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Ramalingam

Ramalingam Kalirajan  |3951 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 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 - Apr 28, 2024Hindi
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I am 55, want to retire. Have total corpus of 7 cr in stocks and MF equity. No life insurance, or ppf, nps, FD etc. Have adequate health insurance.Monthly expense is 1.5 lakhs. Want to leave good corpus in legacy for my son. Please suggest.

Ans: It's admirable that you've accumulated a substantial corpus for your retirement and have a clear goal of leaving a legacy for your son. As a Certified Financial Planner, I'm here to provide guidance on how to make the most of your retirement corpus while ensuring a comfortable lifestyle and leaving behind a meaningful inheritance.

Assess Your Financial Goals:

Before making any decisions, it's crucial to identify your financial goals and priorities. Retirement planning involves striking a balance between maintaining your desired lifestyle and preserving wealth for future generations.

Retirement Income Planning:

With a monthly expense of 1.5 lakhs and a corpus of 7 crores, you'll need to carefully plan your retirement income strategy. Consider creating a systematic withdrawal plan (SWP) from your investment portfolio to ensure a steady stream of income to cover your expenses.

Legacy Planning:

To leave a substantial legacy for your son, it's essential to preserve and grow your wealth over time. Invest a portion of your corpus in growth-oriented assets such as equity mutual funds to generate long-term returns that outpace inflation and build a sizable inheritance.

Diversification and Risk Management:

Diversifying your investment portfolio across different asset classes and sectors can help manage risk and enhance returns. While equities offer the potential for higher growth, consider allocating a portion of your portfolio to fixed-income instruments for stability and income generation.

Estate Planning:

Ensure that you have a comprehensive estate plan in place to distribute your assets efficiently and minimize taxes. Consider creating a will and establishing trusts to protect your wealth and ensure a smooth transfer to your son in the future.

Consult with a Certified Financial Planner:

As a Certified Financial Planner, I strongly recommend consulting with a professional to develop a customized retirement and legacy plan tailored to your specific needs and goals. A CFP can provide personalized advice, address any concerns or questions you may have, and help you navigate complex financial decisions with confidence.

Stay Informed and Engaged:

Stay actively involved in managing your finances and regularly review your investment portfolio to ensure it remains aligned with your goals and risk tolerance. Keep abreast of market trends and economic developments that may impact your investments and adjust your strategy accordingly.

Final Thoughts:

Retirement planning is a journey that requires careful consideration, disciplined saving, and prudent investing. By taking a holistic approach to managing your wealth and seeking professional guidance when needed, you can retire comfortably and leave a meaningful legacy for your son. Remember, it's never too late to start planning for the future, and I'm here to support you every step of the way.
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  |3951 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 04, 2024

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Sir, I am 41 years old , state govt. class I officer, will retire in 2040. I have a term insurance plan of Rs. 1 Cr. No health facility after retirement. I am currently making SIP of Rs. 30000/- in various MFs and total amount accumulated till date is Rs. 21 Lacks. I am covered under NPS. Present corpus under my NPS is Rs. 51 Lacks. I own a residential plot . I have 02 daughters aged 11 Y & 9 Y. there is Rs. 4 Lakh in my PPF who will mature in 2026 and i am not continuously making contribution in PPF. My Goals are as under:- 1. To build home with approximate amount of Rs. 80Lacs in 2028. 2. Require 25 Lakh for daughter education in 2028 and another 25 Lakh for 2nd kid education in 2031. 3. Want to retire rich with good corpus in hand. My present monthly expenditure is Rs. 50000/- . How much corpus will require to retire and live peacefully. Please suggest investment philosophy and best investment options.
Ans: Given your financial goals and current situation, here's a suggested investment strategy:

Home Construction Fund (2028): Since you aim to build a home by 2028, you'll need to save aggressively for this goal. Consider investing in a mix of equity mutual funds and debt instruments to accumulate the required Rs. 80 lakhs by diversifying your investments.

Education Fund for Daughters (2028 & 2031): Allocate a portion of your savings towards education funds for your daughters. Start separate SIPs or investments earmarked for these goals to accumulate the required Rs. 25 lakhs for each daughter's education by the specified years.

Retirement Corpus: To retire comfortably with a good corpus in hand, you need to estimate your post-retirement expenses. Since your current monthly expenditure is Rs. 50,000, factor in inflation and other lifestyle changes to determine your future expenses. Consider consulting a financial advisor to assess your retirement needs accurately.

