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Ramalingam Kalirajan |10924 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 03, 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 - Sep 01, 2025Hindi

To add to my below information i have been investing in PPF and SIP but i dont any kind of huge investment or money accumulated but struggling and trying to bakance it all . I want you to suggest something which would help for my retirement and also balance paying debts. Now i also satrted keeping a small amount like 3000 aside for emergency funds

Ans: – You have started SIPs and PPF with commitment.
– Keeping Rs.3000 aside for emergencies is a wise step.
– Balancing debt, savings, and family needs is never easy.
– Still, you are showing discipline which deserves respect.

» Understanding Your Struggle
– You feel that no big wealth has accumulated yet.
– That is normal in the early years of investing.
– Compounding shows magic only after 10–15 years.
– First phase feels slow, but progress builds over time.
– Patience and consistency are the real wealth creators.

» Present Position
– You have investments in PPF and mutual funds.
– You have started emergency fund now.
– You also carry some debts that need attention.
– You are trying to balance many goals together.
– This requires a 360-degree strategy.

» Importance of Emergency Fund
– Emergency fund acts like financial oxygen.
– Rs.3000 saving is a good start.
– Slowly increase it to cover six months of expenses.
– Keep it in FD or liquid mutual funds.
– This fund avoids sudden borrowing during crisis.

» Debt vs Investment Balance
– Debt repayment looks urgent but needs strategy.
– Aggressive repayment may reduce investment growth.
– Controlled EMI with parallel investing builds long-term wealth.
– Remember, debt is temporary but retirement is permanent.
– Prioritise both in balance, not one over other fully.

» Why Not Focus Fully on Loan Repayment
– Loan interest is usually lower than equity growth.
– If you prepay, money gets locked in asset.
– No liquidity benefit after prepayment.
– Continuing EMI and parallel investing creates bigger corpus.
– Tax benefits on loan interest also reduce cost.

» Value of Retirement Planning
– Retirement is a non-negotiable goal.
– You cannot borrow for retirement needs.
– PPF is good but slow to grow.
– Equity mutual funds create faster wealth.
– Small increase in SIP every year boosts corpus.

» Issues with Overdependence on PPF
– PPF gives safety but low returns.
– Interest rate changes with government rules.
– Returns may not beat inflation over 25 years.
– For retirement, equity funds are essential.
– Mix of safe and growth assets is better.

» Importance of Equity Mutual Funds
– Equity funds give inflation-beating growth.
– They provide long-term compounding.
– Actively managed funds are better than index funds.
– Fund managers adjust portfolio to market shifts.
– Active management controls risks during market falls.

» Why Avoid Index Funds
– Index funds only copy the market.
– They don’t try to reduce downside risks.
– During market fall, you fall equally with index.
– No human judgement to safeguard returns.
– Actively managed funds outperform with smart allocation.

» Direct Funds vs Regular Funds
– Direct funds may look cheap on paper.
– But they need regular monitoring and research.
– Small mistakes can destroy returns.
– Without proper tracking, you exit at wrong time.
– Regular funds through Certified Financial Planner give guidance.
– CFP hand-holds you in tough market phases.
– That extra support saves you from emotional decisions.

» Building a Systematic Retirement Corpus
– Increase SIP every year as income grows.
– Continue PPF for safety and tax savings.
– Keep NPS or other pension-focused tools as side support.
– Build equity exposure as the core engine.
– Diversify across different categories of funds.
– Review portfolio once every year with a CFP.

» Managing Lifestyle and Expenses
– Control lifestyle creep as income grows.
– Direct extra income towards SIP step-ups.
– Avoid large new loans unless necessary.
– Small adjustments in expenses free up investment money.
– Over years, this adds up to a huge difference.

» Protecting Family with Insurance
– Ensure adequate term insurance cover.
– Cover should be at least 15 to 20 times income.
– This protects family goals if something happens.
– Without this, retirement planning will collapse under risk.

» Tax Rules and Impact on Planning
– Equity mutual fund gains are taxed.
– LTCG above Rs.1.25 lakh taxed at 12.5%.
– STCG taxed at 20%.
– Debt mutual fund gains taxed as per income slab.
– With proper planning, tax outgo can be managed.
– Balanced investing provides both growth and tax efficiency.

» Avoiding Overfocus on Gold or Silver
– Gold looks attractive but it is cyclical.
– It doesn’t provide dividends or interest.
– Long-term, equity beats gold growth.
– Small gold allocation is fine but not major.
– Your retirement cannot depend on gold.

» Emotional Side of Money
– Sometimes you feel progress is slow.
– Comparison with others creates frustration.
– Remember, each financial journey is unique.
– You are building a strong base.
– Compounding rewards patience, not impatience.

» Practical Step-by-Step Path
– Build emergency fund to six months’ expenses.
– Continue EMI and don’t prepay aggressively.
– Increase SIP amount every year with salary hikes.
– Keep PPF and NPS for safety and tax savings.
– Build equity SIPs as the main retirement driver.
– Review plan every year with Certified Financial Planner.

» Role of Certified Financial Planner
– CFP ensures you don’t take wrong turns.
– They align investments with your exact goals.
– They balance safety and growth properly.
– They guide during market corrections.
– This discipline helps you reach retirement target confidently.

» Finally
– You have taken correct first steps already.
– Progress feels slow, but it will accelerate soon.
– Balancing debt and investment is wise, not weakness.
– Equity mutual funds will power your retirement.
– PPF and NPS will provide safety.
– Emergency fund will give you confidence.
– Stay consistent, increase SIP, and protect with insurance.
– In long run, this strategy ensures a secure retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

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