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Ramalingam

Ramalingam Kalirajan  |6546 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 06, 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 12, 2024Hindi
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Sir, I am 59 years old, will retire in January 2025, I want to make SWP of Rs.30 lakh so that I can get Rs 20K monthly pension. Which fund I will select and how to invest ?

Ans: As you approach retirement, it's essential to plan for a steady income stream to support your lifestyle. Here's how you can achieve your goal of setting up a Systematic Withdrawal Plan (SWP) to generate Rs. 20,000 monthly pension from a Rs. 30 lakh corpus:

• Given your age and the need for stable income, consider investing in debt mutual funds or conservative hybrid funds.
• These funds typically invest in fixed-income securities like bonds and offer regular income through dividends or SWPs.

• Look for funds with a track record of consistent returns and a focus on capital preservation.
• Conservative debt funds or monthly income plans (MIPs) may be suitable options for generating steady income while minimizing risk.

• Calculate the SWP amount needed to generate Rs. 20,000 monthly pension from your Rs. 30 lakh corpus.
• Consider factors such as expected returns, withdrawal frequency, and fund expenses when determining the SWP amount.

• It's crucial to review your investment portfolio regularly and adjust your SWP amount as needed based on market conditions and your financial goals.
• Consult with a Certified Financial Planner to help you select the appropriate mutual fund and set up the SWP to meet your retirement income needs.

• Ensure you have a contingency fund set aside for emergencies to cover unexpected expenses during retirement.
• Additionally, consider diversifying your retirement income sources, such as annuities or senior citizen savings schemes, for added financial security.

By carefully selecting the right mutual fund and setting up a disciplined SWP strategy, you can create a reliable income stream to support your retirement lifestyle. Stay focused on your financial goals and consult with a financial advisor for personalized guidance tailored to your needs. Best wishes for a happy and fulfilling retirement!
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  |6546 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2024

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I am 65 and retired, want to invest 50L in SWP scheme with monthly withdrawal of 50k after one year of investing. Pl suggest good fund ????????
Ans: It's wonderful that you're considering investing in a Systematic Withdrawal Plan (SWP) to generate a steady income stream during your retirement years. Given your investment horizon and income requirement, it's essential to choose a fund that balances growth potential with stability.

For your SWP scheme, you may want to consider investing in a balanced or hybrid fund. These funds typically allocate a portion of their assets to equities for growth potential and the remainder to debt instruments for stability.

Balanced funds aim to provide a blend of capital appreciation and income generation by investing in a mix of equities and debt securities. They can be suitable for retirees looking for a steady income stream while also seeking potential growth opportunities.

When selecting a balanced fund, look for one with a consistent track record of performance, low expenses, and a seasoned fund manager. Additionally, consider the fund's asset allocation, risk profile, and investment strategy to ensure it aligns with your financial goals and risk tolerance.

It's crucial to review your investment periodically and make adjustments as needed to ensure your portfolio remains aligned with your income requirements and financial goals.

Before making any investment decisions, I highly recommend consulting with a Certified Financial Planner who can assess your retirement needs and recommend a suitable SWP scheme tailored to your specific circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6546 Answers  |Ask -

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

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I will be retiring In July 2024 . I am planning to invest 50 lac through SWP for a regular income . Where should I Invest i.e. which mutual funds and in what propertion . What should be my withdrawal % to ensure that my invested capital grows o=ver a period of 10 years substantially . Jagannath Khuntia
Ans: You plan to retire in July 2024.

You want to invest Rs. 50 lakhs for regular income through SWP.

You want your capital to grow over 10 years.

You need a balanced investment plan.

Systematic Withdrawal Plan (SWP)

SWP allows you to withdraw a fixed amount regularly.

It provides a steady income stream.

It is tax-efficient compared to traditional options.

Investment Allocation

Diversify your Rs. 50 lakhs investment.

Allocate funds across different mutual fund categories.

Equity Mutual Funds

Equity funds provide high growth potential.

They can offer 10-12% returns over the long term.

Consider allocating 60% of your corpus here.

Hybrid Mutual Funds

Hybrid funds balance risk and reward.

They invest in both equity and debt.

Consider allocating 30% of your corpus here.

Debt Mutual Funds

Debt funds provide stability and regular income.

They are less volatile than equity funds.

Consider allocating 10% of your corpus here.

