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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 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 - Feb 07, 2024Hindi
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I am 48 years old and my monthly income is 1.4 Lac. My existing investment is PPF 1.5 Lakh/year and 18 Thousand Term insurance and Bank FD's. I want to invest in NPS about 50 Thousand/Year. What option to select to earn at least 8% with lower risk. Also let me know what are other options for investment with lower risk?

Ans: Hello Mr. Kumar Shashi Raj,

It's excellent that you're considering diversifying your investments and planning for your future. Given your income and investment goals, let's explore some options:

NPS (National Pension System):

NPS offers different investment options with varying levels of risk and potential returns.
For your objective of earning at least 8% with lower risk, you can consider investing in the "Moderate" or "Conservative" asset allocation options.
These options typically invest a higher proportion of funds in debt instruments, providing stability and lower volatility compared to equity-heavy options.
While NPS offers the potential for attractive returns over the long term, it's essential to understand that past performance is not indicative of future results.
Other options for investment with lower risk:

Debt Mutual Funds: These funds primarily invest in fixed-income securities like bonds and government securities, offering relatively stable returns with lower risk compared to equity investments.
Public Provident Fund (PPF): Since you're already investing in PPF, you can continue to maximize contributions to this tax-efficient instrument, which offers attractive returns along with tax benefits.
Bank Fixed Deposits: FDs provide a fixed rate of interest and are considered low-risk investments. However, they may offer relatively lower returns compared to other investment avenues like mutual funds or NPS.
Government Savings Schemes: Options like Senior Citizen Savings Scheme (SCSS) and Post Office Monthly Income Scheme (POMIS) offer fixed returns with capital protection, making them suitable for conservative investors.
When selecting investment options, consider factors like your risk tolerance, investment horizon, and financial goals. Diversifying across asset classes can help mitigate risk and optimize returns over the long term.

Consulting with a Certified Financial Planner can provide personalized guidance tailored to your specific financial situation and goals.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

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Hi Sir, This is Murugan, from Chennai, working for an IT company. I have started to invest in NPS for the past 7 months (4216?, 10% of my basic salary) for my retirement plan. My take-home salary is ?60,000 (after NPS deduction). I don't have a debit. I would like to invest ?20,000 for my future and also for my child's (4-year-old) education purposes (long-term plan). Please suggest any ideas to achieve my goal. Thanks, Murugan.
Ans: It's great that you've started investing in NPS for your retirement. To achieve your goal of investing ?20,000 for both your future and your child's education, consider the following suggestions:

SIP in Mutual Funds:
Allocate a portion of ?20,000 towards SIPs in mutual funds. Opt for diversified equity funds for long-term growth potential.
Choose funds based on your risk tolerance and investment horizon.
Child Education Fund:
Create a separate fund or invest in child education-specific mutual funds or SIPs for your child's education.
Start a recurring deposit or systematic investment plan (SIP) to accumulate the desired amount by the time your child starts higher education.
Emergency Fund:
Set aside a portion of your monthly income for an emergency fund, aiming to accumulate 3-6 months' worth of expenses.
Consider a liquid or short-term debt fund for this purpose.
Insurance:
Ensure you have adequate life and health insurance coverage for yourself and your family to protect against unforeseen events.
Review & Adjust:
Periodically review your investments to track performance and make necessary adjustments.
Increase your investments gradually as your income grows.
Remember to maintain a balanced approach between equity and debt investments based on your risk tolerance. Consult a financial advisor to create a personalized investment plan tailored to your financial goals and situation.

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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 20, 2024

Asked by Anonymous - Jun 20, 2024Hindi
Money
Iam 440yr old married women, I work in the government sector my take home salary is 73k after all deductions. Ihave personal lone of 25lak, where I pay around 40emi per month, I have so far 19lak in NPS, around 2lak in mutal fund and 1lak in equity, i have few LIC policies and Health insurance and a term plan too. I want to know a few investment options for long term with minimum investment but good returns.
Ans: It’s great to see your proactive approach in planning for long-term investments. Let's break down your situation and explore some investment options that align with your goals and circumstances.

Assessing Your Current Financial Situation
You have a stable job in the government sector with a take-home salary of Rs 73,000 after deductions. You also have some existing investments and insurance policies. This is a great start.

