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Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 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 - Jun 23, 2024Hindi
Money

I am 44 years old working in IT company. 1 Kid, boy 12 years.. Current salary is 2.5L. I have 1 flat of 1Cr. on which no loan. I have 18L in ppf which will mature in 2027. I have started investing 12K per month in SIP since last 12 months. I have Term insurance of 1 Cr. Nps of 3 L. 50 L in cash. Can I go for another flat with 1 Cr Loan now and how much SIP I should more invest now for pension corpus of 5 Cr.

Ans: Planning for a secure future is crucial, especially with retirement and your child’s education in mind. Your current financial situation is strong, but considering another flat with a significant loan requires thorough analysis. Let's delve into your situation and explore the best strategies.

Current Financial Overview
Here's a snapshot of your financial situation:

Age: 44 years
Current Salary: Rs 2.5 lakhs per month
Flat: Worth Rs 1 crore, no loan
PPF: Rs 18 lakhs, maturing in 2027
SIP: Rs 12,000 per month, started 12 months ago
Term Insurance: Rs 1 crore
NPS: Rs 3 lakhs
Cash: Rs 50 lakhs
Family: Wife and 12-year-old son
Evaluating the Purchase of Another Flat
Considering a second flat with a Rs 1 crore loan requires evaluating your current and future financial commitments. While real estate can be a good investment, it also ties up liquidity and involves risks. Instead of real estate, diversifying into other investment options could provide better returns and flexibility.

Importance of Liquidity
Real estate investments lack liquidity. Selling property can take time and may not always fetch the desired price. Maintaining liquidity in your portfolio is crucial for handling emergencies and taking advantage of investment opportunities.

Existing Investments and Future Goals
Your PPF will mature in 2027, providing a lump sum amount. Your SIP investments are a great way to build wealth over time. A term insurance of Rs 1 crore ensures your family’s financial security. Your NPS is also a solid investment for retirement.

Focus on Mutual Funds for Growth
Equity Mutual Funds: Equity mutual funds offer higher returns compared to other investment options. Actively managed funds, in particular, can outperform the market due to professional management. These funds are suitable for long-term goals like retirement.

Balanced Funds: Balanced funds invest in both equity and debt instruments. They offer a balanced risk-return profile, making them suitable for moderate risk-takers.

Debt Funds: Debt funds provide stable returns and are less risky than equity funds. They invest in government securities, corporate bonds, and other fixed-income instruments. Including debt funds in your portfolio helps in risk diversification.

Advantages of Mutual Funds
Diversification: Mutual funds spread your investment across various assets, reducing risk. This diversification is crucial for a balanced portfolio.

Professional Management: Certified financial planners and fund managers handle mutual funds, ensuring better returns through expert management.

Liquidity: Mutual funds can be easily converted to cash. This liquidity provides flexibility in managing your finances.

Power of Compounding: Over time, mutual funds benefit from compounding. This means you earn returns on your returns, significantly boosting your wealth over the long term.

Calculating the SIP for a Rs 5 Crore Corpus
To accumulate a Rs 5 crore corpus, you need a disciplined investment strategy. Assuming a 12% annual return from equity mutual funds, let's estimate the additional SIP amount needed.

Given your current SIP of Rs 12,000 per month and considering you have 16 years until the retirement age of 60, you need to calculate how much more you should invest monthly.

Risk Management
Insurance: Ensure you have adequate life and health insurance. You already have term insurance of Rs 1 crore, which is good. Regularly review your policies to make sure they meet your needs.

Emergency Fund: Maintain an emergency fund covering 6-12 months of expenses. This fund will help you manage unexpected expenses without disrupting your investments.

Planning for Your Child’s Education
Your 12-year-old son will soon require funds for higher education. Start a systematic investment plan (SIP) specifically for his education. Investing in equity mutual funds can help build a substantial corpus for this goal.

Evaluating Non-Performing Policies
If you have any LIC, ULIP, or investment-cum-insurance policies, assess their performance. These policies often come with high fees and low returns. Consider surrendering them and reinvesting in mutual funds. This can provide better returns and more flexibility.

Creating a Retirement Corpus
A retirement corpus of Rs 5 crore will ensure a comfortable post-retirement life. Besides mutual funds, consider the following:

Systematic Withdrawal Plan (SWP): Post-retirement, an SWP from your mutual fund investments can provide a steady income. This ensures financial stability without eroding your capital too quickly.

Fixed Deposits and Senior Citizen Schemes: Invest in fixed deposits and senior citizen savings schemes for stable returns. These options offer safety and predictable income.

Tax Planning
Ensure your investments are tax-efficient. Utilize tax-saving instruments and schemes under Section 80C and other relevant sections. Effective tax planning can maximize your returns and minimize your tax liability.

Regular Review and Rebalancing
Regularly review and rebalance your portfolio. This ensures your investments align with your goals and risk tolerance. A certified financial planner can help you with this process.


Your dedication to securing your family’s financial future is impressive. Managing such a detailed financial plan while working in a demanding field like IT is commendable. Your proactive approach will surely yield positive results.

Final Insights
Investing in another flat with a significant loan might not be the best option given your goals. Instead, focus on building a diversified portfolio through mutual funds. This will provide better returns, flexibility, and liquidity. Aim to build a retirement corpus of Rs 5 crore by increasing your SIP contributions. Regularly review your investments and stay disciplined in your approach.

