I have a very basic question about direct taxes. Interest earned on FD is generally much lesser than inflation %. In that case, why is the interest earned on an FD, taxed?

If I earn 5% interest on Rs 1 crore FD, it would be ~5 lakh per year, which should be tax free. What is your opinion? 

Ans: Appreciate you for continuing your SIP with discipline since 2021. Staying invested for more than three years itself shows commitment and patience, which are very important for long-term wealth creation.

» Understanding the Current Return Experience
– A 6% return over this period can feel disappointing, especially when expectations from equity are higher
– Equity-oriented funds do not move in a straight line; different market phases impact returns differently
– The last few years included sharp rallies, corrections, and sector rotations, which affected diversified strategies unevenly
– Short- to medium-term returns alone should not be the only reason for an immediate decision

» Time Horizon vs Fund Behaviour
– Such funds are designed to perform well over a full market cycle, usually 7 years or more
– Performance between 3 to 4 years can remain muted even if the long-term potential is intact
– Your SIP amount is modest, which means consistency and time will play a bigger role than switching frequently

» Should You Switch Based Only on 6% Return
– Switching only because of recent low returns may lock in underperformance
– It is important to check whether the fund still follows its stated strategy and risk control
– If the fund has become inconsistent, or your overall portfolio lacks balance, then a change can be considered
– Any switch should be part of a broader portfolio improvement, not an isolated action

» Portfolio-Level Assessment Is More Important
– One fund should not be judged in isolation
– A 360-degree view should include:

Overall equity exposure

Allocation between growth-oriented and stability-oriented strategies

Your age, income stability, and future goals
– If your portfolio is dependent on only one equity style, returns may appear slow during certain phases

» What to Do Going Forward
– Instead of fully stopping, you may:

Continue the existing SIP for long-term compounding

Gradually add another actively managed equity strategy with a different approach
– Actively managed funds offer flexibility to shift sectors and reduce downside risk, which is not possible in index-based options
– Active management helps manage volatility better during uncertain markets

» Tax and Cost Awareness
– Any switch in equity funds may trigger capital gains tax
– If held for more than one year, gains above Rs 1.25 lakh are taxed at 12.5%
– Short-term exits attract 20% tax, which can reduce effective returns
– Hence, switching should be value-driven, not emotion-driven

» Finally
– Your investment journey is still on track, and this phase does not define long-term success
– With the right diversification, patience, and periodic review, equity investing rewards discipline
– A structured review with a Certified Financial Planner can help align your SIPs with goals and market realities
– Focus on process, not just recent performance

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

Ans: Appreciate the clarity with which you have shared your income pattern, responsibilities, and future plans. Starting early, investing seriously, and thinking ahead about income reduction already puts you in a strong position.

» Overall View of Your Current Strategy
– Your present high savings rate is a big advantage and should be used wisely
– Long-term orientation of more than 10 years suits equity-oriented investing
– Supporting parents, planning exams, and future family needs show mature financial thinking
– Your strategy is growth-focused, but it needs better protection for the income transition phase

» Suitability of an Equity-Heavy Approach
– High equity exposure is suitable when income is strong and stable
– Future income uncertainty means volatility tolerance may reduce emotionally, even if risk capacity is high
– Equity-heavy portfolios can show sharp short-term falls, which may be stressful during exam or career pressure periods
– The approach is directionally right, but timing and balance need fine-tuning

» Managing the Next 1–2 Years of Income Reduction
– Use the current high-income phase to build strong safety layers
– Increase allocation to low-volatility and short-term holding options meant only for stability
– Create a clear separation between:

Long-term wealth money (do not touch)

Career transition and exam-related money (capital protection focus)
– As income reduces, SIP amounts can be lowered without stopping investments fully

» Asset Allocation Adjustments Over Time
– Gradually reduce exposure to higher volatility segments as income visibility reduces
– Maintain core equity exposure for long-term goals, but avoid over-dependence on aggressive segments
– Avoid frequent switching based on short-term market movement
– Asset allocation discipline matters more than chasing higher returns

» Liquidity and Flexibility Planning
– Ensure emergency and opportunity money is fully ready before income reduces
– Liquid and low-risk options should cover at least all non-negotiable expenses
– This gives confidence to stay invested in equity during market corrections
– Flexibility reduces the risk of forced withdrawals at the wrong time

» Insurance and Protection Review
– Review the existing investment-cum-insurance policy started during postgraduation
– Such policies are usually low on returns and high on cost
– If surrender conditions are reasonable, consider exiting and redirecting money into more efficient options
– Keep pure insurance and investments separate for better clarity and control

» Common Mistakes Seen at This Stage
– Investing aggressively without enough liquidity buffer
– Reducing investments fully instead of adjusting amounts during income dips
– Overexposure to similar equity styles leading to hidden concentration risk
– Ignoring future life changes like marriage, children, and relocation costs

» Tax and Exit Awareness
– Equity fund exits within one year attract 20% tax on gains
– Long-term equity gains above Rs 1.25 lakh are taxed at 12.5%
– This makes planned withdrawals and phased rebalancing more efficient than sudden exits

» Finally
– Your financial foundation is strong and well thought out
– With better balance between growth and stability, you can manage income changes smoothly
– Focus on structure, liquidity, and discipline rather than only return numbers
– A periodic review with a Certified Financial Planner will help you stay aligned as life evolves

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

Ans: No. You cannot take JEE Main in 2028 by just giving 5 subjects in NIOS after passing 12th in 2025.

