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Sanjeev

Sanjeev Govila  | Answer  |Ask -

Financial Planner - Answered on May 19, 2023

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Gurcharan Question by Gurcharan on May 16, 2023Hindi
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sir I am 65 years old govt.pensioners..please advise better saving port folio to help me in old age as well as my grand daughter future ...education expenses...sir post office scheme is longterm investment which i could not use earlier....

Ans: I would like to refer to two myths here before I directly answer your question:-
1. Taking life-time to be minimum 90 years, we’re talking about at least 25 more years of living and investing. Hence, it is a myth that investing in older age should be in absolutely safe instruments since inflation doesn’t care for one’s age.
2. While bank FDs and post office instruments might give you steady returns, please remember that they will always give you returns which will be negative after catering for taxes and inflation. This means that the value of your portfolio will always keep decreasing if you fully invest in such instruments only.

Regarding a good investment portfolio for you, please invest as per your risk profile – meaning how much safety and volatility are you comfortable with – and your future requirements. You have mentioned that you are a govt pensioner, implying that you may be getting enough pension for your day-to-day living. So, make out a list of your future requirements (called financial goals). Then apply the formula that long term requirements go into volatile investments like stocks for better returns and short term into safer ones. On top of this, your risk-taking ability is imposed to give you percentage of safe and volatile investments that you should have.

Amongst the instruments to invest, bank FDs or debt mutual fund for safer investments and equity / hybrid mutual funds for longer term would be good for you. In FDs and debt MFs, try to take longer term investments since interest rates are quite high now. Avoid post office instruments like Senior Citizen Savings Scheme and PO MIS since they compulsorily give you an income which you probably do not need, and hence miss out on the compounding advantages.

For you grand daughter, only good equity funds should do, assuming that she’s very young.
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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Sanjeev

Sanjeev Govila  | Answer  |Ask -

Financial Planner - Answered on Jan 26, 2023

Asked by Anonymous - Jan 26, 2023Hindi
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Sanjeevji, which is the best option to invest senior citizen saving scheme in the post office or bank?
Ans: You primarily have the following four major options for investment as a senior citizen which differ from each other in the way they work. Their important characteristics are given below. If you wish to know more, they are readily available with just a bit of googling:-

1. Senior Citizen Savings Scheme (SCSS). A 5-year scheme, extendable by 3 more years, Maximum investment allowed is Rs 15 Lakhs. Only persons with age 60 and above can invest in it, with the exception of armed forces retired personnel where this limit is 50 years. Current rate of interest is 8% payable on a quarterly basis. Available through Post Office and select banks.

2. Post office Monthly Income scheme (POMIS). A 5-year scheme. Maximum investment allowed is Rs 4.5 Lakhs. Applicable for any adult. Current rate of interest is 7.1% payable on a monthly basis. Available through Post Office only.

3. Pradhan Mantri Vaya Vandana Yojana (PMVVY). It is an insurance policy-cum-pension scheme launched by Govt of India and administered through Life Insurance Corporation (LIC). Its current rate of interest is 8%, minimum entry age 60 years, duration of 10 years, and maximum amount allowed is Rs 15 Lakhs.

4. Bank FDs. Available with all the banks with a choice of tenures. Minimum deposit amount and rate of interest vary from bank to bank. Current rates of interest in State Bank of India for senior citizens are 7.25% for a 1-2 year deposit. Other banks are also similarly placed.

If you want to know more about such options, please go to the link https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx where further details and more such post office schemes are given out.

..Read more

Ramalingam

Ramalingam Kalirajan  |7159 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

Asked by Anonymous - May 29, 2024Hindi
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I am 64 retired from private sector job having old bunglow which was built by my father in 1965. I have invested about 30 Lakh in Post office SCSS another 15 lakh in FD. My monthly income by providing training is about 30 K. I have one daughter and my wife passed away two years back. Can you suggest better options for safe and good growth of my investment.
Ans: Optimizing Your Investments for Safety and Growth

Your dedication to securing your financial future is commendable. With your current investments and income, you have a solid foundation. Let’s explore how you can optimize your investments for safety and growth.

Evaluating Current Investments

You have Rs 30 lakh in the Post Office Senior Citizens Savings Scheme (SCSS) and Rs 15 lakh in fixed deposits (FD). These investments are secure and provide steady returns. However, exploring additional options can help in achieving better growth without compromising safety.

Post Office Senior Citizens Savings Scheme (SCSS)

SCSS is a safe investment providing regular interest payments. It is backed by the government, ensuring capital protection. The interest rate is attractive and provides regular income. Since you have invested Rs 30 lakh, this ensures a stable income stream. However, exploring other options for diversification is prudent.

