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Retired CA at 65, seeking advice on wealth management

Ramalingam Kalirajan |8511 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 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 - Jul 28, 2024Hindi

I am 65 years old retired CA, with wife 64 years. Have own house and car, other wealth 1 cr in bonds, fd and 50 lace in equity and MF. Yearly interest and dividend income rs 9 lace. Yearly exp 6 lace, sip in mf rs 25,000 p. M. Suggest any change if any required.

Ans: You have a well-diversified portfolio with Rs. 1 crore in bonds and fixed deposits and Rs. 50 lakhs in equity and mutual funds. Your yearly interest and dividend income is Rs. 9 lakhs, and your yearly expenses are Rs. 6 lakhs. You also invest Rs. 25,000 per month in mutual funds through SIPs.

Income and Expenses Analysis

Your yearly income of Rs. 9 lakhs comfortably covers your yearly expenses of Rs. 6 lakhs. This leaves you with a surplus of Rs. 3 lakhs annually. This surplus is a positive sign of financial stability and allows for additional investments or savings.

Investment Strategy

Your portfolio is well-balanced between safe (bonds and FDs) and growth-oriented (equity and mutual funds) investments. However, some adjustments can optimize your returns and ensure financial security in the long run.

Bonds and Fixed Deposits

Bonds and FDs provide stable income but offer lower returns compared to other investments. Given your age, stability is important, but some diversification into higher-yield options within your risk tolerance might be beneficial.

Equity and Mutual Funds

Your current allocation to equity and mutual funds helps in capital appreciation. However, it’s crucial to review the specific funds and equities you’re invested in. Focus on actively managed mutual funds. They often outperform index funds, offering higher returns through expert management.

Disadvantages of Index Funds

Index funds track the market and often have lower returns compared to actively managed funds. They lack flexibility in asset allocation and stock selection. In volatile markets, actively managed funds can outperform by making strategic adjustments.

Direct vs. Regular Funds

Direct funds have lower expense ratios but require active management and financial knowledge. Regular funds, managed through a Certified Financial Planner (CFP), provide professional guidance. This ensures optimal portfolio performance and aligns with your financial goals.

Systematic Investment Plans (SIPs)

Continuing your Rs. 25,000 monthly SIP in mutual funds is a wise decision. SIPs help in averaging out market volatility and building a substantial corpus over time. Regularly review and adjust your SIPs based on fund performance and market conditions.

Emergency Fund

Ensure you have an emergency fund covering at least 6-12 months of expenses. This provides a financial cushion in case of unexpected events. Keep this fund in a liquid and safe investment vehicle like a savings account or a liquid fund.

Health Insurance

At 65, health expenses can be significant. Ensure you have adequate health insurance coverage for both you and your wife. Review your current health insurance policies and consider enhancing coverage if necessary.

Estate Planning

Consider estate planning to ensure your assets are distributed according to your wishes. This includes drafting a will and possibly setting up trusts. Estate planning provides peace of mind and protects your family's financial future.

Final Insights

Your financial situation is stable with a good balance of income and expenses. Some strategic adjustments can enhance returns and provide additional security. Focus on actively managed mutual funds over index funds for better returns. Consider regular funds managed through a CFP for professional guidance. Ensure you have an adequate emergency fund and health insurance. Estate planning is also crucial to secure your family's future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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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