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Ramalingam

Ramalingam Kalirajan  |8093 Answers  |Ask -

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
Money

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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Ramalingam

Ramalingam Kalirajan  |8093 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 21, 2024

Asked by Anonymous - May 26, 2024Hindi
Money
Sir,I m 43 year old, working in pvt college and getting 60000per month,pls elaborate me about investing and savings for my retirement and present expenses as I have two kids one is 16year and another one is 12 year
Ans: At 43 years old, with a monthly income of Rs. 60,000, your financial goals should include both immediate and long-term objectives. These goals would typically cover day-to-day expenses, children’s education, and retirement planning. Let’s break down how you can balance your current needs with future savings.

Managing Current Expenses
You have two children, aged 16 and 12, and it’s vital to manage your monthly expenses carefully. A clear budget is the foundation of good financial planning.

Household Expenses: Ensure your essential expenses are well-covered. These include food, utilities, and other daily necessities. Try to allocate a specific amount each month to prevent overspending.

Children’s Education: With children at 16 and 12 years old, educational expenses will increase, especially as your older child approaches higher education. Plan for tuition fees, books, and other related costs.

Emergency Fund: Maintain an emergency fund equivalent to at least six months of your monthly income. This fund will protect you from unexpected financial burdens like medical emergencies or job loss.

Allocating Savings for Future Needs
Balancing current expenses with savings for future needs is key to long-term financial security. Let’s explore how you can start saving efficiently.

Retirement Planning: You’re currently 43 years old, so retirement is still some years away. However, starting early is important. Consider contributing 20-30% of your income towards retirement savings. Look for options that offer a balance between growth and safety.

Children’s Higher Education: Higher education can be costly. Start investing in a dedicated plan for your children’s education. This should be separate from your retirement savings to avoid depleting your retirement funds.

Investment Options for a Secure Future
With a stable income, it’s crucial to explore the right investment options to grow your wealth. A diversified approach is recommended, keeping in mind your risk tolerance and time horizon.

Diversified Mutual Funds
Balanced Growth: Diversified mutual funds offer a mix of equity and debt, balancing risk and reward. This type of fund is ideal if you’re looking for moderate growth without exposing your investments to excessive risk.

Professional Management: Actively managed mutual funds are handled by professional fund managers who adjust the portfolio based on market conditions. This offers you peace of mind, knowing that experts are managing your investments.

Regular Savings: Systematic Investment Plans (SIPs) allow you to invest small amounts regularly. SIPs help in averaging out market volatility and building wealth over time.

Disadvantages of Index Funds and Direct Funds
You might come across index funds or direct funds as investment options. While they may seem appealing due to lower fees, they come with certain disadvantages.

Index Funds: These funds passively track an index and do not try to outperform the market. While fees are lower, they may not provide the returns you need, especially during market downturns. The lack of active management could result in missed opportunities.

Direct Funds: Direct funds cut out the intermediary, saving on commission fees. However, this approach requires you to manage and monitor your investments closely. It’s easy to make mistakes without expert guidance. Regular funds, on the other hand, offer the benefit of advice from a Certified Financial Planner, who can help optimize your investments.

Tax-Efficient Investments
Tax efficiency is a critical aspect of your financial plan. Choosing investments that offer tax benefits can maximize your returns.

Tax-Saving Instruments: Look into options that provide deductions under Section 80C, such as Public Provident Fund (PPF) or certain life insurance plans. These not only help in saving taxes but also ensure a safe return on your investment.

Long-Term Capital Gains: Consider investments that are taxed as long-term capital gains (LTCG) after a holding period. LTCG tax rates are generally lower than income tax rates, making them a tax-efficient option for wealth growth.

Insurance: Protecting Your Family’s Future
Insurance is an essential part of financial planning. It ensures that your family is financially protected in case of any unforeseen events.

Life Insurance: If you haven’t already, consider purchasing a term life insurance plan. This type of insurance provides a high coverage amount at a lower premium, ensuring your family’s financial security if something happens to you.

Health Insurance: With increasing healthcare costs, it’s important to have a comprehensive health insurance policy. This should cover you and your family, including any critical illness riders if possible.

Evaluating Your Retirement Corpus
When planning for retirement, it’s important to estimate the corpus you’ll need. The amount should be sufficient to cover your living expenses without relying on others.

Inflation: Consider inflation when planning your retirement corpus. The cost of living will increase over time, so your savings should be able to provide you with a comfortable lifestyle even 20-30 years from now.

Pension Options: If your employer offers a pension plan, review the benefits. If not, consider setting up a self-managed retirement plan that includes a mix of investments and savings.

Creating a Long-Term Investment Plan
A long-term investment plan is necessary to ensure that your savings grow steadily. This plan should include a mix of short-term and long-term investments, catering to different financial goals.

