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Ramalingam

Ramalingam Kalirajan  |10071 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 08, 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
Parthasarathi Question by Parthasarathi on Jul 07, 2025Hindi
Money

I am 67 years retired with no liabilities. Both the children are well settled. My two SIPs @5000 each, for 5 years will mature in March 2026.How I can employ the maturity amount to increase my monthly income?

Ans: At 67 years, being debt-free and having settled children is wonderful. You also have two SIPs running for five years, maturing in March 2026. That shows disciplined planning. Now your focus is to use this maturity to increase monthly income. Let's understand the most efficient and structured way forward.

Understanding Your Current Financial Situation

Age: 67 years, fully retired.

Liabilities: None. Financially independent. That’s excellent.

Children: Well settled. No further responsibility.

SIPs: Two SIPs of Rs.5000 each, total Rs.10,000/month.

Investment Horizon: 5 years, maturing March 2026.

Objective: Generate steady monthly income after SIP maturity.

You have built your base. Now the goal is monthly stability. Let’s assess how to deploy this future corpus effectively.

Assessing Your Needs and Priorities First

Before investing the maturity, it’s important to assess the following:

Monthly expenses: What is your average monthly cost?

Medical expenses: How much is set aside for health needs?

Emergency fund: Do you have 6 to 12 months’ expenses kept safely?

Risk comfort: Are you okay with some market fluctuations?

Tax slab: Which tax bracket are you in?

These help choose the right investment for income. Not all options suit everyone. Your income plan should match your comfort and safety.

Estimate Your SIP Maturity Value

Each SIP is Rs.5000 for 5 years. So, total investment is Rs.6 lakhs.
Returns over 5 years may range from 8% to 12%, depending on fund performance.
So maturity could be between Rs.7.5 lakhs to Rs.8.25 lakhs.
This is a healthy lump sum to plan income generation.

What Should You Not Do With the Maturity?

Some people make common mistakes after maturity. Avoid these:

Do not keep the full money in savings account. Very low interest.

Avoid putting entire amount in fixed deposits. Not tax efficient.

Do not fall for annuity products. They are rigid and low-yielding.

Don’t invest in real estate for rental income. It needs maintenance and effort.

Avoid investing directly in stocks at this stage. Risk is high.

Also, do not go for index funds. They do not provide better risk-adjusted returns.
Index funds just copy the market. They lack smart strategy.
You need expert-managed active funds to ensure smart allocation.
They manage risk better and aim to beat inflation.

Choose Actively Managed Mutual Funds Only

Avoid index funds, as they offer only average performance.
You need consistent returns, not average returns.
Actively managed funds adjust according to market conditions.
They give potential for better returns even during volatility.
They also align better with income-generation strategy.

Avoid direct mutual fund plans. They look cheaper, but offer no guidance.
At this age, guidance is more important than cost saving.

Regular mutual funds through MFD with CFP support are better.
You get:

Personalised strategy based on your needs.

Ongoing monitoring and rebalancing.

Emotional support during market changes.

Better goal-based tracking.

Fees in regular plans ensure accountability and hand-holding.
Especially useful in post-retirement years.

How to Use the Maturity Corpus to Get Monthly Income

Once SIP matures in March 2026, follow this step-by-step method:

Step 1: Keep Emergency Fund Ready

Set aside Rs.1.5 lakh in liquid mutual fund or sweep FD.

It should cover 6 months' expenses.

Easy to withdraw. No penalties or charges.

Step 2: Invest in Hybrid Mutual Funds

Use a part of corpus in monthly income-type hybrid funds.

These funds have equity and debt mix.

They give regular dividend or SWP options.

Less risky than full equity. Better than FD returns.

Step 3: Start a SWP (Systematic Withdrawal Plan)

From April 2026, start monthly SWP.

Withdraw fixed amount every month from the invested fund.

SWP is more tax-efficient than FD interest.

Choose only after consulting a CFP to align with your tax bracket.

Step 4: Use Laddering Strategy for Debt Mutual Funds

Invest part of the corpus in 3-5 short term debt funds.

Set maturity at different intervals like 1 year, 2 years, 3 years.