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

Asked by Anonymous - May 08, 2024Hindi
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Hi i am investing 48000 in sip monthly starting last 3 months ..sukanya samridi for kid monthly 12500 ..do not have any corpus... Plan to step sip by another 40 k in couple of months..aged 43 years...have term 1 c and otak smart life plan for kid for which I pay 1lac per year for 12 years payment term ...3 years completed.... Pf 22 lac and doing pf plus vpf close to 25000 per month...plan to sell an apt and can get 50 lac in couple of months... Have another apartment for later staying after retirement... Need to generate 4 crore for daughter education marriage and retirement in 8 years time... Please advice
Ans: It's great to see your proactive approach towards securing your daughter's future and planning for your retirement. Let's break down your financial situation and outline a strategy to achieve your goals.

Currently, you're investing ?48,000 monthly in SIPs and ?12,500 in Sukanya Samriddhi Yojana for your kid's future. Additionally, you have term insurance and a life plan for your child, along with a significant PF balance and regular contributions.

Considering your age and financial goals, it's commendable that you're taking steps to enhance your savings and investments. The upcoming sale of an apartment, along with your existing assets, provides a solid foundation to work with.

To generate a corpus of ?4 crore for your daughter's education, marriage, and your retirement in 8 years, we need to focus on optimizing your investments and maximizing returns.

With the additional funds from the apartment sale, consider increasing your SIP investments gradually to accelerate wealth accumulation. Diversify your portfolio across equity, debt, and other asset classes to mitigate risk and enhance returns.

Since you have a relatively short time frame of 8 years, it's essential to maintain a balanced approach to investing, prioritizing growth while safeguarding capital. Regular reviews with a Certified Financial Planner can help ensure your investment strategy remains aligned with your goals and risk tolerance.

Furthermore, continue contributing to your PF and explore other tax-efficient investment avenues to optimize your savings. Ensure adequate insurance coverage to protect your family's financial well-being in case of unforeseen events.

By staying disciplined in your savings and investments and making informed decisions, you're well-positioned to achieve your financial aspirations for your daughter's future and your retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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Ramalingam Kalirajan  |7097 Answers  |Ask -

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

Asked by Anonymous - Jun 22, 2024Hindi
Money
Hello Sir, I am 46 years having two kids elder studying in 7th standard and younger one daughter studying in 2nd standard. Me and my wife take home salary is 1.9L per month. I am in the process to buy a flat for which I have invested all my savings and will have a EMI of 70k for next 13 years. My PPF is getting matured in next year will get 12L. I am investing in SiP 20k per month right now accumulated money in it is 7.6L but 8 will be using it for my flat. I pay 65k per year in LIC.I am worried about future financial growth. Please suggest.
Ans: It's good to see you're taking steps to secure your family's financial future. Balancing multiple financial responsibilities can be challenging, but with careful planning, you can achieve your goals. Let's dive into a detailed analysis of your financial situation and provide some recommendations.

Current Financial Situation
You and your wife have a combined monthly take-home salary of Rs 1.9 lakh. You're investing Rs 20,000 monthly in SIPs and paying an EMI of Rs 70,000 for the next 13 years. You also pay Rs 65,000 annually towards LIC premiums and have a PPF maturing next year with Rs 12 lakh. Your current SIP investment has accumulated Rs 7.6 lakh, which you plan to use for your flat purchase.

Goals and Concerns
Your primary concerns are future financial growth and securing your children’s education and other financial needs. Given that you have two kids, your focus should be on their education, your retirement, and paying off your home loan.

Recommendations
1. Emergency Fund
Firstly, ensure you have an emergency fund. This should cover 6-12 months of your expenses. Given your monthly expenses, aim for Rs 5-10 lakh in a liquid fund or savings account.

2. Review Your Insurance
You're paying Rs 65,000 per year for LIC. Traditional LIC policies often provide low returns. Consider if it's beneficial to continue. You might want to surrender it and invest in mutual funds for better returns. Ensure you have adequate term insurance and health insurance coverage for your family.

3. Utilise Your PPF Maturity
Your PPF is maturing next year with Rs 12 lakh. This is a significant amount. Since you're using your SIP savings for your flat, allocate the PPF amount towards a balanced portfolio of equity and debt funds to maintain liquidity and growth.

4. Increase SIP Investments
Given your financial goals, increasing your SIP contributions gradually as your income grows will be beneficial. This helps in compounding your investments and meeting long-term goals like children’s education and retirement.

5. Children’s Education Planning
Your elder child is in 7th standard and younger in 2nd standard. Higher education costs will rise significantly. Start a dedicated investment plan for their education. Diversify across large-cap, mid-cap, and balanced funds to ensure growth with manageable risk.

6. Retirement Planning
You’re 46 years old with 13-14 working years left. Start focusing on your retirement corpus. Allocate a mix of equity and debt funds. Equities for growth and debt for stability and income. Aim for a corpus that can provide you with a monthly income of Rs 1 lakh post-retirement.

Understanding Mutual Funds
Mutual funds pool money from multiple investors to invest in stocks, bonds, or other securities. They offer diversification and professional management.

