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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 2025

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 09, 2025Hindi

Sir i am 66 years old and retired and have only one daughter married and settled. I have 2 grand children of 5 years and 3 years. I have equity shares of Rs.1.1 cr and a PMS of Rs.88 Lakhs. I have a monthly rental income of Rs.2.5 Lakhs net of taxes. Out of this i contibute SIP of Rs.75K per month for 5 years grandson and Rs.85K for 3 years Grand daughter since 2 years. My assets consists of one commercial bldg valued Rs. 5.5 cr and 2 houses valued at Rs.3 cr and a vacant plot 1.6 cr. I retain Rs.1 lakh per month for my monthly expenses and annual payments towards prooerty tax medical insurance and travels. My question will i be able to create Rs.5 cr for each of my grand children in 15 years with 5% increse in SIP every year. 2 years already completed. My 2nd question is whether our investment are in line and safe.

Ans: ? Strong Financial Foundation and Thoughtful Intentions

– You are showing great care for your grandchildren.
– The SIPs for their future are a strong step.
– Your assets provide a very stable base.
– Rental income of Rs. 2.5 lakh is excellent post-retirement support.
– Holding equity and PMS ensures potential long-term growth.
– Overall, your setup is solid and responsible.

? Review of Monthly SIPs Towards Grandchildren’s Goals

– Rs. 75K for the elder and Rs. 85K for the younger child is generous.
– With 5% annual increase, compounding will boost growth.
– Already two years of SIP is completed.
– That gives you 13 years more of investment time.
– This is a good horizon for equity-focused SIPs.
– With this strategy, Rs. 5 crore per child is achievable.
– But this depends on consistent equity returns over time.
– Market volatility is a factor, but time helps smoothen it.
– SIPs over 15 years usually reward with wealth creation.
– The rising SIP contribution every year also boosts target achievement.

? Portfolio Safety and Risk Allocation Assessment

– Equity shares of Rs. 1.1 crore are good for long-term growth.
– PMS of Rs. 88 lakh adds to the equity exposure.
– However, PMS requires monitoring.
– PMS also comes with higher fees and lower transparency.
– Direct equity too demands active watch and regular reviews.
– In retirement, active management adds stress and risk.
– Shifting some equity to mutual funds via MFD with CFP support is better.
– Actively managed mutual funds bring professional oversight.
– They offer smoother diversification and lower effort for retirees.

? Overexposure to Real Estate: A Review

– Real estate is illiquid and cannot be used quickly in emergencies.
– You own properties worth Rs. 10.1 crore.
– This is a huge chunk of total wealth.
– Commercial property, two houses, and a vacant plot is too much.
– Real estate requires maintenance, taxes, and time to sell.
– Rental income is fine, but too much dependency limits flexibility.
– Consider slowly reducing real estate exposure.
– Use the sale proceeds for safer, more liquid options.
– Use mutual funds aligned with specific goals.
– With the help of a Certified Financial Planner, this can be smooth.

? Emergency Planning and Liquidity Concerns

– You mentioned Rs. 1 lakh/month for expenses.
– But no liquid emergency fund is visible.
– At least 18 months of expenses should be parked separately.
– Keep Rs. 18 to Rs. 24 lakh in safe, low-risk instruments.
– Choose options that are not linked to market volatility.
– This ensures you don’t have to sell assets during downturns.
– Use short-term mutual funds through MFDs with CFP advice.

? Insurance Review for Risk Coverage

– You said annual payments include medical insurance.
– But coverage amount was not mentioned.
– At your age, at least Rs. 15 to 20 lakh health insurance is essential.
– Consider a super top-up plan if needed.
– Don’t let health expenses eat into investment goals.
– Also, review if the policy covers pre-existing conditions and has lifetime renewability.

