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How to Utilize My Income as a 36 Year Old with a 3rd Class Daughter?
Ramalingam Kalirajan |8259 Answers |Ask -Follow
Mutual Funds, Financial Planning Expert - Answered on Jul 25, 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
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
Question by Sagar on Jul 25, 2024Hindi
Sir, My age is 36. My monthly salary is 60k. I have daughter in 3rd class. Living in rental house 9k rent, Personal loan emi 18k, monthly expenses approx 12k, one Investment ELSS fund 5k monthly, term plan 850rs monthly. Sir, Please suggest how can I utilise.
Ans: Financial Health Overview
Your financial situation has several key elements. Your monthly income is Rs 60,000. You pay Rs 9,000 in rent and Rs 18,000 towards a personal loan EMI. Your monthly expenses are around Rs 12,000. Additionally, you invest Rs 5,000 in an ELSS fund and pay Rs 850 for a term plan.
You have a stable salary and some investments. But there are areas where you can optimize your finances.
Expense Management
Rent and Living Expenses:
You pay Rs 9,000 as rent. This seems reasonable given your income.
Your monthly expenses are Rs 12,000. This is good control over day-to-day spending.
Loan Repayment:
Your personal loan EMI of Rs 18,000 is significant. It's important to prioritize repaying this loan.
Insurance and Investments:
You have a term plan costing Rs 850 monthly. This is a good step for securing your family's future.
You invest Rs 5,000 in an ELSS fund. ELSS funds provide tax benefits under Section 80C.
Investment Assessment
Current Investments:
ELSS funds are tax-efficient and can offer good returns. But you should consider diversifying your investments.
Disadvantages of Direct Funds:
Direct funds may seem cheaper but managing them can be complex. Regular funds through a Certified Financial Planner (CFP) offer professional advice and support.
Actively Managed Funds:
Actively managed funds can outperform index funds. They have expert fund managers making strategic decisions. This can lead to higher returns compared to passive index funds.
Financial Goals and Planning
Short-Term Goals:
Focus on repaying your personal loan quickly. This will free up more of your income for savings and investments.
Build an emergency fund. Aim for 3-6 months' worth of expenses. This will provide a safety net for unforeseen circumstances.
Long-Term Goals:
Start planning for your daughter's education. Higher education costs can be significant. Begin a dedicated investment plan for this goal.
Think about your retirement planning. Consider increasing your investments over time.
Actionable Steps
Debt Management:
Prioritize repaying your personal loan. Try to make extra payments when possible.
Avoid taking on new debt until this loan is cleared.
Increase Savings and Investments:
Once your personal loan is repaid, redirect the EMI amount to savings and investments.
Continue with your ELSS investment. But look into adding other mutual funds for diversification. Actively managed funds can be a good option.
Seek Professional Advice:
Consult a Certified Financial Planner. They can help tailor your investment strategy to your goals. Professional advice ensures your investments are optimized.
Final Insights
You are on the right path with a stable income and initial investments. Prioritizing debt repayment and diversifying investments will strengthen your financial position.
Building an emergency fund and planning for future goals like your daughter's education and retirement are essential steps. With strategic planning and professional guidance, you can achieve financial stability and growth.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
Your financial situation has several key elements. Your monthly income is Rs 60,000. You pay Rs 9,000 in rent and Rs 18,000 towards a personal loan EMI. Your monthly expenses are around Rs 12,000. Additionally, you invest Rs 5,000 in an ELSS fund and pay Rs 850 for a term plan.
You have a stable salary and some investments. But there are areas where you can optimize your finances.
Expense Management
Rent and Living Expenses:
You pay Rs 9,000 as rent. This seems reasonable given your income.
Your monthly expenses are Rs 12,000. This is good control over day-to-day spending.
Loan Repayment:
Your personal loan EMI of Rs 18,000 is significant. It's important to prioritize repaying this loan.
Insurance and Investments:
You have a term plan costing Rs 850 monthly. This is a good step for securing your family's future.
You invest Rs 5,000 in an ELSS fund. ELSS funds provide tax benefits under Section 80C.
Investment Assessment
Current Investments:
ELSS funds are tax-efficient and can offer good returns. But you should consider diversifying your investments.
Disadvantages of Direct Funds:
Direct funds may seem cheaper but managing them can be complex. Regular funds through a Certified Financial Planner (CFP) offer professional advice and support.
Actively Managed Funds:
Actively managed funds can outperform index funds. They have expert fund managers making strategic decisions. This can lead to higher returns compared to passive index funds.
Financial Goals and Planning
Short-Term Goals:
Focus on repaying your personal loan quickly. This will free up more of your income for savings and investments.
Build an emergency fund. Aim for 3-6 months' worth of expenses. This will provide a safety net for unforeseen circumstances.