Categories of Mutual Funds
Equity Funds: Invest in stocks. Suitable for long-term growth.
Debt Funds: Invest in bonds. Suitable for regular income and stability.
Balanced Funds: Mix of equity and debt. Suitable for moderate risk and return.
Advantages of Mutual Funds
Diversification: Spreads risk across various securities.
Professional Management: Managed by experts.
Liquidity: Easy to buy and sell.
Compounding: Reinvested earnings generate more returns over time.
Risks of Mutual Funds
Market Risk: Equities can be volatile.
Interest Rate Risk: Debt funds can be affected by interest rate changes.
Credit Risk: Risk of default in debt securities.
Power of Compounding
The power of compounding in mutual funds can significantly grow your wealth over time. The earlier you start, the more you benefit. For example, investing Rs 20,000 monthly at an average return of 12% over 20 years can accumulate a substantial corpus due to compounding.

Disadvantages of Index Funds
Index funds replicate market indices. They have lower costs but also lower flexibility. Actively managed funds, though slightly costlier, can outperform index funds by leveraging market opportunities and managing risks better.

Benefits of Regular Funds
Investing through a Certified Financial Planner (CFP) provides personalized advice, regular monitoring, and adjustments as per market conditions. Regular funds also ensure you have a dedicated advisor for guidance, which is crucial for long-term financial planning.

Final Insights
Balancing current responsibilities with future goals is key. Prioritize emergency funds, review insurance, and plan for children’s education and retirement. Utilize your PPF maturity wisely and increase your SIPs gradually. Mutual funds, with their diversification and professional management, are excellent for achieving long-term growth and stability.

Keep in mind that a balanced approach, mixing equity for growth and debt for stability, is essential. Regular reviews and adjustments to your investment plan will help you stay on track and achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

Asked by Anonymous - Jul 17, 2024Hindi
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Hi Mam, I'm 43+, Monthly take home is around 3.20 Lacs, Currently i have invested in Shares (Current Portfolio is around 1.75 Crs). EMI is around 1.1 lacs P/m (Home loan 1 - 50K per month till 2037, 30K car loan till 2027 (Planning to close this year by paying 13 lacs, please suggest if this option of preclosure is good or EMI is good, will be paying this amount by selling some shares), 30k per month of home 2 till 2040., Recently i have started investing in SIP 1 lacs P/M, and balance 1.20 lacs goes in house, kids education expense. Have EPF balance of 40 lacs as on date. As mentioned above recently i have started investing in SIP (From Oct 2023 onwards), which is at the tune of 1 lacs per month. SIP are Franklin India Prima Fund regular Plan - Growth - 25K, ICICI Prudential Small cap fund retail plan G - 25K, Kotak Multicap fund regular plan growth - 15K, DSP Blackrock mid cap fund regular plan growth - 10 K, and Parag Parikh Flexi Cap fund - Regular plan growth - 25 K. Will increase the SIP investment by 10% every year going forward. Sir, My question is with current SIP investment will i be able to generate 10~12 Cr corpus fund by retirement (Assuming that i will be in Job and working for next 15 years). Current Share portfolio is for long term investment only (assuming i get 12~15% of return every year). Please note : will be spending around 1~1.5 cr for my Son education in engineering from 2027 to 2031, 50% will be spend from savings and balance 50% from education loan.
Ans: Financial Snapshot
Age: 43+
Monthly Take Home Salary: Rs 3.20 lakhs
Current Investment in Shares: Rs 1.75 crores
EMI Payments: Rs 1.1 lakhs per month
Home Loan 1: Rs 50,000 till 2037
Car Loan: Rs 30,000 till 2027 (planning to close this year)
Home Loan 2: Rs 30,000 till 2040
Monthly SIP Investment: Rs 1 lakh (started Oct 2023)
Monthly Household and Education Expenses: Rs 1.20 lakhs
EPF Balance: Rs 40 lakhs
Expected Expenses for Son's Education: Rs 1-1.5 crores (2027-2031)
Assessing Current Investments
Share Portfolio:

Value: Rs 1.75 crores
Assumed Annual Return: 12-15%
Long-term growth potential is strong. Continue holding for compounding benefits.
SIP Investments:

Started in Oct 2023
Current SIP of Rs 1 lakh per month in a diversified mix of funds
Analyzing Loan Preclosure Option
Car Loan Preclosure:

Current EMI: Rs 30,000 per month till 2027
Preclosure Amount: Rs 13 lakhs (consider selling some shares)
Pros of Preclosure:

Reduces monthly EMI burden
Saves interest costs
Cons of Preclosure:

Selling shares might impact portfolio growth
Evaluate if share sale aligns with long-term goals
Recommendation:

If interest rate on car loan is high, preclosure can be beneficial.
Ensure share sale does not significantly affect long-term portfolio growth.
Evaluating SIP Investments
Current SIP Allocation:

Franklin India Prima Fund: Rs 25,000
ICICI Prudential Small Cap Fund: Rs 25,000
Kotak Multicap Fund: Rs 15,000
DSP Blackrock Mid Cap Fund: Rs 10,000
Parag Parikh Flexi Cap Fund: Rs 25,000
Plan to Increase SIP by 10% Annually:

