.5acre agri land in her name purchased by me with good potential for real estate. Invested in stock market 1lac recently in my wife's name. No debt now. Planning construct home 1cr(will get rent 40k per month) in 1year in bangalore, planning to buy car 15lacs less than 2years. Own home in village. Holding 1cr term insurance. My current family expense 1lac per month(including school fees, petrol etc.)Kindly advice me for kids education marriage and my retirement corpus. Currently having 2nd old santro for my personal travel in India.
Ans: Thank you for sharing the details of your financial situation. I understand your goals and concerns, and I appreciate the effort you’ve put into securing your family’s future. Let's analyze your financial position and provide a comprehensive plan for your children's education, their marriage, and your retirement.

Understanding Your Financial Situation
Current Income and Assets
Monthly NRI Salary: Rs 5 lakhs
Upcoming Indian Salary: Rs 2.3 lakhs per month
Plot in Bangalore: 30x40
Active Agricultural Land: 5 acres
EPF Balance: Rs 30 lakhs
Bank Balance: Rs 10 lakhs
Sukanya Samriddhi Yojana: Rs 10,000 per month (Rs 4 lakhs in account)
Gold Jewelry: 750 grams (500 gm yours, 250 gm wife’s)
Agricultural Land (Wife’s name): 1.5 acres
Recent Stock Investment: Rs 1 lakh (wife’s name)
Current Family Expenses: Rs 1 lakh per month
Term Insurance: Rs 1 crore
Plan to Construct Home: Rs 1 crore (rent: Rs 40,000 per month)
Plan to Buy Car: Rs 15 lakhs (in less than 2 years)
Own Home in Village
Current Car: Old Santro
Financial Goals
Children’s education
Children’s marriage
Retirement corpus
Construct home and generate rental income
Purchase a car
Evaluating Your Assets
EPF Balance
Your EPF balance of Rs 30 lakhs is substantial but hasn’t been performing well. It’s crucial to reassess this investment and consider moving a portion to other instruments that may offer better returns.

Agricultural Land and Plot
Agricultural land and the plot in Bangalore are valuable assets. The agricultural land in your wife’s name has real estate potential, which can be considered for future use or sale.

Gold
Gold is a secure investment and can be used as a safety net in times of need. It’s good to have a portion of your assets in gold.

Stock Market Investment
Investing in stocks can yield high returns, but it’s also risky. Ensure you’re diversifying adequately to manage risk.

Planning for Children’s Education and Marriage
Education
Estimate Future Costs: Education costs are rising. Estimate the future costs for both your children’s education. Consider inflation and choose investments accordingly.

Investment Vehicles: SIPs in mutual funds are an effective way to build an education corpus. Diversify between equity and debt funds for balanced growth and safety.

Marriage
Estimate Marriage Expenses: Determine a realistic amount for marriage expenses considering current trends and inflation.

Long-Term Investments: For long-term goals like marriage, consider investing in PPF, Sukanya Samriddhi Yojana (for your daughter), and balanced mutual funds.

Retirement Planning
Retirement Corpus
Calculate Corpus Needed: Estimate the amount you’ll need to maintain your lifestyle post-retirement. Consider inflation and life expectancy.

Diversified Portfolio: A mix of mutual funds, fixed deposits, and pension schemes can help create a robust retirement corpus.

Monthly Contributions
Systematic Investments: Allocate a portion of your salary towards SIPs in mutual funds. Diversify between equity, debt, and hybrid funds for balanced growth and safety.

EPF and PPF: Continue contributing to EPF and PPF. They offer tax benefits and relatively secure returns.

Construction of Home and Rental Income
Construction Plan
Budget Management: Ensure the construction cost of Rs 1 crore is within your budget. Consider taking a home loan if necessary but ensure it’s manageable within your salary.

Rental Income: The expected rental income of Rs 40,000 per month will help supplement your monthly income. This can be allocated towards your children’s education or marriage fund.

Tax Benefits
Home Loan Interest: Utilize tax benefits on home loan interest under Section 24(b) of the Income Tax Act.

Principal Repayment: Avail of tax deductions on the principal repayment under Section 80C.

Buying a Car
Budget Allocation
Down Payment and Loan: Decide on the down payment and the amount to be financed through a loan. Ensure the EMI is affordable within your post-return salary.