Long-Term Goals:
Start planning for your daughter's education. Higher education costs can be significant. Begin a dedicated investment plan for this goal.
Think about your retirement planning. Consider increasing your investments over time.
Actionable Steps
Debt Management:
Prioritize repaying your personal loan. Try to make extra payments when possible.
Avoid taking on new debt until this loan is cleared.
Increase Savings and Investments:
Once your personal loan is repaid, redirect the EMI amount to savings and investments.
Continue with your ELSS investment. But look into adding other mutual funds for diversification. Actively managed funds can be a good option.
Seek Professional Advice:
Consult a Certified Financial Planner. They can help tailor your investment strategy to your goals. Professional advice ensures your investments are optimized.
Final Insights
You are on the right path with a stable income and initial investments. Prioritizing debt repayment and diversifying investments will strengthen your financial position.
Building an emergency fund and planning for future goals like your daughter's education and retirement are essential steps. With strategic planning and professional guidance, you can achieve financial stability and growth.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
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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Asked by Anonymous - Apr 16, 2025Hindi
Hi Sir, I am 51 years old. I have 2Cr in PPF, 4Cr in Deposits and 1Cr in MF. I have recently sold property and have accquired 15Cr. Given how volatile the financial landscape is, where should I invest the 15Cr looking at a horizon of next 20 years for self and family. Besides this I also own 2 other properties totaling 5 Cr.
Ans: You have managed your money with maturity. The assets you’ve built show your disciplined approach. Now, with Rs. 15 Cr in hand, decisions must be thoughtful. Your focus on the next 20 years is correct and forward-thinking.
Let us now assess this with a 360-degree view. This is important for long-term clarity. Let us structure your Rs. 15 Cr for wealth safety, regular income, tax-efficiency and family needs.
Let’s look at each important area.
Understanding Your Current Asset Allocation
You have Rs. 2 Cr in PPF. This is long-term, safe and tax-free.
You have Rs. 4 Cr in deposits. These offer safety but may lag inflation.
You have Rs. 1 Cr in mutual funds. This shows some market participation.
You have Rs. 15 Cr in liquid form from recent sale.
You have Rs. 5 Cr in property. These are non-liquid, and for wealth holding.
Your overall wealth is Rs. 27 Cr. That is impressive. But over-dependence on fixed income can hurt wealth growth. Your PPF and deposits together form Rs. 6 Cr. These do not beat long-term inflation. That is a risk to family security.
Create Clear Financial Buckets for Purpose
Divide your Rs. 15 Cr into three buckets. Each has a different goal.
Bucket 1: For Emergency, Stability and Safety.
Bucket 2: For Medium-Term Needs in 5 to 10 years.
Bucket 3: For Long-Term Wealth Creation.
Let us now explore these buckets.
Bucket 1: Safety and Liquidity (Rs. 1.5 Cr)
This is to protect against sudden health or family emergencies.
Keep Rs. 75 lakhs in liquid funds or ultra-short-term funds.
These provide better returns than savings account. Still safe.
Rs. 75 lakhs can go to laddered fixed deposits.
Split this into 1-year, 2-year and 3-year ladders. Renew based on rates.
This bucket is not for growth. Only for comfort and liquidity.
Bucket 2: Medium-Term Stability (Rs. 3.5 Cr)
This money is not needed now. But may be required in 5 to 10 years.
Here, consider hybrid mutual funds.
Choose a mix of aggressive hybrid and balanced advantage funds.
These offer steady returns with lower volatility.
They shift between equity and debt. This reduces downside.
Choose actively managed funds. Avoid index funds.
Index funds copy the market. In falling markets, they give no protection.
A skilled fund manager in active funds can protect downside better.
Also, invest these in regular plans via a Certified Financial Planner.
Regular plans offer expert reviews and advice.
Direct funds lack this. Mistakes can cost more than small commission.
A CFP can rebalance when needed. Direct plan holders often ignore this.
This medium-term bucket protects you from inflation with lower risk.
Bucket 3: Long-Term Growth and Wealth Building (Rs. 10 Cr)
This is your most powerful wealth creation engine.
Equity mutual funds are the ideal choice.
Choose from flexi-cap, large and mid-cap and small-cap funds.
Diversify across 6-8 funds. Avoid fund duplication.
Avoid index funds here too. They follow the market blindly.
Active funds can outperform with right strategy.
Fund managers in active funds research deeply before investing.
Index funds don’t do that. In volatile markets, they may lag behind.
Active funds also book profits smartly. Index funds don’t do this.
Invest through a Certified Financial Planner in regular plans.
A CFP monitors performance and does course correction.
Direct funds don’t give that support. You may miss key changes.
CFPs also help with capital gain planning and tax harvesting.
Do not invest this money at once.
Use Systematic Transfer Plan (STP).