You are paying an EMI of Rs 40,000 for a personal loan of Rs 25 lakh. This is a significant portion of your salary, and it would be wise to focus on repaying this loan as quickly as possible.

Your current investments include:

Rs 19 lakh in NPS
Rs 2 lakh in mutual funds
Rs 1 lakh in equity
LIC policies, health insurance, and a term plan
Given these details, let's explore some investment options that could help you achieve good returns with minimal investment over the long term.

Prioritizing Loan Repayment
Your first priority should be to manage your personal loan. With an EMI of Rs 40,000, this loan is a major financial commitment. Paying off this loan faster can free up more funds for other investments.

Consider making extra payments towards the principal amount whenever possible. This can reduce the loan tenure and the total interest paid. Allocating bonuses or any additional income towards this loan repayment can be a smart move.

Enhancing Your NPS Contribution
Your Rs 19 lakh in NPS is a solid foundation for your retirement planning. NPS offers a mix of equity, corporate bonds, and government securities, providing a balanced risk-reward ratio. Increasing your contributions to NPS can be beneficial due to the tax advantages and potential for compounded growth over time.

Given your long-term horizon, you might consider allocating a higher percentage towards equity within your NPS. Equity investments typically offer higher returns over the long term compared to debt instruments.

Exploring Mutual Funds for Long-Term Growth
You already have Rs 2 lakh in mutual funds, which is a good start. Investing in mutual funds can provide diversified exposure to various asset classes like equity and debt. Here’s why actively managed mutual funds could be a better choice for you:

Professional Management: Actively managed funds have fund managers who make investment decisions based on market conditions, aiming to outperform benchmarks.

Flexibility: These funds can adapt to market changes, potentially providing better returns compared to index funds which are passively managed.

Diverse Options: There are various types of actively managed mutual funds, such as large-cap, mid-cap, and small-cap funds. Diversifying your investments across these categories can spread risk and enhance returns.

It’s important to review and select funds based on their performance history, fund manager expertise, and alignment with your risk tolerance and financial goals.

Investing in Equity for Higher Returns
With Rs 1 lakh already in equity, you understand the potential for higher returns. Direct equity investments require careful analysis and a strong understanding of the stock market. Here are some tips for your equity investments:

Research Thoroughly: Invest in companies with strong fundamentals, good management, and growth potential. Keep an eye on market trends and news.

Diversify: Spread your investments across different sectors to mitigate risks. Avoid putting all your money in a single stock or sector.

Long-Term Perspective: Equity investments can be volatile in the short term. Stay invested for the long term to benefit from potential growth and compounding returns.

Reviewing LIC Policies and Insurance Coverage
It’s good that you have LIC policies, health insurance, and a term plan. However, it’s important to evaluate these policies periodically to ensure they meet your current needs and financial goals.

LIC Policies: These are typically investment-cum-insurance plans. Compare the returns on these policies with other investment options. If the returns are lower, consider surrendering these policies and reinvesting in mutual funds or other higher-return options.

Health Insurance: Ensure your health insurance coverage is adequate for your family's needs. Medical expenses can be a major financial burden, so having sufficient coverage is crucial.

Term Plan: This is a cost-effective way to ensure your family’s financial security in case of any unforeseen events. Make sure the coverage amount is sufficient to meet your family's future expenses and liabilities.

Balancing Risk and Returns with SIPs
Systematic Investment Plans (SIPs) in mutual funds can be an excellent way to invest regularly with discipline. SIPs allow you to invest a fixed amount regularly, taking advantage of rupee cost averaging and compounding benefits.

Start Small: Begin with an amount you’re comfortable with and gradually increase it as your financial situation improves.

Consistency: Invest consistently, regardless of market conditions. This helps in accumulating wealth over time and reduces the impact of market volatility.

Goal-Based Investing: Align your SIP investments with specific financial goals such as retirement, children’s education, or buying a house.

Emergency Fund and Financial Security
Before making new investments, ensure you have an adequate emergency fund. This fund should cover 6-12 months of living expenses, providing a financial cushion for unexpected situations like medical emergencies or job loss.

Having an emergency fund ensures that you won’t need to dip into your long-term investments during a financial crunch, thereby protecting your investment growth.

