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Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 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 - Jun 25, 2024Hindi
Money

Dear Expert, Hope you are doing great !! I am 47 and my wife is 46 years old, both are working. Our joint take home salary is around 4 - 4.25 L/M (on an average), Our current wealth is per following - 1.6 Cr (Savings, FD, PPF, EF, SSY) All savings - including PPF for both of us - Policy - 25 (Lacks accumulated - our investment ) - Actual FV would be different, they would be maturing at different time frame in next 5-15 years... - MF - (Only Debt) - 15 Lakh, Equity - I had around 50L but sold the complete portfolio for my home investment - as of now nothing in equity side but not really comfortable putting in equity as market is very high - may be once down will resume - my plan is to do lump sump once market is down (waiting for a good correction) - Stock - 1 Lakh - Home - Approx 3 Cr (No home loan as of now) - Second home (Father owner - I am nominee) - 1.5 CR - 2 Properties (Land) - Approx 75 Lakhs - Term Insurance - 1.5 Cr Liabilities - Nothing Monthly Expenses - 1 - 1.5 Lakhs (Including policy & 20K transferring to my parents 10K each) Have two kids - Daughter - Just 12th Passed - She wants to purse Psychology - eventually Phd (her own decision)...I am encouraging her to pursue UPSC..let see - Son - In 9th standard (Would encourage him to eventually do some business, but no compulsion from our side, he is free to do whatever he wants to do) Have simple life style, how should we plan our income/saving in such way that we can comfortably achieve following - Kids Education - ?? Not sure Daughter Marriage - 30-40 Lakhs Son Marriage - ?? (Not sure) Post retirement - 1 - 1.5 L/Monthly income

Ans: I hope you are doing great! You and your wife have a strong financial foundation and clear goals. Let’s work on a plan to ensure you achieve your objectives smoothly.

Current Financial Situation
Let's summarise your current financial position:

Joint Monthly Salary: Rs. 4 - 4.25 lakh.
Total Savings (FD, PPF, EF, SSY): Rs. 1.6 crore.
Policies: Rs. 25 lakh.
Mutual Funds (Debt): Rs. 15 lakh.
Equity: Sold for home investment, planning to reinvest.
Stock: Rs. 1 lakh.
Primary Home: Approx. Rs. 3 crore.
Second Home: Approx. Rs. 1.5 crore (nominee).
Land Properties: Approx. Rs. 75 lakh.
Term Insurance: Rs. 1.5 crore.
Liabilities: None.
Monthly Expenses: Rs. 1 - 1.5 lakh (including Rs. 20k to parents).
Children’s Education and Marriage Goals: Uncertain amounts for education, Rs. 30-40 lakh for daughter’s marriage.
Understanding Your Goals
You have specific financial goals:

Kids' Education: Not sure about the costs.
Daughter’s Marriage: Rs. 30-40 lakh.
Son’s Marriage: Not sure.
Post-Retirement Income: Rs. 1 - 1.5 lakh per month.
Kids' Education Planning
Daughter’s Higher Education
Your daughter’s goal is to pursue psychology and eventually a PhD. Encourage her to explore scholarships and financial aid options.

Son’s Future Plans
Your son is in 9th standard and you are open to his career choices. Keep supporting his interests.

Creating an Education Fund
Start a dedicated education fund for both kids. Invest in a mix of equity and debt mutual funds for growth and stability.

Marriage Fund
Daughter’s Marriage
Plan for Rs. 30-40 lakh for your daughter’s marriage. Start a separate investment in a balanced mutual fund to achieve this goal.

Son’s Marriage
Estimate the cost for your son’s marriage and start saving accordingly. A similar balanced fund can be used.

Retirement Planning
Target Post-Retirement Income
You aim for Rs. 1 - 1.5 lakh monthly post-retirement. Let’s ensure a steady income source.