Use each fund maturity to top-up your SWP or meet future expense.

This gives both income and liquidity.

Step 5: Reinvest Any Surplus

If your monthly income is more than enough, don’t keep surplus idle.

Reinvest in short term mutual funds or hybrid funds.

Let the unused money grow slowly.

Important Tax Rules You Must Know

As per new rules from April 2024:

Equity MF SWP:
Gains above Rs.1.25 lakh yearly are taxed at 12.5%.
If sold before 12 months, taxed at 20%.

Debt MF SWP:
Gains taxed as per your income tax slab. No LTCG benefit now.

So plan your SWP carefully.
Withdraw only the required amount monthly.
Take help from a Certified Financial Planner to manage tax outgo.

Diversify Your Income Sources

It’s best not to rely only on one income source.
Use multiple mutual fund types to spread the risk.

Hybrid Funds with SWP – for monthly cash flow.

Short Duration Funds – for near-term needs.

Liquid Funds – for emergencies.

Avoid annuities. They offer low return and no flexibility.
You lose control of your money once you invest.
Mutual funds offer better control, flexibility and liquidity.

Review Your Insurance Needs

Health insurance is vital at this age.
Make sure you have a personal health policy, not just corporate one.
Also check if any top-up plans are needed.
Keep all documents accessible to your children.

Do not hold LIC endowment or ULIP policies now.
If you have any, review returns.
If it gives less than 6% return, surrender it and shift to mutual funds.

Discuss With Your Family

Share your investment plan with your children.

Keep one nominee updated and trustworthy.

Maintain a list of investment documents and policy details.

Your income plan should work even in your absence.
Ensure family knows where and how to access it.

Financial Planning Should Be Ongoing

Even after retirement, planning is not over.
Every year review your income and expenses.
Rebalance portfolio with help of Certified Financial Planner.
This helps optimise returns and manage risk.

Also update your will if not done already.
Keep all instructions simple and documented.

Finally

You have done a great job by staying financially disciplined.
Now it’s time to use your maturity amount smartly.
Avoid locking full funds in rigid options like annuities or FDs.
Avoid real estate due to high effort and low income yield.
Don’t go for index funds or direct funds to save cost.
Instead, use hybrid and debt mutual funds with SWP.
Plan tax-friendly and flexible income with support of Certified Financial Planner.
Keep some funds for emergencies and medical needs.
Reinvest surplus so that your wealth keeps working for you.

This ensures monthly income with safety, growth, and peace of mind.

Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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  |10071 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 12, 2024

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Hi Joshi Ji, I am 42 years male and having no such exposure in SIP or any other growth funds. Kindly suggest me in which way I can invest at least 35 k/month to generate maximum corpus for my retirement and 20 k/month for my kid's higher education. I have one son and he is currently in class 6th. I have some (approx 50 k/yearly) insurance linked investment rest PF and term insurance, son's tution fees generally fulfill the income tax related requirement. Kindly suggest how to plan my finances. I am seriously feeling that I am late at my financial planning but want to leap it from hereon.
Ans: Dear Sanjay,

Thank you for reaching out for financial advice. It's commendable that you're taking proactive steps towards planning your finances, even if you feel you're starting later than desired. With careful planning and disciplined investing, you can still work towards achieving your financial goals.

Given your objectives of building a corpus for retirement and your child's higher education, here's a suggested plan:

Retirement Planning:

Start investing ?35,000 per month in mutual funds through SIPs targeting retirement. Allocate funds across diversified equity mutual funds to maximize growth potential over the long term.
Consider funds that align with your risk tolerance and investment horizon. Since you're starting relatively late, you may need to take a slightly higher risk to accelerate wealth accumulation.
Regularly review your investment portfolio and adjust asset allocation as needed based on changing market conditions and your evolving financial situation.
Child's Higher Education:

Allocate ?20,000 per month towards building a corpus for your child's higher education.
Invest this amount in a mix of equity and debt mutual funds to balance growth potential with stability. Since your child is in class 6th, you have approximately 6-10 years until higher education expenses arise. You can afford to take a moderate risk with this investment.
Monitor the performance of the funds regularly and make adjustments as needed to stay on track towards your goal.
Insurance and Other Investments:

Continue with your existing insurance-linked investments, PF contributions, and term insurance. Ensure that you have adequate coverage to protect your family's financial future in case of unforeseen events.
Utilize tax-saving investment options such as ELSS (Equity Linked Savings Scheme) mutual funds to optimize tax benefits while building wealth.
Regular Financial Review:

Schedule regular financial reviews with a qualified financial advisor to assess your progress, make necessary adjustments, and ensure that you're on track to meet your financial goals.
Take advantage of any surplus income or windfalls by channeling them towards your investment goals to accelerate wealth accumulation.
Remember, it's never too late to start planning for your financial future. By staying committed to your goals, investing wisely, and seeking professional guidance when needed, you can achieve financial security and provide for your family's needs.

Best regards,

Ramalingam, MBA, CFP
Chief Financial Planner

..Read more

Ramalingam

Ramalingam Kalirajan  |10071 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Feb 20, 2024Hindi
Money
I m 49yrs, investing in SIP since 2019, started with Rs.10k/month, now Rs.20k/month. This month invested Rs.10lk in 4 equity linked MFs with 50% in liquid fund for 6months. Expecting Rs.43lks from PPF by 2031. How should I go further to have monthly income of Rs.2lk after 60yrs of age OR any other suggestion ylto have better corpus accumulation for retired life after 60yrs of age?
Ans: Thank you for sharing your financial journey and goals. Let’s create a plan to help you achieve a monthly income of Rs 2 lakhs after the age of 60 and accumulate a substantial retirement corpus.

1. Current Financial Situation and Goals
You are currently 49 years old and have been investing in SIPs since 2019. Your current SIP investment is Rs 20,000 per month. You recently invested Rs 10 lakhs in four equity-linked mutual funds, with 50% in a liquid fund for six months. You expect Rs 43 lakhs from your PPF by 2031.

Your primary goals are:

Achieving a monthly income of Rs 2 lakhs after 60.
Accumulating a substantial retirement corpus for a comfortable life post-retirement.
2. Analyzing Your Investments
SIP Investments
SIP investments are a great way to build a corpus over time. With Rs 20,000 per month, you are already on the right path. SIPs help in averaging out market volatility and building wealth over the long term.

Lump Sum Investment
You have invested Rs 10 lakhs in equity mutual funds, with half in a liquid fund. This strategy provides growth potential while ensuring liquidity for short-term needs.

PPF
Your PPF account is expected to yield Rs 43 lakhs by 2031. PPF is a safe investment with tax-free returns, which is excellent for long-term goals.

3. Creating a Retirement Corpus
Calculate the Required Corpus
To achieve a monthly income of Rs 2 lakhs post-retirement, you need to calculate the required retirement corpus. Assuming a life expectancy of 85 years and a withdrawal rate of 4%, you will need approximately Rs 6 crores at the age of 60.

Asset Allocation
Diversification across asset classes is crucial. Here’s a recommended asset allocation:

High-Risk Investments
Equity Mutual Funds: Continue investing in equity mutual funds for long-term growth. Increase your SIP amount annually by 10% to boost your corpus.
Medium-Risk Investments
Balanced Mutual Funds: These funds offer a mix of equity and debt, providing balanced growth with moderate risk.

Corporate Bonds: Invest in high-rated corporate bonds for steady returns with moderate risk.

Low-Risk Investments
Debt Mutual Funds: Invest in debt mutual funds for stable returns and lower risk.

Fixed Deposits and PPF: Continue investing in PPF for safe, tax-free returns. Consider fixed deposits for short-term needs.

4. Generating Monthly Income Post-Retirement
Systematic Withdrawal Plan (SWP)
An SWP allows you to withdraw a fixed amount from your mutual fund investments regularly. This provides a steady income while keeping your principal invested for growth.

Dividend-Paying Mutual Funds
Invest in mutual funds that offer regular dividends. This provides an additional income stream.

Interest from Debt Investments
Interest from fixed deposits, corporate bonds, and debt mutual funds can provide a stable income post-retirement.

