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Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Mar 28, 2024

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to the armed forces personnel and their families.
He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.... more
Kumar Question by Kumar on Mar 13, 2024Hindi
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Sir My age is 53. My PF contribution from salary is (20K PF+ 20K VPF + 5K PPF) per month , NPS 50K/per year and Insurance premium of 30K/per year. Invested 20Lakh in 2400 sq ft land. Rest all contribution as of now is Rs 60 Lakh(PF and Insurance). My son is in 6th Standard. My take home after deduction is 1.5 lakh. Don't have any home and staying in rented house. Total expense per month around 40K including sons education. I have not shared in any share market or mutual fund as of now. Is it right age for me to invest in share or mutual fund. What else I can invest so that I can construct a house after retirement and sons education. Thank you

Ans: Upon reviewing your financial status, it's evident that you've made prudent choices in utilizing EPF, VPF, PPF, NPS for retirement savings, alongside owning land assets. However, your investment portfolio is heavily skewed towards debt instruments, lacking significant exposure to equity for potential long-term growth.

It's advisable to assess your risk tolerance with a financial advisor to ensure an appropriate asset allocation. Additionally, consider diversifying into gold or other asset classes depending on risk appetite. By implementing these strategies, you can enhance your financial resilience and pursue long-term wealth accumulation effectively.
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  |8254 Answers  |Ask -

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

Asked by Anonymous - Jun 19, 2024Hindi
Money
I am 39 years old IT employee , I have monthly income of 3.5 lakhs and have a 10 years old son and wife .I have 35 lakhs in PF and 8 lakhs in ppf ,All I invested is in real estate and no other investments also i have 48 lakhs lakh an remaining for a house ,Where should I invest of I need to lan retirement by 50 will need 1.5 lakhs income per month post that
Ans: Retiring by age 50 with a steady monthly income of Rs. 1.5 lakhs is a significant goal. Given your current assets, it's crucial to strategically plan your investments to achieve this target. You have a strong base, and with careful planning, you can reach your retirement goals.

Assessing Current Financial Situation
You have a solid monthly income of Rs. 3.5 lakhs. This is a good start.

You have Rs. 35 lakhs in your Provident Fund (PF) and Rs. 8 lakhs in your Public Provident Fund (PPF). These are excellent long-term savings.

You have invested Rs. 48 lakhs in real estate. However, real estate alone may not be enough for retirement. Diversifying your portfolio is crucial.

Understanding the Importance of Diversification
Diversification is key to minimizing risk and maximizing returns. Currently, your investments are concentrated in real estate. You should consider diversifying into different asset classes.

Building a Balanced Investment Portfolio
1. Equity Mutual Funds:

Equity mutual funds can provide high returns over the long term. They are suitable for your retirement goal, which is more than a decade away.

Consider allocating a portion of your funds to diversified equity mutual funds. These funds invest in a mix of large-cap, mid-cap, and small-cap stocks, providing a balanced exposure to the equity market.

2. Debt Mutual Funds:

Debt mutual funds are less risky compared to equity funds. They provide stable returns and can be used to balance the risk in your portfolio.

Investing in debt funds will ensure that a portion of your investments remains safe, while still earning moderate returns.

3. Public Provident Fund (PPF):

Your current PPF investment is Rs. 8 lakhs. Continue contributing to PPF as it offers tax benefits and guaranteed returns. It’s a safe investment for long-term financial goals.

4. Provident Fund (PF):

With Rs. 35 lakhs in PF, you already have a significant amount saved. Ensure you continue contributing to this fund, as it provides a reliable source of retirement income.

Exploring the Benefits of Actively Managed Funds
Actively managed funds, run by experienced fund managers, can potentially outperform the market. These funds require active monitoring and adjustment, which can lead to better returns compared to passive index funds.

Disadvantages of Index Funds:

Index funds follow the market index, and they do not aim to outperform it. This means during market downturns, index funds will also suffer. They lack the flexibility to adjust holdings based on market conditions.

Benefits of Actively Managed Funds:

Actively managed funds have the potential to generate higher returns. Fund managers can make strategic decisions based on market trends and economic conditions. They can also provide a more tailored investment approach.

Considering the Role of Certified Financial Planners
Investing through a Certified Financial Planner (CFP) can offer several advantages. They provide personalized advice and help create a financial plan tailored to your goals.

Disadvantages of Direct Funds:

Investing directly without professional guidance can be risky. You might miss out on strategic opportunities and fail to manage risk effectively. A CFP can help optimize your investment strategy.

Benefits of Regular Funds through CFP:

Investing through regular funds with the help of a CFP ensures you receive expert advice. They can help you navigate market complexities and make informed decisions. This professional guidance can lead to better financial outcomes.

Creating a Retirement Corpus
To achieve your retirement goal of Rs. 1.5 lakhs monthly income post-retirement, you need to build a substantial corpus. Given your current assets and income, a disciplined investment approach is essential.

