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Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 13, 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
Muten Question by Muten on Jun 11, 2024Hindi
Money

I am 50 and I have approx 9cr + 2 properties worth 7 cr. All my investments atm are in equities (MF 90% (high and medium risk) and 10 % stock). One of the property price is stuck at 3.5 cr from last 10 years. Not sure if I should sell this property and put the money into stocks. I do not need more than 1 lakh per month as I plan to retire in small town and I have a very simple life. So, if i keep aside approx 20 lakh every year and leave rest as invested, How much you think I can conveniently generate from these. Also, do you suggest selling the property and investing this in stocks as I do not want to carry a hassle of maintaining the property and need freedom to go anywhere and live. However if I sell the property I expect 60% will come to me as black and 40% will be white. So I can only invest 50%.

Ans: Firstly, congratulations on building a substantial asset base. Your prudent investments and property holdings reflect a keen eye for financial planning. At 50, planning for a relaxed retirement in a small town is a great choice. Given your current investments and lifestyle, let’s delve into a comprehensive strategy to maximize your returns and simplify your financial life.

Understanding Your Current Financial Position

You have Rs 9 crore in equity investments and two properties worth Rs 7 crore. One of the properties has not appreciated in value for the past decade. Your equity portfolio is well-diversified with 90% in mutual funds (high and medium risk) and 10% in stocks. You aim for a monthly income of Rs 1 lakh and want to set aside Rs 20 lakh annually, leaving the rest invested.

Creating a Monthly Income Stream

To generate a monthly income of Rs 1 lakh, you need investments that offer stability and regular returns. Let’s explore how you can achieve this through a mix of investment avenues.

Systematic Withdrawal Plan (SWP) in Mutual Funds

An SWP allows you to withdraw a fixed amount regularly from your mutual fund investments. This provides a steady income while keeping the remaining corpus invested for growth. Given your substantial mutual fund holdings, an SWP can be an effective strategy. You can set up an SWP to withdraw Rs 1 lakh per month, ensuring a reliable income stream.

Debt Mutual Funds and Fixed Deposits

Consider allocating a portion of your corpus to debt mutual funds and fixed deposits. These instruments offer stability and predictable returns. Debt mutual funds can provide better post-tax returns compared to fixed deposits, making them a suitable choice for regular income.

Public Provident Fund (PPF) and Senior Citizens’ Savings Scheme (SCSS)

Although you are not a senior citizen yet, once you reach 60, SCSS can be an excellent investment for regular income. Meanwhile, you can continue contributing to your PPF account. Both these schemes offer tax benefits and secure returns, adding stability to your portfolio.

Selling the Underperforming Property

You mentioned the property valued at Rs 3.5 crore has been stagnant for a decade. Selling this property can free you from maintenance hassles and provide liquidity for better investments.

Considerations Before Selling

Before deciding to sell, weigh the potential black money issue. If 60% of the sale proceeds are in black money, it limits your reinvestment options. Ensure you understand the legal and tax implications. Consulting a legal advisor can help navigate this aspect.

Investing Sale Proceeds in Stocks

While equities offer high growth potential, investing a large lump sum at once can be risky. Market timing and volatility are significant concerns. Instead, consider a phased approach through Systematic Transfer Plans (STP) or gradually increasing your equity exposure.

Balanced Portfolio Approach

A balanced portfolio with a mix of equity, debt, and other instruments reduces risk and ensures steady returns. Given your substantial corpus, preserving capital while ensuring growth is essential. Let’s explore the components of a balanced portfolio.

Equity Investments

Continue investing in mutual funds and stocks, but with a balanced approach. Allocate a portion to large-cap and multi-cap funds for stability, and the rest to mid-cap and small-cap funds for growth. Regularly review and rebalance your equity portfolio to align with market conditions and your risk tolerance.

Debt Investments

Debt mutual funds, fixed deposits, and government schemes should form a significant part of your portfolio. These instruments provide predictable returns and safeguard against market volatility. Ensure your debt investments are diversified across different types and maturities.

Gold Investments

Gold is a good hedge against inflation and market risks. Consider allocating 5-10% of your portfolio to gold through gold ETFs or sovereign gold bonds. This adds a layer of security and diversification.

Health and Life Insurance

Ensure you have adequate health and life insurance coverage. Medical emergencies can deplete your savings, and having a robust insurance plan protects your financial stability. Life insurance ensures your loved ones are secure in case of unforeseen events.

Tax Planning

Efficient tax planning enhances your returns. Utilize tax-saving instruments and strategies to minimize your tax liability. This ensures more funds are available for investment and income generation.