Fixed Deposits (FD)

Fixed deposits are low-risk investments offering fixed returns. They are suitable for capital protection and generating regular income. However, the returns are often lower compared to other investment options. Diversifying beyond fixed deposits can enhance growth potential.

Exploring Better Investment Options

While safety is paramount, it is essential to consider options that offer better growth. Diversifying your investments can help balance risk and return.

Balanced or Hybrid Funds

Balanced or hybrid funds invest in both equity and debt instruments. They offer a balanced approach to growth and income. These funds provide the potential for higher returns compared to fixed deposits while maintaining moderate risk. They are suitable for conservative investors seeking steady growth.

Debt Mutual Funds

Debt mutual funds invest in fixed-income securities like bonds and debentures. They provide higher returns than fixed deposits with relatively low risk. Debt funds are a good option for generating steady income while preserving capital. They offer liquidity and can be tailored to match your risk tolerance.

Monthly Income Plans (MIPs)

Monthly Income Plans (MIPs) invest primarily in debt instruments with a small portion in equity. They provide regular income along with the potential for capital appreciation. MIPs are designed to generate monthly income, making them suitable for retirees. They offer a balance between safety and growth.

Systematic Withdrawal Plan (SWP)

A Systematic Withdrawal Plan (SWP) allows you to withdraw a fixed amount from your mutual fund investments regularly. This provides a steady income stream while keeping the principal invested. SWPs offer flexibility and can be tailored to your income needs. They ensure liquidity and help in managing cash flow.

Considering Safety and Growth

At 64, balancing safety and growth is crucial. Here are some strategies to consider:

Diversification

Diversifying your investments across different asset classes reduces risk. It ensures that your portfolio is not overly reliant on any single investment. Combining SCSS, FDs, and mutual funds provides a balanced approach.

Regular Income Needs

Your monthly income from training and SCSS interest might suffice for regular expenses. Ensure that your investments provide a stable income stream to meet any additional needs. Consider SWPs or MIPs for consistent income.

Capital Preservation

Prioritize investments that preserve capital while offering growth. Debt mutual funds and hybrid funds are suitable for this purpose. They provide better returns than traditional fixed deposits while maintaining safety.

Emergency Fund

Maintain an emergency fund covering 6-12 months of expenses. This ensures liquidity for unforeseen expenses without disrupting your investment strategy. Keep this fund in a savings account or liquid mutual funds for easy access.

Consulting a Certified Financial Planner

A Certified Financial Planner (CFP) can provide personalized advice. They can help tailor your investment strategy to your financial goals and risk tolerance. A CFP can assist in creating a diversified portfolio balancing safety and growth.

Regular Portfolio Review

Regularly review your portfolio to ensure alignment with your financial goals. Adjust investments based on performance and changes in financial needs. This ensures that your investment strategy remains effective over time.

Conclusion

Your current investments provide a strong foundation. Diversifying into balanced or hybrid funds, debt mutual funds, and monthly income plans can enhance growth potential. Maintaining safety and generating regular income is crucial. Consulting a Certified Financial Planner can offer personalized guidance for optimizing your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7159 Answers  |Ask -

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

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Dear Sir, I am at verge of retirement shortly. I will be getting Rs.60 L. I am thinking of investing Rs.30 L in Senior Citizen scheme of Post Office. Request your suggestion whether this option is ok. If not, kindly advise where to invest this corpus and balance Rs.30 L. I am expecting Rs.50 K plus pm from the investment of Rs.60 L corpus. Kindly advise. Thanks in advance.
Ans: Congratulations on nearing your retirement! This is an exciting and crucial time. I understand your goal is to generate Rs. 50,000 per month from your Rs. 60 lakh corpus. Let's analyze and evaluate your investment options to help you achieve this goal.

Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a popular option. It provides a safe and secure investment with guaranteed returns. The interest rate is attractive compared to other fixed-income instruments. Additionally, SCSS offers tax benefits under Section 80C. However, there are limitations.

Advantages of SCSS:

Safety and security: Backed by the government.
Attractive interest rates: Higher than regular savings schemes.
Tax benefits: Deduction under Section 80C up to Rs. 1.5 lakh.
Disadvantages of SCSS:

Investment limit: Maximum of Rs. 15 lakh per individual.
Lock-in period: Five years, extendable by three years.
Interest rate risk: Rates may change, affecting future returns.
SCSS can be a good option for part of your corpus. Let's explore other options for the remaining Rs. 30 lakh to maximize your monthly income.