1. Setting Clear Goals:

Define how much you need at retirement. This will help you understand how much to save and invest each month.

2. Regular Investments:

Invest regularly in mutual funds through Systematic Investment Plans (SIPs). SIPs help in averaging out market volatility and build a corpus over time.

3. Reviewing and Rebalancing:

Regularly review your investment portfolio. Rebalance it to ensure it aligns with your goals and risk tolerance. This involves shifting funds between asset classes based on market performance and your investment horizon.

Importance of Emergency Fund
Maintain an emergency fund to cover unforeseen expenses. This fund should cover at least six months' worth of expenses. It ensures you don't have to dip into your long-term investments in case of emergencies.

Managing Insurance Needs
Ensure you have adequate insurance coverage. Life insurance protects your family in case of any unfortunate event. Health insurance covers medical expenses, preventing financial strain.

Planning for Your Child's Future
Your 10-year-old son's education and future needs should also be planned for. Consider investing in child-specific mutual funds or creating a dedicated investment plan for his higher education and other needs.

Evaluating Current Investments
Real Estate:

While real estate can provide good returns, it's not very liquid. Consider the rental income potential and capital appreciation of your property.

Provident Fund (PF) and Public Provident Fund (PPF):

These are secure investments with tax benefits. Continue contributing to these funds for long-term stability.

Achieving Financial Independence
To achieve financial independence by 50, you need a comprehensive financial plan. This involves:

1. Increasing Savings:

Try to save and invest a significant portion of your income. Aim to save at least 30-40% of your monthly income.

2. Reducing Debt:

Avoid taking on new debt. Pay off any existing loans to reduce financial burden.

3. Enhancing Income:

Explore ways to increase your income. This could be through promotions, bonuses, or side gigs.

Final Insights
Reaching your retirement goal by 50 is achievable with disciplined planning and strategic investments. Diversify your portfolio, invest in equity and debt mutual funds, and continue contributing to PF and PPF. Seek guidance from a Certified Financial Planner to optimize your investments and ensure a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 14, 2024

Asked by Anonymous - Oct 14, 2024Hindi
Money
My salary 2.4 lac per month. I am 42 my wife and two son comprising of my family. One son is in 5th standard and other yet to start education. I have 2 house emis of 1.6 lacs of which one generates rent of 40k per month. Have around 50 lacs in investment comprising of 20lac in ppf and rest in stocks and sips and mfs. Only have company health insurance and no term insurance. Schooling cost is 1.2 lacs per annum. Rest expenses includes holiday every 6 months and daily needs. Please help me sort out investment to ensure I can generate enough to retire in next 10 years?
Ans: You have a solid foundation, and it’s commendable that you are managing two home loans while balancing various investments. Your monthly salary of Rs 2.4 lakhs and an EMI burden of Rs 1.6 lakhs shows you are carrying significant financial responsibility. However, generating Rs 40,000 from rent is helping reduce the impact of your EMIs.

Key highlights:

Monthly salary: Rs 2.4 lakhs
Two house EMIs: Rs 1.6 lakhs
Rent: Rs 40,000 per month
Investment portfolio: Rs 50 lakhs (Rs 20 lakhs in PPF, rest in stocks, SIPs, and MFs)
Annual schooling cost: Rs 1.2 lakhs
Other expenses: Holiday every 6 months, daily needs
No term insurance
Company health insurance only
While you have done well to invest Rs 50 lakhs, the lack of term insurance and the heavy EMI burden may be areas for improvement. Your goal of retiring in 10 years is achievable, but some adjustments will be necessary to optimize your portfolio and secure a comfortable future.

Investment Strategy Review
Let’s break down your current investments to better align them with your retirement goal in the next 10 years.

PPF (Public Provident Fund) - Rs 20 Lakhs
The PPF is a safe, long-term investment with tax benefits, but its returns are relatively modest. Over the next 10 years, this will continue to grow at a steady pace.

Action Plan:

Keep contributing to your PPF but avoid putting additional large sums.
PPF should be treated as part of your safe, low-risk portfolio.
Stocks, SIPs, and Mutual Funds (Rest of Rs 30 Lakhs)
Your exposure to equities through stocks and mutual funds will help you generate growth, but it needs diversification and regular review. SIPs in actively managed funds are ideal for long-term goals like retirement.

Action Plan:

Actively managed mutual funds: Ensure that the mutual funds you are invested in are diversified across sectors and are actively managed.
Avoid direct funds: Regular funds provide better tracking and advice from an MFD with CFP credentials, which is crucial for your long-term planning.
Review your stock portfolio: Individual stocks carry more risk than mutual funds. It is wise to regularly assess performance and sell off underperforming stocks.
Balance with debt funds: Include some debt funds for stability, especially as you approach your retirement goal.
Rental Income from Property
Your rental income of Rs 40,000 per month is a significant contributor to offset your EMIs. While real estate is not recommended as a new investment option, your existing property generating income can support your cash flow needs.