Setting Up a Contingency Fund

A contingency fund covering at least six months of expenses is crucial. This fund acts as a buffer during emergencies and prevents disruptions in your financial plan. Keep this fund in liquid instruments like savings accounts or liquid mutual funds.

Phased Withdrawal Strategy

Instead of withdrawing a large amount at once, adopt a phased withdrawal strategy. This ensures your investments continue to grow while providing the required income. Review your withdrawal strategy annually to align with your financial needs and market conditions.

Final Insights

Your financial foundation is strong, and with prudent planning, you can enjoy a comfortable retirement. Selling the underperforming property can provide liquidity for better investments, but consider the black money implications carefully. A balanced portfolio approach, combining equity, debt, and gold, ensures growth and stability. Setting up a systematic withdrawal plan and having adequate insurance coverage further secures your financial future. Regularly review and adjust your financial plan to stay aligned with your 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  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

Asked by Anonymous - Jun 08, 2024Hindi
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Hi Sir Iam 54 years old with health issues. I have personal debts to a tune of 70 lakhs. I have a small business which gives me an average monthly income of Rs 30000. On an average my monthly requirement is 1.5lakh. I own a property which is worth around 4 to 5 crore. I have a few options: Option 1: Take half the property, develop it into plots and sell it. Here I will initially need to put in money towards project expenses, which means some more borrowing. Else I can wait to pre sell about 4 plots, which will help me to cover the expenses to develop the plots and then later sell the balance plots and repay my existing debts and then put deposit the balance money in the bank and see if the interest will sustain my monthly requirements. This option has the usual risks of delayed sale of plots etc. Option 2: just sell part of the land as it is. I will get around 1.5 cores if I do this. Out of this 1.5 I will use 70 lakhs towards debt repayment. If I deposit the balance 70lakhs in the bank, how much interest will I get monthly? Option 3: Sell the entire property for about 4 to 5 crores. Repay the 70 lakh debt and invest the balance in bank etc. But this means I will not own anything, and will have to rent a house etc. So my monthly requirement will go upto 2 lakhs per month. Here, the down side is I will be giving up all my assets, which I had retained would have grown in value. Please advise. Thanks.
Ans: At 54, with health issues and a substantial personal debt of Rs 70 lakhs, you are managing a small business that brings in Rs 30,000 per month. Your monthly financial requirement is Rs 1.5 lakhs. You own a valuable property worth around Rs 4-5 crores. You have three main options to consider for managing your debt and ensuring a steady income.

Assessing Your Options
Let's explore each option with a detailed analysis:

Option 1: Develop and Sell Plots
Developing your property into plots and selling them could be lucrative. However, this option involves significant upfront costs and the risk of delays in sales.

Advantages:

Higher Potential Returns: Selling plots can yield higher returns compared to selling the property as a whole.

Retain Ownership: You still retain a portion of the property.

Disadvantages:

Initial Investment: You will need to invest money upfront for development costs, leading to more borrowing.

Risk of Delays: There’s a risk of delayed sales, which can affect your ability to repay debts on time.

Project Management: Managing such a project can be stressful and time-consuming, especially given your health issues.

Option 2: Sell Part of the Land
Selling part of the land can provide immediate funds without the need for further borrowing. This option seems less risky than developing plots.

Advantages:

Immediate Funds: You get immediate funds to repay the Rs 70 lakhs debt.

Reduced Risk: Fewer risks compared to developing plots, as it does not involve further borrowing or project delays.

Disadvantages:

Limited Funds: Selling only part of the land may not generate sufficient funds for long-term sustainability.

Interest Income: Interest from Rs 70 lakhs may not cover your monthly requirement of Rs 1.5 lakhs.

Option 3: Sell Entire Property
Selling the entire property can clear your debts and provide a substantial amount for future investments. This option, however, means giving up ownership and potentially increasing your monthly expenses due to rent.

Advantages:

Debt-Free: You can repay the Rs 70 lakhs debt completely.

Large Corpus: You will have a significant corpus to invest for future income.

Disadvantages:

No Ownership: You will lose ownership of the property, which could appreciate in value over time.

Increased Expenses: Renting a house will increase your monthly financial requirement to Rs 2 lakhs.

Evaluating the Best Option
Given your health issues and the need for a stable monthly income, it's crucial to choose an option that minimizes stress and ensures financial security.

Option 1: Feasibility and Risks
Developing and selling plots can be profitable, but the upfront investment and potential delays pose significant risks. At your age and with health concerns, managing such a project might be too demanding.

