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Sunil

Sunil Lala  |193 Answers  |Ask -

Financial Planner - Answered on Apr 18, 2024

Sunil Lala founded SL Wealth, a company that offers life and non-life insurance, mutual fund and asset allocation advice, in 2005. A certified financial planner, he has three decades of domain experience. His expertise includes designing goal-specific financial plans and creating investment awareness. He has been a registered member of the Financial Planning Standards Board since 2009.... more
Asked by Anonymous - Apr 15, 2024Hindi
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Am 50 yrs old having a Home loan since Jan 2022 of 40 lac for 15 yrs cleared 10 lac principal amount till date, deposited 10 lac in MF's & 40 lac in FD's, am worried how to increase my fund for the future my monthly income is 50,000 per month

Ans: If your investment period is more than you can covert your FD in an equity mutual fund
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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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Dec 25, 2023

Asked by Anonymous - Dec 16, 2023Hindi
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Hi, I'm 31 years old and married. She is a housewife. I have about 30 lakhs in FDs and PPFs. I have loan-free farm land of 35 lakhs, highway touch, which yields only 20k per year in rent right now. I have home loan of 38 lakhs with 33500 EMI. I have just recently started investing in MFs with SIP of 9000 per month in 5-6 different funds comprising of large cap, mid cap, small cap, dividend yield and I want to increase it. I only prefer equity oriented funds because of its higher returns as compared to debt funds as I already have enough FDs to play safely and thus I avoid debt funds. I know I have enough years to gather large corpus till age 60. But right now, please suggest me how much (or how much more) and where should I invest Rs.50000 per month (savings of my salary after all expenses per month) so that I earn exactly Rs.1 lakh per month from all my investments (passive income) in exactly 5 years from now. Also, I wonder if I should pay off my home loan or not coz one side is that currently I avail tax return on interest component upto 3.5 lakhs but the other side is that paying off home loan will lessen my mental burden. So sir, please share your valuable opinion om both these points.
Ans: To be honest, increasing your SIP to 50,000 per month would only accumulate around 40 lakhs in five years. While this might allow you to withdraw 1 lakh per month through a Systematic Withdrawal Plan (SWP), this income stream would only last for four years, as the underlying corpus wouldn't be large enough to sustain it for a decade.

On your investment, we recommend sticking with your diversified SIPs and maybe exploring some specific funds for that extra growth potential. But remember, balance is the key. To counter market volatility and generate some regular income, consider putting 20-30% of your additional investment into hybrid or balanced funds.

You can review your FD allocations to find a sweet spot between higher returns and keeping some available cash for contingency purpose.

Talking about the home loan, weighing the tax benefit with the mental freedom of paying it off is a personal decision. You should compare different scenarios based on your tax bracket, new and old tax regime, and future income growth and future plans. Based on analysis you can consider a partial prepayment to reduce the loan tenure and interest.

..Read more

Ramalingam

Ramalingam Kalirajan  |4625 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 2024

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Hi sir my age 35,I have two kid one is 9 years and second one is 3.5 years I am investing 35 k in a month,which goes to 12k in ulip,10 k in mutual fund 5 k in ppf and rest amount also in mutual fund .don't have any home loan,but now want 15 lac home loan in future. Please suggest some better plan
Ans: You're taking proactive steps towards securing your family's future, which is commendable. Here's a structured plan tailored to your situation:

Emergency Fund: Before considering a home loan, ensure you have an emergency fund covering 3-6 months of expenses. This fund provides a financial safety net during unforeseen circumstances.
Insurance: Prioritize term insurance to provide a financial cushion for your family in case of any unfortunate events. Additionally, health insurance for the family ensures medical expenses are covered.
Child Education: Considering your kids' age, start investing specifically for their education. Opt for a mix of equity and debt funds to balance risk and return. Calculate the estimated education expenses and plan accordingly.
Home Loan: If you're planning a home loan of 15 lakhs in the future, start saving for the down payment now. Evaluate your current investments' returns and decide on increasing SIP amounts or exploring other investment avenues to accumulate the required amount.
Investment Review: Review your current investments to ensure they align with your financial goals and risk tolerance. Consider diversifying across different asset classes to spread risk and optimize returns.
Retirement Planning: It's never too early to start planning for retirement. Evaluate your retirement goals and start investing in retirement-focused funds or pension plans to secure your golden years.
Tax Planning: Ensure your investments are tax-efficient. Utilize tax-saving options like ELSS funds for equity exposure and PPF for debt allocation.
Review and Adjust: Regularly review your financial plan and adjust as needed based on changes in income, expenses, or goals. Consulting a financial advisor can provide personalized guidance tailored to your needs.
Remember, a well-rounded financial plan considers all aspects of your life – from immediate needs like emergency funds and insurance to long-term goals like retirement and child education. Prioritize your goals, plan diligently, and stay invested for the long term to achieve financial stability and growth.