Savings Plan: Start a dedicated savings plan for the car purchase to avoid large financial strain at the time of purchase.

Maintaining Emergency Fund
Emergency Fund
Allocate Funds: Maintain an emergency fund equivalent to 6-12 months of your monthly expenses. This ensures financial stability in case of unforeseen circumstances.

Liquid Investments: Keep the emergency fund in liquid investments like savings accounts or liquid mutual funds for easy access.

Risk Management
Insurance
Health Insurance: Ensure adequate health insurance coverage for your entire family. Consider enhancing your current health insurance plan given the rising medical costs.

Term Insurance: Your Rs 1 crore term insurance is good. Reassess the coverage to ensure it meets your family’s needs.

Diversification
Diversified Portfolio: Diversify your investments across various asset classes to reduce risk and improve returns.

Regular Review: Regularly review your investment portfolio and rebalance it to align with your financial goals and risk tolerance.

Creating a Financial Plan
Setting Clear Goals
Specific Goals: Define specific financial goals for your children’s education, their marriage, and your retirement.

Timeframes: Set realistic timeframes for each goal to help in planning and tracking progress.

Monthly Budget
Income Allocation: Allocate your income towards various expenses, savings, and investments. Ensure you’re saving and investing a significant portion of your income.

Expense Tracking: Track your expenses to ensure you stay within your budget and can allocate more towards savings and investments.

Professional Guidance
Certified Financial Planner (CFP): Consult a CFP to help create a detailed financial plan tailored to your needs and goals.

Regular Monitoring: Regularly monitor and review your financial plan with your CFP to make necessary adjustments based on changing circumstances.

Final Insights
You have a solid foundation with various assets and a good income. By strategically planning your investments and expenses, you can comfortably achieve your financial goals. Focus on diversifying your investments, maintaining an emergency fund, and seeking professional advice. This will ensure your children’s education and marriage are well-funded, and you can enjoy a comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2024

Asked by Anonymous - Jun 26, 2024Hindi
Money
I am 47 year old working IT professional with monthly earning of 2.2 lacs in hand.We are 4 members in my home. Me, my wife and 2 daughters. Elder one is 15 year and younger one is 10 years. All my investments are only in Real Estate ( 3 houses, One house where I live around 4 to 4.5 CR, Another underconstruction one is around 1.5 c (handover of this house most probably will be in 2025 end and it will be around 2 cr), 3rd one is around 40 lac). None of these houses are generating any income. I have few EMIs ( 80000 Home Loan, 24000 personal loan, 5000 Gold. Loa). I do not have any emergency fund, only insurance is from my company, Health insurance is also from my company. (5 lacs). My monthly expenses are always more than 2.2 lacs. It is creating problem for me as I have very less liquid money. I was thinking of selling one of my home (4 to 4.5 cr) and invest that money into other investment tools ( majorly into equity ). This way I'll still have 2 houses with me and this money can take care of my life goals ( Education of daughters, Marriage , My retirement . I am not able to see any other way to secure my future. Pleas suggest what should I do to secure my future given the scenario explained above.
Ans: I understand your concerns. Let's assess your situation comprehensively and devise a plan to secure your future.

Current Financial Snapshot
You have a strong income of Rs. 2.2 lakh per month, but your expenses are high. You have significant assets in real estate but limited liquidity. This imbalance needs addressing to ensure financial security.

Real Estate Assets
Real estate forms a major part of your portfolio. You own three houses, one of which is under construction. These properties are valued at approximately:

Primary residence: Rs. 4 to 4.5 crore
Under-construction property: Rs. 1.5 crore (expected to be Rs. 2 crore post-completion)
Third property: Rs. 40 lakh
These properties are non-income generating, leading to liquidity issues.

Existing Liabilities
You have ongoing EMIs:

Home Loan: Rs. 80,000 per month
Personal Loan: Rs. 24,000 per month
Gold Loan: Rs. 5,000 per month
These loans total Rs. 1.09 lakh per month, contributing to your financial strain.

Lack of Emergency Fund and Insurance
You lack an emergency fund, which is crucial for unexpected expenses. Your only insurance is through your company, with health coverage of Rs. 5 lakh. This is insufficient for a family of four.

Proposed Solution: Selling Real Estate
Selling your primary residence, valued at Rs. 4 to 4.5 crore, can significantly improve your financial situation. Here’s how:

Reduce Debt: Use a portion of the sale proceeds to clear your existing loans. This will free up Rs. 1.09 lakh per month.