Option 2: Immediate Debt Relief
Selling part of the land seems like a balanced approach. You can repay the Rs 70 lakhs debt immediately and invest the remaining Rs 70 lakhs. However, you need to evaluate if the interest income from Rs 70 lakhs is enough to meet your monthly requirements.

Bank Interest Income:

Interest Rate: Assume an average bank interest rate of 6% per annum.

Monthly Income: Rs 70 lakhs * 6% / 12 = Rs 35,000 per month.

With Rs 35,000 from interest and Rs 30,000 from your business, your total monthly income would be Rs 65,000, which is insufficient to meet your Rs 1.5 lakhs requirement.

Option 3: Long-Term Security
Selling the entire property provides a substantial amount to invest. Post repayment of the Rs 70 lakhs debt, you will have approximately Rs 3.3-4.3 crores for investment.

Investment Strategy:

Diversified Portfolio: Invest in a mix of fixed deposits, mutual funds, and bonds to generate a steady income.
Recommended Strategy
Considering the analysis, Option 3 seems the most viable for ensuring long-term financial security despite its downsides. Here’s a detailed plan:

Debt Repayment and Initial Investment
Repay Debt: Use Rs 70 lakhs to clear the debt.

Remaining Funds: Invest the remaining Rs 3.3-4.3 crores wisely.

Investment Allocation
Fixed Deposits: Allocate 20% (Rs 66 lakhs to Rs 86 lakhs) to fixed deposits for a stable, risk-free income.

Mutual Funds: Invest 50% (Rs 1.65-2.15 crores) in mutual funds for higher returns.

Bonds and Debentures: Allocate 20% (Rs 66 lakhs to Rs 86 lakhs) to bonds and debentures for moderate risk and steady income.

Emergency Fund: Keep 10% (Rs 33-43 lakhs) in a liquid fund as an emergency reserve.

Monthly Income from Investments
Fixed Deposits: Rs 66 lakhs at 6% annual interest = Rs 3.96 lakhs per year or Rs 33,000 per month.

Mutual Funds: Assuming an average annual return of 10%, Rs 1.65 crores = Rs 16.5 lakhs per year or Rs 1.37 lakhs per month.

Bonds and Debentures: Rs 66 lakhs at 7% annual interest = Rs 4.62 lakhs per year or Rs 38,500 per month.

Total Monthly Income: Rs 33,000 + Rs 1.37 lakhs + Rs 38,500 = Rs 2.08 lakhs.

This income exceeds your monthly requirement of Rs 1.5 lakhs, ensuring a comfortable lifestyle.

Addressing Concerns
Health Issues
Your health issues require careful consideration. A stress-free and secure financial strategy is crucial. Selling the entire property and investing wisely reduces financial stress and ensures a steady income.

Ownership and Future Value
While losing ownership of the property is a concern, investing the proceeds in diversified assets can provide better financial security. Properties can appreciate, but they also come with risks and responsibilities.

Increased Expenses
Renting a house will increase your monthly expenses. However, the proposed investment strategy generates sufficient income to cover this increase.

Final Insights
Your situation demands a careful balance of debt repayment, investment, and monthly income generation. Considering your health and financial needs, selling the entire property and investing the proceeds in a diversified portfolio seems the most secure option. This strategy ensures debt repayment, generates sufficient monthly income, and reduces financial stress. Always consult with a certified financial planner to tailor this strategy to your specific needs and ensure optimal results.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

Asked by Anonymous - Jun 10, 2024Hindi
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Hi..I am 49 years old I have Stocks of Rs.1.40 Crores, PPF Rs. 20 Lakhs, EPF Rs.25 Lakhs, Rs 20 Lakhs in SGV and Mutual Fund., Real Estate of Rs.55 Lakhs Purchase value with a loan of Rs.24 Lakhs outstanding. I want to purchase a house of Rs.1.60 Crore. Monthly avilable to investment 1.5 lakhs Job is at stake now..Should I purchase the house for staying AT 58 YEARS if job is not yhere in 8 months down the line. Also if I purchase the 2nd house for staying, should I sell the first house which I can get Rs.35 to Rs.40 lalhs after paying my loan and pay for 2nd house or invest in mutual fud and withdraw from the corpus. Secondly. Should I sell part of my stock to pay part of my 2nd house purchase or keep the sale proceeds in Mutual fund and then do a sWP and pay the 2nd house. Thirdly, Stocks I have got about 15 to 10 percent returns in last 2 years Should I keep the complete stock or take out 40 or 50 percent and invest in Mid cap and small cap mutual funds? Fourth If you want to invest 50 lakhs in Small and Mid cap funds..Is it better to go for 4 funds (2 in each category )or 2 funds ( one is each category)
Ans: Current Financial Situation
Assets
Stocks: Rs 1.40 crores
PPF: Rs 20 lakhs
EPF: Rs 25 lakhs
SGBs: Rs 20 lakhs
Mutual Funds: Rs 20 lakhs
Real Estate: Rs 55 lakhs (purchase value) with an outstanding loan of Rs 24 lakhs
Income and Investment Capacity
Monthly Available for Investment: Rs 1.5 lakhs
Job Security: At risk, with potential job loss in 8 months
Goals and Questions
Purchasing a House for Rs 1.60 Crores
You plan to buy a second house for Rs 1.60 crores. You are considering selling your current house and using the proceeds, along with your investments, to fund the purchase.

