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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 04, 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
Chandan Question by Chandan on Nov 22, 2023Hindi
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I am 62. Have monthly pension of about 44,000/-. No liabilities. In the next 3-5 years how can I invest Rs 50,000/- in mutual fund to get a handsome amount

Ans: Given your age and investment horizon, it's crucial to prioritize capital preservation and generate a steady income from your investments. Here's a general strategy for investing Rs 50,000 in mutual funds:

Consider Balanced Funds: Opt for balanced funds or hybrid funds that invest in both equity and debt instruments. These funds offer a balance between growth and stability, making them suitable for retirees seeking regular income and capital appreciation.

Dividend Yield Funds: Look for dividend yield funds that invest in stocks of companies with a track record of paying consistent dividends. These funds can provide a steady income stream through dividend payouts while offering the potential for capital appreciation.

Debt Funds: Allocate a portion of your investment to debt funds, which primarily invest in fixed-income securities such as government bonds, corporate bonds, and money market instruments. Debt funds offer stability and regular income with relatively lower risk compared to equity funds.

Systematic Withdrawal Plan (SWP): Instead of opting for a lump sum investment, consider setting up a systematic withdrawal plan (SWP) from your mutual fund investments. SWP allows you to withdraw a predetermined amount at regular intervals, providing you with a steady income stream while keeping your investment intact.

Diversification: Diversify your investment across multiple mutual fund schemes to reduce risk and enhance returns. Allocate your investment among different asset classes, including equity, debt, and hybrid funds, based on your risk tolerance and financial goals.

Regular Review: Periodically review your mutual fund investments to ensure they align with your investment objectives, risk profile, and changing market conditions. Consider rebalancing your portfolio if necessary to maintain your desired asset allocation.

Before making any investment decisions, consult with a financial advisor who can assess your financial situation, risk tolerance, and investment goals to provide personalized recommendations tailored to your needs. Additionally, consider factors such as taxation, exit loads, and fund expenses while selecting mutual fund schemes.
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  |7101 Answers  |Ask -

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

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Sir, I'm 50yrs old. I earn rs 60p.m. kindly suggest low risk mutual fund so that I can get pension from ,60 yrs to 70 yrs.
Ans: Building a Low-Risk Mutual Fund Strategy for Your Retirement Pension
It's wise to plan ahead for your retirement years, and mutual funds can play a crucial role in generating a steady income stream. Let's explore a low-risk mutual fund strategy tailored to your needs.

Understanding Your Retirement Needs
Income Requirement
With a monthly income target of Rs 60,000 during your retirement years from 60 to 70, ensuring a stable and reliable income source is essential.

Risk Preference
Considering your preference for low-risk investments, prioritizing capital preservation while generating consistent returns is paramount.

Low-Risk Mutual Fund Selection Criteria
Stability
Focus on mutual funds with a history of stable performance and lower volatility, minimizing the risk of significant fluctuations in your investment value.

Consistent Returns
Prioritize funds with a track record of delivering steady returns over the long term, aligning with your goal of sustaining a reliable pension income.

Diversification
Opt for mutual funds that offer diversification across asset classes, such as a balanced mix of equity and debt securities, to mitigate risk effectively.

Recommended Mutual Fund Categories
Debt Mutual Funds
Allocate a substantial portion of your investment towards debt mutual funds, which primarily invest in fixed-income securities, providing stable returns with relatively lower risk.

Conservative Hybrid Funds
Consider conservative hybrid funds, which maintain a conservative allocation to equities while predominantly investing in debt instruments, striking a balance between growth and stability.

Short-Term Debt Funds
Explore short-term debt funds, which invest in fixed-income securities with shorter maturity periods, offering stability and liquidity while minimizing interest rate risk.

Retirement Income Strategy
Systematic Withdrawal Plan (SWP)
Implement a systematic withdrawal plan (SWP) from your selected mutual funds, allowing you to receive a regular income stream while keeping your principal amount invested.

Regular Portfolio Review
Periodically review your mutual fund portfolio to ensure it continues to meet your income requirements and risk tolerance, making adjustments as needed.

Final Thoughts
Professional Guidance
Consider consulting with a Certified Financial Planner to tailor your mutual fund strategy according to your retirement goals and risk profile, ensuring a secure financial future.