Exploring Tax-Saving Investment Options
As a salaried individual, it’s important to explore tax-saving investment options to reduce your tax liability while growing your wealth. Here are a few options to consider:

ELSS Funds: Equity Linked Savings Scheme (ELSS) funds offer tax benefits under Section 80C and have the potential for higher returns due to their equity exposure.

PPF: Public Provident Fund (PPF) offers a fixed return with tax benefits. It’s a safe, long-term investment option with a 15-year lock-in period.

SSY: Sukanya Samriddhi Yojana (SSY) is a government-backed scheme for the girl child, offering attractive returns and tax benefits.

Evaluating Direct vs. Regular Mutual Funds
You might wonder whether to invest in direct mutual funds or regular mutual funds. Here’s why regular funds, especially through a Certified Financial Planner (CFP), could be more beneficial:

Professional Guidance: Investing through a CFP provides access to professional advice, helping you make informed decisions and optimize your portfolio.

Holistic Planning: A CFP can help you with comprehensive financial planning, aligning your investments with your life goals.

Regular Monitoring: Regular funds come with the added advantage of ongoing monitoring and portfolio rebalancing, ensuring your investments remain aligned with your goals.

Direct funds might have lower expense ratios, but the benefits of professional guidance and support through regular funds often outweigh the cost difference.

Focusing on Long-Term Wealth Creation
Your goal is to achieve long-term wealth creation with minimum investment but good returns. Here are a few strategies to help you:

Stay Disciplined: Regular and disciplined investing is key to long-term wealth creation. Stick to your investment plan and avoid making impulsive decisions based on short-term market movements.

Review Periodically: Regularly review your investment portfolio to ensure it remains aligned with your goals and risk tolerance. Rebalance your portfolio as needed.

Educate Yourself: Stay informed about market trends and investment options. Continuous learning can help you make better investment decisions.

Final Insights
Planning for long-term investments requires a strategic approach and disciplined execution. Given your current financial situation, focusing on loan repayment, enhancing your NPS contributions, investing in actively managed mutual funds, and maintaining adequate insurance coverage can set you on the path to financial success.

Remember to prioritize building an emergency fund and consider tax-saving investment options to maximize your wealth creation efforts. Regularly review and adjust your investment plan to stay aligned with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Nitin

Nitin Narkhede  |3 Answers  |Ask -

MF, PF Guru - Answered on Sep 09, 2024

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Can Investment in Gold and Mutual Funds Give High Returns??
Ans: Dear Sumukh,
Thank you for your question about investing in gold and mutual funds. Both of these investment options have their merits, but they work differently and suit different financial goals. Let's explore how they can potentially deliver returns.
1. Gold as an Investment
• Potential Returns: Historically, gold has been seen as a hedge against inflation and currency fluctuations. Over the long term, gold prices tend to rise, but the growth is usually moderate compared to equity-based investments. In the last decade, gold has provided returns averaging 6-8% per year. However, in times of economic uncertainty (like during the pandemic), gold prices surged due to its status as a safe-haven asset.
• Volatility: While gold is a relatively stable investment during periods of economic distress, its prices can be volatile in the short term. It's best suited for long-term portfolios or when you want to diversify and protect your investments from inflation.
• Forms of Gold Investment:
o Physical Gold (Jewelry, Coins, Bars): This involves storage and making charges.
o Gold ETFs or Sovereign Gold Bonds (SGBs): These are better options for investment, offering ease of trading, tax benefits, and interest on SGBs.
2. Mutual Funds as an Investment
• Potential Returns: Mutual funds, especially equity mutual funds, can offer much higher returns than gold over the long term. Over the last 10-15 years, equity mutual funds have provided average returns of 10-15% per annum, depending on the market conditions and the type of mutual fund.
o Equity Mutual Funds have higher growth potential but come with greater risk. These funds invest in stocks of companies, and their performance is directly linked to the stock market.
o Debt Mutual Funds are safer and provide more stable returns (typically 6-8%) but with less growth potential compared to equity funds.
• SIP (Systematic Investment Plan): One of the most popular ways to invest in mutual funds is through SIPs. This method helps mitigate risk through rupee-cost averaging and can lead to substantial returns if done consistently over the long term.
Which One Offers Higher Returns?
• Short-Term Perspective: Gold might offer stability in the short term, but mutual funds, especially equity funds, generally outperform gold when it comes to growth over the long term.
• Long-Term Perspective: Mutual funds, particularly equity mutual funds, are more likely to deliver higher returns over time. Gold can be a good hedge and part of a diversified portfolio, but it's less likely to deliver substantial returns by itself.
Ideal Strategy:
• Diversification: It’s a good idea to diversify your investments between mutual funds and gold. You could allocate a portion of your portfolio (e.g., 10-15%) to gold for safety, while the majority can be invested in mutual funds to maximize growth.
• Risk Profile: If you’re comfortable with market fluctuations, equity mutual funds could be a better choice for high returns. If you prefer safety, a combination of debt mutual funds and gold might be a better strategy.
Conclusion:
• Mutual Funds have the potential to give higher returns than gold, particularly over the long term, thanks to the growth of equity markets. In Mutual funds with High Risk you can earn up to 40% returns, where as at low risk you can get 6 to 9 % returns at debt funds. At Moderate risk you can achive up to 15 to 25% returns.
• Gold, on the other hand, is a safer, long-term investment that can protect against inflation but typically offers moderate returns. Golds can give you on and average of 10 to 15 % return over long horzons.
It’s essential to align your investments with your financial goals, risk tolerance, and investment horizon. You might consider consulting a financial advisor to help create a balanced investment plan.
Best regards,
Nitin Narkhede
Founder & MD, Prosperity Lifestyle Hub https://Nitinnarkhede.com
Free Webinar https://bit.ly/PLH-Webinar