Key Questions
Should I purchase the house for staying at 58 years if job is not secure?
Should I sell the first house and use the proceeds for the second house, or invest in mutual funds and withdraw from the corpus?
Should I sell part of my stocks to pay for the second house, or keep the proceeds in mutual funds and use SWP?
Should I move some stock investments to mid-cap and small-cap mutual funds?
Is it better to invest Rs 50 lakhs in small and mid-cap funds across 2 or 4 funds?
Detailed Analysis
Purchasing the House
Job Security and Financial Stability
Given the potential job loss, ensure financial stability first. Buying a house worth Rs 1.60 crores may strain your finances if your job is at risk.

Using Proceeds from the First House
Selling the First House
Proceeds: Selling the first house can get you Rs 35-40 lakhs after paying off the loan. This can be used towards the purchase of the second house.
Investing in Mutual Funds
Investing Proceeds: If you invest the proceeds in mutual funds, you can withdraw through a Systematic Withdrawal Plan (SWP) to fund the second house. This approach can offer better returns compared to keeping the funds idle.
Selling Stocks for the Second House
Selling Stocks
Partial Sale: Consider selling part of your stock portfolio. This can provide liquidity for the house purchase. However, do not liquidate all stocks, as they offer growth potential.
Investing in Mutual Funds
SWP Strategy: Transfer the sale proceeds to mutual funds and use an SWP for steady payments towards the house. This offers tax efficiency and better returns.
Stock Portfolio Adjustment
Current Returns
Returns: Your stocks have given 10-15% returns over the last two years. This is a decent performance.
Diversifying to Mutual Funds
Reallocation: Moving 40-50% of your stock investments to mid-cap and small-cap mutual funds can diversify your risk and offer higher growth potential.
Investment in Mid-Cap and Small-Cap Funds
Number of Funds
4 Funds Approach: Invest Rs 50 lakhs across 4 funds (2 in mid-cap and 2 in small-cap). This diversifies your risk and provides exposure to different fund management styles.
Recommendations
Prioritise Financial Stability
Ensure you have enough liquidity and emergency funds, given your job risk.
Avoid making large financial commitments like purchasing a new house if job security is uncertain.
Using First House Proceeds
Sell your first house and use the proceeds towards the second house.
If not buying immediately, invest the proceeds in mutual funds and use SWP for payments.
Managing Stock Investments
Sell a portion of your stocks to generate liquidity.
Reinvest in mutual funds, especially mid-cap and small-cap, for better diversification and potential returns.
Mutual Fund Strategy
Invest Rs 50 lakhs in 4 funds (2 mid-cap, 2 small-cap) for balanced diversification.
Ensure the funds are actively managed for better performance.
Final Insights
Maintain financial stability given your job situation. Diversify your investments to reduce risk. Prioritise liquidity and ensure you have enough funds to cover potential job loss. Consider professional advice for a tailored strategy.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

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Me and my father look after a food and beverage shop( sweets and snacks). The property is our own it's around 2200 sqft on a prime location . Now after already running it for more than 30 years we are planning to wind up the business and sell out the land which will earn a sum of rs 6 cr+ to us. And after that we plan to invest that money into different sectors( like land, real estate, equity and FDs). Other option is to mortgage the property and renovate it and put it on rental income which can yield us around 1.2 lacs per month. Now we are little confused as which option to choose. Renovation cost is around 50 lacs and winding up business is due to manpower issues. Also please explain as we sell the property and get 6 cr in hand how do we plan out investment so as to save tax mostly.
Ans: Evaluating Current Situation

You and your father run a food and beverage shop.

You own the property, which is 2200 sqft in a prime location.

