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Ramalingam Kalirajan |4083 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 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 - Jun 09, 2024Hindi

Sir , I am 53 and earning 1.5 lacs take home. I have 35L in PF, 30 L in superannuation, 30L in ppf , Shares worth 35L and FD 16 L .I have 3 Flats and my monthly rental from 2 flats is 28K. I have stll 6 years to go for retirement. I have 2 kids one persuing MBBS daughter and another 10th std. I have to save for my future with 50000 monthly and marriage of my kids. Kindly advise

Ans: At 53, earning Rs 1.5 lakhs per month, you have a solid financial base. With significant investments in PF, superannuation, PPF, shares, and FDs, plus rental income, you're well-prepared for retirement. Your primary goals now are saving for retirement, your children's education and marriages, and ensuring financial stability. Let’s develop a strategy to address these goals.

Compliments and Encouragement
First, congratulations on building a diverse and substantial portfolio! Your dedication and smart decisions have provided a strong foundation. It's commendable that you've thought ahead about your children's futures and your retirement.

Current Financial Assets
You have the following assets:

PF: Rs 35 lakhs
Superannuation: Rs 30 lakhs
PPF: Rs 30 lakhs
Shares: Rs 35 lakhs
FD: Rs 16 lakhs
Monthly Rental Income: Rs 28,000
Three Flats
Monthly Saving Capacity
With a take-home salary of Rs 1.5 lakhs and Rs 28,000 from rentals, you have a steady income. Allocating Rs 50,000 monthly towards savings is a prudent decision. Let's explore how to effectively utilize these savings.

Goals: Retirement and Children’s Education & Marriage
Your goals are clear and significant: funding your retirement and supporting your children's education and marriages. With six years until retirement, a focused and strategic approach is essential.

Systematic Investment Plan (SIP)
Continue with or start a SIP. SIPs provide disciplined investing and leverage the power of compounding. They also help in averaging out market volatility. Considering your Rs 50,000 monthly savings, allocate a portion to SIPs in equity mutual funds for long-term growth.

Portfolio Diversification
Diversification reduces risk and enhances returns. Here's how you can diversify:

Equity Mutual Funds
Allocate a part of your Rs 50,000 monthly savings to equity mutual funds. These funds are ideal for long-term growth and can help build a substantial corpus by the time you retire.

Debt Mutual Funds
Debt mutual funds provide stability and preserve capital. They are suitable for short to medium-term goals, such as your children's education. Allocate a portion of your savings here to balance risk.

Hybrid Funds
Hybrid funds, which invest in both equity and debt, offer a balanced approach. They provide growth and stability, making them ideal for medium-term goals.

Regular Funds vs. Direct Funds
Opt for regular funds through a Certified Financial Planner (CFP). A CFP offers valuable advice, periodic portfolio reviews, and rebalancing. Direct funds save on commissions but lack professional guidance, which can impact long-term returns.

Education and Marriage Fund
For your daughter's MBBS and son's education, consider opening a separate fund. Allocate part of your Rs 50,000 monthly savings to this fund. Use a mix of debt and equity mutual funds to match the timing of these expenses.

Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses. This fund ensures liquidity during unforeseen events without disrupting your long-term investments.

Evaluating Current Investments
Let’s analyze your current investments and how they fit into your overall strategy.

Provident Fund (PF) and Superannuation
These are secure investments providing guaranteed returns. Continue to keep these funds intact for retirement. They form the foundation of your retirement corpus.

Public Provident Fund (PPF)
PPF is another safe investment with tax benefits. Continue investing in PPF to take advantage of compounding and tax-free returns.

Shares
Your shares worth Rs 35 lakhs are significant. Regularly review and rebalance this portfolio with the help of a CFP to maximize returns and manage risks.

Fixed Deposits (FDs)
FDs provide security but lower returns compared to other instruments. Keep them for liquidity and safety but consider gradually moving some funds to higher-yield investments.

Rental Income
Your Rs 28,000 monthly rental income is a steady source. Use this for day-to-day expenses or reinvest part of it for additional growth.

Insurance
Ensure you have adequate life and health insurance. Avoid investment-cum-insurance policies, as they usually offer lower returns. Opt for pure term insurance and invest the rest in mutual funds for better growth.

Retirement Planning
With six years to retirement, focus on building a substantial corpus. Calculate your post-retirement expenses and ensure your investments align to meet these needs. A mix of equity and debt funds will help maintain growth and stability.

Leveraging Technology
Use financial apps and platforms to track and manage your investments. These tools provide insights, track performance, and help in goal tracking.

Regular Portfolio Review and Rebalancing
Regularly review your portfolio to ensure it aligns with your goals. Market conditions change, and so may your financial situation. A CFP can assist in rebalancing your portfolio to maintain the desired asset allocation.

Maximizing Tax Efficiency
Utilize tax-saving instruments within your portfolio. Equity Linked Savings Schemes (ELSS) offer tax benefits under Section 80C and are a good addition. Plan your investments to minimize tax liabilities and maximize post-tax returns.

Educating Yourself
Continue educating yourself about financial products and market trends. This knowledge empowers you to make informed decisions and enhances your financial planning.

Monitoring Market Trends
Stay informed about market trends but avoid reacting to short-term fluctuations. Focus on long-term trends and adjust your strategy with the guidance of a CFP.

Final Insights
Achieving your financial goals requires disciplined saving, strategic investing, and regular review. With your current assets and monthly savings capacity, you're well-positioned to secure your retirement and support your children's education and marriages. Continue with SIPs, diversify your portfolio, and seek professional guidance. Your dedication and prudent planning will lead to financial success and stability.

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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