Action Plan:

Rent reassessment: Ensure you are getting market rent or consider raising it over time to adjust for inflation.
No additional real estate investments: Avoid tying more capital into real estate. Focus on growing your financial portfolio instead.
Critical Areas for Improvement
1. Lack of Term Insurance
It’s essential to secure your family’s future in case of any unexpected event. Currently, you do not have term insurance, which is a vital part of any financial plan.

Action Plan:

Immediate term insurance: Buy a term plan covering at least 10-12 times your annual income. This will ensure your family is financially secure if something happens to you.
2. Health Insurance Coverage
You rely on company-provided health insurance. This is risky, as you may lose coverage if you switch jobs or retire early. Having separate family health insurance will ensure consistent protection.

Action Plan:

Buy individual health insurance: Get family floater health insurance with adequate coverage for your entire family, ensuring lifelong renewability.
Supplemental critical illness cover: Consider adding critical illness coverage to protect against major health expenses.
3. EMI Management
You have significant EMIs totaling Rs 1.6 lakhs per month. While one property generates rental income, the overall EMI burden is high. Managing this will be crucial for freeing up cash flow for further investments.

Action Plan:

Prepay EMIs: Any surplus income should go toward prepaying your loans, starting with the one without rental income. Reducing this burden will ease your cash flow.
No additional loans: Avoid taking on any further debt to ensure your financial plan stays on track.
Retirement Planning
You aim to retire in 10 years, at age 52. With your current lifestyle and goals, your investments will need to provide enough to cover your post-retirement expenses. Here’s a strategy to ensure a comfortable retirement:

1. Estimate Future Expenses
Your current schooling costs are Rs 1.2 lakhs per year, and other living expenses include vacations and daily needs. Over the next 10 years, expenses will increase due to inflation, and you must account for these future costs when planning your retirement.

Action Plan:

Create a detailed budget: Track all your current expenses and project them for the next 10 years, considering inflation. This will give you a clearer picture of your financial needs after retirement.
2. Build a Retirement Corpus
With 10 years to go, you will need to create a solid retirement corpus. The Rs 50 lakhs you currently have, along with further investments, will need to grow substantially. Here’s how to optimize this growth:

Action Plan:

Increase SIP contributions: Start contributing more to your SIPs as soon as your EMI burden reduces. A higher SIP contribution in actively managed mutual funds will provide better growth potential over the next decade.
Diversify investments: Include a mix of large-cap, mid-cap, and flexi-cap funds to ensure a balanced risk-return profile. Actively managed funds, especially those recommended by a certified financial planner, will perform better than index funds or ETFs.
Regular portfolio review: Work with a certified financial planner to review your portfolio annually. Ensure your funds are performing as expected and make necessary adjustments.
3. Plan for Post-Retirement Income
After retirement, you will need a reliable source of income to meet your monthly expenses. Your investments must be structured to provide regular income, adjusted for inflation.

Action Plan:

Systematic Withdrawal Plans (SWP): Set up SWPs in mutual funds to provide a regular, inflation-adjusted income post-retirement.
Emergency Fund: Set aside a portion of your corpus in a liquid fund for emergencies. This will ensure you don’t have to liquidate long-term investments prematurely.
Final Insights
To achieve your goal of retiring in 10 years, you will need to fine-tune your investment strategy and reduce your EMI burden. Your current investments, while substantial, require diversification and a focus on growth-oriented funds.

Additionally, securing term insurance and individual health insurance is critical for protecting your family’s future. By prepaying your loans and increasing SIP contributions over time, you will be better positioned to build a retirement corpus capable of supporting your post-retirement lifestyle.

Finally, always remember that regular reviews with a certified financial planner are key to staying on track and adjusting for any changes in your financial situation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 27, 2024

Asked by Anonymous - Dec 11, 2024
Money
51 years old , I am started 25000 rs investment in mutual fund from last year , presently two houses one loan of rs 40 lakhs and 1/2 kg gold and 35lakhs fd, and 1 open plot of worth 65Lakhs my daughter is studying B.E and son 9th is it effoungh for my retirement.Lic of rs 5000.rs.per month.
Ans: At 51, you are building a good foundation for retirement. Let us evaluate your current situation and provide actionable insights to strengthen your plan.

Current Financial Assets
Mutual Funds: A monthly SIP of Rs. 25,000 started last year is a strong beginning.

Real Estate: You own two houses and an open plot worth Rs. 65 lakhs.

Fixed Deposits (FDs): You have Rs. 35 lakhs in FDs for stability.

Gold: Possession of 1/2 kg of gold adds diversification to your portfolio.

Insurance: A LIC premium of Rs. 5,000 monthly ensures some financial protection.

Loan: You have a Rs. 40 lakh home loan that requires regular servicing.

Strengths in Your Portfolio
Asset Diversification: Your portfolio includes real estate, mutual funds, gold, and fixed deposits.