You plan to sell the property for Rs. 6 crores or renovate it for rental income.

Renovation cost is around Rs. 50 lakhs, and rental income can be Rs. 1.2 lakhs per month.

Manpower issues are prompting you to consider winding up the business.

Your goal is to invest the proceeds wisely and save on taxes.

Option 1: Selling the Property

Selling the property can provide a lump sum of Rs. 6 crores.

This option can simplify your financial management.

You can invest the proceeds in diversified sectors.

Option 2: Renovating for Rental Income

Renovating can cost Rs. 50 lakhs.

It can generate Rs. 1.2 lakhs per month in rental income.

This provides a steady income stream but requires management.

Tax Considerations

Selling the property will attract capital gains tax.

Investing in specified bonds can save on capital gains tax.

You can also reinvest in another property to save on taxes.

Diversified Investment Plan

Mutual Funds

Invest in mutual funds for growth and income.

Consider equity mutual funds for long-term growth.

Hybrid funds can provide a balance of growth and stability.

Systematic Withdrawal Plan (SWP)

Use SWPs for regular income from mutual funds.

SWPs offer tax-efficient regular withdrawals.

Fixed Deposits

Invest in FDs for secure returns.

FDs provide stability and guaranteed returns.

Avoiding Index Funds

Index funds track the market but lack active management.

Actively managed funds can outperform index funds.

A Certified Financial Planner can provide tailored advice.

Avoiding Direct Funds

Direct funds seem cheaper but need professional guidance.

Regular funds, through a Certified Financial Planner, offer expert management.

Final Insights

Selling the property can provide a large corpus for diversified investments.

Renovating for rental income provides a steady cash flow but involves management.

Diversify your investments for growth, stability, and tax efficiency.

Consult a Certified Financial Planner for a detailed, personalized plan.

Appreciate your long-term planning and proactive approach to managing your assets.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

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

Money
Hellopus I am 40 year old married female and have a 1.5 year old daughter. Currently I am drawing 1.13 lakhs monthly. I have 28 lakhs in mutual funds, 10 lakhs in ppf, 26 lakhs in epf, 25 lakhs gold,20 lakhs in lic, 2 lakhs in fd, I am investing 60000 per month in various saving schemes. Now I intend to buy a property worth 1.30 crore. Shall I wait or invest. Am I in a position where I can pay monthly emi of 75000 for next 30 years.
Ans: You've built a strong financial foundation with your savings and investments. This is impressive, considering your current financial obligations and future goals. Let's take a detailed look at your situation and assess whether you should buy the property now or wait.

You earn Rs 1.13 lakhs monthly, and have substantial investments:

Rs 28 lakhs in mutual funds.
Rs 10 lakhs in PPF.
Rs 26 lakhs in EPF.
Rs 25 lakhs in gold.
Rs 20 lakhs in LIC.
Rs 2 lakhs in FD.
You also invest Rs 60,000 per month in various saving schemes.

Monthly EMI and Financial Stability
Purchasing a property worth Rs 1.30 crore will require a significant monthly EMI. If we assume an EMI of Rs 75,000 for 30 years, let's evaluate if this fits into your current financial structure.

Income and Expenses:
Your monthly income is Rs 1.13 lakhs. Deducting Rs 75,000 for EMI, you’ll have Rs 38,000 left for other expenses and investments.

Understanding Your Expenses
Your current monthly investments total Rs 60,000. After accounting for the EMI, it’s essential to ensure your remaining income covers your living expenses, savings, and unexpected costs.

Emergency Fund
An emergency fund is vital. Ideally, you should have 6-12 months of expenses saved. With Rs 2 lakhs in FD, consider increasing this fund to cover unforeseen expenses. This ensures financial stability without disrupting your EMI payments.

Assessing Investment Allocation
Mutual Funds:
You have Rs 28 lakhs in mutual funds. Mutual funds are versatile and offer potential growth. Ensure your portfolio is diversified across equity, debt, and hybrid funds to balance risk and return.

PPF and EPF:
Your PPF and EPF balances are Rs 10 lakhs and Rs 26 lakhs respectively. These are safe, long-term investments providing assured returns. They are also excellent for retirement planning.

Gold:
Gold worth Rs 25 lakhs adds stability and acts as a hedge against inflation. However, its returns are generally lower compared to other investment options.

LIC:
With Rs 20 lakhs in LIC policies, evaluate the performance and returns. If these are investment-cum-insurance policies, consider surrendering and reinvesting the amount in mutual funds for better growth.

