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Saving 1 crore in 10 years: Can I achieve this with my current 10k SIP?

Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 23, 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
Asked by Anonymous - Jan 23, 2025Hindi
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I want to create a corpus of 1 cr in next 10 years. I am doing a sip of 10k from last 5 years. What should i do and how much should i save now monthly and in what options?

Ans: You aim to accumulate Rs. 1 crore in 10 years. Achieving this requires a disciplined savings strategy and optimal investments. Your current SIP of Rs. 10,000 per month for the past 5 years is a great start. However, adjustments are necessary to reach your goal. Let’s create a step-by-step plan.

Understanding Your Current SIP Contributions
Current Progress

Your existing SIPs have built a decent corpus over 5 years.
Equity mutual funds provide growth, especially if the portfolio is well-diversified.
Impact of Time

Compounding needs both time and sufficient contributions.
To achieve Rs. 1 crore in 10 years, you’ll need to increase your SIP contributions.
How Much to Save Monthly
Additional SIP Contributions Needed
Review your target and adjust your SIP contributions.
Based on current market trends, increasing SIP to Rs. 20,000-25,000 monthly could help.
This will ensure you stay on track to meet your goal in the next 10 years.
Investment Options to Consider
Actively Managed Equity Mutual Funds

Actively managed funds offer better growth potential than index funds.
Fund managers help optimise returns by navigating market opportunities.
Diversify across large-cap, mid-cap, and small-cap funds for balanced growth.
Avoid Index Funds for Higher Returns

Index funds follow the market and may not outperform actively managed funds.
Actively managed funds provide a better opportunity for long-term wealth creation.
Hybrid Funds for Stability

Hybrid funds balance equity and debt exposure, reducing volatility.
Allocate a small portion to hybrid funds to stabilise the portfolio.
Systematic Investments Over Lump Sums

Continue SIPs as they help average out market volatility.
Avoid lump-sum investments unless the market shows a significant correction.
Tax-Efficient Investing
Minimise Tax Liabilities

Equity mutual funds offer better post-tax returns compared to debt funds.
Long-term capital gains (LTCG) tax of 12.5% applies only if gains exceed Rs. 1.25 lakh.
Avoid Frequent Redemptions

Keep investments for the long term to minimise short-term capital gains tax of 20%.
Regularly Review Your Investments
Monitor Portfolio Performance

Review your mutual fund portfolio annually.
Ensure funds are consistently outperforming their benchmarks.
Rebalance Periodically

Adjust equity and debt allocations as needed.
Maintain a higher equity allocation for the next 6-8 years, reducing it closer to the goal.
Emergency Fund and Insurance
Maintain an Emergency Fund

Ensure you have 6-12 months of expenses in liquid assets.
This protects your investments during unforeseen financial needs.
Adequate Insurance Coverage

Review your term insurance to ensure it matches your financial responsibilities.
Consider health insurance coverage to avoid medical emergencies impacting investments.
Avoid Common Pitfalls
Avoid Direct Mutual Funds

Direct funds lack personalised guidance.
Invest through a Certified Financial Planner (CFP) who can provide tailored advice.
Stay Consistent

Avoid stopping SIPs during market downturns.
SIPs benefit from market corrections by purchasing more units at lower prices.
Don’t Time the Market

Focus on long-term growth rather than trying to predict short-term market movements.
Final Insights
Reaching Rs. 1 crore in 10 years is achievable with disciplined savings and smart investments. Increase your SIP contributions to Rs. 20,000-25,000 monthly, focusing on actively managed funds. Review your portfolio regularly, rebalance when needed, and maintain financial safeguards like an emergency fund and insurance. These steps will ensure you meet your goal confidently and efficiently.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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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I want a corpus of 1 cr in the next 5-6 year. How much monthly amount and where shall I invest for the goal?
Ans: You want to build a corpus of Rs. 1 crore.
Your time horizon is 5-6 years.
This is a medium-term goal with a big target.