This is a good strategy. It helps to combat inflation and increase your corpus over time.
Active vs. Index Funds:

Advantages of Actively Managed Funds:
Potential to outperform market
Professional management
Disadvantages of Index Funds:
Passive tracking of the market
No chance to outperform during market rallies
Projected Retirement Corpus
Assumptions:

Monthly SIP: Rs 1 lakh (increasing by 10% annually)
Investment Horizon: 15 years
Average Annual Return: 12-15%
Projection:

Estimated Corpus at Retirement:
With a 12% annual return: Approximately Rs 10-12 crores
With a 15% annual return: Potentially higher than Rs 12 crores
Financial Planning for Son's Education
Expected Expenses:

Rs 1-1.5 crores over 4 years (2027-2031)
Plan to use 50% savings and 50% education loan
Recommendation:

Start a dedicated education fund
Consider balanced or hybrid funds for stability and growth
Ensure this fund aligns with the investment horizon and risk tolerance
Final Insights
Your current investment strategy is strong.
Increasing SIP contributions annually is a prudent move.
Evaluate the car loan preclosure option based on interest rates and long-term goals.
Maintain a diversified portfolio to balance risk and growth.
Regularly review your investments with a Certified Financial Planner to stay on track.
By following these steps, you should be well-positioned to achieve a corpus of Rs 10-12 crores by retirement. Additionally, planning for your son's education expenses with a dedicated fund will ensure financial stability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 04, 2024

Money
Hi Sir, I am 35 years old, earning 1L per month. I am investing in 20000 as SIP in different MFs. I am paying 1.5L yearly to SSY and 1.5L to PPF, 50K to NPS. The PPF amount is 2.5L as of now, SSY is 4L (Daughter age is 4y). I have two plots which are equivalent to 50L at present market rate. I have one home loan which is 15K as EMI for another 4 years, before that only I will close. I am planning to construct a new house for rental purpose which may cost around 1.3cr. I will take home loan from bank. My wife is a banker. She earns 70K monthly. I want corpus amount of 10crs by 2040. Could you please suggest for further investment on SIPs.
Ans: You have a solid foundation in place with investments in mutual funds, PPF, SSY, and NPS. You and your wife have a steady combined income of Rs 1.7 lakh per month, and you are targeting a Rs 10 crore corpus by 2040, which is 16 years away.

The current home loan EMI is manageable, and you're planning to construct a new rental property with an additional loan. Achieving a Rs 10 crore corpus by 2040 will require careful planning and disciplined investment in a diversified portfolio.

Let's evaluate your current strategy and suggest some adjustments to help you reach your goal.

Assessment of Current Investments
SIPs in Mutual Funds:

You are currently investing Rs 20,000 per month across different mutual funds.
With a long-term horizon, mutual funds are a great vehicle for wealth creation.
However, achieving your Rs 10 crore target will likely require increasing your SIPs.
Sukanya Samriddhi Yojana (SSY):

You are contributing Rs 1.5 lakh annually towards SSY for your daughter. This is a good long-term investment, especially for securing her education and future financial needs.
SSY offers tax benefits under Section 80C and has an attractive interest rate, making it a secure investment.
Public Provident Fund (PPF):

Your Rs 1.5 lakh annual contribution to PPF is another tax-efficient, risk-free investment.
PPF provides compounded returns, but the lock-in period means liquidity is restricted.
National Pension System (NPS):

NPS is a good long-term retirement savings tool.
However, only a part of the corpus is tax-free upon withdrawal, and annuity purchase is mandatory, which may limit liquidity in retirement.
Recommendations for Reaching the Rs 10 Crore Corpus
To achieve a Rs 10 crore corpus by 2040, you need to ramp up your SIPs and possibly tweak your investment strategy. Here are a few steps you can take:

1. Increase SIP Contributions:
Your current SIP of Rs 20,000 per month is a good start, but to achieve your goal, consider increasing it.
Start with an additional Rs 10,000-15,000 per month and aim for a 10% step-up each year.
This will allow the power of compounding to work in your favour over time.
Invest across different categories like Flexicap, Midcap, and Smallcap funds, which have the potential for high returns over long periods.
2. Portfolio Diversification:
Large Cap Mutual Funds: Consider adding a large-cap fund for stability. These funds invest in well-established companies with a track record of stable performance.
Mid and Small-Cap Funds: Continue investing in mid and small-cap funds as they offer higher growth potential, though with more risk. You can balance risk by allocating less than 30% of your portfolio to these funds.
Debt Funds or Hybrid Funds: To reduce risk, allocate a portion to debt or hybrid funds. These funds offer lower returns but provide stability and reduce volatility, especially as you approach retirement.
3. Home Loan for Rental Property:
You plan to take a Rs 1.3 crore loan to construct a rental property. Ensure the rental income is sufficient to cover the EMI and maintenance costs.
A rental property can offer a stable income stream, but it should not overly strain your cash flow.
Keep in mind that real estate can be illiquid, and capital appreciation is not guaranteed.
4. NPS Allocation:
You are contributing Rs 50,000 annually to NPS. It’s a solid retirement tool, but the mandatory annuity requirement reduces liquidity at retirement.
Consider increasing equity exposure in your NPS portfolio to maximise growth potential.
Evaluating the Real Estate and Loan Impact
While real estate can provide rental income, it has its limitations. Property appreciation is not always guaranteed, and liquidity can be a challenge. The loan you take for constructing a rental property must be balanced against your other financial goals. Be cautious about how much of your income is tied to servicing the loan.