FD:
Your Rs 2 lakhs in FD is a good start for an emergency fund. Ensure you have sufficient liquidity for emergencies.

Cash Flow and Loan Eligibility
Given your current financial commitments, paying a Rs 75,000 EMI might strain your cash flow. It's crucial to maintain a balance between your loan repayments and daily living expenses.

Impact on Lifestyle
Evaluate how a high EMI impacts your lifestyle. You must comfortably manage your expenses, investments, and future needs without financial stress.

Benefits of Waiting
Waiting to buy the property can provide several benefits:

Increased Savings: Allow more time to save, reducing loan amount and interest paid.
Market Conditions: Property prices may stabilize or fall, offering better deals.
Financial Cushion: Build a stronger financial cushion, reducing the burden of EMI.
Power of Compounding in Mutual Funds
Investing consistently in mutual funds harnesses the power of compounding. Over time, even small investments can grow significantly. This can enhance your financial stability and provide substantial returns.

Diversification and Risk Management
Diversifying your investments across different mutual funds reduces risk. Balancing between equity, debt, and hybrid funds helps manage market volatility and provides steady returns.

Mutual Fund Categories
Equity Funds: High risk, high reward. Suitable for long-term growth.
Debt Funds: Lower risk, stable returns. Ideal for short to medium-term goals.
Hybrid Funds: Mix of equity and debt. Balanced risk and return.

Advantages of Mutual Funds
Professional Management: Managed by experts, providing better growth opportunities.
Liquidity: Easy to buy and sell, offering flexibility.
Diversification: Reduces risk by investing in a variety of assets.
Tax Benefits: Certain funds offer tax advantages under sections like 80C.
Potential Risks
Market Volatility: Equity funds are subject to market fluctuations.
Credit Risk: Debt funds carry the risk of issuer default.
Interest Rate Risk: Affects bond prices and, consequently, debt funds.
Reassessing LIC Policies
Evaluate your LIC policies. If they are investment-cum-insurance, consider surrendering them. The amount can be reinvested in mutual funds for better returns and flexibility.

Future Goals and Planning
Your financial planning should align with future goals like your daughter’s education and marriage. Ensure your investments are structured to meet these goals without straining your current finances.

Creating a Balanced Portfolio
Your portfolio should balance risk and reward. A mix of equity, debt, and hybrid funds provides growth and stability. Regularly review and adjust your portfolio to align with your goals and market conditions.

Certified Financial Planner
Engage with a Certified Financial Planner to tailor a financial strategy. They provide personalized advice, ensuring your investments align with your goals and risk tolerance.

Final Insights
Buying a property is a significant decision. Evaluate your financial stability, future goals, and current commitments before proceeding. Ensure you maintain a balance between loan repayments and living expenses. Waiting might provide better financial security and opportunities.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Tech Entrepreneur, Educationist - Answered on Jul 22, 2024

Asked by Anonymous - Jul 21, 2024Hindi
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A doctorate from IIT Bombay in Metallurgy and masters from NIT in Manufacturing with 5 years of experience including 2 years in academics and currently working from past 3 years in industry where I work mostly on finite element analyst of forging and bulk extrusion process and New product development as manager heading a team of 5 people. I have working knowledge of 3-4 FE software related to metal forming domain along with ANSYS STRUCTURAL. Despite that I am not getting any interview calls as I am currently looking for a job switch and have put up my profile both on NAUKRI AND LINKEDIN. Some calls are coming to me but that are all irrelevant profiles in which my expertise is not there. I have been trying for the past 6 months but have not got any positive response. Despite such a highly educated person from premier institute and not getting any response is highly depressing. Could you suggest how to apply and where to apply and any other website where I shall make my profile to get a positive response ? Thanks. .................
Ans: You have accomplished academic background and work in a very specialised area. You may have to expand your job search to a broader field of Metalurgy, Product Managment, Operations and not be limited to Finite Element analysis. Think through again and look for companies active in the field of metallury and users and producers of Steel, Metals. You may also look at academics. Use your academic contacts in the two IIT--IIT B and NIT, previous employers and seek their help in connecting you with possible openings. You also need to give yourself more time and be optimistic.

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Ramalingam Kalirajan  |5108 Answers  |Ask -

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

Asked by Anonymous - Jul 21, 2024Hindi
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Meri umar 46 sal hai 60ke bad 2lak rs mahine ka inkam chahta hun sip me ktane investment karu
Ans: Planning for Post-Retirement Income
You are 46 years old and want a monthly income of Rs 2 lakh after 60. Let's create a strategy to achieve this goal through SIP investments.

