Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |7548 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 12, 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 07, 2024Hindi
Listen
Money

I am 65.Still working for 1.5 lakhs per month. it may contnue one more year. I have FDs - 50 lakhs. How shall I plan my retirment.

Ans: Great savings! To plan retirement:

Estimate monthly expenses (including healthcare buffer and inflation).
Calculate post-retirement income (FD interest + pension).
If income covers expenses, you're on track! If not, consider delaying retirement or exploring investments with potentially higher returns (like balanced mutual funds or SCSS).
Talk to a financial advisor for a personalized plan.
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7548 Answers  |Ask -

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

Money
Hi !!! This is joydev baneree.My per month income is around 1.5 L take home . As on date I have ... Ppf : investing 1.5 L per year Lic : 1.5 L per year Hdfc life insurance : 90 k per year Mutual fund just started with lumsum 50k Home loan : 50 L ( pre emi going on around 40 k per month ) Please advise what should be my best plan to achieve a healthy financial situation after 55 yrs . I am also going to be a Father ( with in 1 month ) . Looking for your kind advise .
Ans: Hi Joydev! First of all, congratulations on the upcoming arrival of your child. This is an exciting time, and it’s great that you’re thinking about securing your financial future as well. With a monthly take-home income of Rs 1.5 lakhs and your current investments and liabilities, you have a solid foundation to build upon. Let’s explore how you can optimize your finances to achieve a healthy financial situation by the time you’re 55.

Assessing Your Current Financial Landscape
Before diving into detailed planning, let’s take a snapshot of your current financial situation:

Income:
Your monthly take-home salary is Rs 1.5 lakhs. This provides a strong base for saving and investing.

Expenses:
Your major monthly expense is the home loan EMI, which is Rs 40,000 during the pre-EMI period.

Investments:

PPF: You’re investing Rs 1.5 lakhs annually.
LIC: Annual premium of Rs 1.5 lakhs.
HDFC Life Insurance: Annual premium of Rs 90,000.
Mutual Funds: You’ve started with a lump sum of Rs 50,000.
Liabilities:
Your home loan balance is Rs 50 lakhs, with a pre-EMI of Rs 40,000 per month.

Creating a Robust Financial Plan
To secure your financial future, especially with a child on the way, you need a comprehensive plan that covers savings, investments, insurance, and debt management.

Evaluating Your Insurance and Investment Choices
You’re currently contributing to LIC and HDFC Life Insurance, which are traditional insurance-cum-investment plans. Let’s assess these:

Insurance Policies:

LIC and HDFC Life: These plans typically combine insurance and investment. However, they often offer lower returns compared to mutual funds and have high costs.
Action Step:

Reassess Insurance Needs: Since these policies are not the most efficient for investment, consider surrendering them. Reinvest the funds into higher-return mutual funds.
Get Term Insurance: Pure term insurance is more cost-effective and provides adequate life cover for your family.
Optimizing Your Investments
You have already started investing in mutual funds, which is excellent. Here’s how to enhance your investment strategy:

Mutual Funds:

Actively Managed Funds: These funds are managed by professionals who aim to outperform the market. They are better suited for higher returns compared to index funds.
Systematic Investment Plan (SIP): Consider setting up a SIP to invest regularly. This will help in averaging your investment cost and building wealth steadily.
Public Provident Fund (PPF):

Safe and Secure: PPF is a secure investment with tax benefits. Continue with this for a portion of your savings as it provides stable returns.
Diversification:

Balance Risk and Return: Diversify your investments across different types of mutual funds like equity, debt, and hybrid funds. This will help manage risk while aiming for higher returns.
Managing Debt Efficiently
Your home loan is a significant commitment. Here’s how to manage it effectively:

Pre-EMI Phase:

Understand Pre-EMI: During this phase, you’re paying only the interest on the loan amount disbursed. This will convert to full EMI once the loan is fully disbursed.
Prepayment Strategy:

Make Prepayments: Whenever possible, make additional payments towards the principal. This reduces the loan tenure and the total interest paid.
EMI Management:

Budget for EMIs: Ensure that your monthly budget comfortably accommodates the full EMI when it starts. This will be higher than the pre-EMI.
Planning for Your Child’s Future
With a child on the way, planning for future expenses is crucial. Here’s how to prepare:

Education and Other Costs:

Estimate Future Expenses: Consider costs for education, healthcare, and other child-related expenses. These can be significant over time.
Children’s Savings Plan:

Start Early: Begin saving for your child’s education and other future needs now. Invest in long-term equity mutual funds to benefit from compounding.
Child-Specific Investments:

Consider Child Plans: Some mutual funds are designed for child-specific goals. These can provide a good mix of growth and safety.
Building a Strong Emergency Fund
An emergency fund is essential, especially with a growing family. Here’s how to build and manage it:

Determine the Fund Size:

Aim for 6 Months: Save enough to cover at least six months of living expenses. This provides a buffer for unexpected situations.
Liquidity:

Keep it Accessible: Place your emergency fund in a high-interest savings account or a liquid mutual fund for easy access.
Regularly Review:

Adjust as Needed: Reassess your emergency fund periodically to ensure it remains adequate as your expenses and liabilities grow.
Planning for Retirement
Achieving a healthy financial situation by 55 includes robust retirement planning. Here’s how to ensure you’re on track:

Set Retirement Goals:

Determine Required Corpus: Estimate how much you’ll need to maintain your lifestyle after retirement. Factor in inflation and healthcare costs.
Separate Retirement Savings:

Use Retirement Accounts: Keep your retirement savings separate from other goals. Use PPF and NPS for tax-advantaged retirement savings.
Regular Contributions:

Invest Consistently: Make regular contributions towards your retirement savings. Increase the contribution amounts as your income grows.
Financial Planning with a Certified Financial Planner
Engaging with a Certified Financial Planner (CFP) can provide valuable insights and tailored strategies. Here’s why you should consider it:

Expert Guidance:

Personalized Advice: CFPs offer expert advice tailored to your financial situation and goals. They help optimize your investments and savings.
Holistic Planning:

Comprehensive Approach: CFPs create a holistic financial plan that covers all aspects, including insurance, investments, and debt management.
Ongoing Support:

Continuous Review: Regular check-ins with your CFP ensure your financial plan stays aligned with your changing needs and goals.
Staying Financially Disciplined
Discipline is key to achieving your financial goals. Here are some tips to maintain financial discipline:

Budgeting:

Create a Monthly Budget: Track your income and expenses. Ensure you allocate funds for savings and investments first.
Avoid Unnecessary Debt:

Be Cautious: Avoid taking on new debts unless absolutely necessary. Keep your debt-to-income ratio low.
Regular Financial Reviews:

Stay Informed: Regularly review your financial plan and make adjustments as needed. This helps you stay on track and adapt to changes.
Leveraging Compounding for Long-Term Growth
Compounding is your best friend when it comes to long-term wealth creation. Here’s how to leverage it:

Start Early:

The Sooner, The Better: Begin investing as early as possible. The longer your money stays invested, the more it compounds.
Consistent Investments:

Regular Contributions: Make consistent investments over time. This maximizes the benefits of compounding.
Reinvest Returns:

Let It Grow: Reinvest any returns from your investments to keep the compounding effect going.
Tax Planning for Optimal Savings
Efficient tax planning can enhance your savings. Here’s how to optimize your tax liability:

Utilize Deductions:

Section 80C: Make use of Section 80C deductions for investments in PPF, ELSS, and insurance premiums to reduce taxable income.
Explore Other Sections:

Other Deductions: Look into deductions under Section 80D for health insurance and Section 24 for home loan interest.
Seek Professional Advice:

Consult a CFP: A CFP can help you navigate tax-saving opportunities effectively.
Final Insights
Joydev, you have a strong financial foundation with a good income and existing investments. By optimizing your insurance and investment choices, managing your debt effectively, and planning for your child’s future, you’re well on your way to securing a healthy financial situation by 55. Regularly review your financial plan, stay disciplined, and seek professional guidance when needed. Your proactive approach and dedication will ensure a prosperous future for you and your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7548 Answers  |Ask -

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

Listen
Money
Hi, I am 33 year old married I have 1 child monthly earning 1.2lk Currently I have 2 home loan 46lack My saving is 5 lack in mutual fund Pf 8 lack Monthly sip 25k I want to retriment at age 55 Pleaese provide solution
Ans: You aim to retire at 55.

You have 22 years to prepare.

Let's review your current financial situation.

Evaluating Your Current Finances
You have two home loans totaling Rs. 46 lakhs.

You have Rs. 5 lakhs in mutual funds and Rs. 8 lakhs in PF.

You also invest Rs. 25k monthly in SIPs.

Your monthly earning is Rs. 1.2 lakhs.

Prioritising Debt Repayment
Focus on managing your home loans.

Consider making extra payments if possible.

Reducing debt will ease financial pressure.

Enhancing Your Savings
Your Rs. 25k monthly SIP is a good start.

Increasing your SIPs over time will boost your savings.

Aim to invest more as your income grows.

Benefits of Actively Managed Funds
Actively managed funds can offer higher returns.

These funds are managed by experts.

They aim to outperform the market.

Importance of Regular Funds
Invest through a Certified Financial Planner.

Regular funds provide professional guidance.

This helps in making informed investment decisions.

Diversifying Your Portfolio
Diversify your investments to reduce risk.

