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Ramalingam

Ramalingam Kalirajan  |7968 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 01, 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 - Mar 30, 2024Hindi
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I have 60 lakhs in EPF (including VPF) and 45 L invested in mutual funds and some 40 L from other sources(like PPF, gratuity, NPS) and am due to retire in 2026 . My advisor is suggesting to withdraw some 30 lakhs from EPF and invest in SBI hybrid fund, from which I can withdraw every month post retirement and the fund will also grow at the same time. He shared the report that 50 L invested for 10 years ,with a monthly withdrawal of Rs. 30 thousand, the fund has grown to 1.29 crores. Is it advisable to withdraw from EPF and invest in MF , please suggest.

Ans: Before making any decisions regarding your investments, it's crucial to carefully evaluate your financial goals, risk tolerance, and investment horizon. Here are some points to consider:

EPF Withdrawal: Withdrawing a significant portion of your EPF balance may impact your retirement savings. EPF offers a stable and secure avenue for retirement savings with tax benefits. Consider the long-term implications of reducing your EPF corpus, especially if it's a primary source of retirement income.

SBI Hybrid Fund: While investing in mutual funds like SBI Hybrid Fund can offer potential growth and regular income through systematic withdrawal plans (SWP), it's essential to assess the fund's risk profile, past performance, and suitability for your financial objectives. Hybrid funds typically invest in a mix of equity and debt instruments, providing a balance between growth and stability.

Financial Advisor's Recommendation: Evaluate your advisor's recommendation in the context of your overall financial plan. Consider seeking a second opinion or conducting thorough research on the suggested investment strategy, including the fund's performance, expense ratio, asset allocation, and withdrawal flexibility.

Financial Planning: Retirement planning involves assessing your income needs, lifestyle expenses, healthcare costs, and inflationary pressures. Ensure that your investment portfolio aligns with your retirement goals and provides adequate income sustainability throughout your retirement years.

Risk Management: Diversification is key to managing investment risk. Consider spreading your investments across different asset classes, such as equity, debt, and fixed income, to mitigate market volatility and enhance portfolio resilience.

Professional Advice: Consult with a certified financial planner or investment advisor who can conduct a comprehensive financial analysis based on your specific circumstances and provide personalized recommendations tailored to your retirement objectives, risk appetite, and time horizon.

Ultimately, the decision to withdraw from EPF and invest in mutual funds should be based on a thorough understanding of your financial situation, investment objectives, and risk tolerance. Take your time to evaluate the pros and cons before making any investment decisions, and prioritize long-term financial security in 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  |7968 Answers  |Ask -

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

Asked by Anonymous - Mar 29, 2024Hindi
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I have 60 lakhs in EPF (including VPF) and 45 L invested in mutual funds and some 40 L from other sources(like PPF, gratuity, NPS) and am due to retire in 2026 . My advisor is suggesting to withdraw some 30 lakhs from EPF and invest in SBI hybrid fund, from which I can withdraw every month post retirement and the fund will also grow at the same time. He shared the report that 50 L invested for 10 years ,with a monthly withdrawal of Rs. 30 thousand, the fund has grown to 1.29 crores. Is it advisable to withdraw from EPF , please suggest.
Ans: Withdrawing a significant amount from your EPF (Employee Provident Fund) and investing it in SBI hybrid fund for monthly withdrawals post-retirement is a decision that requires careful consideration.

EPF is a stable and secure investment option that provides guaranteed returns and tax benefits. Withdrawing a substantial amount from EPF may compromise your retirement savings and future financial security.

While investing in SBI hybrid fund can potentially generate higher returns, it also involves higher risks compared to EPF. Hybrid funds invest in a mix of equity and debt instruments, and their performance can be volatile, especially in the short term.

Before making any decision, consider the following factors:

Risk Tolerance: Assess your risk tolerance and investment objectives. Evaluate whether you're comfortable with the potential volatility and fluctuations in returns associated with SBI hybrid fund.

Retirement Goals: Review your retirement goals and financial needs post-retirement. Ensure that the proposed investment strategy aligns with your long-term objectives and provides sufficient income to meet your expenses during retirement.