By strategically allocating your investments across low-risk mutual fund categories, you can build a retirement portfolio designed to provide a steady pension income during your golden years.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

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

Asked by Anonymous - Jul 07, 2024Hindi
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1 am 50 year old with income of 40000 pm. I want to invest in mutual funds.kindly suggest
Ans: At 50 years old, it’s essential to align your investments with your goals. Consider what you want to achieve with your investments.

Is it retirement planning, creating a safety net, or another goal? Knowing this will guide your investment strategy.

Current Financial Situation

With a monthly income of Rs. 40,000, it’s important to budget wisely. Ensure your monthly expenses, savings, and investments are well balanced.

Allocate a portion of your income to mutual funds after covering essential expenses and an emergency fund.

Choosing the Right Mutual Funds

Mutual funds offer various options, each with different risk levels and returns. It’s crucial to choose funds that match your risk tolerance and investment horizon.

Here are some general categories to consider:

Equity Funds: These are suitable for long-term goals. They have higher returns but come with higher risk.

Debt Funds: These are less risky and provide stable returns. Suitable for short to medium-term goals.

Hybrid Funds: These offer a mix of equity and debt. They balance risk and return.

Benefits of Actively Managed Funds

Actively managed funds are handled by professional managers. These managers make strategic decisions to outperform the market.

This can lead to higher returns compared to index funds. They adapt to market changes and identify opportunities.

Disadvantages of Direct Funds

Direct funds require constant monitoring. They need you to actively manage and rebalance your portfolio.

This can be time-consuming and may not be suitable for everyone. Regular funds, through a Certified Financial Planner (CFP), offer professional management and advice.

Investment Strategy

Diversify: Spread your investments across different types of funds. This reduces risk and enhances returns.

Regular Investment: Consider a Systematic Investment Plan (SIP). This allows you to invest a fixed amount regularly, reducing the impact of market volatility.

Review and Rebalance: Regularly review your portfolio. Ensure it aligns with your goals and risk tolerance. Rebalance if necessary.

Steps to Start Investing

Consult a CFP: A Certified Financial Planner can help you create a tailored investment plan. They provide professional advice and manage your portfolio.

Set Up an SIP: Choose the amount you can invest monthly. An SIP ensures disciplined investing.

Monitor Your Investments: Keep track of your investments. Regularly review their performance and make adjustments.

Creating a Balanced Portfolio

Your portfolio should reflect your goals and risk tolerance. At 50, you might prefer a conservative approach.

Consider a mix of equity and debt funds. This ensures growth while protecting your capital.

Emergency Fund

Ensure you have an emergency fund. This should cover at least 6 months of expenses. It protects you from financial setbacks.

Insurance Coverage

Review your insurance coverage. Adequate health and life insurance are crucial. They protect you and your family from unforeseen events.

Final Insights

Investing in mutual funds can be a great way to grow your wealth. Choose funds that match your goals and risk tolerance.

Consult a Certified Financial Planner for professional advice. Regularly review and adjust your portfolio.

This ensures your investments remain aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ravi

Ravi Mittal  |431 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 22, 2024Hindi
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Relationship
A bit long story I'm 21 student preparing for medical competative entrance exam for past 3 years (21-24).2 year ago this phase I was in a long distance relationship for 4 months with a girl I met in my class .But it didn't last long due to the problems created due to distance as she couldn't understand myself and I couldn't understand herself.so there was a misunderstanding and I couldn't hold on as I was in heavy pressure by exams and financial problems.so I couldn't handle and I felt like too early and broke up with her by losing my mind.she was completely disappointed as I didn't speak to her for more than an year due to one more year preparation.i missed her very much but I didnt tell her.I missed govt seat in border mark and the same year she got into a relationship with another guy in her class.i don't blame her. But I feel like my entire life is shattered and I couldn't move on from that girl till now.I couldn't concentrate on my career too.im kind of person who is always confident in all aspects but I have totally lost my mind .I can see that in an danger situation as age is running and family pressure, everyone of my classmates are far ahead of me I couldn't withstand this situation and couldn't make proper decision in any aspect. Mam please help me out.
Ans: Dear Anonymous,
I understand your concerns. The first step is to focus on moving on; she has, and you should too. Prioritize your career, your family, and your future. Next, what has happened to your career progress has already happened. It's unfortunate, but there's no way to change that. But give yourself a second chance; work harder and achieve greater things than you even imagined before. Trust me, you are not the only person who is standing in a situation like this. Many have, and many more will. But the ones who have passed this time will give you the same advice that I did.