Create an Emergency Fund: Set aside Rs. 10-15 lakh in a high-interest savings account or liquid mutual funds for emergencies.

Insurance: Purchase adequate health insurance (at least Rs. 20 lakh) and a term life insurance policy.

Invest in Equity: Diversify your investments to include mutual funds for long-term growth.

Diversifying into Mutual Funds
Mutual funds can offer higher returns than traditional savings. Let’s explore different categories and their benefits.

Equity Mutual Funds
These funds invest in stocks and have the potential for high returns. Suitable for long-term goals like your daughters' education, marriages, and your retirement. Types include:

Large-Cap Funds: Invest in large, established companies. They are less volatile and provide steady growth.

Mid-Cap Funds: Invest in medium-sized companies. They offer higher growth potential but come with moderate risk.

Small-Cap Funds: Invest in smaller companies. These have the highest growth potential but also higher risk.

Multi-Cap Funds: Invest across companies of different sizes. They offer a balance of risk and return.

Debt Mutual Funds
These funds invest in bonds and other debt instruments. They provide stable returns with lower risk. Suitable for short to medium-term goals and emergency funds.

Liquid Funds: Ideal for emergency funds due to their high liquidity.

Short-Term Debt Funds: Suitable for short-term goals (1-3 years) with moderate returns and low risk.

Corporate Bond Funds: Invest in high-rated corporate bonds, providing better returns than traditional savings.

Benefits of Mutual Funds
Diversification: Spread your investments across different sectors, reducing risk.

Professional Management: Managed by experienced fund managers, ensuring better returns.

Liquidity: Easy to buy and sell, providing quick access to funds.

Compounding: Reinvesting returns helps grow your wealth exponentially over time.

Flexibility: Choose from a variety of funds based on your risk tolerance and goals.

Addressing Expenses
Budgeting: Create a detailed budget to track and control your expenses. Identify areas to cut unnecessary spending.

Emergency Fund: Prioritize building a robust emergency fund to handle unforeseen expenses without disrupting your investments.

Insurance: Ensure adequate health and life insurance to protect your family’s financial future.

Education and Marriage of Daughters
Invest in equity mutual funds to grow your wealth for your daughters' education and marriages. Consider starting systematic investment plans (SIPs) for consistent investments.

Education: Focus on large-cap and multi-cap funds for stable growth over the next 3-5 years.

Marriage: Allocate a portion to mid-cap and small-cap funds for higher growth over the next 10-15 years.

Retirement Planning
Retirement planning should start immediately. Invest in a mix of equity and debt funds to build a retirement corpus.

Equity Funds: Allocate a significant portion to large-cap and multi-cap funds for long-term growth.

Debt Funds: Invest in short-term debt funds and corporate bond funds for stability and regular income.

Avoiding Index Funds
Index funds mimic market indices. They provide average returns and lack active management. Actively managed funds can outperform index funds through skilled management, offering better returns.

Regular vs. Direct Funds
Direct funds have lower expense ratios but require active management. Regular funds, managed by certified financial planners, offer expert guidance and better decision-making, essential for achieving your goals.

Steps to Implement the Plan
Sell the Primary Residence: Use the proceeds to pay off debts, create an emergency fund, and invest.

Consult a Certified Financial Planner: For personalized advice and to select the right mutual funds.

Start SIPs: In equity and debt mutual funds based on your risk tolerance and goals.

Insurance: Purchase adequate health and life insurance to safeguard your family’s future.

Track and Adjust: Regularly review your investments and adjust based on market conditions and life changes.

Final Insights
Your current financial situation, with high expenses and low liquidity, is unsustainable. By selling one property and diversifying into mutual funds, you can secure your financial future. Focus on reducing debt, creating an emergency fund, and investing in a mix of equity and debt funds. Seek guidance from a certified financial planner to tailor the plan to your specific needs and goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6903 Answers  |Ask -

