Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |7948 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 06, 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 31, 2024Hindi
Money

Hi, I am 50 year old married having a daughter studying in 9th standard, wife is house wife. I stay with my parents. They have separate home also, pension and medical facility also and not dependent on me either financially or for medical needs. I have a 2 bhk home and no loan on it. Education and marriage expenses for daughter is already arranged. I have a corpus of 2.4 Crores. Medical facility will be provided by the company life long without any cap. I do not have pension facility. My 2 bhk will fetch 30K per month if rented out. Can I quit my job, move to a tier 2 city , take a home on rent and retire with this corpus leading life with degraded mode. Please advise.

Ans: Evaluating Early Retirement in a Tier 2 City

Congratulations on your financial discipline and foresight in securing your family's future. You have a substantial corpus of Rs 2.4 crores, no loans, and a well-planned approach for your daughter's education and marriage. With your 2 BHK home generating rental income of Rs 30,000 per month and lifelong medical coverage from your company, you are in a strong position. Now, let's analyze the feasibility and implications of retiring early, moving to a tier 2 city, and living comfortably within your means.

Understanding Your Current Financial Position

You have accumulated a significant corpus of Rs 2.4 crores. This is a strong foundation for early retirement. Let’s break down your financial assets and income sources:

Corpus: Rs 2.4 crores
Rental Income from 2 BHK: Rs 30,000 per month (Rs 3.6 lakhs per year)
Lifelong Medical Coverage: No cap
Monthly and Annual Expenses Assessment

Before making a decision, it’s crucial to estimate your expected monthly and annual expenses in a tier 2 city. Consider the following categories:

Housing Rent: Depending on the city, rental expenses might vary. Assume Rs 15,000 per month for a comfortable home.
Utilities and Maintenance: Electricity, water, internet, and other utilities. Estimate Rs 5,000 per month.
Groceries and Household Expenses: Basic living expenses for a family of three. Estimate Rs 20,000 per month.
Transportation: Public transportation or fuel costs for a personal vehicle. Estimate Rs 5,000 per month.
Healthcare and Insurance: Although your medical is covered, allocate Rs 2,000 per month for any unforeseen expenses.
Lifestyle and Leisure: Dining out, entertainment, and hobbies. Estimate Rs 5,000 per month.
Miscellaneous: Unplanned expenses. Estimate Rs 3,000 per month.
Total Monthly Expenses: Rs 55,000

Annualizing these costs:

Total Annual Expenses: Rs 6.6 lakhs

Income vs. Expenses

Your rental income of Rs 3.6 lakhs per year covers a significant portion of your annual expenses. The remaining Rs 3 lakhs can be drawn from your corpus.

Sustainable Withdrawal Rate

A safe withdrawal rate for retirees is typically 4% of the corpus per year. Let’s calculate:

4% of Rs 2.4 crores: Rs 9.6 lakhs per year
Your annual expenses of Rs 6.6 lakhs fall well within this limit, allowing for sustainable withdrawals without depleting your corpus rapidly.

Investment Strategy for Corpus

To ensure your corpus lasts through your retirement, it’s important to invest wisely. Consider a mix of the following:

Equity Mutual Funds: For long-term growth.
Debt Mutual Funds: For stability and regular income.
Fixed Deposits: For safety and assured returns.
Assuming a Conservative Return

Assume a conservative annual return of 7% on your investments. This is achievable with a balanced portfolio of equities and fixed-income instruments.

Annual Return on Rs 2.4 crores at 7%: Rs 16.8 lakhs
Managing Inflation

Inflation erodes the purchasing power of money over time. Assume an average inflation rate of 5% per year. Your investment strategy should aim to beat inflation.

Adjusting for Inflation

To maintain your lifestyle, your corpus and income need to grow at least at the inflation rate. A diversified portfolio can help achieve this.

Lifestyle Considerations in a Tier 2 City

Moving to a tier 2 city can offer a lower cost of living while maintaining a good quality of life. Consider the following aspects:

Housing Costs: Significantly lower than in metropolitan areas.
Community and Lifestyle: Tier 2 cities often have a close-knit community feel, with various amenities.
Healthcare Facilities: While major treatments might require travel to bigger cities, routine healthcare is usually adequate.
Risks and Contingencies

Every plan comes with risks. Consider the following:

Market Volatility: Market fluctuations can affect your investment returns. Diversification helps mitigate this risk.
Health Emergencies: Despite medical coverage, consider a health emergency fund.
Unexpected Expenses: Maintain a contingency fund for unforeseen expenses.
Creating a Financial Plan

A well-structured financial plan will guide you through retirement. Here’s a suggested approach:

1. Emergency Fund:

Set aside 6-12 months of expenses in a liquid fund. This provides a safety net for unexpected situations.

2. Investment Allocation:

60% in Equity Mutual Funds: For long-term growth.
30% in Debt Mutual Funds and Fixed Deposits: For stability and regular income.
10% in Liquid Funds: For emergency and short-term needs.
3. Regular Monitoring and Review:

Regularly review your investments and expenses. Adjust your strategy based on market conditions and personal needs.