Avoiding Index Funds

Index funds passively track the market.

They lack active management, which can limit returns.

Actively managed funds can outperform index funds.

Disadvantages of Direct Funds

Direct funds may seem cheaper but need expertise.

Regular funds, through a Certified Financial Planner, offer professional management.

They provide personalized advice and ongoing support.

Withdrawal Percentage

A safe withdrawal rate is 4-5% per year.

This ensures that your capital grows over time.

For Rs. 50 lakhs, a 4% withdrawal equals Rs. 2 lakhs per year.

Tax Efficiency

Equity funds are tax-efficient for long-term gains.

Hybrid funds also offer favorable tax treatment.

Debt funds provide stability with lower tax efficiency.

Regular Review

Review your portfolio regularly.

Adjust allocations based on market performance.

Seek advice from a Certified Financial Planner for tailored strategies.

Final Insights

Your investment should balance growth and stability.

Diversify across equity, hybrid, and debt funds.

A safe withdrawal rate and professional guidance ensure long-term growth.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6546 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 27, 2024

Money
My father's is retiring next year in 2025 and would like to Invest Rs 50 Lakhs I I need to know best funds for SWP which would provide 20-25K monthly Income ?
Ans: Congratulations to your father on his upcoming retirement! It's wonderful that he is thinking about how to invest his Rs. 50 lakhs to generate a steady monthly income. Let’s explore the best options for setting up a Systematic Withdrawal Plan (SWP) to provide a monthly income of Rs. 20,000-25,000.

Understanding SWP (Systematic Withdrawal Plan)
A Systematic Withdrawal Plan (SWP) is an excellent option for retirees. It allows regular withdrawals from a lump sum investment in mutual funds. This way, your father can receive a fixed amount monthly while keeping the rest of his money invested.

Benefits of SWP
Regular Income: SWP ensures a steady income stream, making it easier to manage monthly expenses. This is particularly beneficial during retirement when a consistent cash flow is essential.

Tax Efficiency: SWP can be more tax-efficient than traditional fixed deposits. Only the capital gains portion of the withdrawal is taxed, not the principal amount. This can lead to significant tax savings, especially over the long term.

Capital Appreciation: The remaining invested amount continues to grow, offering potential capital appreciation over time. This means your father's investment can keep pace with inflation and potentially increase in value.

Flexibility: SWP allows changes in withdrawal amounts and frequency based on financial needs. If your father's expenses increase or decrease, he can adjust the SWP accordingly.

Factors to Consider When Choosing Funds for SWP
Risk Tolerance
Your father's risk tolerance is crucial. Since he is retiring, preserving capital while generating income is vital. Balanced funds or conservative hybrid funds are ideal. They offer a mix of equity and debt, providing stability and growth potential.

Investment Horizon
Although your father needs regular income, the investment horizon should be long-term. This helps mitigate market volatility and maximizes returns. A mix of equity and debt ensures that the portfolio is not overly exposed to market risks.

Fund Performance
Choose funds with a consistent track record. Look for funds that have performed well over the last 5-10 years. Stability and reliability are key when selecting funds for retirement income. Past performance is not a guarantee of future returns, but it can indicate how the fund has managed market cycles.

Expense Ratio
Opt for funds with low expense ratios. High expense ratios can eat into returns, reducing the amount available for monthly withdrawals. A lower expense ratio means more of your money stays invested and working for you.

Professional Management
Actively managed funds are preferable. They are managed by experienced professionals who adjust the portfolio based on market conditions. This reduces risk and improves returns compared to index funds. Active management can provide the necessary expertise to navigate volatile markets and optimize returns.

Types of Funds Suitable for SWP
Balanced Funds
Balanced funds invest in a mix of equities and debt. They provide stability and growth, making them ideal for SWP. They aim to balance risk and return, which is crucial for retirees. By investing in both equities and debt, balanced funds can offer the potential for higher returns than pure debt funds while maintaining a lower risk profile than pure equity funds.

Conservative Hybrid Funds
These funds invest primarily in debt instruments and a smaller portion in equity. They offer stability with some growth potential. They are suitable for investors with a low risk appetite. The debt component provides steady income and preserves capital, while the equity component offers growth potential.

Equity Savings Funds
These funds invest in a mix of equity, debt, and arbitrage opportunities. They offer moderate risk and return. The debt component provides stability, while the equity component offers growth. Arbitrage opportunities help in reducing risk further and can provide consistent returns even in volatile markets.