Here are some points to keep in mind:

Rental Yield vs Loan Cost: Ensure that the rental yield (typically around 2-3%) is higher than the loan interest rate (which can be around 7-9%). If rental yield is lower, it could impact your cash flow negatively.
Liquidity Concerns: Real estate is not as liquid as mutual funds or stocks. In case of emergencies, selling property may take time.
Diversification Risk: Too much investment in real estate can lead to a lack of diversification. Consider balancing it with financial assets like mutual funds, PPF, and NPS.
Suggested Adjustments to Your Portfolio
1. Step-Up SIP Contributions:
Start increasing your SIP amount by Rs 10,000 per month, making it Rs 30,000 in total.
Add Rs 5,000 each to a large-cap and hybrid fund to bring stability to your portfolio.
2. Balanced Approach for Long-Term:
Continue with SSY, PPF, and NPS, but ensure you have adequate exposure to equity mutual funds.
Keep increasing your SIPs with the 10% annual step-up strategy. This will allow you to leverage the power of compounding.
3. Prioritise Debt Reduction:
Pay off your existing home loan as planned in 4 years.
For the new home loan, keep a target to prepay aggressively once your income increases or when you get a bonus.
4. Emergency Fund:
With the upcoming construction loan and increasing SIP commitments, ensure you have an emergency fund that covers 6-12 months of living expenses and loan EMIs.
5. Estate Planning:
You mentioned securing your kids’ future after you and your wife. It is essential to have a clear estate plan in place.
Consider writing a will and reviewing life insurance coverage to ensure your children are well taken care of.
Explore the possibility of setting up a trust to manage your assets for your children, ensuring their long-term financial security.
Final Insights
You have a well-balanced portfolio and are already on the right track. To ensure you reach your goal of Rs 10 crore by 2040, increasing your SIP contributions and maintaining a disciplined approach to debt management will be key. Ensure your portfolio is diversified between equity and debt instruments to manage risk effectively.

Consider real estate as a part of your income stream but don’t over-rely on it for long-term growth. Keep a strong focus on mutual funds for long-term wealth accumulation. Also, estate planning is crucial to ensure your children’s financial well-being.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

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I am looking for a job, I had uploaded my resume in job site. A consultant called me & introduced himself telling he know some of the openings. He had a detailed discussion about my job & my skills. He told need to register to his consultancy for scheduling interview. I registered with him & he got me a interview. Interview was done by the company through skype. I could not see the company persons. They told only they can see me. Interview went on well & regarding salary I told my expectation but they told it is not possible & they told their proposal. Finally I agreed to them. They gave me code & told to visit the company for next round. Consultant called me after first round & told recruiter is very happy with the interview. Regarding salary he told why I agreed for the proposal,he will discuss again & asked to pay charges for some of his services which he will refund the day I visit to the company & take the orders. I paid him. He told there is a increase in salary he has discussed with recruiter & again asked for the money I did only partial payment & further will not pay anything. Second round also happened through skype instead of in person. Interview went on well & salary offered was good comparing to before & there was a big jump. Recruiter told they have planned to give additional responsibilities so they have increased. Finally they gave me a date to visit company. I asked when will I get the order, he replied he will send to consultant as I was taken by them. Till now i did not get the orders, consultant is keep on postponing. Now he told visit to company date is also postponed, he will update in next week & not to worry as job is confirmed. Now not understanding what to do, am I been cheated or wait.
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Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

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I hv started sip in 2008 and still continued , now the monthly sip is 55k and total value is 1.85cr. Need to accumulate 7cr with in next 4 yrs pls guide how can i achieve. - Deepak J. Hajari
Ans: Deepak, your long-term SIP discipline is impressive. Accumulating Rs. 7 crore in 4 years is ambitious. Achieving this goal requires a strategic approach, as time is limited. Let's create an actionable plan for your success.

Current Financial Snapshot
Ongoing SIPs: Rs. 55,000 monthly.
Current Portfolio Value: Rs. 1.85 crore.
Target Corpus: Rs. 7 crore within 4 years.
Your consistent investing habits have built a solid foundation. However, to achieve your target, adjustments are needed.