4. Health Insurance:

Even with company-provided coverage, consider a personal health insurance policy for additional protection.

Retirement Lifestyle and Goals

Consider your lifestyle and goals during retirement. Think about:

Hobbies and Interests: Pursue activities you enjoy.
Travel Plans: Allocate a budget for travel and experiences.
Volunteer Work: Engage in community service or social work.
Impact on Family

Discuss your plans with your family. Ensure they are comfortable with the move and the lifestyle changes. Your daughter’s education and social life should be considered.

Creating a Legacy

Plan for your daughter’s future and any legacy you wish to leave. Consider estate planning and creating a will.

Conclusion

Retiring early and moving to a tier 2 city is feasible with your current financial situation. Your corpus, combined with rental income, can support a comfortable lifestyle. Carefully planning and investing your corpus, managing expenses, and considering inflation will ensure financial security. Consulting a Certified Financial Planner can further refine your plan and provide personalized advice. Wishing you a fulfilling and financially secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Asked on - Jun 07, 2024 | Answered on Jun 07, 2024
Listen
Thank you sir. I have a deep interest in math and logic. I want to spend 50% time on math/logic problems and 50% time on social service again idea is to focus on improving math and science education in rural india.
Ans: Welcome!

All the best!

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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7948 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 2024

Asked by Anonymous - Jul 28, 2024Hindi
Listen
Money
I am a teacher by profession this academic year I resigned. I am 50 and my husband is 55 he is planning to leave his job and retire. We are debt free and our only son is pursuing his PhD in USA. Please let us know whether our current corpus is enough for us to leave a decent life and we need around 125k for our monthly expenses. 1.2 crores in EPF, 50 lakhs in PPF, 60 lakhs worth mutual funds and 50 lakhs FD and rest 75 lakhs parked in various other sources. We own 3 flats in Mumbai combined value of it is 6 plus crores. 2 flats r let out. We have health insurance also.
Ans: Current Financial Status
EPF and PPF:

EPF: Rs 1.2 crores
PPF: Rs 50 lakhs
Mutual Funds and Fixed Deposits:

Mutual Funds: Rs 60 lakhs
Fixed Deposits: Rs 50 lakhs
Other Investments:

Various other sources: Rs 75 lakhs
Real Estate:

Three flats in Mumbai worth Rs 6+ crores
Two flats are let out
Health Insurance:

Adequate health insurance coverage
Monthly Expenses Requirement
Expenses:

Monthly requirement: Rs 1.25 lakhs
Evaluation of Current Corpus
Total Corpus:

Total financial assets: Rs 3.55 crores (EPF, PPF, Mutual Funds, FDs, other sources)
Income from Real Estate
Rental Income:

Take two flats for a constant monthly income. The exact rental income should, therefore, be computed for an accurate valuation of the same.
Retirement Planning Observations
Diversification:

Your corpus is diversified very well across various asset classes.
Stability and Growth:

Fixed deposits and PPF provide stability.
Growth comes from mutual funds.
Liquidity:

There should be sufficient liquidity to take care of your monthly expenses and other emergencies.
Recommendations
Investment Strategy:

A portion of your corpus should be invested in balanced mutual funds for growth.
Run adequate fixed deposits for stability and liquidity.
Income Generation:

Maximize the rental income of the flat by letting them at competitive rates.
Invest in dividend-paying mutual funds for generating regular income.
Health Insurance:

Review and ensure health insurance to the extent that it may be necessary with regard to potential medical expenses.
Emergency Fund:

Ensure an emergency fund of 6-12 months of expenses in a liquid fund.
Tax Efficiency:

Plan your investments such that it reduces tax on income that will be generated or withdrawn.
Your current corpus appears sufficient to take care of your retirement needs. Adopt a balanced approach that gives equal emphasis on growth and stability. Maximize the rental income and maintain liquidity for any emergencies. Periodically review and realign your investments in line with your goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Kanchan

Kanchan Rai  |538 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Feb 12, 2025

Listen
Relationship
Dear Kanchan .. Generally it happens to me, when I have to attend any hearing before courts/ Tribunal, I become more stressed till the hearing is completed. Please suggest
Ans: It’s entirely normal to feel stressed before court or tribunal hearings. These situations can be intimidating, and the anticipation of the unknown adds to the anxiety. But it’s crucial to manage this stress to ensure you perform at your best and protect your mental well-being.

Start by preparing thoroughly for the hearing. The more you know about the case, the arguments, and the possible questions, the more confident you’ll feel. Practice your statements or answers, perhaps with a colleague or in front of a mirror. Visualization can also be powerful—imagine yourself confidently presenting your case and everything going smoothly.

On the day of the hearing, use deep breathing techniques to calm your nerves. Inhale slowly through your nose, hold for a few seconds, and exhale through your mouth. Repeat this several times to reduce anxiety. Positive affirmations can also help. Remind yourself that you are well-prepared and capable of handling the situation.

