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How to create a 5-7 Lacs p.m. income for wife on 10-15 Lacs business income and 4 Crore house?

Ramalingam

Ramalingam Kalirajan  |6922 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 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
Asked by Anonymous - Jul 19, 2024Hindi
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Hi Anil, My Current Assets and debt along with that of my wife are as follows: 1. Equity - 1 Lac SIP p.m. (Just started in name of my Minor and only 17 yo child/Son's Joint Account for his future) 2. Gold - Approx. 5 Crores in self owned Jewelry/Gold 3. Self Owned House - 4 crores (Loan Free - Self Occupied) 4. Self Owned Flat - 8 Crores (Loan Free - Empty) 5. 4 Cars - Approx Current Market Value 2.5 Crores on EMIs of 3.00 p.m. (Current Loan O/S 1.50 Crores) 6. Current Business Income - Approx. 10 - 15 Lacs P.M. 7. Total Business Liability (Business Loans) - 3.50 Crores 8. Enterprise Value of Business as of today - Approx. 3 Crores post depreciation (Actual total Investment was 8 crores 1 year ago, Equity and Debt) My son is 17 yo and starts his Engineering soon, Post 4 years of his B.Tech he plans to study his MBA in the US, approx. Fee and living expenses expected for his entire education from today till end of his MBA is expected to be approx. 2.50 crores. I'm currently 45 years old, and due an undisclosed illness i don't feel i would be in a working state for longer than 8 years to 10 years if I'm lucky. I don't see my Income rising anytime soon due to various reason. Need your advise on from today itself I can start to plan leave behind a solid nest egg for my wife with a decent Income of approx. 5/6/7 Lacs p.m., one loan free residence, a fully paid off education for my Son and whatever accumulates in his SIP in the next 5 to 10 years as I'm sure with his education he will be able to support himself completely. Thanks and Regards Anonymous

Ans: Current Financial Overview

Your assets and liabilities show a diverse portfolio. Here’s a detailed assessment:

Equity Investments: Rs 1 lakh SIP in the joint account for your son.

Gold Holdings: Approx. Rs 5 crores in self-owned jewelry.

Property Assets: Self-owned house worth Rs 4 crores (loan-free). Self-owned flat worth Rs 8 crores (loan-free).

Vehicles: Four cars valued at Rs 2.5 crores with an EMI of Rs 3 lakhs per month (current loan outstanding is Rs 1.5 crores).

Business Income: Approx. Rs 10-15 lakhs per month.

Business Liabilities: Rs 3.5 crores in business loans.

Enterprise Value: Business valued at Rs 3 crores post-depreciation (initial investment of Rs 8 crores a year ago).

Financial Goals

Your primary goals are:

Ensure a nest egg for your wife.

Provide Rs 5-7 lakhs monthly income post-retirement.

Maintain a loan-free residence.

Fund your son’s education, costing Rs 2.5 crores.

Investment Strategy

Here are the steps to achieve these goals:

1. Reduce Debt

Focus on Reducing EMIs: Your car EMIs are high. Try to pay off these loans faster to reduce monthly outflows.

Reassess Business Loans: Consider restructuring business loans to reduce interest rates.

2. Diversify Investments

Equity Mutual Funds: Continue SIPs for your son’s education. Increase SIP amount as income allows.

Gold Monetization: Use some of the gold holdings for gold loans or monetize them. This can generate liquidity without selling gold.

3. Real Estate Utilization

Rental Income: Rent out the empty flat. This will provide a steady income stream.
4. Education Fund

Dedicated Fund: Create a dedicated fund for your son’s education. Use high-growth mutual funds to accumulate the required amount over 4-6 years.
5. Insurance Coverage

Health Insurance: Ensure you have adequate health insurance for yourself and your family. This will reduce the burden of medical expenses.

Term Insurance: Consider a term insurance plan to secure your family’s future. Ensure the sum assured covers all liabilities and future expenses.

6. Estate Planning

Will and Trusts: Draft a will and consider setting up trusts. This ensures a smooth transfer of assets to your wife and son.
Active Management Over Index Funds

Higher Potential Returns: Actively managed funds aim to outperform the market, offering higher potential returns.

Expertise: Fund managers make informed decisions based on market conditions.

Direct vs. Regular Funds

Regular Funds: Invest through an MFD with CFP credentials. They offer professional guidance and help in choosing the best funds.
Final Insights

To secure your family’s future, focus on debt reduction, diversify investments, and ensure adequate insurance coverage. Rental income and dedicated education funds are crucial. Professional management of your investments will maximize returns and ensure financial stability.