Liquidity Needs: Consider your liquidity needs during retirement. EPF provides liquidity in the form of partial withdrawals and advances for specific purposes like medical emergencies, housing, or education. Assess whether investing in SBI hybrid fund will adequately address your liquidity requirements.

Tax Implications: Evaluate the tax implications of withdrawing from EPF and investing in SBI hybrid fund. EPF withdrawals may be subject to tax, especially if withdrawn before the completion of five years of continuous service. Consult with a tax advisor to understand the tax implications and optimize your tax strategy.

Investment Diversification: Ensure that your overall investment portfolio remains well-diversified and balanced. Avoid concentrating too much of your retirement savings in one particular investment or asset class.

Professional Advice: Seek guidance from a certified financial planner or investment advisor who can provide personalized recommendations based on your financial situation, goals, and risk profile.

Ultimately, the decision to withdraw from EPF and invest in SBI hybrid fund depends on your individual circumstances, risk tolerance, and long-term financial objectives. Consider all factors carefully before making any changes to your retirement savings strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7968 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 13, 2024

Money
Dear sir... Am Ravi kumar. age- 33. Am doing SIP, and investing in PPF. in my EPF account i have 2.5 lakhs. I want to withdraw 1 lakh ruppes from EPF and invest into index funds for my retirement. Is it good idea sir ?
Ans: Dear Ravi Kumar,

Thank you for your question. Your initiative in managing your finances at 33 is commendable. Let’s delve into the intricacies of your plan to withdraw Rs 1 lakh from your EPF to invest in index funds and explore a more advantageous approach.

Current Financial Landscape
Firstly, it’s great to see that you are already engaged in systematic investment plans (SIPs) and contributing to your Public Provident Fund (PPF). These steps lay a solid foundation for long-term financial stability.

Systematic Investment Plans (SIPs): SIPs help inculcate disciplined investing and take advantage of rupee cost averaging. This can potentially yield good returns over time.

Public Provident Fund (PPF): PPF is a secure investment option offering tax-free returns and benefits under Section 80C of the Income Tax Act. It’s an excellent vehicle for building a retirement corpus.

Employees’ Provident Fund (EPF): EPF provides a guaranteed return with tax benefits. It’s a secure way to save for retirement, offering compounding benefits over the long term.

The Proposal to Withdraw from EPF
You plan to withdraw Rs 1 lakh from your EPF account, which currently has Rs 2.5 lakhs. The idea is to invest this amount into index funds for your retirement. While this shows proactive thinking, it’s crucial to assess the pros and cons before proceeding.

Evaluating Index Funds
Index Funds: These funds replicate the performance of a specific index (e.g., Nifty 50 or Sensex). They offer broad market exposure and are generally low-cost due to passive management.

Advantages of Index Funds:

Low Expense Ratios: Index funds have lower management fees compared to actively managed funds.
Broad Market Exposure: They provide diversification by investing in a wide range of stocks within the index.
Simplicity: Investing in index funds is straightforward and easy to understand.
Disadvantages of Index Funds:

Lack of Flexibility: Index funds strictly follow the index composition, missing out on opportunities to outperform.
Average Returns: Since they mimic the index, their returns are average, which means they can’t beat the market.
Downside During Market Corrections: Index funds reflect the market downturns directly without any active management to mitigate risks.
Advantages of Actively Managed Funds
Active Management: Actively managed funds are handled by professional fund managers who aim to outperform the market through strategic asset allocation and stock picking.

Benefits of Actively Managed Funds:

Potential for Higher Returns: Fund managers use their expertise to select stocks that can outperform the market.
Flexibility: Managers can adjust the portfolio to take advantage of market opportunities or mitigate risks.
Downside Protection: Active management can help reduce the impact of market downturns through strategic asset allocation.
The Power of Professional Management
Investing through actively managed funds can offer a more dynamic approach. Professional fund managers analyze market trends, company fundamentals, and economic indicators to make informed decisions, potentially leading to better returns.