Required Monthly Investment

To reach Rs. 1 crore, you need to invest a lot.
Exact amount depends on the returns you get.
Roughly, you might need to invest Rs. 1-1.5 lakh monthly.

Investment Options

For 5-6 year goal, use a mix of equity and debt.
Equity for growth, debt for stability.
Balance between risk and returns is important.

Equity Mutual Funds

Put about 50-60% in equity mutual funds.
Choose a mix of large-cap and multi-cap funds.
These can give good returns over 5-6 years.

Debt Mutual Funds

Invest 30-40% in debt mutual funds.
Consider corporate bond funds and banking & PSU funds.
These provide stability to your portfolio.

Hybrid Funds

Put 10-20% in balanced advantage or aggressive hybrid funds.
These funds adjust equity-debt mix based on market.
They can give steady returns with lower risk.

Systematic Investment Plan (SIP)

Use SIP method for investing in mutual funds.
This helps in rupee cost averaging.
It also makes large investments more manageable.

Regular Monitoring

Check your investments every 3-6 months.
See if you're on track to reach your goal.
Make changes if some funds are not performing well.

Increase Investments Yearly

Try to increase your investment amount every year.
Even a 10% yearly increase can make a big difference.
This helps beat inflation and reach your goal faster.

Risk Management

As you get closer to 6 years, reduce equity exposure.
Move more money to debt funds in last 1-2 years.
This protects your gains as you near your goal.

Finally

Rs. 1 crore in 5-6 years is a big goal.
It needs disciplined and aggressive investing.
Consider talking to a Certified Financial Planner for personalized advice.

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

..Read more

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Latest Questions
Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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investing 10 lakhs in Mutual Funds: what fund option should I consider for 3 Years?
Ans: Investing for three years requires balancing returns and safety. Your choice should depend on risk tolerance, taxation, and liquidity needs.

Key Factors to Consider
A three-year horizon is short for equity investments.
Volatility in equities can impact returns if markets decline near redemption.
Debt funds provide stability but may have lower returns than equity funds.
Hybrid funds balance risk and returns better than pure equity or debt funds.
Taxation on mutual funds should be considered before making a choice.
Investment Options Based on Risk Profile
For Conservative Investors
Capital safety is a priority for conservative investors.
Debt mutual funds are suitable due to lower risk.
Short-duration and corporate bond funds offer better returns than fixed deposits.
Dynamic bond funds can work if comfortable with some interest rate risk.
Returns may be lower, but capital protection is higher.
For Moderate Investors
A mix of debt and equity is ideal.
Hybrid funds help balance stability and growth.
Aggressive hybrid funds invest around 65% in equity and 35% in debt.
Conservative hybrid funds invest more in debt and less in equity.
These funds can generate better returns than pure debt funds.
For Aggressive Investors
Equity funds can provide higher returns but come with risk.
Large-cap or flexi-cap funds are better than mid-cap or small-cap for three years.
Equity savings funds reduce risk by holding debt and arbitrage components.
Investors should be ready for short-term volatility in equity investments.
A systematic withdrawal plan (SWP) after three years can help manage risks.
Mutual Fund Taxation for 3-Year Investment
Equity fund LTCG above Rs. 1.25 lakh is taxed at 12.5%.
Equity STCG is taxed at 20%.
Debt funds are taxed as per the investor’s income tax slab.
Hybrid funds taxation depends on their equity component.
Investors in high tax brackets may prefer equity-oriented funds for tax efficiency.
Regular Funds vs Direct Funds
Regular funds provide Certified Financial Planner (CFP) support and expert guidance.
Direct funds may appear cheaper but lack personalized financial advice.
Market conditions change, and professional guidance helps navigate investments.
Investors often make emotional decisions, which a CFP helps avoid.
Long-term returns may be higher with proper advisory support.
Actively Managed Funds vs Index Funds
Actively managed funds aim to beat market returns.
Fund managers adjust portfolios based on market conditions.
Index funds simply follow market indices and lack flexibility.
Actively managed funds can protect during market downturns.
A three-year horizon does not favor passive investing due to short-term volatility.
When to Choose a Systematic Investment Plan (SIP)
A lump sum investment is ideal when markets are low.
SIP helps reduce risk in volatile markets.
If investing in equity or hybrid funds, staggered investment through SIP can help.
Debt funds are better suited for lump sum investments.
SWP can be used for gradual withdrawal after three years.
Liquidity and Exit Strategy
Some funds have exit loads if redeemed before a certain period.
Hybrid and debt funds often have lower exit loads than equity funds.
Ensure liquidity by choosing funds with flexible redemption options.
Plan redemptions at least 3-6 months before the end of the investment period.
Final Insights
Debt funds are safer for conservative investors.
Hybrid funds offer a balance of risk and reward.
Equity funds suit aggressive investors but require risk tolerance.
Mutual fund taxation should be considered before investing.
Regular funds with CFP guidance provide better long-term benefits.
Would you like help in selecting specific categories within these options?