? Rebalancing Need in Current Portfolio

– You are heavily skewed towards equity and real estate.
– Safe, non-market-linked investments are not visible.
– Rebalancing is needed to reduce risk.
– Allocation to low-risk options brings peace and stability.
– Retired life needs more predictable cash flow.
– Equity is good for growth, but you need balance too.
– Asset mix must suit your age and withdrawal needs.
– Allocate some equity to hybrid mutual funds.
– Balanced approach keeps safety and growth together.

? Reviewing the PMS Approach

– PMS charges are usually 2-2.5% annually.
– They may also take a performance-linked fee.
– These eat into your returns.
– PMS is suitable for very high-risk appetite individuals.
– Also, it lacks daily visibility and flexibility.
– Mutual funds through an MFD with CFP help are more transparent.
– These also allow easier goal tracking.
– Consider shifting some of the PMS corpus to mutual funds.
– This will make the portfolio more aligned to your gifting goals.

? Gifting Strategy and Tax Implications

– Gifts to grandchildren are not taxable in their hands.
– But growth from these investments will be taxed.
– Equity mutual funds: LTCG above Rs. 1.25 lakh taxed at 12.5%.
– STCG taxed at 20%.
– This applies even to investments for grandchildren.
– Plan the gift transfers through proper documentation.
– Joint holding or third-party SIPs in their name is possible.
– Consult a tax advisor to handle the mechanics smoothly.

? Ensuring Estate Planning and Legal Clarity

– You have multiple assets and long-term goals.
– Estate planning is very important now.
– Prepare a registered Will covering all assets.
– Mention clear allocations and ownerships.
– Include mutual funds, PMS, shares, and properties.
– This will avoid future disputes or confusion.
– Also consider creating a Trust if needed.
– Especially for minor grandchildren, Trusts offer smooth control.
– A Certified Financial Planner and lawyer can help draft this properly.

? Inflation-Proofing Your Grandchildren’s Corpus

– You aim for Rs. 5 crore per grandchild in 15 years.
– Inflation will reduce purchasing power.
– That means future education and living costs will be higher.
– Long-term equity SIPs help fight inflation.
– Continue with 5% annual step-up as planned.
– This keeps investments ahead of inflation.
– Reinvest dividends if any, to ensure compounding is not interrupted.

? Reviewing the Real Estate Strategy from Legacy Lens

– You have three large real estate assets.
– This is not easy to divide among two grandchildren.
– Property disputes happen often in such cases.
– Liquidity is a problem during asset division.
– Instead, slowly shift to financial assets.
– Mutual funds or bonds are easier to transfer.
– They are clean, transparent, and hassle-free.
– Legacy planning becomes smoother when assets are financial.
– Discuss a phased exit plan from real estate with a Certified Financial Planner.

? Child-Specific Investment Strategy

– Since the children are minors, use guardian accounts.
– SIPs can be in their name with you as guardian.
– Choose child-oriented mutual funds for better structure.
– These come with lock-ins and purpose alignment.
– You can also use diversified equity mutual funds.
– Avoid investing in their name directly under direct plans.
– Regular plans through MFD + CFP offer better advice and clarity.
– MFDs with CFP certification provide goal-linked fund tracking.
– Direct funds do not offer regular reviews and behavioural coaching.

? Monitoring and Rebalancing Your Investment

– Once a year, review SIP progress.
– Check if fund performance is consistent.
– Replace underperformers if needed.
– Review risk levels with your Certified Financial Planner.
– Make small shifts based on market cycle.
– Don’t stop SIPs during market falls.
– In fact, falling markets add more units.
– That helps the SIP strategy work better.
– Use periodic rebalancing to keep portfolio in shape.

? Finally

– Your goal of Rs. 5 crore per grandchild is very possible.
– The SIP structure and 5% step-up are well planned.
– Continue this discipline for another 13 years.
– Review PMS, direct equities, and real estate exposure.
– Shift to more mutual funds with CFP advice.
– Create a robust Will and Trust structure.
– Protect health and emergency fund needs.
– You’ve done very well so far.
– With a few tweaks, your strategy will be even stronger.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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