Investment Options:

Equity Mutual Funds: Given your long-term investment horizon, continue SIPs in equity mutual funds for wealth accumulation. Choose a mix of large-cap, mid-cap, and multi-cap funds based on your risk tolerance and investment objectives.

Debt Instruments: Since retirement planning involves preserving capital and generating regular income, allocate a portion of your investments towards debt instruments like PPF, debt mutual funds, and fixed deposits to provide stability to your portfolio.

NPS: Continue contributing to NPS to build a significant retirement corpus. Monitor your NPS investments regularly and adjust asset allocation based on market conditions and your risk appetite.


Term Insurance and Health Cover: Ensure adequate coverage for your family's financial security. Consider enhancing your health coverage post-retirement to mitigate medical expenses.

Regular Review: Regularly review your investment portfolio and adjust your asset allocation as needed to stay on track with your financial goals.

It's essential to periodically reassess your financial plan and make adjustments based on changing circumstances, market conditions, and personal priorities. Consider consulting a certified financial planner to create a comprehensive financial plan tailored to your specific needs and goals.

..Read more

Ramalingam

Ramalingam Kalirajan  |3951 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 30, 2024

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Sir, I am 41 years old , state govt. class I officer, will retire in 2040. I have a term insurance plan of Rs. 1 Cr. No health facility after retirement. I am currently making SIP of Rs. 30000/- in various MFs and total amount accumulated till date is Rs. 21 Lacks. I am covered under NPS. Present corpus under my NPS is Rs. 51 Lacks. I own a residential plot . I have 02 daughters aged 11 Y & 9 Y. there is Rs. 4 Lakh in my PPF who will mature in 2026 and i am not continuously making contribution in PPF. My Goals are as under:- 1. To build home with approximate amount of Rs. 80Lacs in 2028. 2. Require 25 Lakh for daughter education in 2028 and another 25 Lakh for 2nd kid education in 2031. 3. Want to retire rich with good corpus in hand. My present monthly expenditure is Rs. 50000/- . How much corpus will require to retire and live peacefully. Please suggest investment philosophy and best investment options.
Ans: Considering your financial goals and current situation, here's a suggested investment philosophy and some investment options:

Short-term Goal - Home Construction (2028):
Continue your SIPs in mutual funds to accumulate funds for the down payment.
Explore additional savings options like recurring deposits or short-term debt funds to supplement your savings.
Medium-term Goals - Children's Education (2028 & 2031):
Allocate a portion of your SIPs towards education-focused mutual funds to build a corpus for your daughters' education.
Consider equity-oriented schemes for higher returns over the long term, but ensure a balanced approach considering the time horizon.
Long-term Goal - Retirement (2040):
Utilize NPS effectively by opting for a diversified portfolio comprising equity and debt to match your risk profile and time horizon.
Continue your SIPs in equity mutual funds for long-term wealth accumulation.
Consider availing voluntary contribution facility in NPS to enhance your retirement corpus.
Healthcare and Insurance:
Since you won't have health facilities post-retirement, consider purchasing a comprehensive health insurance policy to cover medical expenses.
Review your term insurance coverage periodically to ensure it aligns with your family's financial needs.
Real Estate:
Evaluate the potential of your residential plot as an investment asset. Depending on its location and future prospects, it could contribute significantly to your wealth accumulation.
Emergency Fund:
Maintain an emergency fund equivalent to at least 6-12 months' worth of expenses to handle any unforeseen financial challenges.
Financial Planning:
Consult with a Certified Financial Planner to create a personalized financial plan considering your specific goals, risk tolerance, and time horizon.
Regularly review and adjust your investment portfolio based on changing life circumstances and market conditions.
By adopting a disciplined investment approach and diversifying your investments across different asset classes, you can work towards achieving your financial goals and ensure a comfortable retirement.

..Read more

Ramalingam

Ramalingam Kalirajan  |3951 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 28, 2024

Asked by Anonymous - May 28, 2024Hindi
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Hi..My name is Shiva and i am 49 years old..i have 35 lakhs in FD's which become 50 lakhs in 2028 and owning a 2bhk flat worth 30 lakh and some funds are invested in open plots which currently worth around 30 lakhs and nearly 16 lakhs are invested in insurance policies which would mature in 3 years from now..and has debt of 7.5 lakh of personal loan and i get 65 thousand as monthly salary with 10 lakhs in PF account. I am blessed with two sons..elder one completed graduation and is ready to do job now..and 2nd one is pursuing graduation 2nd year. I live in my own house and i get 10 thousand as rent monthly and i want to retire by taking health insurance worth 20/30 lakh per annum.please suggest...
Ans: Planning for Retirement at 49: A Comprehensive Guide
Shiva, your dedication to planning for a secure retirement is admirable. Let's develop a comprehensive plan that aligns with your financial goals and ensures a comfortable future for you and your family.