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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

Asked by Anonymous - Sep 09, 2024Hindi
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Hi sir, I have net salary of 2.7L per month and am 46 year old with 2 children aged 12 and 6. I have a EPF+PPF corpus of 65 lakhs , NPS 5 lakhs, 1CR in MF portfolio, invest 50k monthly (Which is on Hold currently) in MF SIPs. I own a house 65L(loan free) & another house 2CR have outstanding loans of 1CR. I have family floater medical insurance with 20L coverage and life cover for 1Cr. I wish to retire by age of 55 - pls advise how much corpus do I need at hand to retire. Consider my monthly expense as 1L
Ans: You are 46 years old with a net salary of Rs. 2.7 lakh per month. You have two children, aged 12 and 6, and a current corpus of Rs. 65 lakh in EPF and PPF, Rs. 5 lakh in NPS, and Rs. 1 crore in your mutual fund portfolio. Additionally, you own two properties, one valued at Rs. 65 lakh (loan-free) and another valued at Rs. 2 crore, with an outstanding loan of Rs. 1 crore. Your current monthly expenses are Rs. 1 lakh, and you have paused your monthly SIP of Rs. 50,000. You also hold a life insurance cover worth Rs. 1 crore and a family floater medical insurance with Rs. 20 lakh coverage.

You plan to retire by the age of 55, which gives you approximately nine years to build a sufficient corpus. Let's explore how much you need to comfortably retire while sustaining your current lifestyle.

Estimating Your Retirement Corpus
To determine your retirement corpus, we need to consider several factors:

Current monthly expenses: Rs. 1 lakh
Retirement age: 55
Post-retirement years: Assuming life expectancy of 85 years, you need to plan for 30 years post-retirement.
Inflation rate: An assumed inflation rate of 6% per year is a reasonable estimate for the future.
Growth rate of investments: Typically, diversified equity mutual funds have delivered around 10-12% returns over the long term.
Based on these factors, your current monthly expenses will increase due to inflation, and you need a corpus that generates enough to cover these rising costs. Since your expenses are Rs. 1 lakh today, they could double or triple over time. Your corpus should be able to sustain this without depleting prematurely.

Breakup of Current Assets
EPF & PPF (Rs. 65 lakh): These are stable, low-risk assets that will help you post-retirement but won't generate high returns.

NPS (Rs. 5 lakh): Provides tax benefits and is specifically designed for retirement savings. It will grow over time but is not highly flexible for withdrawals until retirement age.

Mutual Funds (Rs. 1 crore): This is an excellent foundation for your retirement plan. Equity mutual funds, in particular, have the potential to grow at a faster rate and combat inflation.