5. Additional Considerations
Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of your expenses. This should be easily accessible and invested in liquid instruments like savings accounts or liquid mutual funds.

Tax Planning
Opt for tax-efficient investments to minimize your tax liability. ELSS funds offer tax benefits under Section 80C, while PPF provides tax-free returns.

Regular Portfolio Review
Review your portfolio annually to ensure it remains aligned with your goals and risk tolerance. Rebalance your portfolio as needed to maintain the desired asset allocation.

6. Steps to Achieve Your Goals
Increase SIP Investments: Gradually increase your SIP amount by 10% annually to build a larger corpus.

Diversify Investments: Allocate your investments across equity, balanced, and debt mutual funds for diversification.

Invest Lump Sums Wisely: When you have additional funds, invest them in a mix of equity and debt instruments.

Utilize PPF Wisely: Continue contributing to PPF for safe, tax-free returns.

Plan for Monthly Income: Use SWPs, dividend-paying funds, and interest from debt investments to generate a steady post-retirement income.

Maintain an Emergency Fund: Ensure you have sufficient liquidity to handle emergencies without disrupting your investment strategy.

Tax Planning: Invest in tax-efficient instruments and utilize tax benefits to optimize your returns.

Regular Reviews: Review and rebalance your portfolio annually to stay on track with your goals.

Conclusion
You are on a commendable path towards building a substantial retirement corpus. By increasing your SIP investments, diversifying your portfolio, and planning for a steady post-retirement income, you can achieve your financial goals. Regularly review your portfolio and make adjustments as needed to stay aligned with your objectives.

Investing wisely today will secure your financial future and ensure a comfortable and fulfilling retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |10071 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 06, 2024

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Dear sir/madam, I am 36 years old, and have minimal corpus of ~50 lakhs across MFs, and EPF. I am currently maintaining a monthly SIP of 50k. I am looking to generate a monthly income of 6 lakh post retirement. I am also expecting child education and marriage expenses of ~3Cr. Along the way. Any recommendations for new or alternate investments, increase in SIP amount, etc.?
Ans: Firstly, congratulations on your diligent approach to financial planning. Your commitment to investing through SIPs and building a corpus for your future needs is commendable.

Considering your age, current corpus, and future financial goals, it's crucial to reassess your investment strategy to ensure it aligns with your objectives. Here are some recommendations and considerations to help you navigate your financial journey:

Assessing Current Investments:
Review the performance of your existing MFs and EPF to determine if they are delivering the expected returns.
Evaluate the diversification and risk profile of your portfolio to ensure it's well-balanced and aligned with your risk tolerance.
Increasing SIP Amount:
Given your goal of generating a monthly income of 6 lakhs post-retirement, you may need to increase your SIP amount to accelerate wealth accumulation.
Consider gradually increasing your SIP contributions over time, taking into account your income growth and affordability.
Exploring New Investment Avenues:
Look beyond traditional investment avenues and explore alternative options such as debt funds, equity-linked savings schemes (ELSS), and balanced funds.
Evaluate the potential of adding new investment avenues like direct equities, PPF, or NPS to diversify your portfolio and enhance returns.
Planning for Child's Education and Marriage:
Estimate the future expenses for your child's education and marriage and start setting aside funds specifically for these goals.
Consider investing in child education-oriented mutual funds or setting up dedicated SIPs to accumulate the required corpus over time.
Seeking Professional Guidance:
Consider consulting with a certified financial planner to get personalized advice tailored to your specific financial situation and goals.
A financial planner can help you develop a comprehensive financial plan, optimize your investment strategy, and navigate any uncertainties along the way.
Remember, financial planning is a dynamic process that requires periodic review and adjustments. Stay disciplined, stay informed, and keep your long-term goals in sight. With careful planning and prudent decision-making, you can build a secure financial future for yourself and your family.

