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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 04, 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 10, 2025Hindi

Hi sir My age is 27yrs I'm having 23L in mutual fund Gold worth 8L But I'm having loan of 39L (intrest rate 11%) What will be your suggestion for me In next 3 yrs I have to my marriage and my sister marriage is also pending In sister marriage due to dowry I have to arrange 20L Please guide me

Ans: You have done very well by saving Rs 23 lakh in mutual funds at just 27 years. That shows commitment and responsibility. Holding gold worth Rs 8 lakh also shows your understanding of asset diversification. Your awareness of upcoming responsibilities is impressive.

However, a Rs 39 lakh loan at 11% interest is a heavy burden. Dowry and two weddings in three years will need careful planning. Let us create a practical and complete action plan.

» Understanding Your Current Financial Status

– Age: 27 years. So you have time to plan ahead.

– Mutual fund holding: Rs 23 lakh. This is your biggest asset.

– Gold holding: Rs 8 lakh. May not be fully liquid but has some value.

– Loan: Rs 39 lakh at 11%. This means high interest outgo.

– Upcoming goals: Your marriage and sister’s marriage within 3 years.

– Dowry requirement: Rs 20 lakh. This is time-bound and unavoidable.

– Your cash flow, EMI burden, and savings rate are not shared. But we will still suggest accordingly.

» High-Interest Loan: A Major Wealth Destroyer

– 11% loan is very costly.

– Interest cost over time can eat away returns from mutual funds.

– Holding investments while servicing high-cost debt is not efficient.

– Every month, loan interest is rising faster than mutual fund returns.

– So, repaying loan should be your first priority.

– Delaying repayment will keep compounding interest burden alive.

– Partial prepayment also helps. Don’t wait for full amount.

– Review loan terms. Try negotiating with lender for lower rate.

– Avoid investing fresh money until you reduce debt.

» Suggested Use of Existing Assets

– Mutual funds: Rs 23 lakh. Can be partially liquidated.

– Prioritise redeeming low-return or short-term funds first.

– Redeem equity funds with short-term goals in mind.

– Consider exiting funds with lower return consistency.

– Don’t redeem all at once unless necessary.

– Start with Rs 10–15 lakh partial repayment towards the loan.

– This will lower your EMI or tenure. Both will save interest.

– Keep Rs 8–10 lakh invested in strong-performing mutual funds for wealth creation.

– Continue SIPs only if they don’t hurt cash flow after EMI and savings.

– Redeem funds through MFD. Avoid direct fund redemption.

» Why You Should Not Use Direct Mutual Funds

– Direct funds look cheaper but offer no guidance.

– Without expert advice, you may sell the wrong fund at the wrong time.

– A Certified Financial Planner-backed MFD guides better.

– They help prioritise redemption, rebalancing, and tax planning.

– Also ensure goal alignment, which DIY investors often miss.

– Regular plan via MFD ensures discipline, goal clarity, and peace.

– So, avoid direct funds completely.

» Role of Gold in Current Situation

– Gold gives emotional and traditional value.

– But it is not a strong liquid emergency asset.

– You may keep Rs 3–4 lakh worth of gold for marriage use.

– Rest can be sold or pledged for short-term needs.

– Don’t let gold lie idle while loan interest is compounding.

– If you pledge gold, use lowest-interest gold loan with clear repayment plan.

– Avoid using gold for investments at this stage.

– Gold can be bought again later when you are debt-free.

» Planning for Your Sister’s Marriage and Dowry

– Goal: Rs 20 lakh in 3 years.

– Don’t take more loan for this. It will worsen situation.

– Earmark mutual fund units now for this goal.

– Choose funds that are hybrid or large-cap, not small-cap or thematic.

– Redeem this portion gradually over the next 18–24 months.

– If needed, add SIPs of Rs 10,000/month in short-term debt funds.

– Don’t keep this amount in equity till last minute.

– By year 3, full Rs 20 lakh should be in low-risk funds or savings account.

– Start liquidating in phases 6 months before the wedding.