Best Wishes.

...Read more

Milind

Milind Vadjikar  |682 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 13, 2024Hindi
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Sir, I am 40yrs old. Having monthly takehome salary of 1.1 lakh and rental income of 36000. My investment are 2 flats worth of 1cr. 4 plots in Bhubaneswar worth of 2crs. EPF balance 50 lakh, LIC policies worth of 16 lakhs, NPS worth of 10 lakhs. My monthly saving commitments are - EPF (employee+employer) 28000 NPS 15000 MF 7500 Gold scheme 5000 Financial burden - HL emi of 24000 Monthly expanses 50000 I would like to retire at 50. Please advise for retirement plan with life expectancy of 80yrs.
Ans: Hello;

The value of your investments after 10 years;

A. EPF Corpus+Contribution: 1.6 Cr
B. NPS Corpus+Contribution: 53 L
C. MF(sip) + Gold(sip): 25 L
D. Real estate (land): 3.26 Cr

So sum of A, C & D gives us a corpus of 5.11 Cr

Since you will withdraw NPS before 60 age 80% of corpus will go into annuity while 20% will be available to you.

So you may expect monthly income of around 21 K from annuity(42.4 L).

Balance 10.6 L get added to 5.11L taking your total corpus to ~ 5.2 Cr.

If you invest 5 Cr in a conservative hybrid debt fund and do a SWP at the rate of 3%, you may expect a monthly income of around 1.1 L(post-tax).

Add your monthly rental income of 36 K(No growth factored) and annuity income of 21 K to this and you have total monthly income of 1.67 L after 10 years.

Your current monthly expenses of 50 K after 10 years would be around 90 K and 1.6 L after 20 years.

Considering return of around 7-7.5% from the conservative hybrid debt fund you will still generate inflation adjusted return at 3% SWP after 80 years of age.

Assumptions:
Inflation rate-6%
Return from EPF-8%
Return from NPS-9%
Return from MF-10%
Return from gold-7%
Return from Land-5%
Annuity rate-6%

The spare flat is not considered in this because it will continue to yield you rental income in retirement.

Since real estate(land) returns may fluctuate over 10 years suggest to increase MF sip(6X) as a back-up, also in this case you may decide to retain & invest in NPS upto 60 age.

Of course MF returns are also not assured but you are improving the odds by backing two appreciable assets(RE & equity) over long-term.

Happy Investing;
X: @mars_invest

...Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

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

Money
My age 62, male, getting rental income Rs. 90k nett. Already subscribing 12.5k in PPF for the past 2 1/2 years. No other investments. My target is 5 crores in 10 years. I already have Mediclaim Rs.50 lakhs for me & wife . Please advice me what to do.
Ans: Your current financial foundation is strong and shows promise:

A rental income of Rs. 90,000 per month provides consistent and predictable cash flow. This stability can serve as the backbone for your investment strategy.

PPF contributions of Rs. 12,500 per month for 2.5 years reflect disciplined saving. However, its returns may be insufficient to achieve a high-growth target like Rs. 5 crores in 10 years.

A robust Mediclaim policy of Rs. 50 lakhs for you and your wife ensures adequate health coverage. This safeguard allows you to focus on wealth-building without worrying about medical emergencies.

Despite these positive factors, achieving Rs. 5 crores in 10 years requires a carefully crafted and growth-oriented strategy.

Defining and Prioritising Your Financial Goals
Achieving Rs. 5 crores is ambitious yet achievable with a focused approach:

Define this target as your primary financial goal over the next decade.

Break it into manageable milestones: for example, Rs. 50 lakhs every 1-2 years in cumulative investments and growth.

Prioritise high-return investments that align with your risk tolerance and financial capacity.

Optimising Existing PPF Contributions
While PPF is a secure investment, its growth potential is limited:

Returns: PPF currently offers an interest rate of approximately 7-7.5%, which barely outpaces inflation.

Contribution Review: Consider capping your PPF contributions at Rs. 1.5 lakh annually (to utilise the Section 80C benefit). This ensures that excess funds are redirected to higher-return investments.

PPF can serve as a low-risk component of your portfolio but should not dominate your investment strategy.

Building a Diversified Investment Portfolio
A diversified portfolio will provide a balance of risk and reward. Include the following components:

1. Equity Mutual Funds for Growth
Equity mutual funds are essential for achieving high returns over the long term:

Large-Cap Funds: These invest in established companies and offer stability with moderate growth. They are ideal for a portion of your portfolio to reduce risk.