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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Ramalingam

Ramalingam Kalirajan  |6922 Answers  |Ask -

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

Asked by Anonymous - May 04, 2024Hindi
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Hi sir I am 34 years with take home 75k. Present wife not working and we are having w year daughter and 2 months son. My tax regime is new My expenses as Home loan 11k. Car loan 10.5k. Other expenses 10k. Home expenses and maid 10k. Term insurance yearly 19k with 1 cr coverage. Please suggest me investment of 10-12k Daughter Son Kids higher education Retirement My planning ssy of 50k yearly and nps of 50k Please suggest.
Ans: It's wonderful to see your proactive approach to securing your family's financial future, especially with young children to care for. Let's explore how you can allocate your resources effectively to meet your various financial goals.

Prioritizing Your Investments
Given your income, expenses, and specific financial goals, here's a suggested investment strategy tailored to your needs:

1. Children's Education:
Investing in your children's education is crucial for their future success. Consider opening separate savings accounts or investment plans for your daughter and son. Allocate a portion of your monthly budget (around Rs. 2,000 to Rs. 2,500 each) towards these accounts to accumulate funds over time. Opt for investment options with moderate risk and potential for long-term growth, such as mutual funds or child education plans.

2. Retirement Planning:
It's never too early to start planning for your retirement. Allocate a portion of your monthly budget (around Rs. 3,000 to Rs. 4,000) towards retirement savings. Maximize contributions to your NPS account, taking advantage of the tax benefits offered under the new tax regime. Additionally, consider investing in equity mutual funds or voluntary provident fund (VPF) to supplement your retirement corpus further.

3. Term Insurance:
You've already taken a significant step by securing term insurance coverage of Rs. 1 crore. Ensure that your coverage amount is sufficient to meet your family's financial needs in case of any unfortunate event. Review your insurance needs periodically, especially as your family and financial responsibilities evolve.

4. Emergency Fund:
Building an emergency fund is essential to handle unexpected expenses or financial setbacks. Aim to set aside an amount equivalent to 3 to 6 months' worth of living expenses in a high-yield savings account or liquid mutual fund. Start with a small portion of your monthly budget (around Rs. 1,000 to Rs. 2,000) towards this fund and gradually increase it over time.

Monitoring and Adjusting Your Plan
Regularly review your financial plan to track progress towards your goals and make any necessary adjustments. As your income increases or expenses change, you may need to reallocate your resources accordingly. Consider consulting with a Certified Financial Planner to ensure that your investment strategy remains aligned with your long-term objectives.

Conclusion
By following this investment plan and staying disciplined in your approach, you can build a solid financial foundation for your family's future. Remember that consistency and patience are key to achieving your financial goals over time.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6922 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 13, 2024

Asked by Anonymous - Jun 15, 2024Hindi
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Hello am 40, with monthly salary income of around 1.5 L, wife works part time with around 8k pm these are the only source of family income with 2 school going kids and my elderly dad. We own a house with 27k emi to be closed in next 6 to 7 years + equity corpus around 10L and wife has around 70k + my pf around 9L with some gold of around 200 gms + a small car in seconds + a 15 yr old Jevan Anand policy and company provided medicals+ around 1L in bank. Equity corpus was accumulated over a period of 2 years with invested amount of 6.6 L which is hovering around 10L current value and i am building these assets ongoing basis with around 20 k (10k+10k) pm investment on equity and gold family expenses around 40k pm. All these are self-made with not much guidance or external support. Wanted to understand if am on right track to support myself and my family needs for future. Also will it be wise to replace my small car with family car (around 10to 15L) with my financial situation now? I Dont wish to break any of my corpus considering any future or unforeseen events
Ans: You've done a commendable job of building your assets and managing your finances on your own. Let's assess your current standing and provide insights on future steps, including the decision about upgrading your car.

Current Financial Situation
Income and Expenses
Your combined family income is Rs. 1.58 lakhs per month. With your wife's part-time income, this provides a good cushion. Monthly family expenses are Rs. 40k, and your home loan EMI is Rs. 27k. This leaves you with around Rs. 91k monthly for savings and investments.

Assets
Equity Corpus: Rs. 10 lakhs, accumulated over 2 years from an investment of Rs. 6.6 lakhs.
Gold: 200 grams.
Provident Fund: Rs. 9 lakhs.
Bank Balance: Rs. 1 lakh.
Insurance: Jeevan Anand policy for 15 years.
Car: A small second-hand car.
Liabilities
Your home loan has an EMI of Rs. 27k, which will be closed in 6-7 years. This is your primary liability.

