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53-Year-Old Ex-Govt Employee: Seeking Advice on Managing Finances

Milind

Milind Vadjikar  |556 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 02, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Sudhanshu Question by Sudhanshu on Oct 31, 2024Hindi
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I am an ex government employee aged 53working in private sector now .I have savings in mf of 1.25 cr .equity 80 lacs.epf of 30 lacs .Real estate of 90 lacs in Pune which I want to sell. Salary is 3 lacs per month .pension is 1 lac .i plan to buy a house in Delhi which would be 2.25cr.further expenses mba of son after two years and daughter education and marriage after 8 years Please advise

Ans: Hello;

Following can be earmarked towards house purchase in Delhi(2.25 Cr):

1. Sale of RE property worth 90 L.

2. EPF balance of 30 L.

3. Direct stocks worth 80 L.

4. Part of MF balance worth 25 L.

Balance 1 Cr corpus in MFs will grow 1.25 in 2 years time frame.

50 L maybe allocated for son's higher education.

Balance 75 L may remain in mutual funds for additional 5 years.

Also you may begin a monthly sip of 2 L into a combination of pure equity mutual funds for 7 years duration.

The 75 L lumpsum and 2 L monthly sip will grow into sums of 1.32 Cr & 2.64 Cr respectively.

Hence your total corpus would be 3.96 Cr

You may utilise ~ 1 Cr for daughter's education and marriage.

If you utilise the balance 3 Cr to buy an immediate annuity from a life insurance company, you may expect a monthly income of 1.10 L(post tax).

This alongwith your monthly pension of 1 L will lead to a comprehensive retirement monthly income of 2.1 L.

Happy Investing;
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  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 23, 2024

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I Am 35 yrs old, working in a product based semi conductor company. 1 daughter 7 yrs old. Current salary is 2.5L after deduction take home is around 1.9L. I Home and housing plot worth 1cr( EMIs completed). Having only one liability car loan(28k per month for next 5yrs). I have MF 7.5L, Indian shares 6L, US Shares 10L, SSY 5L, NPS 2L, PF 12L. 3.5cr personal term policy, 1cr term policy from company.Ancient properties ~1Cr. Investing 60k per month for all above instruments.My future requirements are 6Cr for retirement carpus, 2cr for my kid higher studies and marriage. In next 15 yrs I want make this corpus and retire at the age of 50. Please suggest.
Ans: It's great to see you taking charge of your financial future. At 35, working in a semiconductor company with a healthy salary of Rs 2.5L, you're in a strong position. Your take-home salary is Rs 1.9L, which gives you good leverage for savings and investments.

You have a home and a housing plot worth Rs 1 crore, with no EMIs pending. That’s an excellent milestone. Your only liability is a car loan of Rs 28k per month for the next five years.

Your existing investments are quite diverse:

Mutual Funds (MF): Rs 7.5L
Indian Shares: Rs 6L
US Shares: Rs 10L
Sukanya Samriddhi Yojana (SSY): Rs 5L
National Pension System (NPS): Rs 2L
Provident Fund (PF): Rs 12L
Additionally, you have significant term insurance coverage: Rs 3.5 crore personal term policy and Rs 1 crore term policy from your company. Your ancient properties are worth around Rs 1 crore. You are currently investing Rs 60k per month across various instruments.

You aim to accumulate a corpus of Rs 6 crore for retirement, and Rs 2 crore for your daughter's higher education and marriage, within the next 15 years.

Evaluating Your Financial Goals

Your financial goals are ambitious but achievable with a structured approach. Let's break down your goals:

Retirement Corpus of Rs 6 crore in 15 years: This requires disciplined saving and strategic investing.

Rs 2 crore for Daughter's Higher Education and Marriage: Planning for these expenses in 15 years means you need to ensure growth in your investments while managing risks.

Current Investment Portfolio Analysis

Your current portfolio is well-diversified across various asset classes. Here’s a quick analysis:

Mutual Funds (Rs 7.5L): Offers potential for high returns. Consider a mix of large-cap, mid-cap, and small-cap funds for balanced growth.

Indian Shares (Rs 6L) and US Shares (Rs 10L): Good diversification. Continue monitoring and adjusting based on market performance.