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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Hi Team, I have been investing 5percent of my sip in Nasdaq but now unable to do sip. Could you please let me know whichother mf house are accepting sip for global investment
Ans: It seems you were investing in Nasdaq through a mutual fund SIP but are now unable to continue. You are looking for mutual fund houses that still accept SIPs for global investments.

There are multiple factors to consider before continuing with global investments.

Understanding Restrictions on Global SIPs
Many mutual funds had to pause fresh investments in international schemes.
This was due to regulatory restrictions on overseas investment limits.
Some fund houses have reopened investments, but availability changes frequently.
The acceptance of SIPs depends on whether they have room within the limits.
Mutual Fund Houses Offering Global Investments
Some Indian fund houses continue to accept SIPs for international funds.
They may invest in US markets, European markets, or emerging economies.
Some focus on technology stocks, while others cover broader sectors.
The availability of SIPs can change based on fund house policies.
You should check with the fund house or an expert before investing.
Should You Continue Global Investments?
The US market has given strong returns in the long term.
However, global investing comes with risks like currency fluctuations.
The rupee’s movement against the dollar impacts your returns.
The US market is expensive compared to Indian equities.
Diversification is good, but overexposure to a single market is risky.
Actively Managed Funds vs Index Funds
Many global funds track indices like Nasdaq or S&P 500.
Index funds may seem cost-effective, but they lack flexibility.
Actively managed global funds adjust portfolios based on market conditions.
Professional fund managers help manage risks in different economies.
Actively managed funds can outperform during market downturns.
Evaluating Your Investment Strategy
If you were investing 5% in Nasdaq, consider how it fits your overall plan.
Stopping SIPs should not disrupt your long-term goals.
If you cannot continue, ensure other investments balance your portfolio.
Look for options that align with your risk appetite and investment horizon.
Taxation of Global Mutual Funds
Global equity funds are taxed like debt funds.
There is no benefit of lower taxation like domestic equity funds.
Gains are taxed based on your income tax slab.
If you hold for more than three years, taxation remains the same.
Keep tax efficiency in mind while choosing investment options.
What Should You Do Next?
Check with mutual fund houses about SIP availability in global schemes.
If SIP is unavailable, you can still invest through lump sum when the window opens.
Consider balancing global and Indian investments for better diversification.
Review your financial plan to ensure your goals stay on track.
Finally
Investing in global markets can be beneficial, but not without risks.
Active management is preferable over index-based global funds.
Ensure you are aware of taxation before investing.
Focus on a diversified portfolio instead of chasing one market.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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I HAVE RECIEVED A SUM OF RS 10 LACS FROM FRIEND TO PURCHASE A HOUSE - HE HAS STATED I CAN RETURN MONEY AFTER MY DAUGHTER IS EARNING ENOUGH MONEY TO REPAY . I HAVE NOT BEEN FILING RETURNS SINCE I DONT HAVE TAXABLE INCOME . SHOULD I FILE I T RETURN FOR THIS AMOUNT - UNDER WHICH HEAD OF INCOME WILL I HAVE TO SHOW - SHOULD I MENTION IT AS GIFT OR LOAN
Ans: You have received Rs. 10 lakh from a friend for purchasing a house. The friend has stated that you can return it when your daughter starts earning. Since you have not been filing tax returns, let’s assess whether you should file a return and how to declare this amount.