Monthly Income Plans (MIPs)
MIPs primarily invest in debt instruments and a small portion in equity. They aim to provide regular income while preserving capital. They are suitable for conservative investors. The primary goal of MIPs is to provide a steady income stream, making them ideal for retirees looking for regular income.

Setting Up the SWP
Calculating the Withdrawal Amount
To generate Rs. 20,000-25,000 monthly, the SWP should be set up based on expected returns. Assuming a conservative annual return of 8%, an SWP can be structured to withdraw around Rs. 20,000-25,000 monthly without depleting the capital too quickly. This calculation ensures that the withdrawals are sustainable over the long term.

Starting the SWP
Once the funds are selected, invest the Rs. 50 lakhs in these funds. Set up the SWP to withdraw the desired amount monthly. Regularly review and adjust the SWP based on fund performance and changing needs. It's important to start the SWP after understanding the withdrawal rate that ensures the capital lasts through the retirement period.

Tax Implications
SWP is tax-efficient. Only the capital gains portion of the withdrawal is taxed. Long-term capital gains from equity funds (held for more than a year) are taxed at 10% above Rs. 1 lakh per year. Short-term gains are taxed at 15%. Debt fund gains are taxed based on the holding period, with indexation benefits for long-term gains. Understanding the tax implications can help in effective planning and maximizing after-tax returns.

Monitoring and Adjusting the SWP
Regular Review
Regularly review the SWP and the performance of the funds. This ensures the strategy remains aligned with financial goals. Adjustments might be necessary based on market conditions and changing financial needs. Regular reviews help in ensuring that the withdrawals are sustainable and the investment continues to meet the income needs.

Rebalancing the Portfolio
Periodically rebalance the portfolio to maintain the desired asset allocation. This ensures the portfolio remains aligned with risk tolerance and investment goals. Rebalancing helps in managing risk and ensuring that the investment strategy remains effective.

Emergency Fund
Maintain an emergency fund separate from the SWP. This provides a buffer for unexpected expenses without disrupting the SWP. An emergency fund ensures that you don't have to withdraw more than planned from the SWP, preserving the capital for future needs.

Final Insights
Investing Rs. 50 lakhs through an SWP is a smart move for generating a steady monthly income for your father. By choosing the right mix of balanced, conservative hybrid, equity savings, and monthly income plans, he can achieve a stable income while preserving his capital. Regular reviews and adjustments will ensure the SWP remains effective and aligned with his financial goals.

Remember, it’s important to consult a certified financial planner for personalized advice. They can help tailor the SWP to your father’s specific needs and circumstances, ensuring a secure and comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |6546 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 09, 2024

Money
Sir, I have decided to start SIP in the below MFs: Large Cap 1. ICICI Prudential Bluechip Fund- 500 Rs. per month 2. SBI Bluechip Fund- 500 Rs. per month 3. Nippon India Large Cap Fund- 500 Rs. per month 4. HDFC Top 100 Fund- 500 Rs. per month Total Amount : 2000 Rs. per month Balanced Fund 1. ICICI Prudential Equity & Debt Fund- 500 Rs. per month 2. UTI Aggressive Hybrid Fund- 500 Rs. per month Total Amount: 1000 Rs. per month Multi Cap 1. Nippon India Multi Cap- 500 Rs. per month 2. Quant Active Fund- 500 Rs. per month Total Amount- 1000 Rs. per month Your observations on the above please? Should I start my SIP with the above proposed portfolio??
Ans: Your approach to starting a SIP in a combination of large-cap, balanced, and multi-cap mutual funds shows a thoughtful effort toward diversification. This is a great starting point, and I appreciate the time you've taken to create a mix of equity-focused funds. However, before you proceed, there are several points to consider. I will break down the analysis by fund type to help you understand whether this portfolio suits your financial goals, risk profile, and investment horizon.

Large-Cap Mutual Funds
You have selected four large-cap funds with an investment of Rs. 500 per month each, totaling Rs. 2,000.

Diversification Issue: Large-cap funds generally invest in the same set of top companies in India. While large-cap funds are stable, having multiple large-cap funds may lead to portfolio overlap. That means different funds might invest in the same companies, limiting diversification benefits.