Mutual Funds
Mutual funds are a versatile investment option. They offer the potential for higher returns, diversification, and liquidity. By investing in mutual funds, you can balance risk and reward effectively.

Types of Mutual Funds:

Debt Funds: Low-risk, suitable for stable returns.
Equity Funds: High-risk, suitable for long-term growth.
Balanced Funds: Combination of equity and debt, balanced risk.
Advantages of Mutual Funds:

Diversification: Spreads risk across various assets.
Professional management: Managed by experienced fund managers.
Liquidity: Easy to buy and sell units.
Power of compounding: Reinvested earnings generate additional returns.
Disadvantages of Mutual Funds:

Market risk: Returns are subject to market fluctuations.
Management fees: Charges may reduce overall returns.
Debt Funds:

Debt funds invest in fixed-income securities like bonds, debentures, and government securities. They are less volatile and provide regular income.

Advantages of Debt Funds:

Stable returns: Lower risk compared to equity funds.
Tax efficiency: Better post-tax returns than fixed deposits.
Liquidity: Easy to redeem units when needed.
Disadvantages of Debt Funds:

Interest rate risk: Returns can be affected by changing interest rates.
Credit risk: Possibility of default by the issuer.
Equity Funds:

Equity funds invest in stocks and have the potential for high returns. They are suitable for long-term goals.

Advantages of Equity Funds:

High returns: Potential for significant capital appreciation.
Inflation protection: Returns can outpace inflation.
Tax benefits: Long-term capital gains tax advantage.
Disadvantages of Equity Funds:

Market volatility: High risk of short-term losses.
Market timing: Difficult to predict market movements.
Balanced Funds:

Balanced funds combine equity and debt investments. They aim to provide growth with stability.

Advantages of Balanced Funds:

Balanced risk: Mix of equity and debt reduces overall risk.
Diversified portfolio: Exposure to different asset classes.
Moderate returns: Potential for steady income and growth.
Disadvantages of Balanced Funds:

Moderate risk: Not as safe as pure debt funds.
Lower returns: May not match pure equity fund returns.
Systematic Withdrawal Plan (SWP)
An SWP allows you to withdraw a fixed amount from your mutual fund investment at regular intervals. It provides a steady income stream.

Advantages of SWP:

Regular income: Fixed withdrawals as per your requirement.
Tax efficiency: Gains taxed at lower rates compared to fixed deposits.
Flexibility: Modify withdrawal amount and frequency as needed.
Disadvantages of SWP:

Market risk: Withdrawals depend on fund performance.
Capital erosion: Withdrawals may reduce your capital over time.
Fixed Deposits (FDs)
Fixed deposits offer guaranteed returns and capital protection. They are a safe investment for conservative investors.

Advantages of FDs:

Guaranteed returns: Fixed interest rates.
Safety: Low risk of capital loss.
Easy to manage: Simple and straightforward investment.
Disadvantages of FDs:

Low returns: Interest rates are usually lower than inflation.
Taxable interest: Interest income is fully taxable.
Lock-in period: Premature withdrawals may incur penalties.
Monthly Income Schemes (MIS)
Post Office Monthly Income Scheme (POMIS) provides a regular monthly income with low risk. It’s a safe option backed by the government.

Advantages of MIS:

Regular income: Monthly interest payments.
Safety: Government-backed scheme.
Low risk: Suitable for conservative investors.
Disadvantages of MIS:

Low returns: Interest rates are not very high.
Investment limit: Maximum investment of Rs. 4.5 lakh per individual.
Lock-in period: Five years with limited liquidity.
Recommended Strategy
To achieve your goal of Rs. 50,000 per month, a diversified approach is advisable. Here’s a recommended strategy:

1. Invest in SCSS:

Allocate Rs. 15 lakh to SCSS. This provides safety, guaranteed returns, and tax benefits. Expect regular interest income.

2. Invest in Debt Mutual Funds:

Allocate Rs. 20 lakh to debt mutual funds. This provides stable returns, liquidity, and tax efficiency. Choose funds with a good track record.

3. Invest in Balanced Mutual Funds:

Allocate Rs. 10 lakh to balanced mutual funds. This provides growth potential with moderate risk. It helps balance your overall portfolio.

4. Systematic Withdrawal Plan (SWP):

Set up an SWP from your mutual fund investments. Withdraw Rs. 25,000 per month. This provides a regular income stream with tax efficiency.