Comparing Risk and Reward
When choosing between index funds and actively managed funds, it’s essential to consider your risk tolerance and financial goals. While index funds offer simplicity and lower costs, actively managed funds can provide tailored strategies to navigate market volatility.

The Long-Term Perspective
For retirement planning, a long-term investment horizon is critical. Actively managed funds can adapt to changing market conditions, potentially providing better risk-adjusted returns over time.

Investment Strategy and Diversification
Diversification: Spreading your investments across different asset classes and sectors can mitigate risks. Actively managed funds offer diversified portfolios, reducing the impact of poor performance in any single asset or sector.

Regular Monitoring: Unlike index funds, actively managed funds require regular monitoring and rebalancing, ensuring your investments remain aligned with your financial goals.

Tax Efficiency
Consider the tax implications of withdrawing from EPF and investing in mutual funds. While EPF offers tax-free returns at maturity, investments in mutual funds are subject to capital gains tax. Long-term capital gains (LTCG) tax on equity mutual funds is 10% on gains exceeding Rs 1 lakh in a financial year.

Emergency Fund Considerations
Before diverting funds from EPF, ensure you have an adequate emergency fund. This should cover at least 6 months of your living expenses, providing a financial cushion in case of unexpected events.

Evaluating Current Financial Commitments
Assess your existing financial commitments and cash flow. Ensure that diverting funds from EPF doesn’t impact your ability to meet essential expenses or service debts.

Consulting a Certified Financial Planner
While the information provided here aims to guide your decision, consulting with a Certified Financial Planner (CFP) can offer personalized advice. A CFP can help you design a comprehensive investment strategy tailored to your risk profile, financial goals, and time horizon.

Reassessing Retirement Goals
Reevaluate your retirement goals and investment strategy periodically. Adjust your investment mix based on changing financial circumstances, market conditions, and retirement timelines.

Final Insights
Withdrawing Rs 1 lakh from EPF to invest in actively managed funds can be a wise decision if done strategically. Actively managed funds offer potential for higher returns, professional management, and flexibility to navigate market volatility. Ensure your investment decisions align with your long-term financial goals, risk tolerance, and liquidity needs. Consulting a Certified Financial Planner can provide tailored advice to optimize your investment strategy for a secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7968 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

Asked by Anonymous - Jul 08, 2024Hindi
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Money
I have left my job 1.5 year back for pursuing business. I have PF and pension of around 2.5 lac lied in EPF account, the return I am getting on Provident fund isn't giving me pleasure, Although I have doing SIP of 6000 per month also which is giving me 100% return as of now, hence making my mood to switch EPF fund to equity or mutual fund. What would be better for me, plesse suggest.
Ans: You left your job 1.5 years ago to pursue business. You have Rs 2.5 lakh in your EPF account. You are not happy with the returns from the EPF. You also have an SIP of Rs 6000 per month. This SIP has given you 100% return so far. You are thinking of moving your EPF funds to equity or mutual funds.

Evaluating Your Options
EPF Account
The EPF account is a safe investment. It provides fixed returns. It is also tax-free on withdrawal. However, returns are usually lower compared to equity or mutual funds.

Equity Investments
Equity investments can provide high returns. They are, however, risky. Market fluctuations can impact your investments. They require good market knowledge.

Mutual Funds
Mutual funds can balance risk and returns. They are managed by experts. There are various types of mutual funds. Each type suits different risk profiles.

Advantages of Actively Managed Funds
Actively managed funds are overseen by fund managers. These managers aim to outperform the market. They use research and analysis. They adjust the portfolio based on market trends.

Disadvantages of Index Funds
Index funds mirror a market index. They do not try to outperform the market. They offer lower returns compared to actively managed funds. They do not adapt to market changes quickly.

Regular Funds vs Direct Funds
Regular funds are purchased through an intermediary. This intermediary could be a Certified Financial Planner (CFP). CFPs offer valuable advice. They help with investment planning. They provide insights into market trends.

Direct funds, on the other hand, are bought directly from the fund house. They have lower expense ratios. However, they do not offer the advisory support provided by CFPs.