..Read more

Ramalingam

Ramalingam Kalirajan  |10071 Answers  |Ask -

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

Asked by Anonymous - Jul 09, 2024Hindi
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Money
Hello Sir, I am 25 years old.I am investing 23,000 Evey month in MF(60% in mid cap, 30% large cap and 10 to 15% around small cap). I will increase my SIP with my salary like if I got 15 to 20% hike. I want to increase my SIP accordingly. I want 20 crore of age of 45. Pls guide me. how can I achieve my Goal. My salary is 2 lakh per month!!!
Ans: You want Rs. 20 crores by age 45. This is a significant goal, but achievable with disciplined investing.

Current Investment Strategy
SIP Allocation
60% in mid-cap funds

30% in large-cap funds

10% in small-cap funds

Monthly Investment
Rs. 23,000 per month currently
Future SIP Increases
Plan to increase SIP with salary hikes
Evaluating Your Current Strategy
Mid-Cap Funds
Growth Potential: Mid-cap funds offer high growth potential.

Risk: They are riskier compared to large-cap funds.

Large-Cap Funds
Stability: Large-cap funds are stable and provide steady returns.

Lower Risk: Less volatile compared to mid-cap and small-cap funds.

Small-Cap Funds
High Growth: Small-cap funds can provide high returns.

High Risk: They are the most volatile.

Recommendations to Achieve Rs. 20 Crores
Increase SIPs Regularly
Annual Increases: Increase your SIPs by 15-20% annually.

Bonus Investments: Invest additional income from bonuses.

Diversify Your Portfolio
Balanced Approach: Consider adding debt funds for stability.

Reduce Risk: Balance high-risk investments with safer options.

Consider Actively Managed Funds
Expert Management: Actively managed funds can outperform index funds.

Regular Reviews: Ensure fund managers are adjusting to market conditions.

Avoid Direct Funds
Lack of Guidance: Direct funds lack professional guidance.

Benefits of Regular Funds: Investing through a Mutual Fund Distributor (MFD) with CFP credentials ensures expert advice.

Long-Term Investment Discipline
Stay Invested
Market Volatility: Do not panic during market downturns.

Long-Term Focus: Keep your focus on the long-term goal.

Rebalance Your Portfolio
Regular Reviews: Review your portfolio every six months.

Adjust Allocations: Rebalance based on performance and market conditions.

Tax Efficiency
Utilize Tax-Saving Instruments
ELSS Funds: Consider Equity Linked Savings Scheme for tax benefits.

NPS: National Pension System offers tax benefits and long-term growth.

Emergency Fund
Maintain Liquidity
Emergency Savings: Keep 6-12 months of expenses in a liquid fund.

Avoid Withdrawal: Do not dip into your SIP investments for emergencies.

Professional Guidance
Certified Financial Planner
Expert Advice: Consult a Certified Financial Planner for personalized strategies.

Regular Check-ins: Schedule regular reviews with your planner.

Final Insights
To achieve Rs. 20 crores by age 45, increase your SIPs regularly and diversify your portfolio. Balance high-risk investments with safer options and consider actively managed funds. Stay disciplined, review your portfolio regularly, and seek professional advice to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |10071 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 2025

Asked by Anonymous - Jul 06, 2025Hindi
Money
Dear Sir, My home loan is 24.5 LAC. And it's started from last year April 2024, my emi is 30,600 per month for 10 years, if i paid 10 LAC in Jan 2026 it will be beneficial for me or wait for sometime to pay pre closure amount
Ans: Your question is very timely and thoughtful.

You have already completed over one year of EMI payments.

You are also planning a Rs. 10 lakh prepayment in Jan 2026.

This shows strong discipline and intention to reduce debt early.

That is highly appreciated.

Let’s evaluate the benefit from all angles before making the decision.

Let’s assess your EMI schedule, tax benefits, interest savings, and liquidity needs.

We will also look at emotional peace, risk readiness, and overall financial health.

» EMI Tenure and Loan Progress

– Your loan began in April 2024. EMI is Rs. 30,600 for 10 years.

– By Jan 2026, you would have paid 21 EMIs. That is nearly 2 years of repayment.

– You would still have around 99 EMIs pending after Jan 2026.

– Most interest is paid in the first few years. That’s how home loan schedules work.

– So prepayment at this stage can save you substantial interest.

– But, the benefit must be compared with your other financial needs.