Building the Retirement Corpus
With your current savings and continued investments, you can build a sufficient retirement corpus. Here’s a detailed plan:

Savings and Fixed Deposits: Maintain some liquidity.
PPF: Continue investing till maturity for tax-free returns.
Debt Mutual Funds: Ensure a portion for stability.
Equity Investments: Essential for long-term growth.
Investment Strategy
Systematic Investment Plans (SIPs)
Resuming SIPs in equity mutual funds is crucial once the market corrects. Here’s a breakdown:

Equity Mutual Funds: Diversify across large-cap, mid-cap, and small-cap funds.
Debt Mutual Funds: Continue for stability and regular income.
Balanced Funds: A mix of equity and debt for moderate risk and returns.
Benefits of Actively Managed Funds
Actively managed funds outperform index funds. Professional fund managers can adjust the portfolio to maximize returns.

Power of Compounding
Reinvesting returns leads to exponential growth. Compounding is your best ally in wealth creation.

Risk Management
Managing Market Volatility
Equity markets are volatile. Diversification across asset classes reduces risk.

Emergency Fund
Maintain an emergency fund for 6-12 months of expenses. This provides liquidity and financial security.

Detailed Plan
Equity Mutual Funds
Invest in a mix of large-cap, mid-cap, and small-cap funds. Allocate 60% of your portfolio to equities for growth.

Debt Mutual Funds
Allocate 20% to debt mutual funds. These provide stability and regular income.

Hybrid Mutual Funds
Invest 10% in hybrid funds. They offer a balanced approach with exposure to both equity and debt.

Gold Investments
Gold acts as a hedge against inflation. Maintain around 10% of your portfolio in gold.

Life Insurance and Policies
Assessing Current Policies
You have Rs. 25 lakh in policies maturing over 5-15 years. Ensure they align with your goals.

Adequate Life Insurance
Your term insurance of Rs. 1.5 crore is good. Ensure it covers your family’s needs.

Regular Review and Rebalancing
Periodic Review
Review your portfolio periodically. Adjust investments based on market conditions and goals.

Rebalancing
Rebalance annually to maintain desired asset allocation. This keeps your portfolio aligned with your risk tolerance.

Final Insights
Education Fund
Create a dedicated fund for kids’ education. Invest in a mix of equity and debt funds for growth and stability.

Marriage Fund
Plan for your daughter’s marriage with a separate investment. Estimate costs for your son’s marriage and start saving.

Retirement Corpus
Aim for a sufficient retirement corpus with your current and future investments. Diversify your portfolio for growth and stability.

Investment Strategy
Continue SIPs: Resume SIPs in equity mutual funds for long-term growth.
Diversify Portfolio: Maintain a balanced mix of equity, debt, and gold.
Regular Review and Rebalancing: Periodically review and rebalance your portfolio.
By following this comprehensive plan, you can achieve your financial goals and ensure a comfortable future for your family.

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  |7101 Answers  |Ask -

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

Asked by Anonymous - Jun 18, 2024Hindi
Money
Hi, Am 50 yrs old and my wife is 49..we both earn around 4.80 lacs p.a. We have invested around 1 Cr in MF, 1.5 Cr in FDs, 2 investment properties worth 2 Cr, 50 lacs in Equity shares, 50 lacs in ULIPs and 1 Cr in PF. Our estimated requirements are around 1.5 Cr in kids education, 50 lacs in kids marriages and monthly income of around 2 lacs after we leave jobs in another 2 yrs..pls suggest a suitable plan.
Ans: Setting the Stage for Your Comprehensive Financial Plan

At 50 years old, you and your wife have done exceptionally well in building a diverse and robust portfolio. With a combined annual income of Rs 9.6 lakhs, you have substantial investments across mutual funds, fixed deposits, equities, ULIPs, provident funds, and real estate. You’ve built a strong financial foundation, with investments totalling over Rs 6 crore. Now, as you approach retirement and have specific goals for your children’s education and marriage, it’s crucial to refine your strategy for the next phase of your financial journey.

Assessing Your Current Financial Position

Your investment portfolio is impressive and well-diversified, reflecting a careful approach to wealth building.

Breakdown of Your Investments:
Mutual Funds: Rs 1 crore
Fixed Deposits (FDs): Rs 1.5 crore
Investment Properties: Rs 2 crore
Equity Shares: Rs 50 lakhs
Unit-Linked Insurance Plans (ULIPs): Rs 50 lakhs
Provident Fund (PF): Rs 1 crore
Your asset allocation spans across different classes, offering a mix of growth and stability. This is a commendable strategy, balancing risk and return.