Children’s Education: You are well-placed to support their higher education expenses.

Steady Investments: The SIP ensures consistent contributions towards wealth creation.

Areas for Improvement
Mutual Fund Investments
Expand Your SIP Contributions: Rs. 25,000 monthly may need an increase to meet retirement goals.

Focus on Active Funds: Actively managed funds can deliver higher returns than index funds over time.

Disadvantages of Index Funds: Index funds lack adaptability during market fluctuations, limiting growth potential.

Use Regular Plans Through CFP: Regular funds ensure expert guidance, tax efficiency, and consistent monitoring.

Real Estate
Low Liquidity: Real estate may not offer quick access to cash during emergencies.

Maintenance Costs: Real estate requires ongoing expenses, reducing its overall profitability.

Fixed Deposits
Inflation Risk: FD returns are lower and may not match inflation rates.

Better Alternatives: Consider debt funds for higher post-tax returns.

LIC Premiums
Low Returns: Traditional insurance policies like LIC provide limited returns compared to mutual funds.

Recommendation: Surrender and reinvest the proceeds into mutual funds for better growth.

Children’s Education Planning
Daughter’s Higher Education: Prioritise building a specific education fund for her postgraduate expenses.

Son’s Future Needs: Start early to save for his higher education.

Balanced Allocation: Use equity for growth and debt for stability in these funds.

Loan Management
Accelerate Loan Repayment: Clear your Rs. 40 lakh home loan faster to reduce interest costs.

Avoid New Debt: Focus on reducing liabilities to achieve financial independence sooner.

Emergency Fund
Liquidity is Key: Ensure at least 6–12 months of expenses in a liquid emergency corpus.

Fund Sources: Your FDs or a portion of your SIP can be redirected for this.

Retirement Planning
Corpus Estimation
Inflation Adjustment: Factor in inflation to calculate the required retirement corpus.

Living Expenses: Estimate your monthly needs post-retirement, including healthcare and leisure.

Asset Rebalancing
Gradual Shift to Debt Funds: From 55 onwards, reduce equity exposure for stability.

Balanced Allocation: Aim for a 60% debt and 40% equity ratio by retirement.

Tax Efficiency
New MF Tax Rules: Plan redemptions considering the 12.5% LTCG tax above Rs. 1.25 lakh.

Debt Funds Taxation: Gains are taxed as per your income slab; plan accordingly.

Final Insights
Your current financial status is strong, but enhancements are necessary. Increase SIP contributions, diversify into actively managed funds, and focus on reducing liabilities. Revisit your LIC policy and redirect funds for higher returns. Secure your children's education and your retirement with a clear and balanced strategy.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Money
I am retiring from my Job. I have only 50 lakhs corpus to run my family.Can you please advise where to invest 50 lakh money to get 50000/m monthly income.
Ans: You’ve taken the right first step. With Rs 50 lakhs and a goal of Rs 50,000 monthly income, it is critical to design a well-planned investment strategy.

Understanding the Income Need
You want Rs 50,000 per month, which means Rs 6 lakhs per year.

This works out to about 12% per year of your Rs 50 lakh corpus.

Expecting a 12% withdrawal yearly is risky. The corpus can get exhausted early.

A sustainable withdrawal rate is around 6-8% per year only.

This means Rs 25,000 to Rs 33,000 per month is safer long-term.

So first we need to decide: do we want high income now or stable income for life?

Retirement Stage Planning
At retirement, preservation of money is top priority.

Income generation comes second. Growth comes third.

But inflation will reduce purchasing power. So growth cannot be ignored.

Your portfolio must balance growth, safety and liquidity.

So we use a “bucket strategy”. Let us see what that means.

Bucket-Based Investment Planning
Bucket 1: 2 Years of Expenses
This is for monthly income now. Very low risk.

Keep Rs 12 lakhs in this bucket (Rs 6 lakhs per year × 2 years).

Put it in ultra-short debt funds or senior citizen savings scheme.

This will give you predictable cash flow.

You can set up monthly SWP (systematic withdrawal plan) from this.

Bucket 2: Next 3 to 5 Years
This is for income after 2 years.

Slightly higher return potential. Still low to moderate risk.

Invest Rs 15-20 lakhs in hybrid funds or conservative balanced funds.

These funds have 20-30% equity and rest in bonds.

They aim to beat FD returns, without too much fluctuation.

Bucket 3: Long-Term Growth
Remaining Rs 18-23 lakhs can be invested in pure equity mutual funds.

Choose large and flexi cap funds with regular plans via Certified Financial Planner.

This helps protect your lifestyle 10-15 years from now.

This part grows slowly now, but helps fight inflation later.

How SWP Can Help
SWP means you get monthly income from mutual funds.

You can set a fixed monthly amount like Rs 50,000.

Only the withdrawn amount is taxed, not entire profit.

