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Ramalingam

Ramalingam Kalirajan  |6861 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 16, 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
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I am 50 years old. I have my savings as follows: In Indian Banks FDs of Rs 10.6 Cr, In Pre IPO Opportunities Fund Rs 1 Cr, In Offshore Banks FDs of USD 1.45 mil (Rs 11.6 Cr) and In Physical Gold 5 kg (Rs 2.4 Cr purchase price). I have also saved enough to own an house abroad and 3 apartments in India. My Question is will I be able to take care of my retirement with the current savings? My spouse and I are 50 years old and expect to plan till 90 years. Our current expenses amount to Rs 6 lakhs per month. We are a family of 5 with 3 college going kids studying abroad ( Fees USD 35K every year for 4 year course).

Ans: Retirement Planning Assessment
Mr. and Mrs. Karthik, it's commendable that you're proactively considering your retirement planning at this stage of life. Let's delve into your current financial situation and evaluate whether your savings are sufficient to sustain your retirement lifestyle.

Understanding Your Assets
Indian Banks FDs: Your significant holdings in Indian Banks FDs provide stability and security but may offer relatively lower returns compared to other investment options.
Pre IPO Opportunities Fund: Investing in Pre IPO Opportunities Fund involves higher risk but can potentially yield attractive returns, subject to market conditions and the success of IPOs.
Offshore Banks FDs: Holding funds in Offshore Banks FDs diversifies your investment portfolio and provides exposure to foreign currencies, offering potential currency-related gains.
Physical Gold: While gold is considered a safe haven asset, its value can fluctuate over time. Nonetheless, it adds diversification to your portfolio.
Real Estate: Owning properties abroad and in India can serve as a source of rental income and potential capital appreciation, contributing to your overall financial security.
Assessing Retirement Needs
Monthly Expenses: Your current monthly expenses amount to Rs 6 lakhs, including your children's college fees. Planning for a retirement lasting until age 90 requires careful consideration of inflation and lifestyle changes.
College Expenses: Budgeting for your children's college expenses is crucial, considering the significant amount required annually for their education abroad.
Retirement Savings Evaluation
Income Sources: Assessing your potential income sources during retirement, including investment returns, rental income from properties, and any pension or annuity payments, is essential.
Inflation Adjustment: Factoring in inflation when estimating future expenses is crucial to ensure your savings retain their purchasing power over time.
Healthcare Costs: Considering potential healthcare expenses during retirement is important, as medical costs tend to increase with age.
Financial Planning Recommendations
Comprehensive Financial Plan: Consult with a Certified Financial Planner (CFP) to develop a comprehensive retirement plan tailored to your specific goals and circumstances.
Risk Management: Diversify your investment portfolio further to mitigate risks and optimize returns, considering your risk tolerance and time horizon.
Tax Planning: Explore tax-efficient investment strategies to maximize your after-tax returns and optimize your overall financial position.
Regular Reviews: Regularly review and adjust your retirement plan as needed, considering changes in your financial situation, goals, and market conditions.
Conclusion
In conclusion, while your current savings and assets provide a solid foundation for retirement, careful planning and strategic decision-making are essential to ensure financial security throughout your retirement years. Consulting with a Certified Financial Planner can provide you with personalized guidance and peace of mind as you embark on this important journey.

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  |6861 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 14, 2024

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I am 37 years old , earning salary of Rs 40,000/- . I have Fixed Deposit of Rs 6,50,000 . PPF Post Office Savings - Rs 1,00,000 . Saving bank Balance of Rs 2,80,000/- . In case I Plan to retire at 60 years or beyond that say 65 years or more , with these incomes and as salary may increase salary , will expenses work . I am Bachelor right now . Thanks
Ans: You are 37 years old with a monthly salary of Rs. 40,000. Your current investments include:

Fixed Deposits: Rs. 6,50,000
PPF (Post Office Savings): Rs. 1,00,000
Savings Bank Balance: Rs. 2,80,000
You plan to retire between 60 and 65 years old, which gives you a time horizon of 23 to 28 years for retirement planning.

Assessing Your Retirement Goals
Given your current financial status, you have made a good start. However, retirement planning requires a well-structured approach. Your goal is to ensure a comfortable retirement without financial worries.

Understanding Your Future Income and Expenses
Salary Growth

Your salary is likely to increase over time.
This growth can contribute to higher savings and investments.
It’s important to channel this increased income towards your retirement corpus.
Expense Management

While you are currently single, your expenses may increase over time.
Plan for potential changes in lifestyle and inflation.
Set a budget to control your expenses and increase savings.
Inflation Impact

Inflation will erode the purchasing power of your savings.
Consider investments that outpace inflation, ensuring your corpus grows in real terms.
Investment Strategy for Retirement
Diversify Your Portfolio

Relying on Fixed Deposits and PPF alone may not provide the required growth.
Diversify into equity mutual funds for higher returns.
Actively managed funds can outperform index funds and provide better growth.
Regular Investments

Start a Systematic Investment Plan (SIP) in equity mutual funds.
Even small, regular investments can grow significantly over time.
Consider increasing your SIP contributions as your salary grows.
Review and Adjust Portfolio