Evaluating Your Financial Goals

You have set clear financial goals:

Children’s Education: Rs 1.5 crore
Children’s Marriages: Rs 50 lakhs
Post-Retirement Monthly Income: Rs 2 lakhs
Prioritizing and Planning for Education and Marriage
Funding your children’s education and marriages is a top priority. Setting aside Rs 1.5 crore for education and Rs 50 lakhs for marriage expenses requires careful planning.

Children’s Education: The cost of education is substantial and increasing. Allocating Rs 1.5 crore ensures your children have the best opportunities. Given the time frame, a combination of safe and growth-oriented investments is ideal.

Children’s Marriages: Setting aside Rs 50 lakhs for marriages provides for significant expenses without strain.

Planning for Retirement Income

You aim to retire in 2 years and require Rs 2 lakhs monthly to maintain your lifestyle.

Assessing Current and Future Needs
Given your extensive assets, you are well-positioned to generate this income. Evaluating your current income streams and potential returns is essential.

Strategies for Generating Monthly Income
Fixed Deposits (FDs): With Rs 1.5 crore in FDs, you have a source of stable, albeit lower, returns. Consider shifting some funds to higher-yield options for better returns while maintaining liquidity.

Mutual Funds: Rs 1 crore in mutual funds offers growth potential. Actively managed funds can outperform and help achieve higher returns. Aligning these funds with your risk tolerance and income needs will maximize benefits.

Equity Shares: Rs 50 lakhs in equity shares provide significant growth potential. Equities, though volatile, can generate high returns over time. A well-managed portfolio with regular reviews is key.

Provident Fund (PF): Your Rs 1 crore in PF is a reliable source for post-retirement income. It offers safety and consistent returns. Ensuring optimal use of this fund will support long-term financial stability.

Unit-Linked Insurance Plans (ULIPs): Rs 50 lakhs in ULIPs mix insurance and investment. Evaluating the performance and cost of these plans is crucial.

Refining Your Investment Strategy

Optimizing your current investments is vital for meeting your goals. Here’s how to fine-tune your strategy:

Rebalancing Your Portfolio
Regularly rebalance your portfolio to align with your changing risk appetite and financial goals.

Equity Allocation: Given your retirement proximity, a conservative approach is advisable. However, retaining some equity exposure is important for growth.

Debt Allocation: Increase your debt investment to secure stable, lower-risk returns. This can be achieved through debt mutual funds or safe instruments like FDs and PF.

Mutual Funds: Focus on actively managed funds. These funds, driven by skilled managers, have the potential to outperform. Direct funds lack professional guidance and may not meet your expectations.

Ensuring Liquidity and Emergency Fund

Having liquid assets and an emergency fund is essential, especially as you near retirement.

Liquidity Management
Ensure a portion of your assets are in liquid forms. This provides flexibility to meet immediate needs or take advantage of investment opportunities.

Emergency Fund
Maintain an emergency fund covering 6-12 months of expenses. This safeguards against unexpected events without disrupting your investment strategy.

Tax Efficiency in Retirement Planning

Tax-efficient strategies can enhance your post-retirement income. Here are ways to optimize your tax liability:

Maximizing Tax Benefits
Utilize all available tax exemptions and deductions. Investments in tax-saving instruments under Section 80C, 80D, and others can reduce your taxable income.

Tax-Efficient Withdrawals
Plan your withdrawals to minimize tax impact. Structured withdrawals from PF, ULIPs, and capital gains on mutual funds and equities can lower your tax burden.

Reviewing Insurance and ULIPs

Your ULIPs mix insurance with investments. Given the costs and returns, evaluate if they still serve your needs.

Evaluating ULIPs
ULIPs often come with high charges and lower returns compared to mutual funds. Assess the performance and consider redeeming if they underperform.

Insurance Needs
Ensure adequate life and health insurance coverage. As your financial situation evolves, adjust your coverage to protect against unforeseen risks.