..Read more

Ramalingam

Ramalingam Kalirajan  |4625 Answers  |Ask -

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

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Hello Sir, I am 50, with elder kid in final sem of engineering in Germany and younger son in class 10. I have assets worth 6 cr in Bangalore, sip worth around 15 lk I invert regularly in gold as well. Monthly rentals of around 50k, monthly sal of around 3 lk. Have a housing loan of around 50 lk. Got term insurance worth 1 cr, retirement pension scheme of 1.1 lk /month from the age of 60. Do you have any advise to increase my MF investment or do u think monthly income after my retirement wud be sufficient for me and my wife? I have also got EPF and NPS investment..
Ans: Given your financial situation and future goals, it's important to evaluate your current investments and assess whether they align with your retirement objectives and desired lifestyle. Here's some advice to consider:

Review Current Financial Position
Assets and Investments: You have significant assets in Bangalore, SIP investments, gold investments, monthly rentals, and EPF and NPS investments. Assess the performance and diversification of these assets to ensure they are optimized for your retirement goals.

Liabilities: Consider the impact of your housing loan on your cash flow and retirement planning. Evaluate whether it's beneficial to continue paying off the loan or if early repayment is advisable.

Insurance Coverage: Your term insurance coverage is adequate, but review your overall insurance needs, including health insurance and coverage for your children studying abroad.

Retirement Planning and Investment Strategy
Income Projection: Calculate your expected monthly income post-retirement, including pension schemes, rental income, and any other sources. Compare this with your estimated expenses to determine if there's a shortfall or surplus.

Budgeting: Create a detailed budget outlining your current expenses and anticipated expenses in retirement. Account for factors like inflation, healthcare costs, travel, and leisure activities.

Investment Allocation: Review your MF investments and assess whether increasing contributions would align with your retirement goals. Consider diversifying your investment portfolio further to mitigate risk and enhance potential returns.

Retirement Corpus: Estimate the corpus required to maintain your desired lifestyle in retirement. Factor in inflation, life expectancy, healthcare expenses, and other variables to determine an appropriate target.

Financial Independence and Early Retirement
Assess Feasibility: Evaluate whether your current assets and investments, combined with projected income streams, would provide sufficient financial independence for early retirement if desired.

Risk Management: Consider the risks associated with early retirement, such as market volatility, longevity risk, and unexpected expenses. Ensure your investment strategy accounts for these risks and provides a buffer against adverse scenarios.

Professional Advice: Consult with a Certified Financial Planner (CFP) to conduct a comprehensive analysis of your retirement plan. A professional advisor can offer personalized guidance, recommend adjustments to your investment strategy, and help you achieve your retirement goals effectively.

Final Thoughts
While your current financial position appears strong, it's essential to periodically review and adjust your retirement plan as circumstances change. Assess your risk tolerance, liquidity needs, and long-term objectives to make informed decisions about increasing your MF investments or pursuing early retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |4625 Answers  |Ask -

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

Asked by Anonymous - Jun 22, 2024Hindi
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Hello Sir, I am 46 years having two kids elder studying in 7th standard and younger one daughter studying in 2nd standard. Me and my wife take home salary is 1.9L per month. I am in the process to buy a flat for which I have invested all my savings and will have a EMI of 70k for next 13 years. My PPF is getting matured in next year will get 12L. I am investing in SiP 20k per month right now accumulated money in it is 7.6L but 8 will be using it for my flat. I pay 65k per year in LIC.I am worried about future financial growth. Please suggest.
Ans: It's good to see you're taking steps to secure your family's financial future. Balancing multiple financial responsibilities can be challenging, but with careful planning, you can achieve your goals. Let's dive into a detailed analysis of your financial situation and provide some recommendations.