Include a mix of equity and debt funds.

This balances growth and stability.

Reviewing Your Insurance Policies
If you hold LIC, ULIP, or investment-cum-insurance policies:

Consider surrendering them.

Reinvest in mutual funds for better returns.

Planning for Retirement Corpus
Calculate your required retirement corpus.

Consider inflation and future expenses.

A Certified Financial Planner can assist with this.

Creating an Emergency Fund
Establish an emergency fund.

It should cover at least 6 months of expenses.

This safeguards your financial plan.

Monitoring Your Investments
Regularly review your investment portfolio.

Adjust based on performance and goals.

Stay informed about market trends.

Seeking Professional Help
Consult a Certified Financial Planner.

They offer tailored advice.

Their expertise ensures your plan stays on track.

Final Insights
Retiring at 55 is achievable with careful planning.

Focus on reducing your home loans.

Boost your SIPs and diversify your portfolio.

Consider actively managed funds for better returns.

Regularly review and adjust your investments.

Consult a Certified Financial Planner for guidance.

With determination and strategic planning, you can achieve your retirement goal.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7548 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

Listen
Money
I am 41 years and have home loan and vehicle loan of 56 lacs for which repayment dine of around 7 lacs and at present i am job less will soon join job how should i plan my retirement of 60 years , i was on the pacakge of 36 lac per year. What should be my retirement corps and how can i plan
Ans: Retirement planning is essential, especially with current loans. Let's plan a robust strategy.

Assessing Your Current Situation
Home and Vehicle Loans: You have loans of Rs 56 lakhs.

Repayment Done: You have repaid Rs 7 lakhs.

Job Transition: You are currently jobless but will join soon.

Previous Package: You earned Rs 36 lakhs per year.

Setting Retirement Goals
Target Age: Plan to retire at 60 years.

Desired Corpus: Aim for a corpus that sustains your lifestyle.

Steps to Plan Retirement
1. Evaluate Monthly Expenses
List all monthly expenses. Include living, utilities, and loans.

Determine expenses post-retirement. Account for inflation.

2. Clear Outstanding Loans
Focus on clearing your home and vehicle loans.

Use any bonuses or windfalls to reduce debt.

Aim for debt-free retirement. It eases financial stress.

3. Emergency Fund
Build an emergency fund. Cover at least 6 months of expenses.

Keep it in liquid funds. They offer safety and easy access.

4. Reassess Insurance Needs
Ensure adequate health and life insurance coverage.

Avoid investment-cum-insurance plans. Separate investments and insurance.

5. Invest for Retirement
Equity Mutual Funds: For long-term growth, invest in equity mutual funds. They offer better returns than fixed income.

Diversification: Diversify across large-cap, mid-cap, and multi-cap funds. It spreads risk.

Regular Contributions: Start SIPs in mutual funds. Regular investments compound wealth over time.

Professional Management: Choose actively managed funds. They have potential for higher returns.

6. Avoid Index Funds
Disadvantages: Index funds mimic the market. They lack professional management.

Lower Returns: Active funds often outperform index funds. Managers can adjust for market conditions.

7. Regular Funds Over Direct Funds
Professional Guidance: Regular funds offer advisory services. Direct funds lack this.

Ease of Management: Managing direct funds needs effort. Regular funds are managed by professionals.

Higher Returns: Professional management can lead to better returns. Advisors provide valuable insights.

8. Regular Review
Monitor Investments: Regularly review and rebalance your portfolio.

Adjust Goals: Reassess goals and strategy based on life changes. Be flexible.

Planning Your Corpus
Estimate Needs: Estimate the corpus needed for retirement. Consider lifestyle and inflation.

Invest Wisely: Aim for a mix of equity and debt investments. Equity for growth, debt for stability.

Start Early: The earlier you start, the better. It allows compounding to work in your favor.

Final Insights
Planning for retirement needs careful consideration. Clear your debts and build an emergency fund. Invest regularly in diversified mutual funds. Avoid index funds and direct funds. Regularly review your strategy and adjust as needed.

Consult a Certified Financial Planner for personalized advice. A CFP can help create a tailored plan to meet your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Milind

Milind Vadjikar  |868 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Jan 17, 2025

Nayagam P

Nayagam P P  |4056 Answers  |Ask -

Career Counsellor - Answered on Jan 17, 2025

Kanchan

Kanchan Rai  |494 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Jan 17, 2025