Strategizing for Your Investment Properties

Your investment properties are valuable assets but are less liquid.

Managing Investment Properties
Real estate provides rental income and capital appreciation but lacks liquidity. Consider the role these properties play in your overall strategy. Focus on maintaining them or plan for eventual liquidation if needed.

Rental Income
Leverage rental income to support your retirement. It provides a steady cash flow to meet your monthly expenses.

Creating a Sustainable Withdrawal Strategy

A sustainable withdrawal strategy ensures your funds last throughout your retirement.

Safe Withdrawal Rate
Adopt a withdrawal rate that balances longevity and income needs. A common approach is the 4% rule, but customize it based on your specific requirements.

Structured Withdrawals
Plan withdrawals from different asset classes to maintain a balance between growth and security. Start with lower-risk assets and gradually tap into higher-risk investments.

Regular Reviews and Professional Guidance

Regularly reviewing your financial plan ensures it remains aligned with your goals.

Annual Financial Reviews
Conduct annual reviews of your portfolio. This keeps your investments aligned with your evolving financial needs and market conditions.

Certified Financial Planner (CFP) Guidance
Consulting a CFP provides professional insights tailored to your situation. They help optimize your strategy, address complex issues, and ensure long-term success.

Final Insights

You have built a strong financial base with diverse investments. As you prepare for retirement, refining your strategy is essential to meet your specific goals for education, marriage, and monthly income.

Continue leveraging your assets effectively. Focus on optimizing your portfolio, maintaining liquidity, and planning tax-efficient withdrawals. Your disciplined approach and clear objectives will guide you towards a secure and fulfilling retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 04, 2024

Asked by Anonymous - Jul 04, 2024Hindi
Money
My wife and I are around 34 years old. Both are working in IT earning around 2.60l p.m. We have 2 kids(boys), one is studying 2nd class and the other one is 6 months old. Below are our expenditure and savings: Term insurance- 57k p.a for 6 years Life insurance -18k p.a for 6 yrs Own house(brought an independent house at 51l, now it costs - 1cr)-15l Home loan for next 3 years -47k p.m School and transportation fee for the elder boy -1.10l p.a Planning to send day care for a younger boy -20k p.m Monthly expenses -45k p.m Bought 3 plots at 40l(2 to 5 years back for incase any future needs) now costs 50l Our pf bal- around 23l till now Stocks- 7l(invested around 5l in 1 year , profit at 2l) Gold jewellery -220 grams Cash on hand 30l No additional medical insurance apart from the company provided (8l p.a) My wife is planning to work for the next 5 yrs, I will work for 10yrs(these are rough figures as we are working in IT). Need advice on following main things and also please provide suggestions on other things as well, how can we save and invest to get high returns so that we can secure our future financially: 1. Schooling and higher studies for 2 boys(Short and long term education plan for kids. With drawl based on the need in the emergency and pay, please suggest which scheme/plan suits for this). 2. Retirement plan(how can we plan, thinking to utilize here pf amount, suggest any other things as well). 3. Emergency Fund creation plan(where can we invest and withdraw if immediately required). 4. Medical health insurance after retirement(currently a company providing 16l from both of us, how can we plan for future medical emergencies for family). As we have coh 30l, is it worthy to take independent house g+1 -1.4cr (1.1 house loan with we can show tax benefit for both of us in future, 25k p.m rental income, thinking in such a way that it's useful for kids studies, later it may help as pension after retirement. Also in the future land prices may increase high.) or invest somewhere else to get high returns and withdrawal periodically based on our needs. Please provide your valuable suggestions on above 4 points and investment of coh 30l which gives us high returns. It helps us to organise things in a better way for our future. Thank you in advance.
Ans: You and your wife, both aged 34, are in a solid financial position, each earning Rs. 1.30 lakhs per month in the IT sector. You have two young children, one in 2nd class and the other just 6 months old. Your family’s financial situation involves various assets and liabilities, including real estate, stocks, gold, and insurance policies. You’ve taken significant steps to secure your future, but with some strategic guidance, you can optimise your financial planning further.