Real Estate (Rs. 65 lakh + Rs. 2 crore): While real estate holds value, its liquidity is limited. The house you live in does not contribute to your retirement corpus unless you plan to downsize. The second house has a loan of Rs. 1 crore, and the EMIs for this property must be factored into your pre-retirement cash flows.

Life Insurance (Rs. 1 crore): While it’s important for your family’s protection, this doesn’t contribute to your retirement corpus.

Estimating Your Future Monthly Expenses
Your current monthly expense is Rs. 1 lakh, but due to inflation, this figure will increase. Let’s assume the inflation rate remains at 6%. By the time you retire at 55, your monthly expenses will likely double or triple, reaching anywhere between Rs. 1.7 lakh to Rs. 2 lakh per month. Your retirement corpus should be large enough to generate this amount without running out of funds.

In addition, you’ll have to account for:

Healthcare costs: As you age, medical expenses tend to rise. Even though you have Rs. 20 lakh family floater insurance, post-retirement medical costs not covered by insurance should be factored in.

Educational expenses: Your children’s education could be a significant expense over the next 10 to 15 years.

Corpus Required for Comfortable Retirement
To maintain your current lifestyle, you would need a corpus that generates at least Rs. 2 lakh per month during retirement. Based on a withdrawal rate of 4%, which is commonly used to ensure the corpus lasts for the entirety of your retirement, you’ll need a retirement corpus of approximately Rs. 6 to 7 crore.

This corpus will ensure that you can comfortably cover your rising living expenses, healthcare, and other unforeseen costs without depleting your savings.

Recommendations to Achieve the Corpus
Here’s a detailed plan to help you achieve your target of Rs. 6 to 7 crore before retirement:

1. Resume Your SIP Investments
Restart your monthly SIP of Rs. 50,000 immediately. This is crucial, as equity mutual funds can provide the high returns needed to meet your retirement goal.

Consider increasing your SIP contribution each year in line with salary increments. This will accelerate your corpus growth and help you fight inflation more effectively.

2. Focus on Equity Mutual Funds
Given your long-term horizon (9 years until retirement), equity mutual funds remain the best investment option to grow your wealth. These funds have historically provided higher returns (10-12% CAGR), which will be essential for building your retirement corpus.

Ensure your portfolio is diversified across large-cap, mid-cap, and multi-cap mutual funds for balanced growth and risk.

3. Debt Repayment Strategy
You currently have an outstanding home loan of Rs. 1 crore. It’s advisable to clear this debt as early as possible. Carrying such a large debt into retirement can strain your finances.

Use a portion of your liquid assets, such as your mutual fund corpus or any bonuses, to reduce the loan burden gradually. This will free up cash flow and allow you to focus more on building your retirement fund.

4. Maximize Your EPF & PPF Contributions
Continue contributing to your EPF and PPF accounts. While the returns from these are modest, they are low-risk and provide tax-free returns, making them ideal for post-retirement stability.

As PPF matures, consider reinvesting the proceeds into equity mutual funds to capitalize on higher returns.

5. Increase Contributions to NPS
Your NPS balance is currently Rs. 5 lakh. Increase your contributions to this as it provides excellent tax benefits and is tailored for retirement.

NPS is also one of the few products where withdrawals are partially tax-free. Increasing contributions now will give you a more substantial corpus in the future.

6. Prioritize Children’s Education
Plan separately for your children’s education expenses. You might want to use specific child education funds or a combination of mutual funds for this.

Avoid dipping into your retirement savings for education purposes. Set clear boundaries between these two financial goals.

Final Insights
At 46, you are well-positioned financially, but pausing your SIP investments and holding onto a large loan could hinder your retirement plans. Restart your investments and focus on paying off your loan as soon as possible. By maintaining discipline and increasing your contributions to SIPs, NPS, and PPF, you should comfortably achieve your retirement corpus of Rs. 6 to 7 crore. Prioritize growth-oriented investments like equity mutual funds, and continue evaluating your portfolio annually to ensure it aligns with your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

Asked by Anonymous - Sep 03, 2024Hindi
Money
Hello Mr. Ramalingam Good morning. I'm 47 years old, my wife is at 40 and one daughter studying in 8th std. I have an investement in MF worth of 1.8 cr, ULIP of 20 lakhs, Direct equity of 5 lakhs, 1 cr term insurance, 5 lakhs LIC, 30 lakhs FD. Monthly SIP of 65 k in different MF's, accumulated EPF of 40 lakhs, 10 lakhs super annuatation fund. Invested in plot worth of 1 cr and farm land worth of 1.5 cr. No house and no loan. Would like retire by 55 years with monthly income of 2 lakhs / month from investment. Kindly suggest how I can make my finanical plan. Thanks
Ans: Based on your current financial situation and your goal of retiring at 55 with a monthly income of Rs. 2 lakhs, we need to assess your existing investments, future requirements, and how to bridge any gaps in your retirement plan.