Monthly Investments
Rs. 10k in equity.
Rs. 10k in gold.
Assessment of Current Investments
Equity Investments
Your equity investments have grown from Rs. 6.6 lakhs to Rs. 10 lakhs, showing a healthy appreciation. Investing Rs. 10k monthly in equity is a good strategy, considering the long-term growth potential.

Gold Investments
Investing Rs. 10k monthly in gold adds stability to your portfolio. Gold acts as a hedge against inflation and economic uncertainties.

Provident Fund
Your PF of Rs. 9 lakhs provides a safe and stable corpus for retirement. Continue contributing to this as it also provides tax benefits.

Jeevan Anand Policy
Jeevan Anand is a traditional endowment plan. While it offers life cover and returns, its growth rate is typically lower than other investment options. Consider reviewing this policy's performance and comparing it with other potential investments.

Financial Planning for the Future
Emergency Fund
Your current bank balance of Rs. 1 lakh is relatively low for an emergency fund. Ideally, you should have 6-12 months' worth of expenses in a liquid and accessible form. Considering your monthly expenses are Rs. 67k (including EMI), aim for an emergency fund of around Rs. 4-8 lakhs. This can be built gradually by setting aside a portion of your savings each month.

Child's Education
With two school-going kids, planning for their higher education is crucial. Education costs are rising, so starting early will give you a head start. You could allocate a portion of your monthly investments towards child education funds or children's mutual funds. These funds typically offer higher returns over the long term, helping you build a substantial corpus for their education.

Retirement Planning
You have a good start with your PF and equity investments. However, to ensure a comfortable retirement, consider diversifying your investments further. You might explore adding more equity funds, particularly diversified or actively managed funds, to your portfolio. These funds have the potential to offer higher returns compared to traditional investments.

Insurance Coverage
Your Jeevan Anand policy provides life cover, but it's essential to assess if it's adequate. With dependents, including two children and an elderly parent, ensure your life cover is sufficient to cover their needs in your absence. Consider term insurance for higher coverage at a lower premium.

Medical Insurance
While you have company-provided medical insurance, it's advisable to have a separate family floater plan. This ensures coverage continues even if you change jobs or retire. Evaluate the sum assured to ensure it covers major medical emergencies.

Decision on Upgrading the Car
Financial Impact
Replacing your small car with a family car worth Rs. 10-15 lakhs is a significant decision. If you finance the new car, it will add to your monthly EMIs. Consider the impact on your cash flow and whether it would strain your current financial commitments.

Current Financial Priorities
Your primary financial priorities should be building an emergency fund, securing your children's education, and planning for retirement. Upgrading your car, while providing comfort, should not compromise these goals. If you decide to go ahead, consider saving for a larger down payment to reduce the loan burden.

Alternatives
If your current car meets your family's needs, consider postponing the upgrade until you achieve more financial milestones. Alternatively, a certified pre-owned car can offer a balance between cost and comfort.


You've done an excellent job of managing your finances independently. Your dedication to investing regularly and building assets is commendable. Balancing a family's needs with long-term financial planning is challenging, and you've shown great foresight and discipline.

Managing finances with multiple dependents, including children and an elderly parent, can be stressful. It's understandable to seek reassurance and guidance. Your desire to secure your family's future reflects your responsibility and care.

Final Insights
You've made significant progress in building a stable financial foundation. Your focus on regular investments and prudent asset allocation is noteworthy. Moving forward, prioritize building a robust emergency fund, securing higher education for your children, and ensuring sufficient insurance coverage.

Evaluate your Jeevan Anand policy to ensure it aligns with your financial goals. Consider diversifying your investments with actively managed equity funds for better returns. Regarding upgrading your car, weigh the financial impact carefully and prioritize your primary financial goals.

If you need further personalized advice, consulting with a Certified Financial Planner can help refine your strategy and provide peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6922 Answers  |Ask -