Financial Analysis
Income and Expenses
Monthly Income: Rs. 2.60 lakhs (combined)
Monthly Expenses: Rs. 45,000
Home Loan EMI: Rs. 47,000
Daycare Fees: Rs. 20,000
School Fees: Rs. 1.10 lakhs annually (approx. Rs. 9,167 monthly)
Assets
Term Insurance: Rs. 57,000 per annum
Life Insurance: Rs. 18,000 per annum
Home Value: Rs. 1 crore (current)
Plots Value: Rs. 50 lakhs
PF Balance: Rs. 23 lakhs
Stocks: Rs. 7 lakhs (profit Rs. 2 lakhs)
Gold: 220 grams
Cash on Hand: Rs. 30 lakhs
Liabilities
Home Loan Balance: Rs. 15 lakhs (3 years remaining)
Key Financial Goals
Children’s Education
Retirement Planning
Emergency Fund Creation
Medical Insurance Post-Retirement
Detailed Financial Planning
Children’s Education
Short-Term Education Plan

Your elder son’s school fees and upcoming daycare expenses for your younger son necessitate a dedicated fund. You can utilise short-term debt funds or fixed deposits for this purpose. These are low-risk options that ensure the money is available when needed without much volatility.

Debt Funds: These are mutual funds that invest in fixed income securities like bonds and treasury bills. They provide better returns than savings accounts and fixed deposits while maintaining low risk.
Fixed Deposits: These are safer but typically offer lower returns compared to debt funds. They are good for very short-term needs.
Long-Term Education Plan

For higher education, investing in equity mutual funds is advisable. Equity mutual funds offer high returns over a long period, making them suitable for goals that are 10-15 years away. Starting a Systematic Investment Plan (SIP) in these funds can help in averaging the cost of investment and compounding over time.

Equity Mutual Funds: These funds invest in stocks and aim for high growth. While they are riskier, they also offer the potential for higher returns over the long term.
SIP: A Systematic Investment Plan allows you to invest a fixed amount regularly in mutual funds. It helps in averaging out the purchase cost and harnessing the power of compounding.
Recommended Strategy

Short-Term: Invest in debt funds or fixed deposits for immediate schooling needs.
Long-Term: Start SIPs in equity mutual funds for higher education goals.
Retirement Planning
Utilise PF Wisely

Your Provident Fund (PF) balance is a significant asset. Continue contributing to your PF, as it’s a safe and tax-efficient way to build your retirement corpus. The power of compounding will help grow this amount substantially by the time you retire.

Diversified Investment Portfolio

In addition to PF, consider diversifying into equity mutual funds for better growth. These funds provide higher returns compared to traditional savings schemes. Adding some balanced or hybrid funds can help mitigate risks while still aiming for growth.

Retirement Corpus Calculation

Estimate your retirement corpus considering your desired retirement age, lifestyle, and inflation. Use this to set a monthly investment target. Regularly review your investments and adjust your SIP amounts to ensure you stay on track to meet your retirement goals.

Balanced/Hybrid Funds: These funds invest in a mix of equity and debt. They are less risky than pure equity funds but offer better returns than debt funds.
Regular Review: Periodically assess your investments and adjust based on performance and changing financial goals.
Recommended Strategy

EPF/PPF: Continue contributions to your Employee Provident Fund (EPF) and consider opening a Public Provident Fund (PPF) for additional tax-saving benefits.
Mutual Funds: Invest in equity and balanced mutual funds via SIP.
Emergency Fund Creation
Importance of Emergency Fund

An emergency fund is essential for unexpected expenses like medical emergencies, job loss, or urgent home repairs. Aim to save 6-12 months of expenses.

Investment Options

Keep your emergency fund in liquid funds or a high-interest savings account. These options offer easy access and reasonable returns.

Steps to Build

Start by setting aside a fixed amount every month. Automate this transfer to ensure consistency. Use part of your current cash on hand (Rs. 30 lakhs) to create this fund.