For equity funds: STCG is taxed at 20%, LTCG above Rs 1.25 lakh is taxed at 12.5%.

For debt funds: All gains are taxed as per your tax slab.

So plan your SWP smartly, and avoid early redemption from long-term buckets.

Avoid These Mistakes
Don’t invest everything in FD or debt. It won’t beat inflation.

Don’t rely on dividend plans. They are not predictable.

Don’t go for annuities. They lock your capital and give low returns.

Don’t go for direct plans unless you are a full-time expert.

Always go via regular plans with a CFP for advice and monitoring.

Disadvantages of Index Funds
Index funds copy the market. No active research is done.

In falling markets, they also fall badly.

They can’t protect you during market shocks.

Actively managed funds give you better risk-adjusted returns over time.

Certified Financial Planners monitor fund quality and help you exit poor performers.

Direct vs Regular Plans
Direct plans have lower cost but no guidance.

You end up making emotional decisions.

Regular plans come with expert advice from Certified Financial Planner.

CFPs give behavioural control, tax planning and fund monitoring.

For retirement, discipline and peace of mind matter more than saving 0.5%.

Inflation and Longevity Risk
Today Rs 50,000 is enough. In 10 years, you may need Rs 90,000.

Life expectancy can go up to 85-90 years.

So your corpus must keep growing even during retirement.

That is why some part must always remain in equity.

Your goal should be to never touch the principal fully.

Rebalancing Every 2 Years
Every 2 years, shift money from Bucket 2 and 3 into Bucket 1.

This way, you refill the income bucket.

Review fund performance, tax laws and personal needs with your CFP.

Don’t withdraw from equity bucket in a bad market year.

Keep 1 year of expenses always safe and liquid.

Emotional Peace is Priority
Retired life should be relaxed. You should not worry every month.

That is why a structured plan works better than ad-hoc FD or real estate.

You get monthly income, principal protection and long-term growth.

Your wife also feels secure with a system in place.

You can focus on health, hobbies and family—not markets.

Do You Hold LIC, ULIP or Insurance-Based Investments?
If yes, surrender them now. These do not give good returns.

Redeem them and reinvest into mutual funds.

Keep term insurance if needed, but no savings-insurance mix.

Review all old products with a Certified Financial Planner.

Final Insights
Rs 50,000 income is possible, but you must plan carefully.

Aim for 6-8% withdrawal rate for long-lasting corpus.

Use 3 buckets for income now, income later, and growth forever.

Avoid annuities, index funds, and direct plans.

Take help from a Certified Financial Planner who understands your retirement dreams.

Review every 2 years and adjust based on expenses and market.

Retirement is not an end. It is a new phase that deserves full financial attention.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Money
Hi sir. I am 65 yrs old with wife, Sir just to get approx 1 lakh per month for my further life for surviving how much money i required to invest in mutual fund etc . Having own house no rent. Pls advise. Regards
Ans: It is thoughtful to plan for peaceful retirement life.

You have already built a strong foundation. You own a house and have no rent burden. That’s a major relief. Now, your goal is simple and clear—receive about Rs 1 lakh per month to cover expenses for yourself and your wife.

Let me now explain your options and investment plan in a detailed and practical way.

Understanding Your Income Need
Your monthly income requirement is Rs 1 lakh

That is Rs 12 lakhs yearly, for living and medical care

You also want to ensure the money lasts lifelong for you and your wife

This means your investment must give steady monthly income and beat inflation slowly

You will also need some growth, not just fixed income, to maintain purchasing power

Estimating the Ideal Corpus
You are 65 years old. Your financial plan must cover 25 years or more

This is because medical support and expenses increase from 70 years onward

With inflation considered, your Rs 1 lakh monthly need will rise in the future

So, the investment corpus should be large enough to:

Give you Rs 1 lakh per month now

Increase income over time, through partial growth-based funds

Stay safe and not run out before your lifetime

Based on current conditions and long-term returns of mutual funds, you may need Rs 2.1 crores to Rs 2.4 crores approx.

This amount will be divided into different types of funds for safety, income, and growth

If you already have some existing investments, that will reduce the gap

How to Structure the Investment
To ensure income and safety, you need a three-part approach.

Each part has a clear role. This is known as a bucket approach.