Sukanya Samriddhi Yojana (Rs 5L): Great for your daughter’s future. It provides tax benefits and decent returns.

National Pension System (Rs 2L): Long-term retirement savings with tax benefits.

Provident Fund (Rs 12L): A safe and tax-efficient investment.

Term Insurance: Adequate coverage. Your Rs 3.5 crore personal term policy and Rs 1 crore from your company ensure financial security for your family.

Strategic Recommendations

1. Consolidate and Optimize Investments

It’s essential to streamline your investments to maximize returns and minimize risks.

Mutual Funds: Evaluate the performance of your current funds. Consider moving to actively managed funds for potentially higher returns. Regularly review and rebalance your portfolio with the help of a Certified Financial Planner (CFP).

Indian and US Shares: Diversify across sectors and industries. Avoid putting all your eggs in one basket. Monitor global and domestic economic trends.

Sukanya Samriddhi Yojana (SSY): Continue contributing to SSY for its tax benefits and secure returns.

National Pension System (NPS): Increase your contributions if possible. NPS offers good long-term benefits and tax savings.

Provident Fund (PF): Continue your contributions. PF is a low-risk, tax-efficient investment.

2. Increase Monthly Investment Allocation

Currently, you are investing Rs 60k per month. To meet your ambitious goals, consider increasing this amount progressively.

Prioritize High-Growth Investments: Allocate more towards mutual funds and equity shares. This can potentially offer higher returns over the long term.

Utilize Windfalls and Bonuses: Any additional income or bonuses should be invested to boost your corpus.

3. Education and Marriage Fund for Daughter

To ensure Rs 2 crore for your daughter’s education and marriage, focus on long-term growth instruments:

Child Education Plans: Invest in plans specifically designed for education goals. These often offer benefits aligned with educational milestones.

Equity Mutual Funds: Consider equity funds for higher returns. A combination of large-cap and mid-cap funds could provide balanced growth.

Regular Reviews: Monitor the performance of these investments regularly and adjust as needed with your CFP.

4. Retirement Planning

To achieve a Rs 6 crore retirement corpus, focus on a mix of high-growth and stable investments:

Diversified Mutual Funds: Increase your allocation to a diverse set of mutual funds. Actively managed funds often outperform index funds in dynamic markets.

Equity Shares: Continue investing in both Indian and US markets. Keep a balanced portfolio to mitigate risks.

NPS and PF: These are your safety nets. Continue and, if possible, increase contributions to these low-risk instruments.

5. Risk Management

Insurance: Your current term insurance is adequate. Ensure that the policies are reviewed regularly to keep up with inflation and lifestyle changes.

Emergency Fund: Maintain an emergency fund equivalent to 6-12 months of expenses. This ensures financial stability during unforeseen circumstances.

6. Debt Management

Your car loan is the only liability, with a Rs 28k EMI for the next five years.

Early Repayment: If possible, consider early repayment to free up more funds for investments.
Future Financial Strategy

1. Comprehensive Financial Plan

Work with a CFP to create a detailed financial plan. This should include:

Cash Flow Analysis: Understanding your income and expenses to identify saving potential.

Investment Strategy: Tailored to your risk tolerance and financial goals.

Tax Planning: Efficient tax planning to maximize your savings and returns.

2. Regular Financial Reviews

Schedule regular reviews with your CFP. This helps in:

Portfolio Rebalancing: Adjusting your portfolio based on market conditions and life changes.

Goal Tracking: Ensuring you are on track to meet your financial goals.

3. Continuous Learning and Adaptation

Stay informed about financial markets and investment opportunities. Adapt your strategies as required.

Final Insights

Your financial journey is well on track. You have a solid foundation with diverse investments, adequate insurance, and clear financial goals. With a focused strategy, disciplined saving, and strategic investments, achieving your retirement and educational corpus goals is within reach. Regular reviews and professional guidance will ensure that you stay on course.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 18, 2024