Liquid Funds: These mutual funds invest in very short-term instruments and provide liquidity with better returns than savings accounts.
High-Interest Savings Accounts: Offer immediate access and higher interest rates compared to regular savings accounts.
Recommended Strategy

Target Amount: Save 6-12 months of living expenses in liquid and easily accessible funds.
Investment Options: Use liquid funds and high-interest savings accounts.
Medical Health Insurance Post-Retirement
Assess Current Coverage

You currently have Rs. 16 lakhs coverage from your employers. This is good, but consider additional personal health insurance for comprehensive coverage. This ensures you’re protected even after retirement.

Long-Term Health Insurance

Look for family floater health plans that cover you, your wife, and your children. Choose a plan with lifetime renewability and adequate sum insured. Also, consider critical illness insurance for added protection.

Family Floater Plans: These plans cover all family members under a single policy. Ensure it offers sufficient coverage for all members.
Critical Illness Insurance: Provides a lump sum payout if diagnosed with specified serious illnesses. This can help cover costs not covered by regular health insurance.
Recommended Strategy

Personal Health Insurance: Opt for a family floater plan with lifetime renewability and a higher sum insured.
Critical Illness Insurance: Consider adding this for extra coverage against serious illnesses.
Investing Rs. 30 Lakhs Cash on Hand
Avoid Real Estate Investment

Instead of buying another house, which ties up funds and incurs maintenance costs, invest in financial instruments that offer liquidity and growth. Real estate investment, while potentially profitable, lacks the flexibility and liquidity you might need.

Investment Options

Equity Mutual Funds: For long-term growth. Allocate a significant portion to these funds. They offer higher returns and can be withdrawn partially when needed.

Debt Funds: For stability and moderate returns. Good for medium-term goals and partial withdrawals.

Hybrid Funds: Balance between equity and debt. Lower risk compared to pure equity funds but higher returns than debt funds.

Systematic Withdrawal Plans (SWP): Invest lump sum in mutual funds and withdraw a fixed amount regularly. Useful for supplementing income post-retirement.

Equity Mutual Funds

Long-Term Wealth Building: These funds are ideal for creating long-term wealth. Investing Rs. 30 lakhs here can yield significant returns over 10-15 years.
Partial Withdrawals: You can withdraw money partially when needed, providing flexibility.
Debt Funds

Stability and Returns: They offer more stability and are suitable for medium-term goals.
Safety: Less volatile than equity funds, making them a safer option for conservative investors.
Hybrid Funds

Balanced Growth: These funds offer a mix of safety and growth, making them suitable for medium to long-term investments.
Risk Mitigation: Less risky than pure equity funds, they provide a balanced approach to investing.
Systematic Withdrawal Plans (SWP)

Regular Income: Invest a lump sum in mutual funds and withdraw a fixed amount regularly.
Post-Retirement: SWPs can provide a regular income stream, supplementing your retirement corpus.
Recommended Strategy

Equity Mutual Funds: Invest a significant portion for long-term wealth building.
Debt Funds and Hybrid Funds: For medium-term stability and growth.
SWP: To create a regular income stream post-retirement.
Final Insights
You’re in a strong financial position with a good income and diverse assets. Focus on clearing your home loan and maintaining your insurance.

Prioritise building an emergency fund and investing in mutual funds for your children’s education and your retirement. Avoid additional real estate investments. Instead, leverage equity and debt mutual funds for liquidity and growth.

Regularly review and adjust your financial plan to stay on track. Consider working with a Certified Financial Planner to optimise your strategy and ensure you meet your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ravi