Is Filing an ITR Necessary?
You don’t have taxable income, so filing is usually not required.
However, Rs. 10 lakh in your account can attract scrutiny.
To avoid future issues, filing an ITR is advisable.
It helps maintain transparency with the tax department.
How to Declare This Amount?
This is not a gift because a gift from a friend is taxable if above Rs. 50,000.
It is best to treat this as a loan.
Loans from friends do not attract tax but should be documented.
Declaring It Under the Right Income Head
A personal loan is not income, so it does not fall under "Income from Other Sources."
It is not taxable, but should be disclosed as "Loan Taken" in the balance sheet section of ITR.
If interest is paid on the loan, that interest will be taxable for the lender.
Steps to Ensure No Future Tax Issues
Keep a written agreement mentioning the loan terms.
The agreement should mention that repayment will be made after your daughter starts earning.
Ideally, the friend should transfer funds through a bank and not in cash.
If the tax department questions the transaction, you can show this agreement.
Final Insights
Filing an ITR is recommended for clarity.
Declare the amount as a loan, not a gift.
Maintain proper documentation to avoid future issues.
Ensure transactions happen through a bank for transparency.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 02, 2025Hindi
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I am an employee. My company pays my rent amount to my house owners account. the amount is 9000. but my house rent is 4900 and I asked to return the remaining amount to return to me. My house owner is a senior citizen and has 5 houses. remaining houses pay rent in cash. He said I get taxed on the amount so I am deducting the tax amount. I feel he is cheating me in the name of tax. please help me in this issue.
Ans: Your house owner is deducting tax from the extra rent you asked him to return. It is important to assess whether this is a fair deduction or if he is keeping a part of your money unfairly.

Understanding Taxation on Rental Income
Your house owner is a senior citizen and has five rental properties.
He receives rent from other tenants in cash, which may not be reported as income.
The rent he receives from you is directly deposited into his bank account. This means it is officially recorded.
He may be liable to pay tax on this recorded income.
Why Is He Deducting Tax?
If he is filing income tax returns properly, he should pay tax on total rental income.
The tax he pays depends on his total income, including all rental earnings.
If he has no other income, rental income is taxed as per his slab.
If his total taxable income exceeds the exemption limit, tax is applicable.
Assessing If He Is Cheating You
Your employer is paying Rs 9,000 rent, but your actual rent is Rs 4,900.
The extra Rs 4,100 should be returned to you in full.
He is deducting a tax amount before refunding, which raises concerns.
The tax rate he claims to deduct should be verified.
If he is keeping a significant portion, he may be misusing tax as a reason.
Steps to Verify the Tax Deduction
Ask him to provide a written explanation of the tax deduction.
Request a receipt or breakdown of how much tax he is paying on rental income.
Check his income tax return (if he agrees) to see if he is genuinely paying tax.
If he is hesitant, he may be deducting more than required.
What Can You Do?
Ask your employer to pay only Rs 4,900 directly to him instead of Rs 9,000.
If the employer insists on paying Rs 9,000, ask for an official agreement with the owner.
Clarify in the agreement that extra rent paid will be refunded without deductions.
If he refuses, inform him that you will consult a tax expert.
You can also ask him to show proof of tax paid on the deducted amount.
Handling This in a Legal Way
There is no rule that allows a landlord to deduct tax from refunded rent.
Rental income tax is the landlord’s responsibility, not yours.
He should pay tax on his total income, not on your refund.
If he is deducting an unusually high amount, it is unfair.
Alternative Options
Consider renting a different house where the rent payment process is straightforward.
If your employer allows, request them to revise the rent agreement.
Check if your company can provide a direct reimbursement to you instead.
Final Insights
Your landlord is responsible for paying tax on his rental income.
He cannot deduct tax from the amount he is refunding to you.
If he insists on deducting tax, ask for proof and clarification.
If he refuses to return the full extra amount, he may be misusing tax as an excuse.
You can take steps to ensure you receive the rightful refund.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 01, 2025Hindi
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I am 30 male. Working in Mumbai in BFSI sector. My in hand salary is 67k. Looking to start investement for retirement. Please suggest if NPS would be good option. If there is any fund which is similar to NPS can suggest as well. Looking to start with 10k as beginning. Also please suggest if the NPS in tier 1 can help in tax saving as well.
Ans: Your decision to start investing early for retirement is excellent. At 30, you have time to build a strong corpus.