Asked by Anonymous - Jul 07, 2024Hindi
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I am 45 years age. Current investment balance in PF and VPF-45,00,000 mutual funds-27,00,000, Shares-700,000, NPS-6,00,000,LIC-10,00,000 Monthly investment PF and VPF-43,000, Mutual funds -32,000,NPS-6000, LIC-4500 Shares-10,0000. Yearly step up in PF vpf, mutual fund is 10% Current leaving in pune and home loan is 50,00,000. One home is in Nashik current market price is 75,00,000. I have daughter in 10th std and son in 6th std. Expecting Rs 50,00,000 on both education expenses after their 10th std. I want to retire at the age of 52. Expecting monthly income of Rs 1,00,000 after retirement.
Ans: You are 45 years old with a comprehensive investment portfolio. Here's a summary:

Provident Fund (PF) and Voluntary Provident Fund (VPF): Rs. 45,00,000
Mutual Funds: Rs. 27,00,000
Shares: Rs. 7,00,000
National Pension System (NPS): Rs. 6,00,000
Life Insurance Corporation (LIC): Rs. 10,00,000
Your monthly investments are:

PF and VPF: Rs. 43,000
Mutual Funds: Rs. 32,000
NPS: Rs. 6,000
LIC: Rs. 4,500
Shares: Rs. 10,000
You own a home in Pune with a home loan of Rs. 50,00,000 and another home in Nashik with a market value of Rs. 75,00,000. Your daughter is in 10th std, and your son is in 6th std, with expected education expenses of Rs. 50,00,000 each.

You plan to retire at 52 and desire a monthly income of Rs. 1,00,000 post-retirement.

Financial Goals
Children's Education: Rs. 50,00,000 each after 10th std.
Retirement Planning: Achieve a monthly income of Rs. 1,00,000 post-retirement.
Loan Management: Efficiently manage the home loan of Rs. 50,00,000.
Recommendations for Financial Stability
1. Children's Education Fund
Dedicated Savings: Start a dedicated investment for your children's education.
Systematic Investments: Consider mutual funds tailored for education expenses with a horizon of 2-5 years.
2. Retirement Planning
Current Investments: Continue your current investments in PF, VPF, mutual funds, and NPS.
Retirement Corpus: Calculate the required retirement corpus to achieve Rs. 1,00,000 monthly income.
3. Home Loan Management
Prepayments: Make prepayments on your home loan whenever possible. This reduces interest and tenure.
Budget Allocation: Allocate a portion of any surplus towards prepaying the loan.
4. Portfolio Review and Diversification
Diversification: Ensure your portfolio is well-diversified across equity, debt, and other assets.
Regular Review: Review your portfolio annually and rebalance based on market conditions.
Analytical Insights
Children's Education Fund
Investment Strategy: Invest in a mix of equity and debt funds for a balanced approach.
Education Plans: Consider child education plans that offer a mix of growth and safety.
Retirement Planning
Corpus Calculation: To achieve Rs. 1,00,000 per month, you need a significant retirement corpus. Assuming a 4% withdrawal rate, you will need approximately Rs. 3 crores.
Current Contributions: Your current contributions are substantial. Continue with yearly step-ups to keep pace with inflation.
Risk Management
Insurance Coverage: Ensure adequate life and health insurance coverage.
Emergency Fund: Maintain an emergency fund of 6-12 months of living expenses.
Key Considerations
Risk Tolerance: Align your investments with your risk tolerance and financial goals.
Financial Goals: Prioritize your children's education and retirement planning.
Regular Review: Annual reviews and adjustments are crucial for staying on track.
Final Insights
To achieve financial stability and meet your goals, continue your disciplined investment approach. Start a dedicated fund for your children's education and make strategic prepayments on your home loan. Ensure your investment portfolio is diversified and regularly reviewed. Adequate insurance coverage and an emergency fund are essential for risk management. By following these recommendations, you can secure a comfortable retirement and provide for your children's education.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6903 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 03, 2024

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Good morning sir My self Erla srinivas age 50 years working in pharmaceutical company Having own flat in Hyderabad and no loans. Tax payer. My only one child is studying 9th standard EPF 20 lacs and having 5 Open plots Kindly suggest me after retirement fixed monthly income Regards Srinivas
Ans: Financial Assessment

Your financial situation looks good overall. Well done!
You have a stable job and own property. That's great.
Having no loans is excellent for financial health.

Current Assets

EPF savings of Rs. 20 lakhs is a good start.
Five open plots provide some diversification.
Owning a flat in Hyderabad adds to your assets.