Assessing Your Current Situation
Current Age: 46 years
Retirement Age: 60 years
Target Monthly Income Post-Retirement: Rs 2 lakh
Time Horizon: 14 years
Estimating Required Corpus
To generate a monthly income of Rs 2 lakh, you need a substantial retirement corpus. Let's estimate the corpus required using a safe withdrawal rate of 4%.

Annual Income Required: Rs 2 lakh x 12 = Rs 24 lakh
Corpus Needed: Rs 24 lakh / 4% = Rs 6 crore
SIP Investment Strategy
To accumulate Rs 6 crore in 14 years, consistent SIP investments are crucial. Let's determine the monthly SIP amount needed.

Calculate Monthly SIP Amount
The calculation involves assumptions about expected returns. Assume an annual return of 12% from equity mutual funds.

Using an online SIP calculator:

Corpus Required: Rs 6 crore
Time Horizon: 14 years
Expected Annual Return: 12%
The estimated monthly SIP amount needed is around Rs 1 lakh.

Recommendations for SIP Investments
Diversify Your Portfolio
Equity Funds: Focus on diversified equity funds for higher growth.
Balanced Funds: Include balanced funds for stability and moderate returns.
Debt Funds: Allocate a portion to debt funds for lower risk.
Regularly Review and Adjust
Monitor Performance: Regularly review your portfolio's performance.
Adjust Allocations: Adjust allocations based on market conditions and goals.
Gradually Increase SIP Amount
Step-Up SIP: Increase your SIP amount annually to boost corpus growth.
Bonus or Increment: Use bonuses or salary increments to increase investments.
Final Insights
To achieve a post-retirement income of Rs 2 lakh per month, you need to accumulate around Rs 6 crore.

Start with a monthly SIP of around Rs 1 lakh.
Diversify your investments across equity, balanced, and debt funds.
Regularly review and adjust your portfolio.
Gradually increase your SIP amount over time.
By following this strategy, you can achieve your retirement income goal. Consult a Certified Financial Planner to tailor the plan to your specific needs and circumstances.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

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

Asked by Anonymous - Jul 03, 2024Hindi
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Hi My per annum package is around Rs. 21 lacs. I have a home loan EMI of Rs. Rs. 2.28 lacs. I have investment of Rs. 3.6 lacs in various insurance schems. Apart from that I have some investment of Rs. 200000 in MF. Please guide me how much investment I need to do for tax savings ?
Ans: Income and Existing Investments
Annual Package: Rs 21 lakhs
Home Loan EMI: Rs 2.28 lakhs per annum
Insurance Investments: Rs 3.6 lakhs
Mutual Fund Investments: Rs 2 lakhs
Tax Saving Investments Under Section 80C
To maximize tax savings under Section 80C, you can invest up to Rs 1.5 lakhs per annum. Here’s a breakdown:

Existing Eligible Investments
Home Loan Principal Repayment: Part of your home loan EMI goes towards principal repayment, which qualifies under Section 80C.
Insurance Premiums: The Rs 3.6 lakhs in insurance schemes might include premium payments that are eligible under Section 80C.
Additional Investments Required
Calculate Existing Deductions: First, identify the portion of your EMI and insurance premiums that qualify for Section 80C. Let's assume your home loan principal repayment is Rs 1 lakh per annum and the insurance premiums are Rs 50,000 per annum.
Investment Suggestions for Additional Tax Savings
To fully utilize the Rs 1.5 lakhs limit, you need to invest an additional Rs 50,000.