Let’s assess if NPS is a good choice.

Understanding NPS for Retirement
NPS is a government-backed retirement scheme.
It invests in equity, corporate bonds, and government securities.
You can choose an active or auto allocation strategy.
Tier 1 NPS is locked until retirement.
60% of maturity value is tax-free. The rest must be used for an annuity.
Tax Benefits of NPS
Contributions under Section 80CCD(1) are part of Rs. 1.5 lakh limit.
Extra Rs. 50,000 deduction is available under Section 80CCD(1B).
Employer contribution is tax-free under Section 80CCD(2).
Annuity payouts after retirement are taxable.
Limitations of NPS
NPS has restrictions on withdrawals before retirement.
Equity exposure is capped at 75%, reducing long-term growth potential.
Returns depend on market conditions and fund manager performance.
40% mandatory annuity purchase reduces liquidity at retirement.
Alternative Investment Options
Mutual funds offer better flexibility and growth potential.
Actively managed equity funds outperform index-based options.
Midcap and flexi-cap funds provide long-term capital appreciation.
Hybrid funds balance risk and return for stability.
Portfolio Strategy for Retirement
A mix of equity and debt ensures a stable corpus.
Invest through SIPs to reduce market timing risks.
Increase allocation as income grows.
Keep a mix of large, mid, and small-cap funds.
Avoid over-reliance on any single investment product.
Final Insights
NPS is good for disciplined retirement savings.
Tax benefits are attractive, but liquidity is limited.
Mutual funds offer better long-term growth and flexibility.
A combination of both can work well for retirement planning.
Increase investment gradually as salary increases.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Feb 07, 2025Hindi
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I am planning to invest monthly 10,000 in nifty ETF, 10,000Motilal Oswal NASDAQ 100 ETF, 8000 in Axis Midcap fund, 6,000 in Tata small cap Fund, 3,000 in SBI innovation Fund, 3000 in Tata consumer fund, 3,000 in Tata nifty 200 alpha 30 fund and 2,000 in Motilal oswal nifty 500 momentum 50 fund. I am planning to invest for next 25 years for my daughter's education and marriage. My risk appetite is high. Is above strategy or funds are good for maximum return? I am planning to deploy more whenever market corrects and hold investment for 25 years, will it work for maximize portfolio return over long run?
Ans: Your long-term investment plan is well-structured. It is good to see a disciplined approach.

Investing for 25 years can generate significant wealth. But fund selection and strategy must be optimized.

Let’s analyse your portfolio.