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Radheshyam

Ans: No. You cannot take JEE Main in 2028 by just giving 5 subjects in NIOS after passing 12th in 2025,

Good luck.
Follow me if you receive this reply.
Radheshyam

Ans: Yes. You can register for JEE Mains now and correct the name later (during the correction window or before counselling with a supporting certificate). This generally won’t cause a problem as long as you update the documents to match before seat allocation.

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Radheshyam

Ans: BITS Pilani CS is generally considered the better overall choice (brand, opportunities, and placements) if fees aren’t a concern.

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Radheshyam

Ans: Don’t rely only on PSUs! Competition is very high. Skills and experience can offset an average CGPA in private IT, while GATE/govt prep serves as your safety net. Try to raise your CGPA above 7, as many companies and some government roles use 60%+ as a cutoff, but 6.89 is still workable. Follow a dual approach: make placements/internships your main focus. Since service-based IT firms are the most practical entry, keep GATE prep as a slow backup. However, it is highly recommended that you contact your college's placement division for more details on the current requirements.

Good luck.
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Radheshyam

Ans: You haven't mentioned if you've already applied/appeared for JEE Main January 2026 session. For April session registration, FIRST get your NCL/caste certificates corrected from the issuing authority (7-15 days process), then register by Feb 25. Form corrections won't fix certificate mismatches—JoSAA will reject mismatched documents. Apply for 2-3 additional engineering entrance exams as backup options rather than depending solely on JEE. All the BEST for Your JEE preparation!

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Ans: You have done very well to start early, invest regularly, and build a sizeable corpus of around Rs.24 lakh by age 38. Investing as a couple, keeping a long-term view, and accepting moderate-to-high risk clearly show discipline and maturity. This itself puts you ahead of many investors.

» Target Feasibility and Time Horizon
– A 9-year horizon is reasonably good for equity-oriented investing, especially when SIP amount is strong and discipline is visible.
– With a monthly SIP of around Rs.55,000 and an existing corpus already in place, the target range of Rs.1.75 Cr to Rs.2 Cr by 2035 is achievable, but it will not happen by default.
– Market returns will not be even every year. Some years will test patience. Staying invested matters more than timing.
– To improve certainty and reduce pressure in later years, annual step-up is strongly advisable.

» Need for SIP Step-Up
– Without increasing SIP, the gap between effort and target may widen, especially if markets give average returns.
– A yearly step-up of even 8% to 10% can make a big difference over 9 years.
– Step-up should ideally match salary growth, bonuses, or business income rise.
– This keeps lifestyle stable while wealth grows silently in the background.

» Portfolio Structure Assessment
– Overall, your asset mix shows good balance across growth-oriented equity, stability-oriented allocation, and some global exposure.
– Splitting investments between spouses is sensible for long-term planning and tax efficiency.
– Exposure to mid-sized companies adds growth, but it also adds volatility. Your risk profile supports this, but allocation must be controlled.
– Flexibility-oriented funds give stability during market cycles and help reduce sharp drawdowns.
– Multi-asset exposure helps in volatile phases, but too many similar allocations can reduce clarity.

» Observations on Equity Allocation
– There is overlap in categories across both portfolios, especially in flexi and mid-cap styles.
– Too many funds in similar categories do not always improve returns; they often dilute conviction.
– A slightly more streamlined structure can improve monitoring and discipline.
– Growth funds should remain the core, but risk concentration must be watched as the goal year approaches.

» Gold, Silver, and Overseas Exposure
– Limited allocation to precious metals is fine as a stabiliser, not as a return driver.
– Keeping this allocation capped avoids drag on long-term growth.
– Overseas equity exposure adds diversification and currency hedge, but it should not dominate the portfolio.
– Periodic review is important as regulations and valuations change.

» What Changes Can Be Considered
– Reduce duplication across similar equity styles between both portfolios.
– Keep one clear growth-oriented core and one stability-oriented support structure.
– Gradually increase allocation to relatively stable equity styles after age 42–43 to protect accumulated corpus.
– Ensure each fund has a clear role; if the role is unclear, the fund may not be needed.

» Risk Management and Goal Alignment
– As the corpus grows, protecting gains becomes as important as chasing returns.
– Around the last 3 years, volatility management should take priority over aggressive growth.
– Periodic rebalancing is essential, especially after sharp market rallies.
– Emergency fund, health cover, and term protection should be adequate so investments are never disturbed mid-way.

» Tax Awareness While Investing
– Equity mutual fund gains held long term are taxed only beyond the exempt threshold, which supports long-term discipline.
– Short-term exits are costly from a tax point of view and should be avoided unless absolutely necessary.
– Asset allocation discipline reduces unnecessary churn and tax leakage.

» Finally
– Your goal is realistic, your discipline is strong, and your starting point is solid.
– Annual SIP step-up is not optional; it is the key enabler for reaching the upper end of your target.
– Simplification, role clarity of funds, and periodic review will improve outcomes without increasing stress.
– Staying invested with patience will matter more than reacting to short-term market noise.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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