5. Fixed Deposits (FDs):

Allocate Rs. 10 lakh to fixed deposits. This provides safety, guaranteed returns, and easy management. Use the interest income for monthly expenses.

6. Monthly Income Schemes (MIS):

Allocate Rs. 5 lakh to POMIS. This provides a regular monthly income with low risk. It's a safe option for conservative investors.


I understand that managing retirement finances can be challenging. Your goal is to ensure a comfortable and secure retirement. Diversifying your investments across different options will help you achieve this goal.

Final Insights
Investing in SCSS, mutual funds, FDs, and MIS can provide a balanced and diversified portfolio. This approach helps generate a steady income while minimizing risk. Regular reviews and adjustments will ensure your portfolio stays aligned with your goals.

Feel free to reach out for any further assistance. Your retirement is a significant milestone, and careful planning will help you enjoy it to the fullest.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Milind

Milind Vadjikar  |702 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 26, 2024

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Hi Experts, I seek your guidance on my mutual fund portfolio. Below are the details: Total Portfolio Details: - Total Invested Amount: ?15,76,159 - Current Value: ?19,35,234 - Total Returns: ?3,59,075 (+22.78%) - XIRR: 20.75% Monthly SIP Contribution: ?1,18,000 Breakdown of monthly SIP contributions across funds: 1. Parag Parikh Flexi Cap Fund Direct Growth – ?30,000 2. SBI Large & Midcap Fund Direct Plan Growth – ?15,000 3. SBI Magnum Mid Cap Fund Direct Plan Growth – ?20,000 4. Nippon India Large Cap Fund Direct Growth – ?30,000 5. Nippon India Small Cap Fund Direct Growth – ?7,500 6. ICICI Prudential Technology Direct Plan Growth – ?10,000 7. Quant Small Cap Fund Direct Plan Growth – ?7,500 8. HSBC Small Cap Fund Direct Growth – ?5,000 9. Edelweiss US Technology Equity Fund of Funds Direct Growth – ?5,000 Can you suggest if I am on track to create 5 CR corpus in 10 years I have ?25 lakh invested in a Fixed Deposit (FD) in my mother’s account, earning an interest rate of 7.75%, to generate tax-free returns. Additionally, I’m planning to purchase a plot worth ?30–50 lakh in the next 1–2 years. Is it a good idea to keep the money in FD for now, or are there better short-term investment options I should consider to maximize returns while keeping the funds accessible for my future purchase? Looking forward to your suggestions! Thank you!
Ans: Hello;

Your monthly sip value adds upto 1.3 L however you have claimed it to be 1.18 L. (Maybe a typo).

Existing corpus(19.35 L) and monthly sip (1.3 L) won't reach 5 Cr in 10 years.

You have two options to make it happen:

1. Increase monthly sip amount to 1.9 L.

2. Top-up current monthly SIP of 1.3 L by minimum 10% each year for 10 years.

Both ways will lead you to a corpus of 5 Cr over 10 years.

You may consider money market mutual funds for parking your funds for a 1 year horizon. Returns may be comparable to FD returns but with flexibility to withdraw anytime. They typically have low to moderate risk.

Happy Investing;
X: @mars_invest

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Nayagam P

Nayagam P P  |3928 Answers  |Ask -

Career Counsellor - Answered on Nov 26, 2024

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Is doing BBA + Law (Honors) from BITS Law is worth
Ans: Anju, prior to addressing the question, I would like to draw your attention to a recent article in 'The Times of India' which indicates that a majority of law graduates tend to favor employment in corporate settings over practicing in courts. Now, coming to your question, please note, BITS Law School's BBA + LLB (Hons) program is a 5-year program that combines business administration with legal studies. The program focuses on areas such as corporate law, intellectual property, business laws, and dispute resolution. The program offers a strong multidisciplinary approach, preparing students for careers in corporate law, legal consultancy, and management. Its strengths include a business + legal acumen curriculum, industry-driven curriculum, and a reputation for excellence in education and placement opportunities. However, it lacks the legacy and alumni network of top-tier law schools and can be expensive. Career opportunities include corporate and business law, management roles, consulting, entrepreneurship, academia/research, international arbitration, cyber and technology law, corporate governance, and intellectual property rights. The program is worth considering if you aim for a corporate or business law career, are comfortable with the cost and value of the BITS brand, and have excellent industry connections and internships. Build your profile well by the time you complete your BBA+LLB & improve your all other skills required. All the BEST for Your Prosperous Future.

To know more on ‘ Careers | Education | Jobs’, ask / follow Us here in RediffGURUS.

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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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