Investment Horizon and Risk Appetite
You plan to invest for 25 years. This is ideal for wealth creation.
Your risk appetite is high. This allows you to invest aggressively.
Long-term investing reduces market volatility impact.
Staying invested through market cycles is key.
Issues with ETF Investments
You plan to invest in Nifty and Nasdaq ETFs.
ETFs follow an index and lack active management.
No fund manager works to generate extra returns.
Active funds can outperform during different market cycles.
ETFs do not adjust to changing market conditions.
Expense ratio is low, but returns are also market-linked.
Actively managed funds have delivered better long-term returns in India.
Fund Selection Analysis
Your portfolio has midcap, small-cap, innovation, consumer, and factor-based funds.
Midcap and small-cap funds provide high growth. But they are volatile.
Innovation and sectoral funds focus on specific themes. These funds carry high risk.
Factor-based funds follow a strategy like momentum or alpha. Performance varies in different market conditions.
Portfolio lacks a strong large-cap or flexi-cap fund. These provide stability.
Diversification and Balance
Portfolio is highly tilted towards high-risk funds.
Lack of a flexi-cap fund may impact risk-adjusted returns.
Large-cap funds give stability in market downturns.
A mix of large, mid, and small-cap funds creates a balanced portfolio.
Too many thematic and factor-based funds increase unpredictability.
Market Timing Strategy
Deploying more in corrections can increase returns.
But market corrections are unpredictable.
Staggered investments through SIPs and STPs work better.
Avoid lump sum investments unless valuations are very attractive.
Portfolio Optimisation Recommendations
Reduce exposure to index ETFs. Shift to actively managed large-cap or flexi-cap funds.
Keep midcap and small-cap allocation but balance with a flexi-cap fund.
Reduce allocation to thematic and factor-based funds. These should be only 10-15% of your portfolio.
Ensure a strong large-cap or flexi-cap presence for stability.
Maintain liquidity for market corrections, but do not try to time the market aggressively.
Final Insights
Your investment horizon and discipline are strengths.
Portfolio needs better balance between growth and stability.
Actively managed funds can generate better long-term returns than index ETFs.
Midcap and small-cap exposure should be paired with large-cap stability.
Market timing should be done cautiously to avoid overexposure in corrections.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Jan 29, 2025Hindi
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I am 26 years old female i just got job with salary 60K monthly i dont have savings i need financial security how can I invest once job start
Ans: You are starting your financial journey at the right time. Your early investments will create long-term security. A structured approach will help you achieve financial freedom.

Below is a complete guide for your financial planning.

Step 1: Build an Emergency Fund
Keep at least 6 months' expenses as a safety net.
Save Rs 1.5 lakhs in a high-interest savings account or liquid fund.
This fund protects you in case of unexpected expenses.
Step 2: Get the Right Insurance
Buy a Rs 1 crore term insurance plan.
Get a Rs 10 lakh health insurance policy.
Choose a separate accidental cover for added protection.
Step 3: Plan Your Expenses and Budget
Track your spending for better financial control.
Save at least 40% of your salary every month.
Keep fixed expenses like rent and EMI within 30% of your income.
Step 4: Start Investing for Wealth Growth
Begin a SIP in actively managed mutual funds.
Avoid index funds as they lack flexibility in market changes.
Invest in a mix of large-cap, mid-cap, and flexi-cap funds.
Step 5: Plan for Tax Savings
Use Section 80C to reduce taxable income.
Invest in PPF or ELSS mutual funds for tax benefits.
Consider NPS for additional deductions under Section 80CCD(1B).
Step 6: Avoid Common Financial Mistakes
Do not buy ULIPs or endowment plans.
Avoid unnecessary credit card debt.
Do not invest all money in fixed deposits.
Step 7: Set Long-Term Financial Goals
Plan for a home purchase after 5-7 years.
Start investing early for retirement.
Increase your SIPs as your salary grows.
Finally
Focus on financial discipline from day one.
Keep a mix of equity and debt investments.
Review your portfolio every 6 months.
If you follow these steps, you will achieve financial security.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

...Read more

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Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

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I am 42 yrs working in a PSU Bank. Service left is 18 yrs. Corpus is 60 lacs in NPS tier 1 and 2. Wife is housewife. 2 children 11 and 5. Have medical issues. Loan is 1.20 crore with 2 houses worth 4 crore. How much corpus i require if i plan for a premature retirement at 50 yrs. Thank you
Ans: Your goal of retiring at 50 is achievable. But it needs careful planning.

Your current situation has many factors to consider.

Let’s go step by step.