» Planning for Your Own Marriage

– Keep cost expectation realistic. Avoid going overboard.

– Estimate possible expenses—venue, clothing, gifts, etc.

– Earmark a separate fund for this.

– Ideally use part of the gold you hold for this.

– Use Rs 3–4 lakh in short-term funds to build a marriage corpus.

– Avoid using fresh loan or credit card for marriage.

– Keep this budget lean. Focus more on financial foundation post-marriage.

» Why You Must Avoid Index Funds and ETFs

– Index funds don’t allow active stock selection.

– They just mirror the market without downside protection.

– In volatile years, they fall as much as markets.

– Indian market is still evolving. Active managers can outperform.

– Active mutual funds with experienced managers offer better growth potential.

– Index funds are passive. No tactical shifts are possible.

– You need smart active funds, especially when goals are tight and returns must be dependable.

» Future Monthly SIP Strategy (After Debt Control)

– After paying down some loan, resume SIPs in small steps.

– Start with Rs 5,000–10,000 per month in hybrid or flexi-cap funds.

– Use only regular plans through a qualified MFD with CFP guidance.

– Increase SIPs once loan is mostly repaid and weddings are done.

– Always link SIPs to a specific goal—retirement, home, child education.

– Avoid random investing without time horizon clarity.

– Review SIP portfolio yearly with your MFD.

– Avoid SIPs in sectoral, thematic, or small-cap funds at this stage.

» Emergency Fund Planning Post-Marriage

– Once weddings are completed, focus on emergency fund.

– Keep 6 months’ expense in a liquid or low-duration fund.

– This gives protection against job loss or health emergencies.

– Don’t skip this. It avoids taking personal loans in future.

– Build it slowly over 6–12 months after marriage.

– Avoid using savings account or FD for this. Returns are low and taxable.

» Insurance and Protection Planning

– Check if you have adequate term life cover.

– Minimum cover should be 15–20 times your yearly income.

– Don’t use ULIP or traditional LIC policies. They give poor returns.

– If you have ULIP or money-back LIC policies, plan surrender.

– Shift proceeds to goal-specific mutual funds.

– Keep health insurance in place for self and future family.

– Medical costs can derail savings if not insured.

» Tax Implications While Redeeming Mutual Funds

– Equity mutual fund: LTCG above Rs 1.25 lakh taxed at 12.5%.

– STCG (sold before 1 year) taxed at 20%.

– Debt mutual fund: All gains taxed as per income slab.

– Sell long-term holdings first to reduce tax.

– Sell in parts over multiple financial years if needed.

– A CFP-qualified MFD can guide tax-efficient redemptions.

» Avoid Real Estate or New Big Loans

– Don’t buy land or property until your loan is cleared.

– Real estate brings EMIs, taxes, registration cost, and low liquidity.

– Postpone any new home or plot purchase till savings are stable.

– Focus on building low-debt, high-surplus financial life first.

– Rent if needed, but don’t enter EMI trap again now.

» Step-by-Step Action Plan for You

Repay Rs 10–15 lakh of your loan now using mutual fund.

Keep Rs 8–10 lakh invested for sister’s wedding fund.

Use gold worth Rs 3–4 lakh for marriage needs.

Sell or pledge remaining gold only if unavoidable.

Do not invest further until some loan is cleared.

Resume SIPs only when monthly surplus improves.

Work with CFP-backed MFD for goal alignment and fund selection.

Avoid index funds, direct funds, ULIPs, and real estate.

Rebuild emergency fund post-marriage.

Avoid borrowing more. Focus on saving smartly and consistently.

» Finally

– You are young and already ahead in saving habits.

– But large debt and upcoming expenses need careful steps now.

– Reduce loan burden first. Don’t let interest eat future wealth.

– Use mutual funds and gold wisely to manage upcoming weddings.

– Keep your long-term financial health strong.

– Avoid shortcuts like more loans, direct funds, or index funds.

– With smart execution, you can manage all goals without future regret.

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.