Bucket 1: Income Now – High Stability

This bucket gives monthly cash flow from safe and stable sources

Use debt mutual funds (regular plan), which suit retired investors

Only select high-quality, low-risk funds. Do not chase returns here

Choose regular plan and invest through a Certified Financial Planner for tracking and rebalancing

This bucket will cover 3 to 5 years of income, approx. Rs 40 to 60 lakhs

Withdraw monthly from here

Refill this bucket every few years using growth from other buckets

Bucket 2: Income Later – Conservative Growth

This gives returns better than FDs, with moderate risk

Invest in hybrid mutual funds, which balance equity and debt

Prefer regular funds with a Certified Financial Planner for guidance

SIPs are not needed here. Use lump sum with gradual SWP later

This portion may be Rs 60 to 80 lakhs, depending on your comfort

It helps maintain the next 6 to 10 years of income

Bucket 3: Long-Term – Growth and Inflation Protection

Invest in carefully selected diversified equity mutual funds

Choose active funds with experienced fund managers

Do not use direct funds. Use regular plan via a CFP for right entry, exit and strategy

This bucket keeps growing silently and will beat inflation

Withdraw only after 7 to 10 years, in parts, to refill Bucket 1

Allocate Rs 70 lakhs to Rs 90 lakhs here

This part ensures your funds don’t run out at 80 or 85 years

This three-bucket structure keeps your income stable. It also grows your money silently. You don’t have to sell equity in a bad year.

Why Mutual Funds and Not Fixed Deposits?
FDs give low returns. They do not beat inflation

FDs are fully taxable as per slab, unlike mutual funds

FDs do not allow gradual withdrawal (SWP)

In FDs, once you exhaust the amount, there's no backup

Debt mutual funds in regular plan allow you to withdraw monthly, and rebalance annually

Long-term capital gains tax on equity mutual funds is only 12.5% after Rs 1.25 lakh gain, which is efficient

Tax is only paid when gains are withdrawn

Debt mutual fund gains are taxed as per your slab, but only on redemption

All this makes mutual funds more flexible and tax-smart than FDs

Why Not Index Funds or Direct Funds?
Index funds are passive. They don’t adapt to market risk or sector weakness

In retirement, you need funds that protect capital, not just follow markets

Index funds cannot avoid bad sectors or weak companies

Active mutual funds managed by experienced fund managers give more stability in volatile years

Direct funds have lower expense ratio, but no advisor or help when markets fall

At your age, you need review, support, and guidance, not DIY investing

A Certified Financial Planner will help you adjust your SWP, rebalance funds, and guide redemptions

So, prefer regular plans via a CFP who understands retirement planning

Do not take risk with direct funds or online platforms without guidance

How Much to Withdraw?
Use Systematic Withdrawal Plan (SWP) instead of withdrawing full amounts

Withdraw Rs 1 lakh monthly from debt bucket for 3 to 4 years

After that, shift matured growth from hybrid and equity funds to refill Bucket 1

This way, you are not touching equity money during market lows

Your capital remains safe, and money flows monthly like a pension

Withdraw only what you need, not extra

What If You Live Longer?
This is the most important concern in retirement planning

Your corpus must last at least 25 to 30 years

That’s why we kept a large equity portion to grow with time

Medical inflation, caregiving, and lifestyle will change in 15 to 20 years

You must prepare now, not later

This structure ensures you never run out of money, and your capital can outlive you

What About Health Emergencies?
Keep a separate emergency fund of Rs 5 to 7 lakhs for medical support

Do not mix it with mutual fund buckets

Prefer senior citizen health plans, even if costly. Premium is worth it

If you already have a plan, great. But renew carefully each year

Medical inflation is nearly 10% per year now

Avoid depending on children or borrowing for health care

Tax-Efficient Withdrawals
Equity mutual fund gains beyond Rs 1.25 lakh are taxed at only 12.5%

If you withdraw in small parts, tax is reduced

Debt mutual funds are taxed as per slab, but only when you redeem

Use SWP to keep yearly gains below threshold

Regular plan through CFP ensures you plan withdrawals and avoid heavy tax in one year

Do not redeem all at once. That will trigger higher tax

Review and Rebalance Every Year
Sit with your Certified Financial Planner once a year

Review performance of each bucket

Shift from growth to income bucket as needed

Reduce exposure to equity slowly after 75 years, if required

You can also leave extra funds as inheritance for spouse or children

This review ensures discipline, control, and peace of mind

Final Insights
To get Rs 1 lakh monthly, you may need Rs 2.1 to Rs 2.4 crore corpus

Divide this wisely into three buckets for income, safety, and growth

Avoid FDs, index funds, and direct funds. They may hurt your long-term financial safety

Regular mutual funds via a Certified Financial Planner give support, safety, and flexibility

Use Systematic Withdrawal Plans to create a pension-like flow

Keep an emergency fund for medical expenses separately

Review portfolio yearly and adjust slowly. Don’t panic in market changes

Your wife’s future must be protected even after you. This structure ensures that too

You have lived wisely. Now, invest wisely to live peacefully

If you share the exact amount available for investing, I can show the exact plan in numbers. You may also explore a written financial plan with a Certified Financial Planner for even more clarity.

Best Regards,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

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Hi , Need help , my brother in law has decesed and left shares in USA which is he got as part of his compensation and benefits , the broking firm says that they dont have beneficiary process , hw do get that transffered to my sister who is legal hire
Ans: I’m very sorry to hear about your brother-in-law’s passing. In such times, handling legal and financial formalities can feel overwhelming. But don’t worry—we’ll walk through this step by step in a clear and practical way.