Start by parking Rs. 10 Cr in liquid funds.
Gradually shift to equity over 18-24 months.
This reduces entry risk due to market timing.
This is your family’s future security. Plan this layer with care.
Tax Planning and Capital Gains Efficiency
Your existing PPF is already tax-free. Keep it intact.
The Rs. 4 Cr in fixed deposits may be fully taxable.
Spread maturities to reduce tax burdens in one year.
Invest new money via mutual funds to lower taxation.
Equity mutual funds have better post-tax returns than FDs.
After the new rule, LTCG over Rs. 1.25 lakh is taxed at 12.5%.
This is still better than FD interest taxed as per slab.
Also, mutual funds offer more control over tax timings.
Stay invested for over one year to qualify for LTCG in equity mutual funds.
Debt mutual funds are now taxed as per slab for all durations.
So, use equity or hybrid equity-oriented funds more for tax efficiency.
Plan for Family Income Needs in Retirement
Even though you have 20 years, some income may be needed.
Create a passive income plan from mutual funds.
Use SWP (Systematic Withdrawal Plan) from balanced or hybrid funds.
They allow tax-efficient regular cash flow.
Better than FD interest. FDs offer less flexibility.
Reinvest what you don’t spend. Let compounding work for longer.
Avoid annuities. They lock funds and give low returns.
Mutual funds give liquidity and better growth.
Protect Your Wealth with Risk Management
Recheck your term insurance cover. Ensure it’s enough for your family.
Medical insurance should also be reviewed. Family floater with Rs. 25 lakhs is ideal.
Do not mix insurance and investment.
If you hold LIC, ULIPs or other bundled policies, evaluate now.
Surrender them if they are underperforming.
Reinvest proceeds in mutual funds.
You need pure insurance and pure investment. Not a mix.
Estate Planning and Family Financial Clarity
Your wealth is large. Create a Will now. Don't delay this step.
Mention asset distribution clearly.
Assign nominees across all investments.
Tell your family where documents and investments are kept.
Add joint holders or Power of Attorney if needed.
Consider forming a family trust if your estate is complex.
Consult a lawyer for this. Your Certified Financial Planner can guide you too.
Estate clarity gives peace of mind to all.
Ongoing Portfolio Review and Adjustments
Markets change. Goals shift. Health changes. Family needs evolve.
Review your portfolio every year.
A Certified Financial Planner helps track progress.
They rebalance funds based on market and your risk.
They help adjust tax strategy as per rule changes.
They assist in aligning investments to changing family goals.
Avoid doing this alone. Mistakes compound over time.
Finally
You’ve built a strong financial foundation. That’s a rare achievement.
Now, shift focus from only capital safety to capital growth.
Your Rs. 15 Cr can become a family legacy. Let it grow wisely.
Avoid chasing returns. Instead, follow a disciplined process.
Work with a Certified Financial Planner. They bring vision and discipline.
Keep your investments simple. Keep your goals clear.
Review regularly. Protect your wealth from inflation and taxes.
And keep your family informed at every step.
This is how you create wealth. And protect it for 20 years and beyond.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Let us now assess this with a 360-degree view. This is important for long-term clarity. Let us structure your Rs. 15 Cr for wealth safety, regular income, tax-efficiency and family needs.
Let’s look at each important area.
Understanding Your Current Asset Allocation
You have Rs. 2 Cr in PPF. This is long-term, safe and tax-free.
You have Rs. 4 Cr in deposits. These offer safety but may lag inflation.
You have Rs. 1 Cr in mutual funds. This shows some market participation.
You have Rs. 15 Cr in liquid form from recent sale.
You have Rs. 5 Cr in property. These are non-liquid, and for wealth holding.
Your overall wealth is Rs. 27 Cr. That is impressive. But over-dependence on fixed income can hurt wealth growth. Your PPF and deposits together form Rs. 6 Cr. These do not beat long-term inflation. That is a risk to family security.
Create Clear Financial Buckets for Purpose
Divide your Rs. 15 Cr into three buckets. Each has a different goal.
Bucket 1: For Emergency, Stability and Safety.
Bucket 2: For Medium-Term Needs in 5 to 10 years.
Bucket 3: For Long-Term Wealth Creation.
Let us now explore these buckets.
Bucket 1: Safety and Liquidity (Rs. 1.5 Cr)
This is to protect against sudden health or family emergencies.
Keep Rs. 75 lakhs in liquid funds or ultra-short-term funds.
These provide better returns than savings account. Still safe.
Rs. 75 lakhs can go to laddered fixed deposits.
Split this into 1-year, 2-year and 3-year ladders. Renew based on rates.
This bucket is not for growth. Only for comfort and liquidity.
Bucket 2: Medium-Term Stability (Rs. 3.5 Cr)
This money is not needed now. But may be required in 5 to 10 years.