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

Money
Hello Sir, I am 44 and my wife is 41 and we are both working in the software industry and have a 10 year old daughter. We have taken home salaries of 3.6 L and 3.1 L per month respectively. At this point we have real estate worth of around 5-6 crores (2 flats and 2 plots) and rental income from one of the flats is 20k. Our Financial assets are PF - 1 CR, PPF - 20 L, NPS - 20 L, NPS - 20 L, Sukanya Samrithi - 10 L, Mutual funds - 50 L, Bank balance / FD's - 50 L, Shares / Options / RSU's ($80000) - ~65L, Gold (physical & Digital) - ~1.5 CR, Some Unlisted Shares - 6L, Some LIC's - 6L, Crypto - 7 L and we have 2 good Cars InheritanceOur ancestral inheritance would be roughly 8 CR's We have monthly investments of Mutual Fund SIP's - 1.5 L, Bank RD'S - 1.2 L, PF (Employee & Employer) - 1 L, PPF - 25000 NPS - 30000 and Sukanya Samrithi - 12500 InsuranceWe have taken sufficient term insurance and health insurance of around 1 cr apart from the corporate insurance cover We don't have any loans or EMI's and current monthly expenses are around 1.7 L and typically take an international vacation every year. Considering the uncertainty in the corporate sector we want to achieve financial independence and invest our surplus money wisely. Please advice
Ans: You and your wife have built a strong financial foundation. Your combined monthly salaries of Rs. 6.7 lakh, along with substantial real estate holdings and financial assets, reflect good financial discipline. It’s commendable that you have no loans or EMIs and that you are investing systematically in mutual funds, PPF, NPS, Sukanya Samriddhi, and other instruments.

Your monthly expenses are around Rs. 1.7 lakh, which is manageable given your income. Additionally, you have set up term and health insurance, which protects your family in unforeseen circumstances.

Real Estate Portfolio
Your real estate portfolio of Rs. 5-6 crores is valuable, with one property generating Rs. 20,000 per month in rental income. However, real estate is not as liquid as other investments, and the returns can be inconsistent due to market fluctuations. Diversifying away from real estate into more liquid and scalable assets like mutual funds can enhance your portfolio’s flexibility and growth.

Financial Assets Review
You have accumulated an impressive range of financial assets:

Provident Fund: Rs. 1 crore is a solid, long-term foundation for your retirement.
Public Provident Fund (PPF): Rs. 20 lakh is a reliable and tax-efficient investment.
National Pension Scheme (NPS): With Rs. 20 lakh in NPS and a Rs. 30,000 monthly contribution, this will provide additional retirement security.
Sukanya Samriddhi Yojana (SSY): Rs. 10 lakh saved for your daughter’s future education or marriage is a prudent move.
Mutual Funds: Rs. 50 lakh indicates a good approach to market-based investments.
Bank Balance and Fixed Deposits (FDs): Rs. 50 lakh gives you liquidity but earns low returns. Consider reducing exposure here.
Shares, Options, RSUs: Rs. 65 lakh (approx.) in stocks and RSUs is impressive and provides equity exposure.
Gold: With Rs. 1.5 crore in gold, you have a significant portion in this asset class. While gold is a good hedge, it doesn’t generate regular income.
Unlisted Shares: Rs. 6 lakh in unlisted shares adds some diversity but carries high risk.
Crypto: Rs. 7 lakh in cryptocurrencies is highly speculative. You should carefully monitor this segment.
Income and Investment Streams
You have a total of Rs. 1.5 lakh in mutual fund SIPs, Rs. 1.2 lakh in recurring deposits, Rs. 1 lakh in PF, Rs. 25,000 in PPF, Rs. 30,000 in NPS, and Rs. 12,500 in Sukanya Samriddhi. This indicates you are systematically investing Rs. 4.07 lakh per month. Your strategy of spreading investments across different asset classes is good, but there’s room for optimization.

Insurance
Your term insurance of Rs. 1 crore is sufficient to provide financial security for your family. You also have adequate health insurance, which is critical given the rising costs of healthcare. Since you are covered with corporate insurance as well, you are in a strong position.

Monthly Expenses and Lifestyle
Your monthly expenses of Rs. 1.7 lakh include international vacations, reflecting a comfortable lifestyle. Given your substantial income, this is well within your budget. However, given the uncertainty in the corporate sector, you should focus on increasing your investment surplus and potentially adjusting your lifestyle slightly to allocate more toward long-term financial independence.

Ancestral Inheritance
You are expecting an inheritance of Rs. 8 crore, which adds further to your financial strength. While inheritance can offer significant financial security, it is important not to rely solely on this for your long-term financial planning. Planning for financial independence with the assumption that this inheritance may be delayed or used differently is wise.

Goals for Financial Independence
Given the uncertainty in the corporate sector, achieving financial independence as early as possible is a wise goal. Here are some key strategies to focus on:

Build a Corpus for Early Retirement: Financial independence means having enough passive income to cover your expenses without relying on your active income from employment. To achieve this, you should aim to build a corpus that generates sufficient returns to cover your expenses.

