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Ramalingam Kalirajan |10872 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 04, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Aaron on Jul 21, 2025Hindi

Hi I am 45 years old with salary of 2.3 L Salary PM. I have home loan EMI of 42 K ( 28 L Loan amount left) and Car loan EMI of 12.5 K ( 6 L Loan amount left). Currently investing 22k pm in SIP ( Around 8 L Portfolio) and 60 K annually in LIC and similar policies . I have savings of around 30 L ( invested ). Please advise if anything can be altered , looking for a corpus of 3 Cr in next 5 years

Ans: You are already earning well and saving regularly. That shows strong financial discipline. At age 45, your efforts are visible in your Rs.30 lakh savings and Rs.8 lakh SIP portfolio. You are also managing EMIs while investing Rs.22,000 every month. This is a solid starting point. Now, let’s assess how to aim for Rs.3 crore corpus in the next 5 years.

» Income, Expense and Loan Evaluation

– Your monthly income is Rs.2.3 lakh.
– Home loan EMI is Rs.42,000.
– Car loan EMI is Rs.12,500.
– Total EMIs are Rs.54,500.
– That is 23.6% of your income.
– This EMI-to-income ratio is in a safe zone.
– You also invest Rs.22,000 monthly via SIPs.
– Plus, you pay Rs.60,000 annually into LIC and similar plans.
– You also hold Rs.30 lakh in investments.

– Overall, your financial base is strong.
– But there’s room for sharper allocation.
– Current cash flow can support higher investments.
– Let’s now build the strategy for Rs.3 crore target.

» Understand the Goal of Rs.3 Crore in 5 Years

– Rs.3 crore in 5 years is aggressive.
– It needs high savings and high returns.
– It is not impossible.
– But it needs tight execution and timely rebalancing.
– You already have Rs.38 lakh invested.
– This includes Rs.30 lakh lump sum and Rs.8 lakh SIP portfolio.
– Plus Rs.22,000 SIP monthly is ongoing.

– If this continues for 5 years, total additions will be large.
– But to reach Rs.3 crore, growth rate must be very efficient.
– Every rupee must be working with focus.

» Surrender LIC and Investment-Cum-Insurance Policies

– You are putting Rs.60,000 yearly in LIC-type products.
– These are not wealth creators.
– They give poor returns, often below inflation.
– Insurance and investment must stay separate.
– Traditional plans eat into returns.
– Their charges and lock-ins are limiting.

– Surrender those plans now.
– Take the surrender value.
– Redirect the amount into mutual funds.
– Long-term, this will yield better growth.

– If these are ULIPs, the logic remains same.
– Charges are high and funds are average.
– You need compounding and flexibility now.
– Mutual funds are better designed for this.

» Increase SIPs and Use Strategic Lumpsum Allocation

– Your current SIP is Rs.22,000.
– This can be gradually increased to Rs.35,000.
– Every salary hike should be partly added to SIPs.
– This step will build stronger monthly discipline.

– Your Rs.30 lakh savings can be partly reallocated.
– Don’t invest full lump sum at once.
– Use Systematic Transfer Plans (STP).
– Park funds in ultra-short term or liquid funds first.
– Then move to equity mutual funds every month.

– This will avoid market timing risk.
– It gives smoother entry into equity.
– Use active mutual funds for this strategy.
– Don’t use index funds.

– Index funds mirror markets.
– They can’t manage downside well.
– They can’t switch between sectors.
– Active funds have expert managers.
– They identify growth opportunities better.
– This makes them more suited for wealth-building.

– Direct mutual funds may look cheaper.
– But they come without support.
– You won’t get timely rebalancing.
– You won’t get risk alignment advice.
– Regular funds through Certified Financial Planner give better structure.
– They also guide with taxation, reviews and emotional control.

» Debt Loan Strategy – Home and Car

– You have Rs.28 lakh of home loan.
– EMI is Rs.42,000.
– Loan interest gives tax benefit under section 24.
– Keep paying EMI as planned.
– Don’t rush to close this loan.

– Your returns from SIPs can be higher than interest paid.
– So, investing is smarter than pre-paying.
– But keep emergency buffer of 4–6 EMIs.
– Park it in liquid mutual fund, not savings account.

– Car loan of Rs.6 lakh is a short-term liability.
– EMI is Rs.12,500.
– Try to close this in next 6–9 months if cash permits.
– That EMI amount can then be shifted to SIPs.
– It will then support long-term growth.

» Protecting Your Goals with Insurance

– Have you taken term insurance?
– If not, take one immediately.
– Choose sum assured of at least Rs.1 crore.
– It should cover your loans and dependents.

– Health insurance is equally essential.
– Don’t depend only on employer cover.
– Take separate family floater policy.
– Keep sum insured relevant to medical inflation.

– Review both policies every 3–5 years.
– Update nominees, documents and premiums regularly.

» Tax Planning to Free Up More Investment

– You can save tax under Section 80C.
– But avoid LIC for this section.
– Use ELSS mutual funds.
– They give better returns and have only 3-year lock-in.

– Use Rs.60,000 LIC premium space and shift to ELSS.
– It will serve dual purpose – save tax and grow money.

– Health insurance premiums can be claimed under 80D.
– Use 24(b) for home loan interest.
– Use refund to increase SIPs.

– Every tax rupee saved must be invested.
– That improves total yearly contribution to corpus.

» Strategy for Reaching Rs.3 Crore in 5 Years

– You already have Rs.38 lakh in investments.
– If your SIP is increased to Rs.35,000 per month…
– If your Rs.30 lakh is deployed smartly with STP…
– If ELSS is used instead of LIC…
– If car EMI is redirected to mutual funds in 6–9 months…
– You can create additional corpus.

– You also need average returns of 11%–12% annualised.
– For this, stick to active funds with growth focus.
– Don’t panic if markets fall short-term.
– Equity needs at least 3–5 year horizon.

– Rebalance portfolio every year.
– Trim underperformers and increase top performers.
– Use help from a Certified Financial Planner for this.
– Emotional bias can cause wrong exits.

– Avoid distractions like crypto, quick money apps or FDs.
– Stay disciplined and focused on the Rs.3 crore target.

» Don’t Mix Goals. Keep Corpus Pure

– Don’t use this corpus for any other expense.
– Not for travel, gifts, or gadgets.
– Even education of children must have separate fund.
– This keeps the purpose pure and results clear.

– Label each investment with the goal name.
– Like “Retirement 2030” or “Corpus 3 Cr”.
– This keeps focus high.
– It also gives motivation to stick to plan.

– Avoid chit funds, NPS, and post office schemes for this goal.
– They can’t give required growth.

» Final Insights

– You are in a very good position today.
– Income is high. Savings are good.
– Only 5 years left means you need tight focus now.
– Surrender poor performing LIC and ULIP plans.
– Increase SIPs and use STP for lump sum.
– Maintain proper insurance protection.
– Stick to mutual funds. Avoid index funds and direct plans.
– Don’t touch corpus for non-emergency reasons.

– Review yearly. Stay flexible but committed.
– Avoid emotional mistakes.
– Rs.3 crore is within your reach with these changes.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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