Key Challenges
Short Time Frame: Four years is a limited period for aggressive wealth accumulation.
Significant Gap: A gap of Rs. 5.15 crore remains to meet the Rs. 7 crore goal.
Market Volatility: Equity investments might face short-term volatility.
Recommendations to Bridge the Gap
1. Increase Your SIP Contributions
Raise your SIP amount to Rs. 1.25 lakh per month.
This increase ensures faster wealth creation through compounding.
Prioritise high-growth funds in equity-oriented categories.
2. Invest Lump Sum Amounts
Consider deploying a lump sum if you have idle savings or low-yield investments.
Invest in aggressive equity mutual funds for higher potential returns.
Break down the lump sum into tranches for better market timing.
3. Diversify into High-Growth Mutual Funds
Focus on small-cap and mid-cap mutual funds for higher growth potential.
Maintain a balance with some large-cap exposure for stability.
Ensure the portfolio aligns with your high-return requirements.
4. Avoid Overexposure to Debt or Low-Yield Instruments
Limit debt investments during this aggressive growth phase.
Avoid instruments like FDs or debt mutual funds with lower returns.
Rely on equity for the next four years to maximise growth.
5. Rebalance Your Portfolio Regularly
Conduct a portfolio review every 6 months.
Reallocate funds based on underperforming or outperforming sectors.
Keep your portfolio aligned with market trends and your goals.
6. Capitalize on Bonus or Windfall Gains
Direct any bonuses, salary hikes, or windfall gains towards your target.
Avoid unnecessary expenses during this focused phase.
Tax Efficiency Matters
Equity Mutual Funds Taxation: Gains above Rs. 1.25 lakh are taxed at 12.5%.
Debt Mutual Funds Taxation: Taxed as per your income slab.
Plan redemptions strategically to minimise tax liabilities.
Leverage Market Opportunities
Benefit from Market Corrections: Use corrections as opportunities to invest lump sums.
Stay Invested for Compounding: Avoid early redemptions to let compounding work fully.
Role of Regular Monitoring
Track Performance: Ensure funds are performing as per expectations.
Switch Funds if Needed: Shift from underperforming funds to high-growth options.
Final Insights
Deepak, achieving Rs. 7 crore in 4 years requires aggressive yet calculated strategies. Increase your SIPs, deploy lump sums, and focus on high-growth funds. Regular monitoring and disciplined investing are key to your success. Stay patient and consistent.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 20, 2024Hindi
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I am 50 yrs old. If I invest 60k per month for 10 yrs in SIPs of MF then will I be able to achieve the corpus of Rs. 2.50 Crs and if not how much shall I invest per month and in which SIP schemes
Ans: You have a clear goal to invest Rs. 60,000 per month for 10 years. The goal is to accumulate Rs. 2.5 crore through mutual fund SIPs. Let us analyse your query in detail and provide actionable insights.

Evaluating the Feasibility of Your Investment Plan
10-Year Time Frame:
Ten years is a medium-term horizon. Equity-based mutual funds offer good growth potential for this period.

Monthly SIP Contribution:
A SIP of Rs. 60,000 is significant. It shows your commitment to wealth creation.

Target Corpus Analysis:
The target of Rs. 2.5 crore depends on consistent returns. Market performance influences results.

Expected Returns:
Equity funds can give 10%-12% annualised returns in the long run. However, returns are not guaranteed.

Is Rs. 60,000 Sufficient?
Your current contribution may not be sufficient to reach Rs. 2.5 crore in 10 years.

For 10%-12% Returns:
You might accumulate Rs. 1.9–2.1 crore. There could be a shortfall of Rs. 40–60 lakh.

Solution:
Increase your SIP amount to Rs. 75,000–80,000 monthly for a better chance of achieving the goal.

Optimising Your SIP Contributions
Step-Up SIPs:
Increase your SIP amount by 5%-10% every year. This adjusts for inflation and higher earnings.

Lump Sum Boost:
If you have surplus funds, invest a lump sum. This accelerates your goal.

Diversify Investments:
Allocate across equity and hybrid funds for balanced growth and risk management.

Selecting the Right SIP Investments
Actively managed funds are suitable for your goals. Avoid index funds due to their limitations.

Equity Funds for Growth:
These funds have high growth potential over 10 years.

Diversified Portfolio:
Choose funds across large-cap, mid-cap, and multi-cap categories. This spreads risk effectively.

Hybrid Funds:
Hybrid funds provide stability by balancing equity and debt investments.

Avoiding Direct Funds
Investing through direct funds might seem cost-effective but has drawbacks.

Limited Guidance:
Direct funds lack professional advice. This could lead to suboptimal fund choices.

Benefits of Regular Plans:
A Certified Financial Planner ensures proper fund selection and portfolio review.

Managing Tax Implications
Understanding taxation helps optimise your returns.

Long-Term Gains:
LTCG above Rs. 1.25 lakh is taxed at 12.5%. Plan redemptions strategically.

Short-Term Gains:
STCG on equity is taxed at 20%. Avoid frequent withdrawals to minimise this tax.

Hybrid Funds Taxation:
Gains from hybrid funds are taxed as per your income slab.

Steps to Achieve Rs. 2.5 Crore
Increase SIP Amount:
Raise your SIP to Rs. 75,000–80,000 monthly.

Review Annually:
Monitor portfolio performance and adjust investments.

Use a Balanced Strategy:
Combine equity funds with hybrid funds to optimise risk and return.

Seek Professional Help:
Work with a Certified Financial Planner to refine your plan.