Assets You Already Have
You have built a solid foundation of investments, which is impressive. Let’s break down your current assets:

Mutual Fund portfolio: Rs. 1.8 crore
ULIP: Rs. 20 lakhs
Direct equity: Rs. 5 lakhs
Term Insurance: Rs. 1 crore (sufficient for family protection)
LIC: Rs. 5 lakhs (Could be better allocated elsewhere)
Fixed Deposit: Rs. 30 lakhs
EPF: Rs. 40 lakhs
Superannuation Fund: Rs. 10 lakhs
Real Estate Investments: Plot (Rs. 1 crore) and farmland (Rs. 1.5 crore)
Your current SIP of Rs. 65,000 monthly in mutual funds is a good strategy for wealth accumulation.

Assessing Your Retirement Goal
You wish to have Rs. 2 lakhs per month as retirement income starting at 55. Considering inflation, your future expenses will likely be higher than Rs. 2 lakhs, which we must account for in your financial plan. Assuming you retire at 55 and live till 85, your investments need to generate returns for 30 years.

Evaluating Existing Investments
1. Mutual Funds:
Your current MF portfolio of Rs. 1.8 crore is a major asset. Continue with your SIPs to grow this corpus.
You might consider reviewing your fund allocations to ensure diversification across large-cap, mid-cap, and debt funds for stability and growth. Ensure these are actively managed funds, as they typically perform better than index funds over time.
2. ULIP:
ULIPs often have high charges and offer lower returns compared to mutual funds. It would be wise to surrender this policy and reinvest the Rs. 20 lakhs into mutual funds. This will offer better long-term growth for retirement.
3. Direct Equity:
Direct equity investments, while rewarding, are risky, especially as you approach retirement. It’s advisable to either reduce exposure to individual stocks or move to safer large-cap funds or balanced funds to ensure stability.
4. Fixed Deposit:
Rs. 30 lakhs in FD is a safe bet, but it yields lower returns. Consider using a portion of this for debt mutual funds, which offer slightly better returns and are tax-efficient.
5. LIC:
The Rs. 5 lakhs in LIC should be reconsidered, as insurance-based investment products are typically low-yielding. It’s better to surrender and reinvest this in mutual funds or safer investment options that offer higher returns.
6. Real Estate:
Your plot and farmland, though valuable, are illiquid assets. Real estate cannot generate a regular retirement income unless sold or rented out. Ideally, you should not rely on these for monthly income during retirement. Focus on liquid investments that can generate steady cash flow.
Plan for Retirement Income
Here’s how you can plan to generate Rs. 2 lakhs per month during retirement:

1. Continue Your SIPs:
Your monthly SIP of Rs. 65,000 is a good practice. If you can increase this slightly over the next few years, it will help you build a larger corpus for retirement. Aim to have at least Rs. 5-6 crore in liquid assets by the time you retire.
2. Shift to More Conservative Funds Closer to Retirement:
As you approach retirement, gradually move some of your equity-heavy investments into safer debt funds or balanced funds to preserve capital and reduce market risk.
3. Utilize the EPF and Superannuation Fund:
Your Rs. 40 lakhs in EPF and Rs. 10 lakhs in superannuation fund will continue to grow. Do not withdraw this early; allow it to accumulate till your retirement for a sizeable corpus that can act as a fixed-income generator.
4. Create an Income Stream with SWP:
Systematic Withdrawal Plan (SWP) from mutual funds will help you generate a monthly income after retirement. This is tax-efficient and can provide you with the Rs. 2 lakhs you desire. You can gradually withdraw from your mutual fund corpus post-retirement, ensuring your capital lasts for 30 years.
5. Review and Increase Insurance:
Your current term insurance of Rs. 1 crore is adequate for now. Ensure you have it in place till your retirement to protect your family in case of any unforeseen events. No need for further investment in insurance-based products like ULIPs or LIC.
Things to Keep in Mind
Inflation Protection: Rs. 2 lakhs per month today will not hold the same value in the future due to inflation. Plan to increase your SIP amounts and grow your corpus to account for this.