Equity Exposure: With 15-20 years until retirement, you can afford to have some exposure to equity investments. Equities have the potential to deliver higher returns over the long term, though they come with higher risks.

Debt Instruments: Complement your equity investments with safer debt instruments like bonds or fixed deposits. This will balance your portfolio and provide a steady income stream with lower risk.

Regular Review and Adjustment
A financial plan is not a one-time activity. Regularly reviewing and adjusting your plan is crucial to keep up with changes in your life and in the market.

Annual Review: Set aside time each year to review your financial plan. Assess whether your investments are performing as expected and whether you need to make any changes.

Goal Adjustment: As your children grow older and your financial situation changes, you may need to adjust your goals. Ensure your plan remains aligned with your evolving needs.

Final Insights
Balancing current expenses with future savings is a delicate task, but it’s entirely achievable with a disciplined approach. Prioritizing your children’s education, creating a solid retirement plan, and choosing tax-efficient, diversified investments will help you build a secure financial future. Regular reviews and adjustments to your plan will ensure you stay on track to meet your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8093 Answers  |Ask -

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

Asked by Anonymous - Jun 23, 2024Hindi
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I am 42 single mother. I have 12 year old daughter. My current saving is 16L in mutual and I am contributing 50K every month to this. 3 L in stocks. I monthly salary is 1.5L and earnjng 30K from other source. My monthly expense is 70 to 90K. I am living in rented apartment. My other saving is arround 6L in FD, 3 L in equity based policy, 28L in PPF. I want to retire by 55. My other goals are I need 50L for my daughter's education in 6 years. I need money for down-payment for house too. Please help me in planning
Ans: Assessing Your Financial Situation
You are a 42-year-old single mother with a 12-year-old daughter. Your current financial status includes:

Mutual Funds: Rs. 16 lakhs (with a monthly contribution of Rs. 50,000)
Stocks: Rs. 3 lakhs
Monthly Salary: Rs. 1.5 lakhs
Other Income: Rs. 30,000 per month
Monthly Expenses: Rs. 70,000 to Rs. 90,000
Fixed Deposit (FD): Rs. 6 lakhs
Equity-Based Policy: Rs. 3 lakhs
Public Provident Fund (PPF): Rs. 28 lakhs
Your financial goals are:

Saving Rs. 50 lakhs for your daughter’s education in 6 years.
Saving for a down payment for a house.
Retiring by 55.
Saving for Your Daughter’s Education
You need Rs. 50 lakhs in 6 years for your daughter's education. Here's a plan:

Mutual Funds: Continue your monthly investment of Rs. 50,000. These funds offer higher returns over the long term.

FD and PPF: Utilize some of your FD and PPF savings to ensure you reach the target. PPF will mature and provide a lump sum amount.

Equity-Based Policy: Review the policy’s performance. Consider shifting to mutual funds if returns are not satisfactory.

Saving for a Down Payment on a House
You need to save for a down payment on a house. Here’s how you can manage:

Monthly Savings: Allocate a portion of your Rs. 50,000 monthly savings to a dedicated fund for the down payment.

Debt Mutual Funds: Invest in debt mutual funds for stability and moderate returns. They are less volatile and suitable for short-term goals.

PPF Maturity: Use a portion of your PPF when it matures for the down payment.

Planning for Retirement by Age 55
You want to retire by age 55. This gives you 13 years to build a retirement corpus. Here’s a plan:

Diversify Investments: Continue investing in mutual funds for growth. Allocate a portion to balanced and debt funds for stability.

NPS (National Pension System): Consider starting an NPS account. It provides tax benefits and helps in building a retirement corpus.

Equity Exposure: Maintain a healthy equity exposure through mutual funds. Equity provides higher returns over the long term.

Asset Allocation and Diversification
To achieve your goals, a diversified portfolio is crucial. Here is a suggested asset allocation:

Equity (including Mutual Funds): 50%
Debt (including FDs and Debt Funds): 30%
PPF and EPF: 20%
Benefits of Actively Managed Funds
Actively managed funds have professional fund managers who aim to outperform the market. Here are some benefits:

Professional Expertise: Fund managers use their expertise to select stocks, aiming for higher returns.

Flexibility: Actively managed funds can adjust portfolios based on market conditions.

Disadvantages of Direct Funds
Direct funds might seem attractive due to lower expense ratios. However, investing through a Certified Financial Planner (CFP) offers several advantages:

Expert Guidance: A CFP provides personalized advice based on your financial goals.

Regular Monitoring: They monitor your investments and make adjustments as needed.

Peace of Mind: Having a professional manage your investments reduces the stress of decision-making.

Regular Review and Adjustments
Regularly review your investment portfolio. Market conditions change, and your portfolio should adapt. A CFP can help with this:

Performance Review: Check the performance of your funds annually.