Final Insights
Your goal of Rs. 2.5 crore in 10 years is achievable with adjustments. Increase your SIP amount and maintain discipline. Diversify investments and periodically review the portfolio. A Certified Financial Planner can guide you for maximum efficiency and clarity.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 19, 2024Hindi
Money
Im a 34 year old, my father is planning on selling a property from which he would provide me with a gift of 1 Crore. At the moment , since my business has not launched, I would like to be earning interest from the Corpus amount and would also like to have a withdrawal of around 40-50K per month. Im very new to investing, and all i know is , getting half baked answers just isnt worth it. So im asking the experts, what is a realistic return that I could hope for? Provided its invested into mutual funds and debt funds. I would like to protect the corpus and make it grow while also trying to a withdrawal of 50-k per month.
Ans: Firstly, it's fantastic that you're approaching your investment decisions with a clear goal in mind. Receiving a gift of Rs 1 Crore from your father is a significant opportunity. Your desire to earn regular income while protecting and growing the principal corpus is a smart approach, especially given the current stage of your business. Let’s explore a realistic strategy for achieving your goal of monthly withdrawals while ensuring long-term growth.

Key Objectives
Preserve the Corpus: Ensuring the Rs 1 Crore grows steadily and does not erode.
Generate Monthly Income: Aiming for Rs 40,000–50,000 monthly withdrawals to meet your cash flow needs.
Balanced Risk: A mix of investments in mutual funds and debt funds to balance growth with security.
Types of Funds to Consider
To achieve your objectives, the portfolio needs to include a mix of debt and equity mutual funds. Here’s an overview of each option:

1. Debt Funds (Low-Risk)
Debt funds are ideal for stability. They typically offer steady returns with lower volatility. These funds invest in bonds, government securities, and corporate debt.

Stability: They offer relatively stable returns with low risk to the principal.
Monthly Income: Debt funds with monthly income plans (MIPs) can provide regular payouts.
Expected Returns: Historically, debt funds return 7-9% annually, depending on the type and tenure of the bonds they invest in.
2. Equity Mutual Funds (Moderate to High-Risk)
Equity funds invest in stocks and can offer higher returns, but with more volatility. Over the long term, they have the potential to outperform debt funds, though there can be short-term fluctuations.

Growth Potential: Equity funds are essential for capital appreciation.
Risk Profile: Equity mutual funds carry more risk but can provide higher long-term returns.
Expected Returns: Historically, equity funds can offer 10-15% returns per annum, depending on market conditions and fund management.
Expected Return and Withdrawal Strategy
Given your goal of withdrawing Rs 40,000–50,000 monthly (Rs 4.8–6 lakh annually), let’s assess a realistic return scenario:

1. Required Returns for Monthly Withdrawal
To generate Rs 4.8–6 lakh annually, you need to have a combination of income and growth.
Assumption: You need a mix of debt and equity funds. If you target an average return of 8-9% per annum from debt and equity, your portfolio should generate enough income.
2. Risk-Return Balance
Debt Funds: These funds will give stability and a guaranteed income, but at a lower return rate.
Equity Funds: These can help grow your corpus and offer a better chance of increasing the monthly withdrawal amount over time.
3. Potential Returns Based on Allocation
50% Debt Funds: Target return of 7-8% annually.
50% Equity Funds: Target return of 12-14% annually.
This balanced approach provides income and growth, helping you meet your withdrawal goal while maintaining long-term growth.

Portfolio Structure Suggestions
1. Debt Fund Allocation (50%)
Why Debt?: Debt funds offer lower risk and more predictable returns, making them suitable for generating a steady income.
Types of Debt Funds to Consider:
Corporate Bond Funds: These offer better returns than government bond funds, but at slightly higher risk.
Short-Term Debt Funds: These funds invest in short-term instruments and are less sensitive to interest rate changes.
Monthly Income Plans (MIPs): These funds are specifically designed to provide monthly payouts, offering an income stream.
2. Equity Fund Allocation (50%)
Why Equity?: Equity funds will provide higher returns and help your corpus grow over time. They are necessary for long-term wealth creation.
Types of Equity Funds to Consider:
Large-Cap Funds: These invest in well-established companies with a stable growth record.
Flexi-Cap Funds: These funds invest across all market caps, allowing flexibility to choose the best opportunities.
Hybrid Funds: A mix of debt and equity, hybrid funds are suitable for balancing risk and return.
Tax Considerations for Your Portfolio
Mutual fund investments are subject to taxes on the capital gains.

Equity Funds:
Long-Term Capital Gains (LTCG): If held for more than 1 year, LTCG above Rs 1.25 lakh is taxed at 12.5%.
Short-Term Capital Gains (STCG): If sold within 1 year, STCG is taxed at 15%.
Debt Funds:
LTCG: If held for more than 3 years, debt fund gains are taxed at 20% with indexation benefits.
STCG: If sold within 3 years, gains are taxed according to your income tax slab.
You should plan your withdrawals in a way that balances both income generation and tax efficiency.