Review Investment Allocation: While your current investments are diversified, there is room for improvement. Mutual funds should be a bigger part of your investment strategy due to their higher potential for growth and liquidity compared to real estate and FDs. You can consider increasing your SIPs or even adding more funds to increase equity exposure.

Enhance SIP Contributions: You are currently contributing Rs. 1.5 lakh to SIPs. To fast-track your goal of financial independence, consider increasing your SIP contributions by Rs. 50,000 to Rs. 1 lakh more per month. Since you already have a comfortable income surplus, this should be feasible.

Bank Recurring Deposits (RDs): Rs. 1.2 lakh per month in RDs is a significant amount. While RDs are low risk, the returns are also limited. You may consider redirecting some of this towards higher-return options like mutual funds.

Avoid Over-Reliance on Gold: With Rs. 1.5 crore in gold, your portfolio may be too heavily tilted toward this asset. Gold does not generate regular income or dividends, and its growth potential is limited. Consider gradually reducing your gold exposure and moving funds into more productive assets like equities.

Unlisted Shares and Crypto: Rs. 7 lakh in crypto and Rs. 6 lakh in unlisted shares carry high risk. Monitor these investments carefully, and avoid increasing exposure unless you fully understand the risks. While diversification is good, high-risk assets should not form a large part of your portfolio.

Reassess LIC Policies: If your LIC policies are purely for investment purposes, they may not be the most efficient vehicles for wealth creation. You could consider surrendering these and redirecting the funds into higher-return mutual funds, where returns are generally better over the long term.

Planning for Your Daughter’s Future
You’ve already made good progress with Rs. 10 lakh in Sukanya Samriddhi. Continue contributing to this for her education and marriage. Additionally, consider earmarking a portion of your mutual fund investments specifically for her education, given the rising costs of higher education.

Early Retirement Consideration
You are in a strong financial position to aim for early retirement. Here are some recommendations to strengthen this possibility:

Calculate Required Corpus: Based on your current lifestyle and expected future expenses, estimate the corpus you need to retire comfortably. Given your monthly expenses of Rs. 1.7 lakh, your retirement corpus should be large enough to generate sufficient passive income.

Focus on Increasing Equity Exposure: Equities are a growth-oriented asset class, and with your long-term horizon, increasing your exposure to equity mutual funds can provide the growth needed to achieve financial independence sooner. This is especially important if you wish to retire early.

Increase Contributions to NPS: NPS is a great retirement-oriented product that provides both tax benefits and long-term growth potential. You can consider increasing your contributions to NPS to create a larger retirement corpus.

Final Insights
You and your wife have laid the foundation for a financially secure future with a diversified portfolio and strong income. However, to achieve financial independence and protect against corporate sector uncertainty, you should focus on optimizing your investments.

By increasing SIP contributions, reducing exposure to low-return instruments, and focusing on high-growth assets, you can fast-track your financial independence. Additionally, ensure that your investment strategy accounts for your daughter's future, early retirement goals, and potential lifestyle changes.

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

..Read more

Latest Questions
Radheshyam

Radheshyam Zanwar  |1019 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Nov 04, 2024

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Hi Sir, I am tensed as JEE Main Examination is approaching and i am scared that i would only be able to score 100/300 at best. Please suggest me some good regional colleges. I am female single girl child in Delhi. Engineering was never my first priority yet I chose it because it seemed a safe option. I would also try and give CUET. One more concern is that my 5th subject in class 12 is GST or Geospatial Technology. Is there any scope for this subject through which I can enter a decent college. I dont want to spend my parents money..Please help. I am distressed
Ans: Hello Shaamhavi
First I would like to say that without any fear in mind and a predetermined score, you appear for JEE 2025 in 1st session. To improve your score/performance, you have 2nd attempt also.
You said, engineering was never your 1st priority. Then, why not have discussed this fact with your parents or parents have forced you to go for engineering? It is not clear from your question. How you can say, it is a safe option is also not clear.
If you are scared about JEE preparation, then it would be better to try CUET. GST i.e. Geospatial Technology is a good subject and there is scope in this field.
Now, I would like to suggest you: (1) Focus more on JEE preparation or CUET (2) Try to excel in GST subject (3) Try to score more and more in the respective examinations on a priority basis, (4) No need to take the stress about parents money as the expenses are already done on your classes + college tuition fees, etc. (5) Leave up all other aspects of Regional College availability, descent college in GST field etc. (6) For all your problems, only one answer: SCORE HIGH IN THE EXAMIANTIONS IN WHICH YOU ARE APPEARING.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
Thanks.

Radheshyam

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