Here, consider hybrid mutual funds.
Choose a mix of aggressive hybrid and balanced advantage funds.
These offer steady returns with lower volatility.
They shift between equity and debt. This reduces downside.
Choose actively managed funds. Avoid index funds.
Index funds copy the market. In falling markets, they give no protection.
A skilled fund manager in active funds can protect downside better.
Also, invest these in regular plans via a Certified Financial Planner.
Regular plans offer expert reviews and advice.
Direct funds lack this. Mistakes can cost more than small commission.
A CFP can rebalance when needed. Direct plan holders often ignore this.
This medium-term bucket protects you from inflation with lower risk.
Bucket 3: Long-Term Growth and Wealth Building (Rs. 10 Cr)
This is your most powerful wealth creation engine.
Equity mutual funds are the ideal choice.
Choose from flexi-cap, large and mid-cap and small-cap funds.
Diversify across 6-8 funds. Avoid fund duplication.
Avoid index funds here too. They follow the market blindly.
Active funds can outperform with right strategy.
Fund managers in active funds research deeply before investing.
Index funds don’t do that. In volatile markets, they may lag behind.
Active funds also book profits smartly. Index funds don’t do this.
Invest through a Certified Financial Planner in regular plans.
A CFP monitors performance and does course correction.
Direct funds don’t give that support. You may miss key changes.
CFPs also help with capital gain planning and tax harvesting.
Do not invest this money at once.
Use Systematic Transfer Plan (STP).
Start by parking Rs. 10 Cr in liquid funds.
Gradually shift to equity over 18-24 months.
This reduces entry risk due to market timing.
This is your family’s future security. Plan this layer with care.
Tax Planning and Capital Gains Efficiency
Your existing PPF is already tax-free. Keep it intact.
The Rs. 4 Cr in fixed deposits may be fully taxable.
Spread maturities to reduce tax burdens in one year.
Invest new money via mutual funds to lower taxation.
Equity mutual funds have better post-tax returns than FDs.
After the new rule, LTCG over Rs. 1.25 lakh is taxed at 12.5%.
This is still better than FD interest taxed as per slab.
Also, mutual funds offer more control over tax timings.
Stay invested for over one year to qualify for LTCG in equity mutual funds.
Debt mutual funds are now taxed as per slab for all durations.
So, use equity or hybrid equity-oriented funds more for tax efficiency.
Plan for Family Income Needs in Retirement
Even though you have 20 years, some income may be needed.
Create a passive income plan from mutual funds.
Use SWP (Systematic Withdrawal Plan) from balanced or hybrid funds.
They allow tax-efficient regular cash flow.
Better than FD interest. FDs offer less flexibility.
Reinvest what you don’t spend. Let compounding work for longer.
Avoid annuities. They lock funds and give low returns.
Mutual funds give liquidity and better growth.
Protect Your Wealth with Risk Management
Recheck your term insurance cover. Ensure it’s enough for your family.
Medical insurance should also be reviewed. Family floater with Rs. 25 lakhs is ideal.
Do not mix insurance and investment.
If you hold LIC, ULIPs or other bundled policies, evaluate now.
Surrender them if they are underperforming.
Reinvest proceeds in mutual funds.
You need pure insurance and pure investment. Not a mix.
Estate Planning and Family Financial Clarity
Your wealth is large. Create a Will now. Don't delay this step.
Mention asset distribution clearly.
Assign nominees across all investments.
Tell your family where documents and investments are kept.
Add joint holders or Power of Attorney if needed.
Consider forming a family trust if your estate is complex.
Consult a lawyer for this. Your Certified Financial Planner can guide you too.
Estate clarity gives peace of mind to all.
Ongoing Portfolio Review and Adjustments
Markets change. Goals shift. Health changes. Family needs evolve.
Review your portfolio every year.
A Certified Financial Planner helps track progress.
They rebalance funds based on market and your risk.
They help adjust tax strategy as per rule changes.
They assist in aligning investments to changing family goals.
Avoid doing this alone. Mistakes compound over time.
Finally
You’ve built a strong financial foundation. That’s a rare achievement.
Now, shift focus from only capital safety to capital growth.
Your Rs. 15 Cr can become a family legacy. Let it grow wisely.
Avoid chasing returns. Instead, follow a disciplined process.
Work with a Certified Financial Planner. They bring vision and discipline.
Keep your investments simple. Keep your goals clear.
Review regularly. Protect your wealth from inflation and taxes.
And keep your family informed at every step.
This is how you create wealth. And protect it for 20 years and beyond.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Apr 17, 2025 | Answered on Apr 17, 2025
ListenThank you sir for your insights and professional advice.
Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Dr Dipankar Dutta |1139 Answers |Ask -Follow
Tech Careers and Skill Development Expert - Answered on Apr 16, 2025
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