Current Financial Situation
You and your wife have a combined monthly take-home salary of Rs 1.9 lakh. You're investing Rs 20,000 monthly in SIPs and paying an EMI of Rs 70,000 for the next 13 years. You also pay Rs 65,000 annually towards LIC premiums and have a PPF maturing next year with Rs 12 lakh. Your current SIP investment has accumulated Rs 7.6 lakh, which you plan to use for your flat purchase.

Goals and Concerns
Your primary concerns are future financial growth and securing your children’s education and other financial needs. Given that you have two kids, your focus should be on their education, your retirement, and paying off your home loan.

Recommendations
1. Emergency Fund
Firstly, ensure you have an emergency fund. This should cover 6-12 months of your expenses. Given your monthly expenses, aim for Rs 5-10 lakh in a liquid fund or savings account.

2. Review Your Insurance
You're paying Rs 65,000 per year for LIC. Traditional LIC policies often provide low returns. Consider if it's beneficial to continue. You might want to surrender it and invest in mutual funds for better returns. Ensure you have adequate term insurance and health insurance coverage for your family.

3. Utilise Your PPF Maturity
Your PPF is maturing next year with Rs 12 lakh. This is a significant amount. Since you're using your SIP savings for your flat, allocate the PPF amount towards a balanced portfolio of equity and debt funds to maintain liquidity and growth.

4. Increase SIP Investments
Given your financial goals, increasing your SIP contributions gradually as your income grows will be beneficial. This helps in compounding your investments and meeting long-term goals like children’s education and retirement.

5. Children’s Education Planning
Your elder child is in 7th standard and younger in 2nd standard. Higher education costs will rise significantly. Start a dedicated investment plan for their education. Diversify across large-cap, mid-cap, and balanced funds to ensure growth with manageable risk.

6. Retirement Planning
You’re 46 years old with 13-14 working years left. Start focusing on your retirement corpus. Allocate a mix of equity and debt funds. Equities for growth and debt for stability and income. Aim for a corpus that can provide you with a monthly income of Rs 1 lakh post-retirement.

Understanding Mutual Funds
Mutual funds pool money from multiple investors to invest in stocks, bonds, or other securities. They offer diversification and professional management.

Categories of Mutual Funds
Equity Funds: Invest in stocks. Suitable for long-term growth.
Debt Funds: Invest in bonds. Suitable for regular income and stability.
Balanced Funds: Mix of equity and debt. Suitable for moderate risk and return.
Advantages of Mutual Funds
Diversification: Spreads risk across various securities.
Professional Management: Managed by experts.
Liquidity: Easy to buy and sell.
Compounding: Reinvested earnings generate more returns over time.
Risks of Mutual Funds
Market Risk: Equities can be volatile.
Interest Rate Risk: Debt funds can be affected by interest rate changes.
Credit Risk: Risk of default in debt securities.
Power of Compounding
The power of compounding in mutual funds can significantly grow your wealth over time. The earlier you start, the more you benefit. For example, investing Rs 20,000 monthly at an average return of 12% over 20 years can accumulate a substantial corpus due to compounding.

Disadvantages of Index Funds
Index funds replicate market indices. They have lower costs but also lower flexibility. Actively managed funds, though slightly costlier, can outperform index funds by leveraging market opportunities and managing risks better.

Benefits of Regular Funds
Investing through a Certified Financial Planner (CFP) provides personalized advice, regular monitoring, and adjustments as per market conditions. Regular funds also ensure you have a dedicated advisor for guidance, which is crucial for long-term financial planning.

Final Insights
Balancing current responsibilities with future goals is key. Prioritize emergency funds, review insurance, and plan for children’s education and retirement. Utilize your PPF maturity wisely and increase your SIPs gradually. Mutual funds, with their diversification and professional management, are excellent for achieving long-term growth and stability.

Keep in mind that a balanced approach, mixing equity for growth and debt for stability, is essential. Regular reviews and adjustments to your investment plan will help you stay on track and achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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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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