Let’s now see how to help your sister claim those US shares in a structured and smooth process.

Step 1: Understand the Account Type
First, confirm if the shares were held in a brokerage account (like E*TRADE, Schwab, Fidelity, etc.)

If it's an individual account, and there is no named beneficiary, then it becomes part of the estate

If it’s a joint account or transfer-on-death (TOD) account, transfer may be easier. But as you said, no beneficiary process, so likely an individual account

Step 2: Contact the Brokerage Firm
Your sister (as legal heir) must inform the broker of the death, in writing

Include death certificate copy and ask them for their formal estate transmission process

Every broker has a survivor claim or estate settlement team—you must reach them

Even if they don't have a "beneficiary form", they will have a probate transfer process

Step 3: Probate and Court Documents
Since there is no beneficiary, the assets will be distributed based on:

Will, if your brother-in-law made one, or

US State intestacy laws, if there was no Will

So:

Your sister needs to check which US state the brokerage account was in (where it was opened or where he worked/lived)

She needs to apply for probate in that US state or seek a court order to declare her as legal representative of the estate

This will likely need:

Death certificate (with apostille, if required)

Proof of relation (marriage certificate, if she is wife, or legal heirship certificate)

No objection from other legal heirs (if needed)

A US-based probate attorney can help if it's complex

Step 4: Prepare Essential Documents
Usually, the brokerage will ask for:

Original or notarized copy of the Death Certificate

Court-certified documents showing your sister as the executor or legal heir

Letter of Testamentary or Letter of Administration from US court

ID proof and address proof of the claimant

W-8BEN form, if she is not a US citizen/resident (this is for non-resident tax purposes)

Step 5: Tax Withholding and Reporting
US stocks may have capital gains or dividends subject to US tax rules

If the shares are transferred or sold later, the IRS may withhold tax for non-resident heirs

Your sister should consult a tax advisor in India for Indian tax obligations on these shares (especially if sold and proceeds brought to India)

Step 6: Receiving the Shares or Funds
Once the brokerage accepts all documents, she has two options:

Transfer shares to her own brokerage account (in USA or India, depending on broker’s policy)

Or, sell the shares and get proceeds wired to her bank account in India (this may take 4–6 weeks)

She must keep:

Copies of all forms submitted

Tax statements and brokerage letters

Confirmation of transfer/sale, for her own IT return in India

Final Insights
The process may take 2 to 4 months, depending on state laws and document completeness

Please avoid any panic sales or agents who promise shortcuts

Stick to the official channel of the brokerage firm and US court for a smooth, legal transmission

A probate attorney in the US may be required if the estate is large or complex

A Certified Financial Planner in India can help with reinvesting those proceeds wisely after they are received

Helping your sister through this legal maze is a powerful support. She needs clarity and calm guidance, and you’re doing the right thing by seeking this advice.

If you need help connecting with US-based estate attorneys or structuring her future investment in India post-transfer, I’ll be happy to help.

Best Regards,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

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Dear Sir / Madam, I purchased a flat for Rs 29.3L on Sept 2013. The registration cost was Rs 1,46,500/-. I sold the flat for Rs 89L on Feb 2025. The brokerage fees was Rs 1.5L. How much would be the capital gains amount that I need to invest in Capital gains bonds ? Which tax regime would result in lesser tax, the earlier tax regime or the revised tax regime of last year Thanks Jay
Ans: You’ve clearly explained the purchase cost, sale value, and related expenses. That helps a lot in giving an accurate and comprehensive answer.

Let us now assess your capital gains liability, step by step, and guide you on how much to invest in capital gains bonds, along with which tax regime may benefit you more.

Understanding Long-Term Capital Gains (LTCG)
Since you purchased the flat in September 2013 and sold it in February 2025, the holding period is more than 24 months.

So this is classified as a long-term capital asset.

Therefore, the profit from this sale is considered as Long-Term Capital Gains (LTCG) and taxed accordingly.

Indexed Cost of Acquisition
To calculate LTCG, we must use the Indexed Cost of Acquisition, as per the Cost Inflation Index (CII).

Let’s now list down the known values:

Purchase Price = Rs 29.3 lakhs

Registration Charges = Rs 1.465 lakhs

Total Purchase Cost = Rs 30.765 lakhs

Year of Purchase = FY 2013-14 → CII = 220

Year of Sale = FY 2024-25 → CII = 363

Now apply indexation:

Indexed Purchase Cost = (Original Cost × CII in year of sale) ÷ CII in year of purchase

So:

Indexed Cost = (30.765 × 363) ÷ 220 = approx Rs 50.79 lakhs

Net Sale Proceeds
Sale Price = Rs 89 lakhs

Brokerage paid = Rs 1.5 lakhs

Net Sale Consideration = Rs 87.5 lakhs

Long-Term Capital Gain
Now compute the LTCG:

LTCG = Net Sale Value – Indexed Purchase Cost

= Rs 87.5 lakhs – Rs 50.79 lakhs = Rs 36.71 lakhs (approx)

This is your taxable long-term capital gain.