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

Asked by Anonymous - Sep 22, 2024Hindi
Money
I am 47 years old and working abroad in the Gulf., married but have no children. An insecure job (Sales and Marketing in the Healthcare segment) with 9 months remaining in the present contract period and a monthly salary of 2.65 lakhs in INR after conversion. Living expenses required 1.25 lakhs and I am left with only 1.4 lakhs to send back home every month. Ongoing medical expenses for the family require around 12 lakhs (+ an additional 2 lakhs) to be completed in the next 9 months. No home/car/personal loan in India presently. Assets include Home + Plot in home town, two houses earning rent of 10K per month, Ancestral property of agricultural land of 3 acres (which is barren and hard to grow any crop), Equity investments of 5 lakhs in shares with cash on hand of 8 lakhs in India. Other investment liabilities presently include LIC Premiums, ULIP premiums, and Health and Car insurance which works out to 2 lakhs per annum for the next 2 years. Investments in insurance and ULIPs will yield returns only from Dec 2026. Applying for jobs in India and abroad but no luck yet. Suggest a plan on how I manage my finances if I have to come back abruptly given the insecure situation in this part of the world. And what key questions I need to answer., I am confused.
Ans: You are currently 47 years old, working in an unstable sales and marketing job in the healthcare sector in the Gulf. You have nine months left in your contract and face uncertainty about future employment. You earn Rs. 2.65 lakhs per month, and after living expenses of Rs. 1.25 lakhs, you send Rs. 1.4 lakhs back to India. Additionally, there are ongoing medical expenses amounting to Rs. 12 lakhs, plus an extra Rs. 2 lakhs that need to be met within the next nine months. You have some key financial commitments in the form of LIC, ULIP premiums, and health and car insurance, amounting to Rs. 2 lakhs annually for the next two years.

Your assets include a home, a plot in your hometown, two rental houses earning Rs. 10,000 monthly, agricultural land, Rs. 5 lakhs in equity, and Rs. 8 lakhs in cash savings.

Let’s break down how you can manage your financial situation, especially if you must return to India abruptly.

Assessing Cash Flow & Medical Expenses

Your current salary provides you with Rs. 1.4 lakhs to send back home every month, but there is a pressing need to cover medical expenses of Rs. 12-14 lakhs over the next nine months.

These medical expenses will eat into your monthly savings or cash reserves, which means you may face a liquidity crunch in the short term. It is essential to ensure you have a clear plan for covering these medical costs while continuing to save for future needs.

What You Can Do

Create a Medical Emergency Fund: Allocate a portion of your Rs. 8 lakhs in cash reserves specifically to handle these medical costs. This will prevent unnecessary pressure on your monthly cash flow and give you peace of mind. You can then prioritize building this fund up again once the medical expenses are over.

Prioritize Savings: Focus on increasing your savings, even if that means slightly cutting down your living expenses abroad. See if there are areas where you can cut back or reduce discretionary spending to boost your savings buffer. Even saving an extra Rs. 10,000-20,000 monthly can help.

Evaluating Investment Commitments

You have insurance and ULIPs as investments, with returns starting from December 2026. However, these investments are likely not yielding optimal returns due to their high costs.

What You Can Do

Review Your Insurance Plans: If possible, check if any of the insurance or ULIP policies are underperforming. Given that their maturity is still a few years away, it might be wise to consider if surrendering these policies and reinvesting in more flexible and higher-yielding options like mutual funds will benefit you. Consult a Certified Financial Planner to guide you in this area.

Switch to Regular Mutual Funds: If your focus is on actively managed mutual funds, you should consider shifting some of your insurance-based investments into well-researched funds through an MFD and CFP. Actively managed funds have the advantage of being able to outperform index funds, especially during volatile market conditions. Since your ULIPs and insurance may have higher charges, they could hinder your returns compared to mutual funds.

Why Avoid Direct Funds: If you have been considering direct mutual funds, it’s important to know they can sometimes result in missed opportunities or inadequate management due to the absence of a professional advisor. Regular funds, when invested through a trustworthy MFD with CFP credentials, can outperform direct funds because they offer better fund selection, continuous monitoring, and timely adjustments.

Managing Assets and Liabilities

You have various assets: property in your hometown, two rental houses bringing in Rs. 10,000 per month, equity investments worth Rs. 5 lakhs, Rs. 8 lakhs in cash, and agricultural land that is barren.

What You Can Do

Maximize Rental Income: Rs. 10,000 from two houses is a modest amount. You may want to assess if there is potential to increase this rent over time. If you feel that these properties are not providing enough returns, consider renting out the home or plot in your hometown as well. Since you don’t have plans to live there right now, renting these out may provide a steady cash flow that can offset your living expenses in India or abroad.