Recommendation: You might consider reducing the number of large-cap funds. You could keep one or two large-cap funds and allocate the remaining amount to another fund category for better diversification. This will help balance your portfolio and reduce duplication of holdings.

Balanced Funds (Equity & Debt Mix)
Balanced funds aim to reduce volatility by investing in both equity and debt. This adds stability, especially during market downturns.

Suitability: The two balanced funds you've chosen offer a mix of aggressive equity exposure and debt, which helps cushion your portfolio in volatile market conditions.

Investment Horizon: Since you are looking at a long-term horizon, this allocation is beneficial as these funds provide moderate risk and can help you during market corrections.

Recommendation: Continue with these balanced funds as they serve the purpose of balancing risk with potential returns. Keep monitoring their performance and ensure that they stay aligned with your financial goals.

Multi-Cap Funds
Multi-cap funds are a great addition to your portfolio as they invest in large, mid, and small-cap companies. This provides you with diversified exposure across the market spectrum.

Suitability: The two funds you've selected offer you a balanced growth opportunity by investing in companies of various market capitalizations. Multi-cap funds tend to be more volatile than large-cap funds but have the potential for higher returns over the long term.

Recommendation: Multi-cap funds are a good option for investors with a long investment horizon, such as yourself. They will allow you to participate in the growth of companies across sectors and sizes. You can continue with this allocation, but monitor the portfolio periodically to ensure its performance aligns with your risk tolerance.

Overall Portfolio Assessment
Diversification: Your portfolio is moderately diversified across large-cap, balanced, and multi-cap categories. However, due to the multiple large-cap funds, you might see overlap, as discussed earlier. For a more optimized portfolio, you can consider adding a mid-cap or small-cap fund instead of having too many large-cap funds. These categories can provide higher growth potential over the long term, but they come with higher risk.

Risk and Return Balance: Your current portfolio is balanced between high-stability funds (large-cap and balanced funds) and higher growth potential funds (multi-cap). This combination works well for investors who seek steady growth with limited risk.

General Suggestions on Mutual Fund Selection
Avoid Overlapping: As mentioned earlier, holding multiple funds from the same category, especially in large-cap funds, can lead to overlapping holdings. Try to consolidate and focus on fewer but stronger funds within each category to avoid unnecessary duplication.

Regular vs. Direct Plans: You may want to consider investing through regular plans with a Certified Financial Planner (CFP) or Mutual Fund Distributor (MFD). Direct plans seem attractive because they come with lower expense ratios. However, regular plans offer the benefit of professional advice, which is essential for long-term portfolio maintenance. A CFP or MFD can help you rebalance your portfolio, monitor fund performance, and provide tax-efficient strategies.

Active Funds Over Index Funds: Active funds, which you have chosen, can outperform index funds in the long run. Unlike index funds, which merely track the market, active funds are managed by experienced fund managers. They have the flexibility to pick and choose stocks that have the potential for higher returns, which could be beneficial for you given your long-term goals.

Taxation of Mutual Funds
Equity Funds: Long-term capital gains (LTCG) tax on equity mutual funds is 12.5% for gains above Rs. 1.25 lakh. This means that after holding equity funds for more than one year, your returns will be taxed at this rate.

Short-Term Capital Gains (STCG): Equity funds held for less than one year are taxed at 20%. Ensure you have a long-term approach to minimize this taxation.

Balanced Funds: Balanced funds are taxed based on their equity exposure. If they hold more than 65% in equity, the taxation is similar to equity funds. Otherwise, they will be taxed like debt funds.

Debt Funds: Long-term capital gains on debt funds are taxed based on your income tax slab. Given this, holding debt funds for over three years helps in availing indexation benefits, reducing tax liabilities.

Retirement Planning and Financial Goals
Given your age and your desire to build a retirement corpus in 10 years, your portfolio should focus on growth. Based on the mix of funds you’ve selected, here’s an evaluation:

Retirement Corpus: You will need a solid growth strategy to accumulate the desired retirement corpus in the next decade. Given your current portfolio allocation, it is important to keep your equity exposure high, as it offers the best growth potential over the long term.

Children's Education and Marriage: With two young children, education and marriage expenses will be significant. Keep in mind that education costs rise faster than inflation. To manage these future needs, consider segregating your investments: one portfolio for retirement and another for education.

Emergency Fund: Ensure you also maintain a sufficient emergency fund in liquid instruments such as fixed deposits or liquid mutual funds. This fund should cover at least 6 to 12 months of expenses.