– This is not only about saving interest. It is about holistic financial planning.

» Interest Cost Evaluation and Savings Opportunity

– Your home loan interest rate is not mentioned. But let us assume a normal range.

– Most floating-rate loans now charge 8.5% to 9.5% annually.

– Prepaying Rs. 10 lakhs will reduce the outstanding principal sharply.

– As a result, the total interest over the loan period will reduce.

– You may save many lakhs over the long term by doing this early prepayment.

– You will also reduce your EMI period or future EMI amount.

– That helps you become debt-free faster.

– But, timing matters. January 2026 is still over 5 months away.

– You must consider where that Rs. 10 lakhs is now kept.

– Is it earning anything? If kept idle in savings, it gives low returns.

– In that case, prepayment gives better value.

– But if it is growing in mutual funds or long-term instruments, returns may be higher.

– Compare this interest cost versus what you earn from that Rs. 10 lakh.

– You must also think about safety, peace of mind, and future stability.

» Tax Benefits on Home Loan and Prepayment Impact

– Under Sec 24(b), you get deduction of up to Rs. 2 lakhs on home loan interest.

– This reduces your taxable income. Helps especially if you are in the 20% or 30% slab.

– Also, under Sec 80C, you get Rs. 1.5 lakh deduction for principal.

– But that Rs. 1.5 lakh 80C is usually covered by EPF, PPF, insurance, ELSS, etc.

– If you prepay Rs. 10 lakh, your interest in future years may fall.

– Then, the Rs. 2 lakh interest deduction under Sec 24(b) may not be fully used.

– But remember, you are spending Rs. 10 lakhs to save Rs. 2-3 lakhs of tax.

– That alone should not decide the choice.

– Interest saved is usually more than tax benefit lost in the long run.

– Prepayment still makes sense. But only if you are not compromising other goals.

– Always assess tax benefit as a secondary aspect, not the main reason.

» Your Liquidity and Emergency Readiness

– The biggest question is: Will you have enough money left after prepayment?

– Will you still have emergency funds of 6 to 12 months of expenses?

– Will you have cash for job loss, health issues, or family needs?

– Rs. 10 lakh is a big amount. Once paid, you cannot get it back easily.

– Banks do not refund prepayments. So you must be ready for cash crunch.

– If you have other liquid savings of at least Rs. 3 to 5 lakhs, then it is safe.

– But if this Rs. 10 lakh is your full backup, wait before prepaying.

– You must not become asset-rich but cash-poor.

– Also, do not disturb investments set for your long-term goals.

– Check how your mutual funds, PF, PPF, child goals, and retirement are aligned.

– Your financial safety net should never be at risk due to a home loan prepayment.

» Emotional Peace and Debt Reduction Mindset

– Paying off loans early gives peace of mind.

– Mentally, it feels lighter to reduce your EMI burden.

– For many families, freedom from loans matters more than returns from investment.

– If this Rs. 10 lakh is not required for your next 5 years, then prepaying is peaceful.

– But if the same money is helping you sleep better by keeping it in hand, wait.

– Your comfort and security are more important than any math.

– Financial planning is not only numbers. It is also emotional readiness.

– A good Certified Financial Planner balances both head and heart.

– If you feel better seeing lesser EMIs or faster closure, then go ahead with prepayment.

– If you fear losing liquidity or missing opportunities, then wait.

– In either case, the aim is to stay financially strong, not just interest-efficient.

» Other Choices to Use That Rs. 10 Lakh

– If you are not fully prepared for long-term goals, this Rs. 10 lakh may help.

– Retirement corpus, child education, spouse goals — all need investment.

– If those are underfunded, invest this Rs. 10 lakh in mutual funds.

– But not in index funds or direct funds.

– Index funds may look cheap, but they follow the market blindly.

– They underperform in volatile or sideways markets.

– Actively managed mutual funds by experienced managers adapt better.

– Direct funds also seem cheaper on surface.

– But there is no support, guidance, or review.

– Regular plans through a qualified MFD with CFP guidance add long-term value.

– The extra 0.5% cost gives better selection, periodic review, and mistake-avoidance.