Reassess Agricultural Land: The agricultural land isn’t generating any income, which can be a missed opportunity. You might want to explore leasing it out to someone who can cultivate it. Even a nominal rent could be beneficial, as the land is otherwise lying idle. This would also reduce maintenance costs and make the land more productive.

Strengthen Equity Portfolio: You have Rs. 5 lakhs in equity investments. While this is a good start, considering the potential of equity to generate inflation-beating returns over the long term, you could aim to increase this allocation. Since equities can provide better returns than ULIPs and insurance policies, focusing on this area will help in wealth accumulation for future needs.

Evaluate Gold as an Investment: If you have any idle gold investments, you might want to consider their value. Gold can act as a hedge against inflation, and selling or leveraging it in times of emergency could provide you with immediate liquidity. This can be an option for medical expenses or any abrupt changes in your income.

Retirement Planning and Building a Safety Net

Since you are 47, it’s important to start thinking about building a retirement corpus, especially if you return to India soon. You should aim for a financial plan that provides income stability for the long term.

What You Can Do

Continue Building Emergency Fund: Given the uncertainties in your job, focus on creating a solid emergency fund. Ideally, this should cover 12-18 months of your expenses in case of job loss or a sudden need to return to India. With your living expenses at Rs. 1.25 lakhs monthly, you would need a fund of Rs. 15-20 lakhs. This will give you a cushion while searching for jobs or setting up income streams back home.

Build Your Retirement Portfolio: A retirement corpus should be a top priority at this stage. You can create a mix of investments, focusing on debt and equity mutual funds to balance risk and returns. Avoid relying heavily on insurance products like ULIPs, as they may not provide the liquidity and returns you need for retirement planning. Regular SIPs in diversified equity funds can grow your portfolio faster than ULIPs.

Ensure a Stable Post-Retirement Income: Since you own properties and have rental income, you already have a base for post-retirement income. You can further enhance this by investing a part of your equity or savings into high-dividend-paying stocks or mutual funds. Also, systematically investing into debt mutual funds closer to your retirement will ensure a predictable income stream.

Job Uncertainty and Transitioning Back to India

Since there is a chance you may need to return to India abruptly, it's essential to have a plan that ensures financial security during the transition.

What You Can Do

Build a Buffer for the Transition: You may not find a job in India or abroad right away. Therefore, it’s important to create a transition fund to cover at least six months of living expenses. This should be separate from your emergency fund. This buffer will allow you to take the time to find a suitable job without financial stress.

Explore Freelance/Consulting Work: Given your experience in sales and marketing in the healthcare sector, you may want to explore opportunities for freelance consulting or remote work. These jobs can give you flexibility and a backup income source.

Invest in Upskilling: Now might be a good time to invest in upskilling or gaining certifications that can improve your chances of finding a new job in India or abroad. Explore courses that are in demand within your industry and sector, whether in digital marketing, healthcare innovations, or related fields.

Final Insights

You are in a challenging yet manageable situation. Your key focus should be on building a solid emergency fund, reviewing your insurance-based investments, and increasing your equity exposure. Since job security is uncertain, preparing for a possible return to India is essential. Maximize your income sources, whether through increased rent or alternative job opportunities like freelance consulting.

You already have a solid asset base, but liquidity and future income stability are crucial. Ensure that your investments are aligned with long-term growth goals and provide flexibility in case of sudden changes in your employment status.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Instagram: https://www.instagram.com/holistic_investment_planners/

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Insurance, Stocks, MF, PF Expert - Answered on Nov 02, 2024

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I have taken parents health insurance in office coverage is 1 lack base and top up is 3lacks and premium is 38.5k. Since im paying more for less coverage planning to take outside. Taken care supreme with rider for mother which doesn't have waiting period. Father has gone through heart surgery no insurnace is willing to give the insurnace except care heart with the waiting period 2 years and co pay 20% and consumables will not be covered and heart related will not be covered. For both mother and father i need to pay 5k per month for care insurnace. Its like a burden paying office insurnace 38.5k and outside 60k . What should i do, I'm really confused to take outside health insurance or not. Cannot stop office insurnace since it does take have waiting period for parents. Please help me
Ans: Hello;

What is the current age of your mother and father?

Based on your reply I may be able to guide you suitably.

Best wishes;

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