Asked by Anonymous - Jan 17, 2025Hindi
Listen
Relationship
Then doctor asked her why she stopped and what I said, my wife said that he is asking for female staff and doctor said “I am a doctor and I am not having female staff and there is nothing male and female in doctor’s consultation” my wife got convinced and told me that we are continuing with this doctor and I also shaked my head as consent sign but not aware with the upcoming surprise and then she open her upper body part and doctor did the check up by pressing or whatever doctor does. And I was not ready for this So, I am still in trauma due to this, but I don’t want her to show her body to any male doctor. That picture comes again and again in my eyes. I don’t want to break my relation with wife, because we married 20 years before and we have 2 daughter and I love her too much. But she has disobeyed me and obeyed that doctor. I am in a trauma. What should I do to come out of this trauma. Please let me know.
Ans: To address your trauma, start by having an open and honest conversation with your wife about your feelings. Express your emotions calmly, without blame, so she can understand the depth of your discomfort and help you work through it. It's also crucial to recognize that trust and mutual respect are fundamental in any relationship. Your wife’s decision was likely driven by her need for medical care, not a desire to hurt or disobey you.

Consider seeking professional help for yourself. A therapist or counselor can provide a safe space for you to explore these feelings, work through the trauma, and develop strategies to cope with intrusive thoughts. They can also help you understand the importance of medical privacy and the necessity of certain procedures, which may ease your discomfort over time.

Additionally, you might want to explore couples counseling. This can help both of you navigate this situation together, rebuild trust, and strengthen your relationship. Remember, your goal is to maintain a loving and supportive partnership, and professional guidance can be instrumental in achieving that.

Your love for your wife and your desire to keep the relationship strong is evident. By addressing these feelings head-on and seeking support, you can move towards healing and maintaining the bond you cherish.

...Read more

Ramalingam

Ramalingam Kalirajan  |7548 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 17, 2025

Asked by Anonymous - Jan 17, 2025Hindi
Listen
Money
I'm 35 years old. I want to invest INR 65000 for retirement at 50 years old. My current expenses 65000 per month. Please guide me.
Ans: Retiring at 50 with your current lifestyle requires a carefully crafted investment strategy. Here’s a detailed guide tailored to your goal.

Step 1: Define Retirement Corpus Requirement
Current Monthly Expenses: Rs. 65,000.
Inflation Adjustment: At 6% inflation, your expenses will increase significantly by 50.
Retirement Corpus: The corpus must sustain you for at least 30+ years post-retirement.
Lifestyle Goals: Include travel, medical emergencies, and aspirational expenses in calculations.
Step 2: Asset Allocation Strategy
A balanced mix of equity and debt instruments can help grow your wealth steadily while minimizing risks.

1. Equity Mutual Funds (70% Allocation)
Why Equity? High growth potential to beat inflation over the long term.
Recommended Categories: Flexi-cap, mid-cap, and large-cap funds.
SIP/Investable Amount: Invest Rs. 45,500 monthly in equity mutual funds.
2. Debt Instruments (30% Allocation)
Why Debt? Stability and regular income during volatile markets.
Recommended Options: PPF, short-term debt mutual funds, or NPS (Tier I).
SIP/Investable Amount: Allocate Rs. 19,500 monthly.
Step 3: Include Inflation Protection
Inflation reduces the value of money significantly over time.
Your retirement corpus should grow faster than the inflation rate.
Equity exposure helps overcome inflation impacts effectively.
Step 4: Ensure Tax Efficiency
1. Equity Mutual Funds
Tax Rules: Long-term capital gains (LTCG) above Rs. 1.25 lakh taxed at 12.5%.
Action Plan: Use annual redemption to manage gains below taxable limits.
2. PPF and NPS
Tax Benefits: Both offer tax-saving benefits under Section 80C.
Lock-in Period: Ensure alignment with your retirement timeline.
Step 5: Emergency Fund Creation
Build an emergency fund equivalent to 12 months’ expenses (Rs. 7.8 lakh).
Park it in liquid funds or a high-yield savings account for quick access.
Step 6: Health and Risk Coverage
Health Insurance: Ensure adequate coverage to avoid depleting investments during medical emergencies.
Life Insurance: Use a term plan to secure your dependents until you achieve your retirement goal.
Step 7: Regular Portfolio Reviews
Review your portfolio every six months.
Rebalance based on performance, changing goals, and market conditions.
Seek advice from a Certified Financial Planner for optimized asset allocation.
Step 8: Additional Recommendations
Avoid Real Estate: Illiquid and high transaction costs make it unsuitable for your timeline.
Avoid Direct Investments: Opt for regular plans via mutual fund distributors guided by a CFP.
Diversify Investments: Explore international mutual funds for added growth.
Step 9: Incremental Contributions
Increase your SIP amount annually by 10-15% to align with income growth.
This ensures your corpus grows significantly over time.
Finally
Achieving financial independence by 50 is ambitious but achievable. Consistency in investments, inflation-adjusted growth, and regular reviews are critical. Focus on disciplined execution of the outlined plan for a secure and fulfilling retirement.

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x