– That brings better return than direct, unmanaged investing.

– So if you delay prepayment, don’t keep that Rs. 10 lakh idle.

– Put it to work through a long-term, diversified, tax-aware mutual fund portfolio.

– Match it to your goals, age, and risk appetite.

– Use only debt funds for less than 3 years. Use equity for more than 5 years.

– Also follow the updated capital gains tax rules now in force.

– These will apply when you exit mutual funds later.

– If this Rs. 10 lakh is not required in near future, investing may grow your wealth.

– If this feels unsafe, then home loan prepayment is still a good call.

» Ideal Approach Based on Situation

– If you have no major upcoming expense, then early prepayment is useful.

– If your emergency fund is untouched, then this move is secure.

– If your long-term goals are already funded, prepayment clears debt faster.

– If interest rate is above 9%, prepayment becomes even more beneficial.

– If job is stable and no income interruption is foreseen, go ahead.

– But if any of these are weak or uncertain, do not hurry.

– Wait for 6-12 months. Observe how rates, income, and expenses move.

– Meanwhile, invest that Rs. 10 lakh in a short-term fund with liquidity.

– Let that money earn better than savings account.

– If situation remains strong by Jan 2026, you may prepay with full confidence.

– Else, you can decide again at that point based on comfort and readiness.

– Either way, you are still progressing.

– Both options — prepayment or investing — are productive, if handled with thought.

» Finally

– You are thinking in the right direction. That’s the best start already.

– You are not ignoring the EMI burden. You want to plan ahead.

– That is very encouraging.

– Do not feel forced to prepay or delay.

– The right answer depends on your comfort, liquidity, and goals.

– Early prepayment is good if your financial base is ready.

– But there is no harm in waiting a few more months and reassessing.

– Peace and clarity are more important than urgency.

– You can also take part prepayment route. Pay Rs. 5 lakh in Jan 2026.

– Keep another Rs. 5 lakh for emergency or mutual fund.

– That brings the best of both.

– Stay debt-free, but also stay liquid and goal-focused.

– A Certified Financial Planner can help you model both paths and take balanced action.

– The right move is one that fits your full financial picture — not just the EMI part.

– Keep going strong.

– You are already ahead of many by asking this question today.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |10071 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 2025

Asked by Anonymous - Jul 05, 2025Hindi
Money
I am 35yrs old and my monthly salary is 75k. I am married and I have family health insurance of 10 lakhs, I have a daughter and a son and we are expecting the third child in the month of December. I have started with SIP of 1k 3 months back. I am taking mortgage loan of 30 lakhs on the house for 13 % interest from IIFL kindly suggest me to utilise the loan amount properly in various ways possible to invest. I am planning to utilise for the coaching centre development and 10 lakhs is taken for my brothers kidney transplant treatment expenditure.
Ans: – You are managing family, career, and investments together.
– Starting SIP early is a very positive step.
– Taking responsibility for your brother’s treatment shows great strength.
– Planning coaching centre development is a wise idea.
– Having family health cover is also a good base already.

» Analysing the Loan and Its High Interest Rate

– Rs. 30 lakhs loan at 13% interest is quite costly.
– This means high EMI and high total interest outgo.
– Every rupee must be used carefully to avoid wastage.
– Unused funds from the loan must not sit idle.
– Interest burden will continue regardless of usage.

» Immediate Medical Emergency for Brother

– Rs. 10 lakhs for kidney transplant is necessary and unavoidable.
– Keep this amount fully liquid and easily accessible.
– Use savings account or short-term ultra-safe debt fund.
– Avoid locking this amount in business or market-linked funds.
– Medical treatment should be done on priority basis.

» Business Development – Coaching Centre Use

– This is an opportunity for future income growth.
– Plan expansion only after checking location demand.
– Avoid spending large amount at once.
– Phase out business investments over 6 to 12 months.
– Start with essentials like rent, furniture, and staff salary.
– Don’t overspend on branding or decoration initially.
– Use part of loan in setting up technology and marketing.
– Focus on breakeven as early as possible.