Multi-Cap or Flexi-Cap Funds: These provide exposure to companies of all sizes, offering growth and diversification.

Sectoral and Thematic Funds: Avoid these unless you have a high risk tolerance and understand market dynamics.

ELSS Funds: These not only provide tax savings under Section 80C but also deliver market-linked returns.

Why Avoid Index Funds?

Index funds may offer simplicity and lower expense ratios, but they lack flexibility. They cannot adapt to market conditions or capitalise on outperforming sectors. Actively managed funds, on the other hand, have the potential to outperform the market, especially in a developing economy like India.

Start with a Systematic Investment Plan (SIP) in selected funds to build wealth steadily.

2. Debt Mutual Funds for Stability
Debt funds add stability to your portfolio and reduce overall risk:

Choose funds with low credit risk and moderate duration to ensure safety and predictable returns.

Debt funds are suitable for short- to medium-term goals or as a fallback during market corrections.

Taxation Note: Both LTCG and STCG on debt funds are taxed as per your income tax slab. This should be factored into your planning.

3. Balanced Advantage Funds
Balanced advantage funds (BAFs) dynamically allocate assets between equity and debt. They:

Provide exposure to equity while minimising downside risk.

Offer a suitable option for someone nearing retirement but seeking growth.

4. Gold Investments for Diversification
Allocate a small portion (5-10%) of your portfolio to gold:

Gold serves as a hedge against inflation and currency depreciation.

Choose gold ETFs or sovereign gold bonds for ease of liquidity and better returns.

Emergency Fund Creation
Having an emergency fund is non-negotiable:

Maintain at least 6-12 months of expenses in liquid investments like liquid mutual funds or high-interest savings accounts.

This ensures liquidity for unforeseen events without disturbing your long-term investments.

Focus on Retirement Planning
At 62, balancing growth and safety becomes critical:

Estimate your monthly retirement expenses, considering inflation over the next 10-15 years.

Your target of Rs. 5 crores should primarily serve as your retirement corpus.

Allocate assets thoughtfully:

60-70% in equity funds for growth.
30-40% in debt funds for stability.
Periodically rebalance your portfolio to maintain this allocation.

Strategic Tax Planning
Tax efficiency can significantly impact your returns:

Continue using Section 80C to its full potential, including ELSS funds and PPF.

Consider the National Pension System (NPS) for an additional Rs. 50,000 deduction under Section 80CCD(1B).

Be mindful of the new taxation rules for mutual funds:

Equity Mutual Funds: LTCG above Rs. 1.25 lakh is taxed at 12.5%; STCG at 20%.
Debt Funds: LTCG and STCG are taxed as per your income slab.
Consult a Certified Financial Planner to optimise your tax strategy.

Regular Portfolio Monitoring and Rebalancing
Investing is not a one-time activity:

Review your portfolio every six months or annually to track performance.

Rebalance your asset allocation periodically to align with your financial goals and risk appetite.

Stay committed to SIPs even during market downturns, as this ensures cost-averaging.

Additional Suggestions
Avoid Over-Reliance on PPF
While PPF is safe, it is not sufficient for wealth creation. Shift excess contributions to equity-based investments for better returns.

Avoid Direct Stocks
Direct equity investing requires time, expertise, and constant monitoring. It carries higher risk and may lead to losses without proper research. Instead, rely on equity mutual funds managed by professionals.

Avoid Mixing Insurance and Investments
Do not invest in ULIPs or endowment plans, as they offer suboptimal returns. Stick to pure insurance products for protection and mutual funds for growth.

The Role of a Certified Financial Planner
To achieve Rs. 5 crores, a well-crafted financial plan is essential. A Certified Financial Planner (CFP) can:

Analyse your current investments and recommend improvements.

Design a customised strategy tailored to your income, expenses, and goals.

Provide periodic reviews to ensure you stay on track.

Finally
Achieving Rs. 5 crores in 10 years is a realistic goal if you adopt a disciplined and diversified approach.

Optimise your PPF contributions and channel excess funds into higher-growth investments.

Build a diversified portfolio with equity and debt mutual funds.

Include a small allocation to gold and maintain an emergency fund.

Stay consistent with your SIPs and review your investments regularly.

Work with a Certified Financial Planner to create a personalised roadmap.

By following these steps, you can secure your financial future and meet your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...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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