Retirement Planning

We need to plan for steady income after retirement.
Your EPF and property can be part of this plan.
We should look at other investment options too.

Investment Strategy

Mutual funds can be a good choice for you.
They offer better liquidity than land plots.
Professional fund managers handle the investments.

Disadvantages of Plot Investments

Plots can be hard to sell quickly.
They need maintenance and may have legal issues.
Returns depend on location and market conditions.

Advantages of Mutual Funds

Easy to buy and sell units.
Professional management of your money.
Diversification across many stocks or bonds.
Regular income options are available.

Action Steps

Review your current expenses and future needs.
Start investing in mutual funds for retirement.
Consider selling some plots for more liquid assets.
Speak with a Certified Financial Planner for personalized advice.

Finally

Your financial base is strong. Good job!
With some changes, you can have a secure retirement.
Start planning now for a comfortable financial future.

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

..Read more

Latest Questions
Milind

Milind Vadjikar  |556 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 02, 2024

Asked by Anonymous - Nov 01, 2024Hindi
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Hi I am 43 years old working in corporate sector in Bangalore for last 20 years. I got impacted by job loss due to the economic scenario and I am finding it difficult to get a job now for almost last 1 year. I am living off my savings. My investments are 1.5 Cr in FD, 2.75 Cr direct investment in equity, 80 Lakh in MF, 35 Lakh in PF, 1 Cr in NPS/Pension fund and 50 Lakhs in Gold. I live in the house I own and I have no loan. I also own a piece of Land worth 60 lakhs. I dont have any debts now. I dont have term life insurance, I have health insurance cover of 2 CR for family. My son is in 10th standard and wants to study abroad which will be a major expense in future. My monthly expenditure including school fees is 1.75 lakhs. Please advise me on how to manage the assets and how to move around the investments as getting a job seems to be more difficult.
Ans: Hello;

Following is the sum of investments you currently hold:

1. FDs: 1.5 Cr
2. Direct stocks: 2.75 Cr
3. MF corpus: 0.8 Cr
4. Land property: 0.6 Cr
5. PF corpus: 0.35 Cr
6. NPS corpus: 0.2 Cr
Grand TOTAL: 6.20 Cr

You should apply for premature withdrawal of NPS. Since this being premature withdrawal your corpus of 1 Cr will get divided into two components 0.8 Cr worth annuity you will have to buy while rest 0.2 Cr comes to you which is indicated above.

The gold asset worth 50 L is purposely not considered here. It may be used as a emergency safe reserve.

You may invest 6.2 Cr corpus in ICICI Pru equity savings fund (low to moderate risk) and do an SWP at 3% which may yield you a monthly income of ~1.4 L (post tax).

The 0.8 Cr of NPS used to buy annuity will yield you a monthly income of around 40 K (6% annuity rate considered), therefore your total monthly income will be 1.4+0.4=1.8 L.

The average returns of ICICI Pru equity savings fund are 8-9% but it is relatively less risky and this is more important.

To fund overseas education of your son, you may have to partially deplete the corpus apart from emergency gold reserves.

Hence it makes sound practical sense to have term life cover of ~ 2 Cr with riders for critical care and accident benefit for 15-20 years, apart from the health care cover which you have already.

This will ensure son's education and income for regular household expenses remain more or less unaffected in the unfortunate situation of your demise.

Also please keep searching for assignments, if not possible full time, maybe part time or on consultation basis.

This will keep you focused and busy.

Feel free to revert.

Happy Investing;

...Read more

Milind

Milind Vadjikar  |556 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 02, 2024

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I have taken parents health insurance in office coverage is 1 lack base and top up is 3lacks and premium is 38.5k. Since im paying more for less coverage planning to take outside. Taken care supreme with rider for mother which doesn't have waiting period. Father has gone through heart surgery no insurnace is willing to give the insurnace except care heart with the waiting period 2 years and co pay 20% and consumables will not be covered and heart related will not be covered. For both mother and father i need to pay 5k per month for care insurnace. Its like a burden paying office insurnace 38.5k and outside 60k . What should i do, I'm really confused to take outside health insurance or not. Cannot stop office insurnace since it does take have waiting period for parents. Please help me
Ans: Hello;

What is the current age of your mother and father?

Based on your reply I may be able to guide you suitably.

Best wishes;

...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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