Regularly review your portfolio to ensure it aligns with your goals.
Adjust your investments based on market conditions and personal circumstances.
A Certified Financial Planner can help you with periodic reviews.
Maximizing PPF Contributions

PPF is a safe investment with tax benefits, but the returns are moderate.
Maximize your contributions to PPF, but also look for growth-oriented options.
Emergency Fund

Maintain an emergency fund to cover 6-12 months of expenses.
This fund should be in a liquid, easily accessible form.
It ensures that you don’t dip into your long-term savings for unexpected needs.
Tax Efficiency

Choose tax-efficient investment options to reduce tax liabilities.
Utilize Section 80C, 80D, and other available deductions.
Proper tax planning can enhance your overall returns.
Planning for Post-Retirement Income
Creating a Retirement Corpus

Aim to build a retirement corpus that can generate sufficient monthly income.
A combination of fixed-income instruments and growth assets is ideal.
Consider reinvesting interest or dividends to maximize the corpus.
Generating Passive Income

Plan for a mix of passive income sources like dividends, interest, and pension.
Diversifying income streams can provide stability during retirement.
Debt Management

Avoid taking on unnecessary debt as it can burden your retirement planning.
If you have any debt, prioritize clearing it to free up resources for savings.
Healthcare and Insurance

As you age, healthcare expenses may increase.
Ensure you have adequate health insurance coverage.
Consider a health insurance policy that covers critical illnesses and hospitalization.
Long-Term Financial Planning
Retirement Corpus Estimation

Estimate the corpus required based on your desired retirement age and lifestyle.
Factor in inflation, healthcare, and potential future expenses.
A Certified Financial Planner can help you with accurate estimations.
Increasing Investment Knowledge

Stay informed about various investment options.
Understanding your investments will help you make better decisions.
Regular reading and consultation with financial experts can be beneficial.
Avoiding Common Mistakes

Don’t rely solely on low-risk, low-return investments.
Avoid withdrawing from your retirement corpus prematurely.
Ensure your investments are diversified and aligned with your goals.
Starting Early

The earlier you start, the more time your money has to grow.
Compounding works best over long periods, so start investing now.
Even small contributions can grow significantly over 23-28 years.
Final Insights
Your current financial position is stable, and you have a solid foundation for retirement planning. However, to achieve a comfortable retirement, you need to take proactive steps. Diversify your investments, increase your equity exposure, and regularly review your portfolio.

As your salary increases, channel the extra income towards growing your retirement corpus. This will ensure that you have enough to support your desired lifestyle during retirement.

Retirement planning is a long-term process, and staying disciplined is key. Regularly review and adjust your plans as needed, keeping your goals in mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Sir My Age is 38 Now. Running Business In Pune city. Below are the My Assets & Liabilities. Current Values - Assets. Own Industrial Plot - Rs. 2.0 Cr Business Income Yearly Rs. 24.00 Lack Own Company Investment ( Machinery, Debtors Etc ) - Rs 2.40 Cr Mutual Fund & Share Market Investment Rs. 2.10 Cr Bank FD - Rs. 50.00 Lack Own 3 Flats in Pune - Rs. 75 lack, 50 Lack & 35 Lack ( Current Values ) Golds - Rs. 25.00 Lack Land - Agriculture - Rs. 50.00 Lack Term Insurances - Rs. 20.00 Lack ( Till Date Premium Paid ) Labilities. House Loan - Rs. 30.00 Lack ( EMI 26500.00 PM ) Loan will close after 17 years. Car Loan - Rs. 6.35 lack ( EMI 12500.00 PM ) Loan will close after 5 years. This Assets & investment sufficient for maintain 7 family members Expenses after retirement ? ( 4 Adult + 3 Children (Below 5 Years) ). I will retire at the age of 45.
Ans: Hello;

What is the expected monthly rental from industrial plot and machinery?

Are you currently occupying one of the flats mentioned here or are all of them given on rent?

Also your term life insurance is very low. You should have minimum term insurance cover of 2.4 Cr.

You have good assets in agri land, industrial land, gold, real estate but they are relatively illiquid when need arises hence term insurance cover with riders for critical care and accident benefit are an absolute must!

Considering the home loan tenure of 17 years and 3 small kids in the family to be supported for education and decent lifestyle, I am not sure if you can retire in 7 years timeframe from now.

However I would appreciate your reply to my queries above, before I give my firm view about your retirement in 7 years timeframe.

Best wishes;

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Asked by Anonymous - Oct 30, 2024Hindi
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I have around 1 crore to invest. I am 61 years old retired defence officer and pension amounting to around ?1,50,000/- per month and medically covered. Need some sound investment plan for 1 crore. Don't have any liabilities?
Ans: Hello;

You may invest your corpus into following two funds in proportion of 50:50,

1. Kotak Arbitrage fund (low risk)
You may consider modest return of 6% from this scheme.

2. ICICI Pru equity savings fund (low to moderate risk). You may consider modest return of 8% from this scheme.

Theses investments will retain purchasing power of your corpus aginst inflation and deliver some real returns too with low to moderate risk.

This is in accordance with your age and commensurate risk appetite.

Happy Investing;

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

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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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