Current Financial Situation
Fixed Deposits: Rs 35 lakhs, maturing to Rs 50 lakhs by 2028
Property: 2BHK flat worth Rs 30 lakhs, generating Rs 10,000 monthly rent
Open Plots: Rs 30 lakhs
Insurance Policies: Rs 16 lakhs, maturing in 3 years
Debt: Rs 7.5 lakhs personal loan
Salary: Rs 65,000 per month
Provident Fund: Rs 10 lakhs
Financial Goals
Retirement at 60
Health Insurance Coverage: Rs 20-30 lakhs per annum
Managing Debts
Investment Growth
Investment Strategy
Surrendering Insurance Policies
Insurance policies often offer lower returns compared to other investment options. Consider surrendering them and reinvesting the proceeds in higher-yield investments.

Fixed Deposits (FDs)
FDs are safe but offer moderate returns. As your Rs 35 lakhs will become Rs 50 lakhs by 2028, consider diversifying some of this amount into other investment avenues.

Mutual Fund Investments
Benefits of Actively Managed Funds
Actively managed funds offer professional management, flexibility, and the potential for higher returns. They adapt to market conditions and aim to outperform benchmarks.

Diversifying Across Funds
Consider a mix of large-cap, mid-cap, and small-cap funds. This diversifies risk and enhances growth potential. Regular funds, managed by a Certified Financial Planner, provide personalized guidance and regular portfolio reviews.

Health Insurance
Securing a robust health insurance plan is crucial. A coverage of Rs 20-30 lakhs per annum ensures protection against unforeseen medical expenses. Evaluate different plans based on coverage, premiums, and network hospitals.

Debt Management
Paying off your Rs 7.5 lakh personal loan should be a priority. Consider using part of your insurance policy proceeds or fixed deposits to clear this debt. Reducing liabilities enhances financial security.

Emergency Fund
Maintain an emergency fund equivalent to six months of expenses. This ensures liquidity for unexpected financial needs. Utilize your fixed deposits and provident fund for this purpose.

Estate Planning
Ensure proper estate planning. Create a will and consider setting up a trust. This ensures smooth asset transfer and management in the future.

Children's Education and Career
With your elder son ready to start working and the younger one in graduation, their financial independence will soon reduce your financial burden. Encourage them to start investing early for their financial security.

Regular Reviews and Adjustments
Regularly review your investment portfolio and financial plan. Adjustments based on market conditions and life changes ensure you stay on track towards your goals. Consulting a Certified Financial Planner can provide valuable insights and guidance.

Conclusion
With strategic planning and disciplined investments, you can achieve your retirement goals. Diversify your investments, secure comprehensive health insurance, manage your debts, and regularly review your financial plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3951 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 18, 2024

Asked by Anonymous - Jun 10, 2024Hindi
Money
I am 35 year old . I have 20 lakhs invested in MF small cap and flexicap. My salary is 1.5 L in hand . I want to retire by 55 years with a corpus of 10 crores . Please suggest
Ans: Current Financial Position
First, congratulations on your investments and a solid monthly income. You have Rs 20 lakhs in small cap and flexicap mutual funds. With a monthly salary of Rs 1.5 lakh, you are in a strong position to grow your wealth and meet your retirement goal of Rs 10 crore by 55.

Assessing Your Investment Portfolio
Small Cap and Flexicap Funds
Your current investments in small cap and flexicap funds indicate a willingness to take on risk for higher returns. Small cap funds can offer substantial growth, while flexicap funds provide flexibility in allocation across market capitalizations, helping manage risks.

Diversification
Diversifying across different asset classes is essential. Although small caps can provide high returns, they are also volatile. Flexicap funds offer some diversification, but consider spreading investments across other equity funds, debt instruments, and fixed income securities to balance risk and reward.

Active Fund Management
Actively managed funds, like the ones you are currently invested in, often outperform passive index funds due to professional management. Fund managers actively select stocks, aiming to achieve better returns than the market.

