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Ramalingam Kalirajan |2677 Answers |Ask -Follow

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

I am 48 yrs old i will be retiring on attaining 60 .I hav an fd of 25lak n few stocks n a monthly of 19 k in MF. I thought of starting to build a rental house for generating income for my retirement but m in a confusion as I will hav to break my fd as I don't want to take a loan.pls kindly help me with ur advice

Ans: It's impressive that you're planning ahead for your retirement at 48. You've accumulated a decent amount in fixed deposits (FD), stocks, and are investing regularly in mutual funds (MF), which is a great start.
Building a rental property can indeed be a strategy to generate passive income during retirement. However, breaking your FD to fund the construction raises a few considerations. FDs offer stability and guaranteed returns, and breaking them prematurely may result in loss of interest and penalties.
Before making any decisions, consider the following:
1. Evaluate Returns: Compare the potential rental income from the property with the interest you're earning on your FD. Ensure that the rental income justifies breaking the FD.
2. Risk Management: Real estate investments come with risks like property maintenance, vacancies, and market fluctuations. Assess your risk tolerance and ensure you have a contingency plan.
3. Diversification: Don't put all your eggs in one basket. Consider diversifying your investments to spread risk. You already have stocks and MFs; adding real estate can further diversify your portfolio.
4. Consult a Professional: Seek advice from a Certified Financial Planner (CFP) who can help you analyze your financial situation, assess the viability of the rental property, and create a comprehensive retirement plan.
5. Alternative Financing: Explore alternative financing options like taking a loan against your FD instead of breaking it entirely. This way, you can maintain the FD and still fund the construction.
Ultimately, the decision should align with your financial goals, risk tolerance, and retirement aspirations. A well-thought-out plan, backed by professional advice, can help you navigate this important decision effectively.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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