Equity-Linked Savings Schemes (ELSS)
Benefits: ELSS funds offer tax savings and have the potential for high returns.
Lock-in Period: They come with a 3-year lock-in period, the shortest among all tax-saving options under Section 80C.
Public Provident Fund (PPF)
Benefits: PPF offers tax-free returns and is a safe investment option.
Lock-in Period: 15-year lock-in, but partial withdrawals are allowed after the 7th year.
Sukanya Samriddhi Yojana (SSY)
Benefits: If you have a daughter, SSY is a good option with attractive interest rates and tax benefits.
Lock-in Period: Till the daughter turns 21 or gets married after the age of 18.
National Savings Certificate (NSC)
Benefits: NSC is a safe investment option with a fixed interest rate.
Lock-in Period: 5 years.
Voluntary Provident Fund (VPF)
Benefits: You can contribute more than your mandatory EPF contribution.
Returns: Similar to EPF returns and safe.
Other Tax-Saving Sections
Section 80D - Health Insurance Premium
Benefits: Deduction up to Rs 25,000 for self, spouse, and children. Additional Rs 25,000 for parents under 60 and Rs 50,000 if they are over 60.
Section 80E - Education Loan Interest
Benefits: Deduction on interest paid on education loans for higher studies.
Section 24 - Home Loan Interest
Benefits: Deduction up to Rs 2 lakhs on interest paid on home loan.
Review and Reallocate Existing Investments
Insurance Policies
Evaluation: Assess if your insurance policies are purely for investment or provide adequate life cover.
Reallocation: Consider surrendering or reducing investment-cum-insurance policies and reallocating to mutual funds.
Mutual Funds
Focus on Growth: Since your goal is wealth creation, consider allocating more to equity funds for higher growth potential.
Final Insights
Maximize Section 80C: Utilize the full Rs 1.5 lakh limit under Section 80C with a mix of ELSS, PPF, and SSY.
Diversify: Ensure your portfolio is diversified across different asset classes for balanced growth and risk management.
Regular Monitoring: Periodically review and adjust your investments to stay aligned with your financial goals.
Certified Financial Planner: Consider consulting a Certified Financial Planner for personalized advice and strategy.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5108 Answers  |Ask -

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

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I have invested 10L in Mutual Fund through Lumpsum mode. The 4 schemes which I have invested in are PPFAS FLEXI CAP REG-G (2.5L), ICICI PRU equity & Debt-G (2.2L), ICICI PRU Large & Mid Cap-G (2.2L), SBI long term Equity Reg-G (2L), SBI contra -G (1.10L). Investment objective is long term wealth creation and time frame is 15 years. Kindly Suggest if choice of funds is good and what could be potential return.
Ans: Let's review your mutual fund choices and assess their suitability for your long-term wealth creation goal.

Current Investment Overview
Total Investment: Rs 10 lakhs
Investment Mode: Lumpsum
Time Frame: 15 years
Fund Allocation
PPFAS Flexi Cap Reg-G: Rs 2.5 lakhs
ICICI Pru Equity & Debt-G: Rs 2.2 lakhs
ICICI Pru Large & Mid Cap-G: Rs 2.2 lakhs
SBI Long Term Equity Reg-G: Rs 2 lakhs
SBI Contra-G: Rs 1.1 lakhs
Evaluation of Fund Choices
PPFAS Flexi Cap Reg-G
Flexibility: Invests across market capitalizations and sectors.
Potential: Good for capturing diverse market opportunities.
Long-Term Suitability: Suitable for long-term wealth creation.
ICICI Pru Equity & Debt-G
Balanced Approach: Mix of equity and debt.
Stability: Provides a cushion against market volatility.
Long-Term Suitability: Suitable for balancing risk and returns.
ICICI Pru Large & Mid Cap-G
Growth Potential: Invests in large and mid-cap companies.
Risk-Return Balance: Good for capturing growth in established and growing companies.
Long-Term Suitability: Suitable for long-term capital appreciation.
SBI Long Term Equity Reg-G
ELSS Fund: Offers tax benefits under Section 80C.
Equity Focus: High equity exposure for potential high returns.
Long-Term Suitability: Suitable for long-term wealth creation with tax benefits.
SBI Contra-G
Contrarian Strategy: Invests in undervalued stocks.
Potential: Can yield high returns if the strategy pays off.
Long-Term Suitability: Suitable for long-term investors willing to take higher risks.
Potential Returns
Assuming an average conservative annual return of 10-12% for a diversified portfolio, your potential return over 15 years could be significant. However, mutual funds are subject to market risks, and actual returns may vary.

Recommendations
Diversification: Your portfolio is well-diversified across different fund types and strategies, which is good for risk management.

Fund Performance Review: Regularly review the performance of your funds. Consider reallocating if any fund consistently underperforms its benchmark.

Stay Invested: For long-term wealth creation, stay invested for the entire 15-year period to benefit from compounding.

Avoid Index Funds: Actively managed funds like yours can potentially offer better returns than index funds.

Additional Considerations
Regular Monitoring: Keep an eye on your portfolio and the market trends.
Certified Financial Planner: Consult a Certified Financial Planner for personalized advice and adjustments.
Final Insights
Balanced Portfolio: Your fund choices provide a good mix of growth, stability, and potential tax benefits.
Long-Term Focus: Stay focused on your long-term goal and avoid frequent changes based on short-term market fluctuations.
Potential for Growth: With disciplined investing and regular monitoring, your portfolio has the potential to achieve significant growth over 15 years.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

...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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