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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 04, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Dr on Jun 29, 2025Hindi

Both of us are 42 years old. Professionals. Monthly earning around 4 lakhs. Monthly expenses around 85 thousands. 5 members(including parents). Emergency fund - 7.5 lakhs. Term plan- 1.5 crore each of us. Direct equity worth- 1.52 crore.(Ongoing). MF portfolio 90 lakhs.(Running). PPF - 34 lakhs.(Running). One ancestral home approximate 70 lakh. One apartment present value - 90 lakhs(loan closed in 6 years). Personal health insurance - 10 lakh each with 1 crore super top up. Parents - 10 lakh each with 20 lakh super top up. Daughter is in class 6. Approximately need 60 lakhs for higher study(after 6 years). Monthly SIP 20k running. PPF s are running with contribution. No debts at present. In which way should I draw further planning? Thanks

Ans: Your financial structure is well thought out and very disciplined.
At 42, with strong savings, zero debt, and active investing, you are already ahead.
Still, a structured 360° plan will sharpen your journey further.

Let’s break it down carefully with full clarity.

Present Financial Strength: Clear and Robust
Let’s start with what is working well:

Monthly income is strong: Rs. 4 lakh

Expenses are under control: Rs. 85,000

Emergency fund of Rs. 7.5 lakh is good

Term cover of Rs. 1.5 crore each is ideal

Mutual funds: Rs. 90 lakh – very strong

Direct equity: Rs. 1.52 crore – solid but needs review

PPF corpus of Rs. 34 lakh – excellent for safety

Health insurance: Complete and sufficient

No loans – this gives great peace of mind

SIP of Rs. 20,000 – good but can be increased

Real estate is inherited – no dependency

You have built a great foundation.
Now we will structure your next 15 years for goals and financial freedom.

Review Mutual Fund and Direct Equity Exposure
You have Rs. 90 lakh in mutual funds and Rs. 1.52 crore in equity.
That’s nearly Rs. 2.42 crore in market-linked assets.

This is strong but needs ongoing review and allocation clarity.

Please ensure:

You do not hold index funds

Index funds do not offer downside protection

They blindly carry underperforming stocks

In volatile years, index returns become sub-par

Use actively managed funds through MFD with CFP certification

Also, if you are investing in direct mutual funds, pause and rethink.

Direct funds miss expert review

You may miss rebalancing

You may underperform despite good markets

A Certified Financial Planner can manage regular plans better

You save time, confusion, and emotional stress

Switch to regular plans and build SIPs under expert guidance.

Your mutual funds should now follow a goal-based bucket system.

6-year goal: Education – safe hybrid or conservative allocation

10+ year goal: Retirement – high equity, small-cap and flexi-cap focus

3–5 year goals: Use balanced advantage or debt hybrid

Review portfolio allocation with MFD regularly.

Consolidate and Optimise Equity Holdings
Rs. 1.52 crore in stocks is a strong equity base.
But many investors carry too many stocks or emotional holdings.

Please review:

Are stocks diversified across sectors?

Are they over-concentrated in one group or market cap?

Are you booking partial profits or just holding?

Are dividends re-invested wisely?

Direct equity must not be over 40–45% of total portfolio.
You already crossed this.
You must slowly move part of it to mutual funds.

SIPs are more disciplined.
Equity markets are emotional.
Diversify stock corpus over 3 years into goal-based SIPs.

This brings long-term consistency.

Increase SIP Size Aligned to Goals
Rs. 20,000 monthly SIP is too small at your income level.
You are already saving a lot, but not all in SIP form.

Here’s what you should do:

Increase SIP to Rs. 60,000 over next 6 months

Use it to create 3 clear goals:

Daughter’s education (Rs. 60 lakh in 6 years)

Retirement corpus (Rs. 6–8 crore in 15 years)

Health corpus for post-retirement

Use separate folios or schemes for each goal.
Don’t mix retirement and education in one SIP.

Planning for Daughter’s Education
Your child is in class 6.
You need Rs. 60 lakh in 6 years.

You must:

Set aside Rs. 45–50 lakh from current MF corpus

Shift it to low-volatility hybrid or conservative equity

Continue SIP of Rs. 10,000–15,000/month for this goal

Avoid small-cap or aggressive funds here

Do not keep in stocks or volatile sectoral funds

Ensure liquidity by 5th year

Move full corpus to liquid fund 6 months before need

Review annually with Certified Financial Planner.

Build Retirement Corpus Carefully
At age 42, you have 13–15 years to retire.

Assume you stop active income at 58.
You need minimum Rs. 6–8 crore retirement corpus.

Already you have:

Rs. 90 lakh mutual fund

Rs. 1.52 crore equity

Rs. 34 lakh PPF

Plus PF continues to grow

Now, you must:

Start separate SIP of Rs. 25,000/month toward retirement fund

Choose aggressive mix: flexi-cap, midcap, focused

Review risk yearly

Don’t rely on PPF only. It won’t beat inflation

Avoid NPS if flexibility is key

Keep retirement SIPs untouched till 58

Slowly de-risk 5 years before retirement

Use balanced or hybrid post 55

Also consider spouse’s retirement corpus separately.
Build two streams. Do not merge both entirely.

Real Estate Should Not Be Relied On
You have ancestral house and one apartment.

Avoid considering them as investment.

They don’t give inflation-beating return

Liquidity is poor

Maintenance cost is high

Can create inheritance confusion later

Cannot fund short-term needs

Do not buy more property.
Stick to mutual funds, debt funds, and equity as core investment tools.

Health and Term Insurance Are Perfect
You have set this part brilliantly.

Rs. 1.5 crore term cover is ideal

10 lakh personal cover + 1 crore super top-up gives good cushion

Parents have 10 lakh + 20 lakh super top-up – excellent

Renew without gap

Review every 3 years

Only add accident cover if not done already.

Emergency Fund is Decent
Rs. 7.5 lakh is okay.
But consider growing it to Rs. 10 lakh in 2 years.

Use liquid fund or sweep-in FD

Keep 2 months of expenses in savings account

Balance in short-term debt fund

Never touch this for vacations or shopping.

Create a Will and Asset Structure
You have multiple assets – equity, MF, PPF, property.

You need:

A clear Will

Nominee details updated

A family asset register

A login access plan for dependents

Spouse should know everything

In case of any emergency, clarity is critical.
This removes confusion for your daughter later.

Use a Certified Financial Planner Now
You are at a critical stage of wealth building.
You need structure more than new ideas.

A Certified Financial Planner will:

Create asset allocation

Link each investment to goals

Track SIPs with you

Suggest switches and changes when needed

Help with tax planning

Manage volatility and greed

Protect wealth from random investment decisions

Don’t do it all yourself.
Use experts to reduce risk and optimise performance.

Watch These Habits Going Forward
Build these for long-term success:

Review portfolio every 6 months

Increase SIPs yearly by 10%

Book partial profits in stocks every year

Track child’s goal corpus till target is met

Do not use credit cards for lifestyle

Maintain clean expense tracker

Avoid mixing investment and insurance ever again

Don’t fall for new product pitches

Follow one written plan with full faith

Finally
You are in a very strong financial position.
But even strong portfolios need structure.
You must now:

Increase SIPs

Reduce direct equity exposure gradually

Align each investment with goal

Monitor risks and returns

Protect and transfer wealth smartly

You are already on the right road.
Now build speed with direction and safety.

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

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