Ravi Mittal  |431 Answers  |Ask -

Dating, Relationships Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 22, 2024Hindi
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Relationship
A bit long story I'm 21 student preparing for medical competative entrance exam for past 3 years (21-24).2 year ago this phase I was in a long distance relationship for 4 months with a girl I met in my class .But it didn't last long due to the problems created due to distance as she couldn't understand myself and I couldn't understand herself.so there was a misunderstanding and I couldn't hold on as I was in heavy pressure by exams and financial problems.so I couldn't handle and I felt like too early and broke up with her by losing my mind.she was completely disappointed as I didn't speak to her for more than an year due to one more year preparation.i missed her very much but I didnt tell her.I missed govt seat in border mark and the same year she got into a relationship with another guy in her class.i don't blame her. But I feel like my entire life is shattered and I couldn't move on from that girl till now.I couldn't concentrate on my career too.im kind of person who is always confident in all aspects but I have totally lost my mind .I can see that in an danger situation as age is running and family pressure, everyone of my classmates are far ahead of me I couldn't withstand this situation and couldn't make proper decision in any aspect. Mam please help me out.
Ans: Dear Anonymous,
I understand your concerns. The first step is to focus on moving on; she has, and you should too. Prioritize your career, your family, and your future. Next, what has happened to your career progress has already happened. It's unfortunate, but there's no way to change that. But give yourself a second chance; work harder and achieve greater things than you even imagined before. Trust me, you are not the only person who is standing in a situation like this. Many have, and many more will. But the ones who have passed this time will give you the same advice that I did.

Best Wishes.

...Read more

Milind

Milind Vadjikar  |682 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Nov 22, 2024

Asked by Anonymous - Nov 13, 2024Hindi
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Money
Sir, I am 40yrs old. Having monthly takehome salary of 1.1 lakh and rental income of 36000. My investment are 2 flats worth of 1cr. 4 plots in Bhubaneswar worth of 2crs. EPF balance 50 lakh, LIC policies worth of 16 lakhs, NPS worth of 10 lakhs. My monthly saving commitments are - EPF (employee+employer) 28000 NPS 15000 MF 7500 Gold scheme 5000 Financial burden - HL emi of 24000 Monthly expanses 50000 I would like to retire at 50. Please advise for retirement plan with life expectancy of 80yrs.
Ans: Hello;

The value of your investments after 10 years;

A. EPF Corpus+Contribution: 1.6 Cr
B. NPS Corpus+Contribution: 53 L
C. MF(sip) + Gold(sip): 25 L
D. Real estate (land): 3.26 Cr

So sum of A, C & D gives us a corpus of 5.11 Cr

Since you will withdraw NPS before 60 age 80% of corpus will go into annuity while 20% will be available to you.

So you may expect monthly income of around 21 K from annuity(42.4 L).

Balance 10.6 L get added to 5.11L taking your total corpus to ~ 5.2 Cr.

If you invest 5 Cr in a conservative hybrid debt fund and do a SWP at the rate of 3%, you may expect a monthly income of around 1.1 L(post-tax).

Add your monthly rental income of 36 K(No growth factored) and annuity income of 21 K to this and you have total monthly income of 1.67 L after 10 years.

Your current monthly expenses of 50 K after 10 years would be around 90 K and 1.6 L after 20 years.

Considering return of around 7-7.5% from the conservative hybrid debt fund you will still generate inflation adjusted return at 3% SWP after 80 years of age.

Assumptions:
Inflation rate-6%
Return from EPF-8%
Return from NPS-9%
Return from MF-10%
Return from gold-7%
Return from Land-5%
Annuity rate-6%

The spare flat is not considered in this because it will continue to yield you rental income in retirement.

Since real estate(land) returns may fluctuate over 10 years suggest to increase MF sip(6X) as a back-up, also in this case you may decide to retain & invest in NPS upto 60 age.

Of course MF returns are also not assured but you are improving the odds by backing two appreciable assets(RE & equity) over long-term.

Happy Investing;
X: @mars_invest

...Read more

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 22, 2024

Money
My age 62, male, getting rental income Rs. 90k nett. Already subscribing 12.5k in PPF for the past 2 1/2 years. No other investments. My target is 5 crores in 10 years. I already have Mediclaim Rs.50 lakhs for me & wife . Please advice me what to do.
Ans: Your current financial foundation is strong and shows promise:

A rental income of Rs. 90,000 per month provides consistent and predictable cash flow. This stability can serve as the backbone for your investment strategy.

PPF contributions of Rs. 12,500 per month for 2.5 years reflect disciplined saving. However, its returns may be insufficient to achieve a high-growth target like Rs. 5 crores in 10 years.

A robust Mediclaim policy of Rs. 50 lakhs for you and your wife ensures adequate health coverage. This safeguard allows you to focus on wealth-building without worrying about medical emergencies.