Healthcare Costs: As you age, healthcare expenses might rise. Ensure that your health insurance coverage is sufficient, or consider top-up plans to enhance your coverage.

Reassess Regularly: Financial planning is not a one-time activity. Review your portfolio annually to ensure you are on track and make adjustments based on changing market conditions or personal goals.

Final Insights
You are in a strong financial position and well on your way to a comfortable retirement. However, small changes like surrendering low-return policies and enhancing your mutual fund portfolio can make a significant difference. Focus on building a larger liquid corpus by continuing your SIPs and shifting towards income-generating assets as you near retirement.

Stay disciplined with your investments, and you will likely achieve your retirement goal of Rs. 2 lakhs monthly without financial stress.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

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Sir, I have both Mirae asset Large and Mid cap fund with sip + Mirae asset Large cap fund (sip stopped) Can I make STP or complete SWITCH from Mirae asset large cap fund to Mirae asset large and Mid cap fund. ? is it advisable
Ans: Switching or making a Systematic Transfer Plan (STP) from Mirae Asset Large Cap Fund to Mirae Asset Large and Mid Cap Fund can be considered based on your financial goals, risk tolerance, and investment strategy.

Factors to Consider:
1. Portfolio Diversification:
Large Cap Fund: Primarily invests in the top 100 companies, which are considered stable and less volatile. It is ideal for those seeking steady returns with relatively lower risk.
Large and Mid Cap Fund: Combines both large-cap (safer, stable) and mid-cap (higher growth potential but riskier) stocks. This offers a balanced approach, with more room for growth but with a bit more risk.
If your goal is to increase exposure to mid-cap stocks for potentially higher growth, an STP or switch to the Large and Mid Cap Fund makes sense. This fund offers a more diversified approach while still having a safety net of large-cap investments.

2. Investment Time Horizon:
Large and mid-cap funds tend to perform better in the long term (5+ years), as mid-caps may take time to realize their full growth potential. If your investment horizon is shorter, sticking with a large-cap fund may be preferable.
3. Risk Appetite:
Mid-cap stocks have higher growth potential but come with increased volatility. If you are comfortable with short-term fluctuations for long-term gains, an STP into the large and mid-cap fund could align with your goals.
4. Performance Track Record:
Both funds from Mirae Asset have strong reputations, but large-cap funds offer more consistent returns with lower downside risks during market corrections. You may want to assess the historical performance and volatility of both funds to see which fits your strategy better.
Why Use STP Instead of a Lump Sum Switch?
Tax Efficiency: An STP allows you to move funds gradually, spreading out tax implications and avoiding a large one-time exit load or capital gains tax.
Risk Mitigation: Instead of moving all your funds at once, an STP reduces the risk of entering at a high point in the market.
Consistent Investment: You continue investing in a disciplined manner, benefiting from rupee cost averaging.
Final Insight:
If your risk profile supports it, and your goal is long-term wealth creation, a STP from Mirae Asset Large Cap Fund to Mirae Asset Large and Mid Cap Fund can be a good option. This allows you to diversify your portfolio while retaining some stability through large-cap exposure.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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Nitin