Existing Financial Position
NPS Tier 1 and 2 Corpus: Rs. 60 lakh
Loan Outstanding: Rs. 1.2 crore
House Value: Rs. 4 crore
Wife’s Income: None
Children’s Age: 11 and 5
Service Left: 18 years (Retirement at 60)
Medical Issues: Important to plan for healthcare expenses
Key Challenges in Early Retirement
You will retire at 50 but need income for 40+ years.
Loan repayment is a big commitment.
Children’s education expenses will rise.
Medical costs may increase in the future.
Your pension from NPS will start at 60.
Corpus Required for Early Retirement
Your annual expenses after retirement must be estimated.
Inflation will increase your costs every year.
Children’s education and other future needs must be considered.
A corpus should generate monthly income while keeping pace with inflation.
A rough estimate suggests you may need Rs. 5-6 crore.

Loan Management Before Retirement
Try to repay or reduce the Rs. 1.2 crore loan before retiring.
High loan liability will put pressure on your corpus.
Using rental income (if any) can help in repayment.
Partial loan prepayment every year will reduce interest burden.
Investment Strategy
NPS will give pension after 60, but you need income from 50-60.
Keep a mix of equity and debt investments for steady income.
Have 5-7 years’ expenses in low-risk instruments.
The rest should be in well-managed mutual funds for growth.
Medical Planning
You must have sufficient health insurance.
Set aside Rs. 25-30 lakh for medical emergencies.
If possible, buy super top-up insurance for additional coverage.
Children’s Education and Future Planning
Major expenses for education will come after your retirement.
Plan a separate corpus for higher education.
Avoid using retirement corpus for children’s expenses.
Final Insights
Retiring at 50 is possible but requires a bigger corpus.
Your priority should be loan repayment.
Medical costs and children’s education must be planned separately.
A structured withdrawal and investment strategy is essential.
A target corpus of Rs. 5-6 crore would give more financial security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Money
Ramalingam

Ramalingam Kalirajan  |7945 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 12, 2025

Asked by Anonymous - Jan 27, 2025Hindi
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Hi. I am 34 years old. My investments are as follows 1. MF: 65 lakhs 2. FD: 5 Lakhs 3. PPF: 25 Lakhs 4. NPS : 23 Lakhs 5. PF : 12 lakhs I dont have any family and live alone in own house in Delhi. No parents to take care of. No wife and children. I have my own monthly expenses of 35000. Can i retire?
Ans: Your question about early retirement is important. You have built a strong financial base. But retirement at 34 needs careful assessment.

Let’s analyse your situation step by step.

Your Existing Corpus
Mutual Funds: Rs. 65 lakh
Fixed Deposit: Rs. 5 lakh
PPF: Rs. 25 lakh
NPS: Rs. 23 lakh
PF: Rs. 12 lakh
Total Corpus: Rs. 1.3 crore
You own a house, which reduces your living costs. Your monthly expense is Rs. 35,000.

Longevity Risk
You are 34 now. If you retire today, your corpus should last 50+ years.
Inflation will increase expenses. Rs. 35,000 today may not be enough in 10 years.
You need investments that beat inflation.
Cash Flow Planning
PPF and NPS have lock-ins. You cannot access them fully right now.
PF can be withdrawn, but using it now will leave nothing for later.
Your liquid assets (MFs + FD) total Rs. 70 lakh.
This amount must generate Rs. 35,000 monthly while growing with inflation.

Investment Strategy for Retirement
A mix of equity and debt is essential.
Keep enough in liquid funds or FDs for 3-5 years’ expenses.
The rest should be in well-managed mutual funds for long-term growth.
NPS can provide pension after 60. But you need income now.
Medical and Emergency Planning
You need personal health insurance. Employer-provided cover will end after retirement.
A corpus for medical emergencies is crucial. At least Rs. 20 lakh should be set aside.
Keep a contingency fund for unexpected expenses.
Alternative to Immediate Retirement
You may consider semi-retirement. A small income source reduces pressure on investments.
Passive income options can help, but they need careful planning.
Final Insights
Your current corpus is good but may not be enough for 50+ years.
Inflation, medical costs, and longevity risks must be considered.
A structured withdrawal and investment plan is crucial.
Retiring now is possible but not entirely secure. A phased approach is better.


Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Money
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