Final Insights
Consolidate Funds: Instead of multiple large-cap funds, consider focusing on 1 or 2 strong performers. This will reduce duplication and enhance your returns.

Monitor and Review: Regularly review the performance of your funds with a Certified Financial Planner. This will ensure your portfolio stays aligned with your goals and risk tolerance over time.

Tax Planning: As your investments grow, it’s important to remain mindful of the tax implications of your gains. Keeping a long-term approach will help minimize taxes.

Long-Term Vision: Focus on maintaining an equity-heavy portfolio for the next 10 years, as equity investments tend to outperform in the long run. Balanced and multi-cap funds can provide a good mix of stability and growth.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

Ravi

Ravi Mittal  |349 Answers  |Ask -

Dating, Relationships Expert - Answered on Oct 09, 2024

Asked by Anonymous - Oct 08, 2024Hindi
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Relationship
Hello Ravi. Im a 33 year old female, in search of life partner. Through matrimony groups I was shared a contact of a guy and we spoke over call. Initially there was interest from both ends we messaged each other and asked for calls. As we came to know about each other, he is more of an extrovert, enjoys socializing ,consumes alcohol etc. Although Im exposed to cosmopolitan culture I come from a more disciplined/simple/traditional upbringing. Not orthodox but would have preferred someone without those habits. I did not judge him based on his habits, I clearly told that we may try to give each other a chance and I do consider all the other good things in him like being ambitious, attached to his family, independent, cooks for himself , has a good routine, a person who enjoys life and seemed like a happy and cheerful guy. But he kind of judged me for expressing that I looked at alcohol as not a very good habit etc . He had past relationships and asked my opinion on continuing with them as friends, again I said that its past so if he is over it and doesn't let it hamper his future I wouldn't look at it negatively. Although seems like he even had physical relations I dint dig deep or asked any questions. I felt like I did give it a shot and wanted to take a chance bcoz of few good aspects considering we both are of similar backgrounds (the way we were exposed to mixed cultures etc growing up), have satisfied each others non negotiables , have same opinions on joint family, kids etc. He also expressed dilemma over being in different cities cant get to know each other etc and I was like we can meet if we wish to and if we want to take it forward, its not an impossible task. The last time we spoke he said he needs time and he wasnt sure, also suggested that we speak to other people as well. now its been 2 months and neither of us contacted each other. I assumed as he asked for time if he was interested he would get back, he even was seeing all my WA status updates until some time back. So I dint contact, also even while we were talking most of the times it was me initiating msgs asking for call etc. He even acknowledged the same that Im putting efforts and he is unsure etc . So should I really contact him now and check what he though or have self respect and ignore thinking that he is not interested (which looks like the case as he dint contact in 2months). The problem is Im also finding very difficult to find right guys and I feel in certain aspects he is good and should I really give it a chance and try from my side ? Parents are not involved as seems entire decision is of the guy. Im not on dating apps etc, never been in relationship and only looking for a person who can commit and Im in no space to do trial and error or want to get into online dating at this point of time because Im an emotional person and attaching-detaching is not easy for me. I guess Im attached to this person also somewhere and constantly thinking if I should msg or ignore. I was open to talk to others and see but unfortunately nothing worked out and dint get to talk to anyone else in this time. Please advise me, these thoughts are eating me up.
Ans: Dear Anonymous,
I am glad that neither one of you decided to rush into committing to one another. Let me address all the issues one by one

First, I understand that you are not judging his lifestyle, but that does not mean you are not allowed to be concerned about it. We all have our preferences and there is nothing wrong with that.

Second, why should you be the only one putting in the work? A healthy connection is forged when both parties take an equal part in building it. Moreover, don't you think you deserve someone who would love to put some effort into building a relationship with you?

Third, if he isn't sure about this marriage, it is okay. But that does not mean he should leave you hanging. If it has been over two months and you are finding it difficult to give him any more time and space, you can communicate that to him. You can ask him if he has made up his mind and what his intentions are.

Fourth, please do not build a relationship with a person you are not entirely satisfied with because you do not have a better option right now. Do not set your bar low. Lack of options should not be the reason you choose him; you should only decide to marry him when you firmly believe that he is the right man for you.

Best Wishes.

...Read more

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MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Oct 09, 2024

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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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