Setting Financial Goals
Retirement Corpus of Rs 10 Crore
To accumulate Rs 10 crore in the next 20 years, a systematic approach is essential. Regular investments, disciplined savings, and smart financial planning will be your keys to success.

Monthly Savings and Investments
With a monthly salary of Rs 1.5 lakh, you have the capacity to save and invest significantly. Aim to allocate a substantial portion of your income towards investments. This disciplined approach will help you reach your retirement goal.

Investment Strategies
Increase SIP Amount
Consider increasing your monthly Systematic Investment Plan (SIP) contributions. This will enhance the compounding effect and accelerate the growth of your corpus. Start by assessing how much more you can comfortably invest each month.

Diversified Equity Funds
Invest in a mix of large cap, mid cap, and small cap equity funds. Large cap funds provide stability, mid cap funds offer growth potential, and small cap funds can deliver high returns. This balanced approach reduces risk while maximizing returns.

Debt Instruments
Incorporate debt instruments into your portfolio. These provide stable returns and reduce overall portfolio risk. Options include government bonds, corporate bonds, and debt mutual funds. These investments add a layer of security and ensure consistent growth.

Balanced Funds
Consider balanced funds or hybrid funds, which invest in both equities and debt. These funds provide growth and stability, reducing the impact of market volatility on your portfolio. They are managed by professionals who adjust the asset allocation based on market conditions.

Regular Reviews
Regularly review your investment portfolio. Monitor the performance of your funds and make adjustments as needed. This proactive approach ensures that your investments remain aligned with your financial goals.

Tax Efficiency
Utilize tax-efficient investment options to maximize your returns. Equity-linked savings schemes (ELSS) offer tax benefits under Section 80C of the Income Tax Act. These funds provide tax deductions while delivering equity returns, enhancing your overall portfolio performance.

Risk Management
Diversification
Diversify your investments across various asset classes to manage risk effectively. Avoid over-concentration in any single asset class, ensuring a balanced and resilient portfolio.

Emergency Fund
Maintain an emergency fund to cover unforeseen expenses. This fund should be easily accessible and liquid. It provides financial security and prevents the need to liquidate long-term investments during emergencies.

Insurance Coverage
Ensure you have adequate insurance coverage. Life insurance and health insurance protect your financial well-being and provide peace of mind. Adequate coverage ensures that your financial goals remain on track even in adverse situations.

Steps to Achieve Retirement Goal
Step 1: Assess Current Financial Status
Evaluate your current financial situation, including income, expenses, and existing investments. This assessment provides a clear picture of your starting point and helps in planning the way forward.

Step 2: Set Monthly Savings Target
Determine a realistic monthly savings target based on your income and expenses. Aim to save and invest at least 30-40% of your income. This disciplined approach will help you reach your retirement goal.

Step 3: Choose Suitable Investment Options
Select investment options that align with your risk tolerance and financial goals. Diversify across equity funds, debt instruments, and balanced funds. Regularly review and adjust your investments to optimize returns.

Step 4: Monitor and Review
Regularly monitor and review your investment portfolio. Track the performance of your investments and make necessary adjustments. Stay informed about market trends and economic conditions to make informed decisions.

Step 5: Seek Professional Advice
Consult a Certified Financial Planner (CFP) for personalized advice. A CFP can provide insights into market conditions and suggest strategies aligned with your financial goals. Professional guidance ensures that your investments are well-managed and optimized for growth.

Evaluating Investment Options
Equity Mutual Funds
Investing in equity mutual funds is essential for long-term growth. Large cap, mid cap, and small cap funds provide a balanced approach to risk and return. Choose funds with a strong track record and professional management.

Debt Mutual Funds
Debt mutual funds offer stable returns and reduce overall portfolio risk. They invest in government securities, corporate bonds, and other fixed-income instruments. Include these in your portfolio for consistent growth and stability.

Hybrid Funds
Hybrid funds, also known as balanced funds, invest in both equities and debt. These funds provide growth potential and stability, reducing the impact of market volatility. They are managed by professionals who adjust the asset allocation based on market conditions.

Systematic Investment Plan (SIP)
SIP is a disciplined way to invest regularly in mutual funds. It allows you to invest a fixed amount at regular intervals, benefiting from rupee cost averaging and the power of compounding. Increase your SIP contributions to enhance your corpus over time.