» Avoid Spending Full Loan Immediately

– You are not forced to use all Rs. 30 lakhs now.
– Keep a part of loan in low-risk parking place.
– Use short-term debt fund or liquid fund with no exit load.
– Withdraw when business or medical needs arise.
– Don’t allow funds to lie in savings account earning low interest.

» Do Not Use Any Amount for Consumption

– Don’t use loan money for personal luxury or lifestyle.
– No electronics, jewellery, or vehicles from this loan.
– You are paying 13% interest, use it only for value creation.
– Avoid giving any part of the loan to others as casual support.

» Managing EMI Alongside Household Budget

– EMI on Rs. 30 lakhs at 13% will be heavy.
– Your Rs. 75k salary will face pressure from EMI, SIP, and family.
– Keep fixed monthly expenses under tight control.
– Review all regular spends and cut non-essentials.
– Prioritise needs over wants for the next 2–3 years.
– Increase SIP only once your EMI is manageable.

» Continue SIP with Discipline

– Though amount is small, your SIP builds wealth habit.
– Don’t stop SIP even if budget becomes tight.
– Increase SIP slowly as income rises.
– Choose actively managed funds, not index funds.
– Index funds don’t protect during market fall.
– Active funds adjust to changes and give better protection.

» Direct Funds Are Not Ideal for You

– Avoid investing in direct mutual funds.
– You get no personalised support or guidance there.
– Wrong decisions can damage long-term wealth.
– Invest via regular plans with an MFD and CFP.
– Get full-time advice, updates, and goal tracking help.

» Emergency Fund is Missing

– You must keep Rs. 1–2 lakhs aside for emergencies.
– This should not come from loan amount.
– Build this over next few months from salary savings.
– Use high-liquidity options like liquid mutual funds or sweep FD.

» Child-Related Future Expenses

– You are expecting third child soon.
– Future expenses like education and health will increase.
– Avoid touching SIP or business funds for school fees.
– Plan separate SIPs for kids’ education goal later.
– Maintain health insurance with maternity cover wherever possible.

» Keep Personal and Business Accounts Separate

– Don’t mix business and personal funds.
– Create a separate bank account for coaching centre.
– Record all income and expense in simple format.
– Use business income to slowly repay loan too.

» Loan Repayment Should Be a Priority

– Try to repay part of loan early if possible.
– Business profit can be used to prepay some part.
– Even Rs. 2–3 lakhs paid early will reduce interest burden.
– Don’t wait for full term of loan.
– Avoid taking another loan till this one is cleared.

» Don’t Invest Remaining Loan in Risky Options

– Don’t try to grow loan money via equity investments.
– You are paying 13% interest.
– Most equity returns are not guaranteed and are market linked.
– If returns go down, you still pay full interest.
– Use loan only for fixed needs like business or treatment.

» Avoid Insurance-Cum-Investment Products

– Don’t use loan money for buying ULIPs or endowment plans.
– They give poor returns and lock your money.
– They mix insurance with investment, which is harmful.
– If you already hold such plans, review and consider surrender.
– Use that money in good mutual funds for better results.

» Long-Term Financial Strategy After Loan Use

– Once business is running, start surplus-based SIPs.
– Create specific SIPs for child education and retirement.
– Review insurance needs again after third child is born.
– Don’t over-rely on health cover from employer.
– Take term insurance separately for family safety.

» Monitoring and Support

– Review all goals every 6 months.
– Track loan balance, business income, SIP growth.
– A CFP can support you across all financial areas.
– Work with MFD for implementation and fund advice.

» Finally

– You are taking bold and smart steps under pressure.
– Rs. 10 lakhs for brother’s health is unavoidable.
– Use it only for that and keep it liquid.
– Use balance money gradually for coaching centre.
– Don’t spend full Rs. 30 lakhs in one go.
– Avoid luxury or emotional spending with loan money.
– Keep EMI low by avoiding misuse of loan.
– Continue SIP without fail.
– Avoid index funds and direct funds.
– Use only actively managed mutual funds through MFD.
– Repay loan as early as possible.
– Start new SIPs once income improves.
– Maintain strong financial habits and discipline.
– Your future will surely improve with right planning.

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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