Risk Management and Capital Preservation
Your focus on preserving the corpus is essential. While debt funds provide safety, equity funds add the potential for capital appreciation. To protect your capital:

Diversify Across Different Asset Classes: Ensure a mix of debt, equity, and hybrid funds.
Review Portfolio Regularly: Market conditions change, and it’s important to keep your portfolio aligned with your risk tolerance and financial goals.
Avoid Overconcentration: Don’t put all your funds into one type of asset. Spread your investments across sectors and instruments.
Steps to Implement Your Strategy
1. Choose Mutual Funds Through an MFD with CFP Credentials
Why?: Investing through a Certified Financial Planner (CFP) ensures your investments are aligned with your long-term goals and risk profile.
Avoid Direct Funds: While direct funds have lower expense ratios, you miss out on valuable advisory support. An MFD offers curated fund selection, tax advice, and regular portfolio reviews.
2. Start with a 50-50 Debt-Equity Split
Debt: Focus on short-term and MIPs for income generation.
Equity: Invest in large-cap or flexi-cap funds for long-term growth.
3. Monitor and Rebalance
Rebalance your portfolio annually based on market performance and changing needs.
Adjust debt and equity allocations depending on your withdrawal requirements and market conditions.
Final Insights
With Rs 1 Crore, you can generate enough income for your monthly withdrawals while allowing your money to grow. A balanced approach of 50% debt funds and 50% equity funds is a realistic strategy to achieve this. Your investment portfolio will ensure that you have both stability and growth, helping you meet your cash flow needs while protecting and growing your corpus.

It's crucial to engage with a Certified Financial Planner to tailor the investment strategy to your exact needs. Their expertise will help you make better decisions for both tax efficiency and long-term wealth creation.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 19, 2024Hindi
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Money
Hello, I have FD of 50 lakh, PPF of 10.5 lakh 3.3 lakh in savings account, 4.2 lakh in NPS. 10 lakh in Mutual Fund. My take home salary is 1.6 lakh per month. I want to retire by 50 with a take home pension of 2.5 lakh per month. My present age is 30. Can you suggest me a plan? Is it possible?
Ans: You aim to retire by 50 with a monthly pension of Rs. 2.5 lakh. This is a highly ambitious target but achievable with proper planning and disciplined execution.

Let’s evaluate your current financial standing and suggest a structured plan.

Current Financial Overview
Fixed Deposits (FDs): Rs. 50 lakh (safe but low returns).
PPF: Rs. 10.5 lakh (good for tax-free growth).
Savings Account: Rs. 3.3 lakh (low returns).
NPS: Rs. 4.2 lakh (moderate returns and tax-efficient).
Mutual Funds: Rs. 10 lakh (diversified and growth-oriented).
Monthly Income: Rs. 1.6 lakh take-home salary.
This diversified portfolio shows financial discipline. However, adjustments are needed to align with your retirement goal.

Key Challenges
High Retirement Corpus Needed: To generate Rs. 2.5 lakh monthly, you’ll need around Rs. 8-10 crore.
Short Time Horizon: You have 20 years to build the required corpus.
Underutilised Assets: FDs and savings account funds could generate better returns elsewhere.
Inflation Impact: Your post-retirement expenses will rise due to inflation.
Recommendations for Your Retirement Plan
1. Increase Investment in Mutual Funds
Shift a portion of your FDs and savings to mutual funds.
Focus on diversified funds across large-cap, mid-cap, and small-cap categories.
Allocate to equity-heavy funds for better long-term returns.
2. Optimise PPF Contributions
Continue contributing to PPF yearly to maximise tax benefits.
Treat PPF as part of your debt allocation for retirement.
3. Maximise NPS Contributions
Increase NPS contributions to Rs. 50,000 yearly for tax benefits under Section 80CCD(1B).
Select aggressive equity options within NPS for higher growth.
4. Set Up Systematic Investment Plans (SIPs)
Start investing Rs. 50,000 monthly in SIPs across mutual funds.
Gradually increase SIP contributions by 5-10% annually.
Use equity funds for wealth accumulation.
5. Reallocate Fixed Deposits
Retain 10-20% of your FDs as an emergency fund.
Move the remaining funds to mutual funds and other growth-focused instruments.
6. Inflation-Proof Your Retirement
Assume a 6-7% annual inflation rate for your retirement planning.
Ensure your investments provide returns above inflation.
7. Tax-Efficiency Awareness
Use ELSS funds for tax savings under Section 80C.
Review capital gains taxation on mutual funds under new rules.
Keep tax-efficient options like PPF and NPS in your portfolio.
8. Track and Adjust Regularly
Review your portfolio every 6-12 months.
Rebalance funds based on performance and market conditions.
Consult a Certified Financial Planner for strategic adjustments.
Action Plan to Build Rs. 8-10 Crore Corpus
Short-Term Actions (Next 1-3 Years)
Start SIPs of Rs. 50,000 per month immediately.
Reallocate 30-40% of FDs to mutual funds.
Increase NPS contributions for better growth and tax benefits.
Mid-Term Actions (4-10 Years)
Gradually increase SIP amounts by 5-10% annually.
Reduce FD exposure further as your mutual fund corpus grows.
Invest any bonuses or surplus income into equity funds.
Long-Term Actions (11-20 Years)
Shift equity-heavy investments to balanced funds 5 years before retirement.
Plan for a Systematic Withdrawal Plan (SWP) to create a regular income.
Use PPF and NPS as fallback options for additional income.
Addressing Your Goal of Rs. 2.5 Lakh Monthly Pension
You will need Rs. 8-10 crore to generate Rs. 2.5 lakh monthly.
This can be achieved with disciplined investments and compounding returns.
Ensure your retirement plan includes both growth and stability.
Finally
Your financial goal is ambitious but achievable. Align your investments with a growth-focused approach. Start SIPs, optimise underutilised assets, and regularly review progress. Plan for inflation and taxes to secure a stress-free retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...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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