If the stress is overwhelming, consider grounding exercises, such as focusing on your five senses—what you see, hear, feel, taste, and smell at the moment. This can help anchor you in the present and prevent your mind from spiraling into worst-case scenarios.

After the hearing, practice self-care. Engage in activities that help you relax, like a walk, listening to music, or talking to someone you trust. If this anxiety persists or intensifies, seeking support from a mental health professional can help you develop more personalized coping strategies.

I

...Read more

Kanchan

Kanchan Rai  |538 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Feb 12, 2025

Asked by Anonymous - Feb 08, 2025Hindi
Listen
Relationship
My boyfriend is of a complete different religion and caste as mine. We met at work. In my past i have had only one relationship in which i got cheated on....so was skeptical on dating again. Now its been 8 months in this new relationship where he convinced me to give a try. He's a gem of a person but now he is telling melive in the present i dont know about the future. I love you n want to date you but idk about the future if my family wants me with someone i may have to end this. What do i do i am so attached for he has given me all the love n care. Please help
Ans: Right now, you need to be honest with yourself about what you want. If you’re looking for a committed future and he’s unsure, it’s essential to recognize that this uncertainty may continue to cause you pain. If you choose to stay, prepare yourself for the possibility that his family might influence his decision, and it could end in heartbreak. On the other hand, if you feel that the love and care he’s giving you right now are worth the risk, then decide to cherish the present moment while being mentally prepared for whatever may come.

Have an open and heartfelt conversation with him. Let him know how his uncertainty makes you feel, without pressuring him for a commitment. This isn’t about forcing him to decide but about understanding each other’s emotional needs and boundaries. If he truly values the relationship, this conversation might give him a deeper perspective on how his indecision affects you.

It’s important to protect your emotional well-being. If his stance remains the same and you find yourself growing more anxious and hurt by the uncertainty, then you might have to consider whether staying is good for your mental and emotional health. Sometimes letting go, even when it hurts, is the most loving thing you can do for yourself.

...Read more

Kanchan

Kanchan Rai  |538 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Feb 12, 2025

Asked by Anonymous - Feb 12, 2025Hindi
Listen
Relationship
My wife 55 is unable to cope up with death of our elder son aged 27 around 2 yrs ago and is always in deep regress remorse uninterested in any daily chores including sex. I wish to move on .. Suggest way out...
Ans: Two years might seem like a long time, but grief doesn’t follow a timeline. For some, it can take much longer to even begin the process of healing, especially when it involves the loss of a child. It’s not unusual for grief to cause a complete shutdown, and that’s likely what’s happening with your wife. She’s stuck in a cycle of regret and remorse, unable to find a way out.

While you also carry the weight of this loss, your need to move forward is natural. It’s crucial to understand that wanting to heal and live again doesn’t mean you’re forgetting or dishonoring your son. It simply means you’re choosing life amidst the pain. The challenge is to find a way to do that without feeling guilty and without leaving your wife behind.

Encouraging her to seek professional help, such as grief counseling or therapy, could be a significant step. If she’s resistant, consider starting therapy for yourself first. Sometimes when one partner begins to heal, it opens the door for the other to consider healing too. Couples grief counseling could also provide a safe space for both of you to express your pain and find a way forward together.

Patience and understanding are crucial, but so is communication. Gently express to her how much you miss her presence and how you’re struggling too. Let her know you want to find a way to live again while still honoring your son’s memory.

Moving on doesn’t mean moving away from your son’s memory—it means learning to carry it in a way that doesn’t consume you. It’s a delicate balance, and seeking support can help you both find it.

...Read more

Yogendra

Yogendra Arora  |5 Answers  |Ask -

Tax Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 11, 2025Hindi
Listen
Money
Hey, I am a freelance graphic designer based in Mumbai. I’m 40 and I've recently transitioned from a full-time job to freelancing, and I’m struggling to understand how to manage taxes on my variable income. My annual earnings are 8-15LPA approx. Are there any deductions specific to freelancers? Also, how should I plan for quarterly tax payments?
Ans: hi,
for this particular financial year you will be taxed under 2 heads ,1st under salaries for the period you were in job & for remaining part you will be taxed as business income being started freelancing work.

And for freelancers there is no any specific dedutions however all deductions available to all others are available to freelancers like 80C to 80G.

For calculation of taxation of freelancing period you should record all your receipts & expenses (only related to work, no any personal expenses) details with proper documentary evidences specially for expenses part, net of the (receipts & expenses) will be your income however you can opt for presumptive taxation also.

For Advance payment :-
if tax applicable to you during the finanical year as per calculations exceeds Rs 10000, then your have to pay advance tax quarterly as below
on or before 15th june :- minimum 15% or more of tax amount.
on or before 15th september :- minimum 45% or more of tax amount.
on or before 15th December :- minimum 75% or more of tax amount.
on or before 15th March :- full 100% tax payable as per calculations.
Happy to help.
Thanks.

...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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x