Achieving Financial Independence
Financial Discipline
Maintain financial discipline by sticking to your investment plan. Avoid unnecessary withdrawals and ensure regular contributions to your investments. Consistent investing and financial discipline are key to achieving your retirement goal.

Knowledge and Awareness
Stay updated with financial news and market trends. This knowledge will help you make informed decisions about your investments. Regular updates ensure that your investment strategy remains relevant and effective.

Flexibility and Adaptability
Be flexible with your investment strategy. If market conditions change, be prepared to adjust your strategy. Flexibility ensures that your investments remain aligned with your financial goals.

Long-Term Perspective
Maintain a long-term perspective on your investments. Market fluctuations are normal, but a long-term approach helps you stay focused on your financial goals. Avoid reacting to short-term market movements and stay committed to your investment plan.

Emergency Preparedness
Maintain an emergency fund to cover unforeseen expenses. This fund should be liquid and easily accessible. It provides financial security and prevents the need to liquidate long-term investments during emergencies.

Final Insights
Reaching your goal of Rs 10 crore by the age of 55 is achievable with a strategic and disciplined approach. Focus on optimizing your current investments, increasing contributions to high-growth instruments, and maintaining a balanced portfolio. Regular reviews and professional guidance will keep you on track. Remember, consistency and informed decision-making are key to financial success.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Moneywize

Moneywize   |122 Answers  |Ask -

Financial Planner - Answered on Jun 25, 2024

Asked by Anonymous - Jun 13, 2024Hindi
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Ours is a family of 3 people -- My wife, I and my daughter who is 15. I am 39, my wife is 37 and our monthly expenses are Rs 90K. I own my house and expect to have no fixed income after 65 years, and expect to live till 75. Considering the ever increasing price rise what should be my corpus at 65 for me to continue living the life style I am living today?
Ans: Calculating your retirement corpus:

Here's how to estimate the corpus you'll need to maintain your current lifestyle after retirement:

1. Retirement period:

You plan to retire at 65 and expect to live till 75. So, your retirement period is 75 - 65 = 10 years.

2. Inflation adjustment:

You've rightly considered inflation. To estimate future expenses, we need to factor in inflation. A safe assumption for India is 5-7% inflation. Let's take an average of 6%.

3. Current monthly expenses:

You spend Rs 90,000 per month currently.

4. Future monthly expenses:

To find the monthly expense at retirement (at 65), we need to consider inflation for 26 years (39 years till retirement + 10 years retirement).

You can use an inflation calculator online or a simple formula:

Future monthly expense = Current monthly expense * (1 + Inflation rate)^number of years

In your case, Future monthly expense = Rs 90,000 * (1 + 0.06)^26 ≈ Rs 3,28,550 (approximately Rs 3.29 lakh)

5. Total corpus calculation:

Now you can calculate the total corpus needed. Here's a common approach:

Total corpus = Monthly expense * Number of years in retirement * 12 (months)

However, this method doesn't consider the fact that you'll be withdrawing money every month, reducing the corpus. A more accurate method is using the Time Value of Money (TVM) concept. There are online TVM calculators or Excel functions you can use.

Here's an alternative approach that provides a reasonable estimate:

Multiply the future monthly expense (Rs 3.29 lakh) by a factor considering inflation over the period. This factor can vary depending on your risk tolerance and investment strategy. A factor of 200 is often used as a conservative estimate.
Total corpus = Rs 3.29 lakh/month * 200 (factor) = Rs 6.58 crore (approximately Rs 658 million)

Additional factors to consider:

• Daughter's future expenses: Your daughter will be an adult by the time you retire. While she won't be financially dependent, consider any potential future support you might want to provide for her education or marriage.
• Healthcare costs: Healthcare expenses tend to increase with age. Factor in potential medical needs during retirement.
• Debt: If you have any outstanding debt by the time you retire, you'll need to account for its repayment in your corpus calculation.
• Investment returns: The corpus amount assumes a certain rate of return on your investments. Research different investment options and their potential returns to refine your calculations.

Recommendation:

Consult a financial advisor for a personalised retirement plan considering your specific financial situation, risk tolerance, and investment goals. They can help you create a more comprehensive plan and suggest suitable investment strategies to achieve your corpus target.

Remember, this is an estimate. Regularly review your plan and adjust it based on changing circumstances.

...Read more

Mayank

Mayank Chandel  |1003 Answers  |Ask -

IIT-JEE, NEET-UG, SAT, CLAT, CA, CS Exam Expert - Answered on Jun 24, 2024

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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