Nitin Narkhede  |3 Answers  |Ask -

MF, PF Guru - Answered on Sep 09, 2024

Asked by Anonymous - Sep 07, 2024Hindi
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Money
I. Have 1 crore where can i invest for 2 yrs to get bigger returns, that amt is for ur daughter marriage
Ans: Dear Friend,
Thank you for your query. It's great that you're planning ahead for your daughter's marriage. With ?1 crore available for investment over a two-year period, you’ll want to balance growth with a moderate level of risk, since the time horizon is relatively short.
Key Considerations:
Since the investment horizon is only two years, it's important to prioritize capital preservation while seeking returns higher than traditional savings accounts or fixed deposits. Investments in high-risk options like equities are not advisable for such a short duration, as markets can be volatile. Instead, a mix of low to medium risk instruments will be more suitable.
Suggested Investment Options for Two Years:
1. Debt Mutual Funds - Short-Term Debt Funds or Corporate Bond Funds can offer returns in the range of 6-8% per annum. These funds invest in government securities, corporate bonds, and other fixed-income instruments. They are safer than equity investments and are suited for a 2-year investment period.
- Dynamic Bond Funds can also be considered, as they adjust their portfolios according to interest rate fluctuations, potentially offering better returns than fixed deposits.
2. Fixed Deposits (FDs) - Though FDs offer lower returns (typically 6-7% per annum), you can opt for Corporate FDs from highly rated companies which offer slightly higher interest rates. FDs provide safety and guaranteed returns, but they may not grow your wealth significantly.
3. Arbitrage Mutual Funds - Arbitrage funds take advantage of the price difference between the cash and futures markets. They are relatively low-risk and provide returns similar to short-term debt funds but with better tax efficiency if held for more than one year. These can be a good option for a two-year horizon, offering returns of around 5-6%.
4. High-Quality Non-Convertible Debentures (NCDs) - NCDs from reputed companies offer fixed interest rates, usually ranging from 7-9%. They can be a good option for someone seeking stable returns. However, be cautious about the credit ratings of the issuing company.
5. Ultra Short-Term Mutual Funds - These funds invest in short-term debt instruments and are suitable for a two-year horizon. They generally offer returns slightly higher than savings accounts, around 6-7%.
6. Post Office Monthly Income Scheme (MIS) - If you prefer absolute safety, this government-backed scheme offers around 6.6% interest per annum, with monthly interest payouts. You can park part of your investment here for assured returns.
7. Liquid Funds or Short-Term Gilt Funds - Liquid funds invest in money market instruments and offer stable returns with high liquidity. For a two-year period, liquid funds can yield around 5-6%. Gilt funds are another option, which invest in government securities and are suitable for low-risk investors. These funds may provide returns in the range of 6-7%.
For Example, you can plan a Portfolio Allocation for ?1 Crore as follows
1. Debt Mutual Funds (40% - ?40 Lacs) : Short-term debt or corporate bond funds for capital appreciation and safety.
2. Fixed Deposits or Post Office MIS (30% - ?30 Lacs) : Secure investments with guaranteed returns.
3. Arbitrage Funds or Dynamic Bond Funds (20% - ?20 Lacs) : To benefit from moderate growth with tax efficiency.
4. Liquid Funds (10% - ?10 Lacs) : For high liquidity and short-term needs.
It’s highly recommended to consult with a certified financial advisor to fine-tune this plan according to your exact goals and risk tolerance.
Best regards,
Nitin Narkhede
Founder & MD, Prosperity Lifestyle Hub
https://Nitinnarkhede.com
Free Webinar https://bit.ly/PLH-Webinar
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Radheshyam

Radheshyam Zanwar  |823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Sep 09, 2024

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Career
My son completed his BSC aviation how can I find job
Ans: Hi BAB
Congratulations to you and your son for completing B.Sc. Aviation. I hope during graduation, your son will have participated in extracurricular activities and might have completed some additional courses related to the aviation field. Yet, to get a job or to apply for a job, here are a few points:
(1) Try to get additional certifications (pilot training, aviation safety) for specialized roles.
(2) Look for roles in airlines, airports, and aviation companies in operations, safety, or logistics.
(3) Connect with industry professionals through aviation events and social media
(4) Use platforms like Naukri, Indeed, and LinkedIn to search for aviation roles/jobs
(5) Expertise skills in aviation management, safety, and flight operations.

Keep an eye on the following government/private job portals for notifications and eligibility criteria.
(1) Air Traffic Control (ATC): Jobs in the Airports Authority of India (AAI).
(2) Indian Air Force: Roles as Ground Duty Officers or Pilot through AFCAT.
(3) Airport Management: Positions in AAI for airport operations.
(4) Civil Aviation Department: Jobs related to aviation safety and regulations.
(5) Public Sector Airlines: Positions in Air India or similar public airlines.

You can check job listings and updates on the official AAI website aai.aero

If you are dissatisfied with the reply, pl ask again without hesitation. If satisfied, pl like and follow me.
Thanks a lot.
(Radheshyam)

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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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