Exemption via Capital Gains Bonds (Section 54EC)
You can invest in capital gains bonds under Section 54EC to save tax.

Eligible bonds are from REC, NHAI, etc.

Maximum investment allowed = Rs 50 lakhs per financial year

Minimum lock-in period = 5 years

Interest = around 5.25% p.a. (taxable)

In your case:

LTCG is approx Rs 36.71 lakhs

So, invest Rs 36.71 lakhs in Section 54EC bonds before 6 months from date of sale (i.e., by August 2025)

This will give you 100% LTCG exemption

Earlier vs Revised Tax Regime
Here is how to think about it:

Earlier Regime:
Allows deductions like Section 80C, 80D, HRA, LTA, and home loan interest.

LTCG tax on property is 20% after indexation. This applies in both regimes.

However, if you have many deductions, earlier regime may reduce total tax.

New Regime (as per Budget 2023-24 onwards):
Lower slab rates but no major deductions allowed

LTCG tax on property remains the same – no extra benefit here

So the decision depends on your other income and deductions

In most cases:

If you claim 80C, 80D, housing loan, etc., then earlier regime is better

If your income is purely salary, and you don’t claim deductions, then new regime may help

But in your case, LTCG tax remains same in both

Additional Tips
Capital Gains Bonds must be held for 5 years. Premature exit is not allowed.

Interest is taxable every year. So factor that into your ITR.

Keep bank receipts, bond certificates, and sale documents safely for 6+ years.

File Schedule CG in ITR-2 next year (AY 2025–26)

What If You Don’t Want to Invest in Bonds?
You can also save LTCG tax by buying a new residential property under Section 54

Property must be bought within 2 years (or constructed within 3 years)

If planning to reinvest in property, do it within deadline

If not, 54EC bonds are simpler, more flexible

Final Insights
Your capital gain is around Rs 36.71 lakhs

Invest that amount in 54EC bonds before August 2025

You can save 100% capital gains tax legally

Choose earlier tax regime if you have deductions like 80C, housing loan, etc.

Keep proofs for cost, sale, brokerage, and 54EC investment for future tax queries

Plan carefully. This one-time decision affects your long-term finances

If you want help calculating future taxes or planning retirement income from property sales, always consult a Certified Financial Planner. It’s not just about tax-saving—it’s about protecting your wealth over time.

Best Regards,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8254 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Asked by Anonymous - Mar 13, 2025Hindi
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Eps. Calculate. Pension. Up to. 58. Yr. but. I. Contribute. Upstox. 60. Yers. Deferred. What. Should. I. Do
Ans: You are asking about EPS (Employee Pension Scheme) and contributing till age 60, while pension is allowed only up to age 58.

This is a very common confusion.

Pension Under EPS Is Payable From 58 Years
EPS gives monthly pension after 58 years.

You must have completed at least 10 years of service.

From 58 years, you can start monthly pension under EPS.

This is not automatic. You have to apply through your employer or EPFO.

What Happens If You Work Till Age 60?
EPS allows voluntary contribution up to age 60.

This is called deferred pension.

If you delay pension from age 58 to 60, you get a bonus.

Bonus is 4% extra pension for each deferred year.

So, 8% more pension if you start at 60 instead of 58.

What You Should Do
If you plan to work till 60, you can continue EPS till then.

You will contribute 12% EPF as usual. Employer’s share will go to EPF + EPS.

When you retire at 60, apply for Form 10D to start pension.

You will get 8% higher pension than normal.

If You Don’t Want to Wait Till 60
You can still start pension at 58.

Just inform EPFO that you want to begin EPS from 58.

No bonus in that case. But you get pension earlier.

Important Reminders
EPS amount is fixed, based on salary and service years.

EPS is not linked to EPF balance or mutual fund returns.

Maximum EPS pension is usually around Rs 7,500/month, unless you opted for higher pension.

You cannot withdraw EPS corpus — only monthly pension allowed.

What Is “Higher Pension”?
EPFO recently gave an option to opt for higher pension.

That means, full employer contribution (8.33%) goes to EPS, not capped at Rs 15,000 salary.

You must apply before the deadline.

It gives more pension, but reduces EPF balance.

If you haven’t applied for higher pension, your EPS will be based on Rs 15,000 salary cap.

Final Insights
EPS pension starts from 58 years, not automatically. You must apply.

You can defer to 60 for 8% extra pension.

Contribution can continue till 60 if you keep working.

Higher pension option may be useful if your salary was above Rs 15,000 for long.

Talk to your employer’s HR or visit EPFO portal to check your service record and eligibility.

Your next step should be to decide whether you want to defer EPS or not.

Then, plan how to combine EPF, EPS, and other investments for retirement income.

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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