Rebalancing: Adjust your portfolio to maintain the desired asset allocation.

Final Insights
To achieve your financial goals, create a diversified portfolio. Continue investing in mutual funds and maintain your PPF contributions. Use a portion of your FD and PPF for your daughter's education and down payment for a house. Consider NPS for retirement savings. Regularly review your investments and make necessary adjustments. With disciplined investing, you can secure your daughter's education, your retirement, and save for a house down payment.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Milind

Milind Vadjikar  |1102 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 06, 2024

Asked by Anonymous - Oct 05, 2024Hindi
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Hello I want to retire . My current liabilities are my daughter education MBBS Rs 85000/ per month, Son education 11000 per month,, home loan 33000/- per month , House hold 50,000 per month , Term Insurance , Mutual fund , health insurance RS 1L per month . Come to savings. I have 87 L FD, 35 L PPF, 5 L shared, 76 L EPF, post office other scenes 6 L, Mutual fund 19 L . I have my own house worth of 2 Cr . My net take home salary is 2.09 L per month , wife take home 52K per month . This saving is ok to generate cash for above mentioned expenses. I want to retire as soon as possible. Please guide
Ans: Hello;

Let us summarize your monthly expenses:
1. Kid1 Education: 85 K
2. Kid2 Education: 11 K
3. Home loan EMI: 33 K
4. Household Exp: 50 K
5. Insurance & MF: 100 K
Grand TOTAL: 279 K(2.79 L) per month

Now let us summarize your monthly earnings:

1. Self Salary: 209 K
2. Spouse Salary: 52 K

Grand TOTAL: 261 K (2.61L per month)

Now let's summarize your savings:
1. FDs: 87 L
2. PPF: 35 L
3. Stocks: 5 L
4. EPF: 76 L
5. POS: 6 L
6. MFs: 19 L

Grand TOTAL: 228L (2.28 Cr)

If you liquidate this sum from current investments and buy an immediate annuity from an insurance company for your corpus of 2.28 Cr, assuming annuity rate of 6% you may expect a monthly payout of 1.14 L(pre-tax).

Adding this to your spouse income it gives us monthly earnings of 1.66 L

Expenses- New Earnings=
-279+166=-113 K(1.13 L shortfall per month)

I understand your situation. Unhealthy work life makes one hellbent to stop working at some point.

Take a break. Seek alternate job opportunity but hang in there because your responsibilities regarding loan liability and children's education are ongoing.

Focus on prepaying the home loan as early as possible.

The incremental savings may be transferred to regular MF investments for 5-7 yr horizon so as to enhance your retirement corpus.

Happy Investing!!

You may follow us on X at @mars_invest for updates.

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8093 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 30, 2025

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Hello Sir, I am 40 yrs old, I have 2 childrens (1 daughter & 1 son, 7 & 3 yrs old), Currently My in hand salary is 60 K, I have only 1 SBI life policy in which I invest 2k monthly, I don't have any SIP or any other policies, Yearly I put 30-40 K in PPF account, My monthly expenses near about 35 K (including rent, children fee, home expenses etc) I don't have any type of loan. I want to do saving for children's education & for my retirement for future, also I have ancestral home, kindly guide me.
Ans: Your income of Rs 60K per month is stable.

You have a good habit of saving in PPF.

Your expenses are manageable, and you have no loans.

You have an SBI Life policy, but no mutual fund investments.

Your goal is to save for children's education and retirement.

Evaluating Your Existing Investments
SBI Life Policy
Investment-cum-insurance plans have low returns.

Surrender the policy and reinvest in better options.

Get a term plan for financial security instead.

PPF Strategy
PPF is safe but has limited growth.

Continue for long-term security, but don’t rely only on it.

Optimising Your Savings
Emergency Fund
Keep at least 6 months’ expenses in a savings account or liquid fund.

This ensures financial safety during unexpected situations.

Children's Education Planning
Education costs will rise with inflation.

Invest in actively managed mutual funds for long-term growth.

Avoid fixed deposits for long-term goals.

Retirement Planning
You have no retirement savings apart from PPF.

Start investing monthly in mutual funds for compounding benefits.

Delay will make retirement planning difficult.

Creating a Balanced Investment Strategy
SIP Investments
Invest through SIPs in actively managed mutual funds.

Choose funds based on your risk tolerance.

Increase SIPs whenever your income grows.

Asset Allocation
Balance investments between equity and debt.

Equity gives high returns, and debt gives stability.

Avoid putting all money in one asset class.

Final Insights
Your income allows you to invest regularly.

SBI Life policy should be surrendered and reinvested.

PPF is good but not enough for long-term goals.

Invest in SIPs for children’s education and retirement.

Keep an emergency fund for financial security.

Start early to benefit from compounding.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..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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