Recommendations for Your EPF Funds
You might consider moving part of your EPF to mutual funds. This could provide better returns. However, keep some portion in EPF for safety.

Here are a few steps to consider:

Assess Your Risk Tolerance: Understand your comfort with market risks. Equity and mutual funds can be volatile.
Diversify Your Investments: Do not put all your funds in one type of investment. Balance between EPF, equity, and mutual funds.
Consult a Certified Financial Planner: A CFP can guide you. They can help balance your portfolio. They can provide insights into market trends.
Reevaluate Your Investment Periodically: Keep checking your investments. Make adjustments as needed.
Final Insights
Your decision to move EPF funds to mutual funds can be beneficial. It requires careful planning. Balancing between safety and returns is key.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Radheshyam

Radheshyam Zanwar  |1190 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Feb 16, 2025

Asked by Anonymous - Feb 15, 2025Hindi
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I gave 12th class exams last year scored 81% dummy school had 66 and 77 percentile in mains 1 and 2 and 90.2 percentile in mhtcet being a non Maharashtraian. 123 in bitsat. Took a drop, studied hard yet scored 60 percentile in mains 2025 first attempt. Feeling disheartened havent been able to study nicely after results. Will it be practical to focus on mains 2 as i doubt my capabilities or bitsat entirely? Or any other exam i have a good scope in? Wish to get into a tier 1 clg (have delhi domicile as i did my 12th from delhi). If yes, how do i build the momentum and get back to studies and which exam should i be focusing on since i have failed mains 1 also.
Ans: Hello dear.
Remember, the JEE exam and passing engineering from 1st tier engg college can't be a parameter of success in life If you look nearby, many people are successful, but none of them have completed their engineering from 1st tier college or cleared JEE like competitive examinations. You tried your best but failed to crack JEE in 1 or 2 attempts. No problem. You are not alone in this worst situation (as per your thinking)! You also gave the MHT-CET and got a good percentile (90.2). You could be admitted to a good private engg college with this percentile in Maharashtra. But why you did not take this decision is not clear. I would like to suggest you, please drop the idea of appearing for JEE this time and clear any state-level engineering entrance examination. Take admission to a reputed private engineering college and start you journey in a fresh mood. For your reference, there are 10 engineering colleges in India where you can get admission without a JEE score. To know more details, please copy and paste the following link into your browser- https://timesofindia.indiatimes.com/education/news/10-engineering-colleges-in-india-for-pursuing-btech-without-jee-main-2025-score/articleshow/118162587.cms.
Focus either on the state-level engineering entrance examination or choose the best options from the given link, if your financial position is strong.

If satisfied with the reply, please like and follow me, else ask again.
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Radheshyam

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Radheshyam

Radheshyam Zanwar  |1190 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Feb 15, 2025

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My son has got 91 percentile in the recent jee exam , he has next attempt in april, but i feel its difficult for him , can i know about other good colleges in karnataka , as im based their. interested in computer science and aeronautical degree, also advise some recent good courses for his career in india.
Ans: Hello Manoj.
Do not get stressed at this stage. Even though his score is 91 percentile in 1st attempt, he can do well in 2nd attempt. But from the safer side, ask him to appear in the Karnataka State Engineering Entrance Examination also. Even if he scores less in JEE on 2nd attempt, he may good college via the state entrance examination in CSE or aeronautical engineering as per your wish. For your reference, there are 10 colleges in India where you can get admission without a JEE score. To know more details, please copy and paste the following link into your browser- https://timesofindia.indiatimes.com/education/news/10-engineering-colleges-in-india-for-pursuing-btech-without-jee-main-2025-score/articleshow/118162587.cms.
There are no such courses to be called as recent. The choice of courses depends upon the interest of your son. Hence there is no need to hurry and get into panic at this stage. Let him appear for both exams first, Ask about his interests, and then choose the course accordingly. I would be happy to suggest you after knowing his scores in JEE+State entrance + his liking.
Till then, ask him to focus only on two engineering entrance exams. Best of luck to your son for upcoming exams.

If satisfied with the reply, please like and follow me, else ask again.
Thanks
Radheshyam

...Read more

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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