Despite these positive factors, achieving Rs. 5 crores in 10 years requires a carefully crafted and growth-oriented strategy.

Defining and Prioritising Your Financial Goals
Achieving Rs. 5 crores is ambitious yet achievable with a focused approach:

Define this target as your primary financial goal over the next decade.

Break it into manageable milestones: for example, Rs. 50 lakhs every 1-2 years in cumulative investments and growth.

Prioritise high-return investments that align with your risk tolerance and financial capacity.

Optimising Existing PPF Contributions
While PPF is a secure investment, its growth potential is limited:

Returns: PPF currently offers an interest rate of approximately 7-7.5%, which barely outpaces inflation.

Contribution Review: Consider capping your PPF contributions at Rs. 1.5 lakh annually (to utilise the Section 80C benefit). This ensures that excess funds are redirected to higher-return investments.

PPF can serve as a low-risk component of your portfolio but should not dominate your investment strategy.

Building a Diversified Investment Portfolio
A diversified portfolio will provide a balance of risk and reward. Include the following components:

1. Equity Mutual Funds for Growth
Equity mutual funds are essential for achieving high returns over the long term:

Large-Cap Funds: These invest in established companies and offer stability with moderate growth. They are ideal for a portion of your portfolio to reduce risk.

Multi-Cap or Flexi-Cap Funds: These provide exposure to companies of all sizes, offering growth and diversification.

Sectoral and Thematic Funds: Avoid these unless you have a high risk tolerance and understand market dynamics.

ELSS Funds: These not only provide tax savings under Section 80C but also deliver market-linked returns.

Why Avoid Index Funds?

Index funds may offer simplicity and lower expense ratios, but they lack flexibility. They cannot adapt to market conditions or capitalise on outperforming sectors. Actively managed funds, on the other hand, have the potential to outperform the market, especially in a developing economy like India.

Start with a Systematic Investment Plan (SIP) in selected funds to build wealth steadily.

2. Debt Mutual Funds for Stability
Debt funds add stability to your portfolio and reduce overall risk:

Choose funds with low credit risk and moderate duration to ensure safety and predictable returns.

Debt funds are suitable for short- to medium-term goals or as a fallback during market corrections.

Taxation Note: Both LTCG and STCG on debt funds are taxed as per your income tax slab. This should be factored into your planning.

3. Balanced Advantage Funds
Balanced advantage funds (BAFs) dynamically allocate assets between equity and debt. They:

Provide exposure to equity while minimising downside risk.

Offer a suitable option for someone nearing retirement but seeking growth.

4. Gold Investments for Diversification
Allocate a small portion (5-10%) of your portfolio to gold:

Gold serves as a hedge against inflation and currency depreciation.

Choose gold ETFs or sovereign gold bonds for ease of liquidity and better returns.

Emergency Fund Creation
Having an emergency fund is non-negotiable:

Maintain at least 6-12 months of expenses in liquid investments like liquid mutual funds or high-interest savings accounts.

This ensures liquidity for unforeseen events without disturbing your long-term investments.

Focus on Retirement Planning
At 62, balancing growth and safety becomes critical:

Estimate your monthly retirement expenses, considering inflation over the next 10-15 years.

Your target of Rs. 5 crores should primarily serve as your retirement corpus.

Allocate assets thoughtfully:

60-70% in equity funds for growth.
30-40% in debt funds for stability.
Periodically rebalance your portfolio to maintain this allocation.

Strategic Tax Planning
Tax efficiency can significantly impact your returns:

Continue using Section 80C to its full potential, including ELSS funds and PPF.

Consider the National Pension System (NPS) for an additional Rs. 50,000 deduction under Section 80CCD(1B).

Be mindful of the new taxation rules for mutual funds:

Equity Mutual Funds: LTCG above Rs. 1.25 lakh is taxed at 12.5%; STCG at 20%.
Debt Funds: LTCG and STCG are taxed as per your income slab.
Consult a Certified Financial Planner to optimise your tax strategy.

Regular Portfolio Monitoring and Rebalancing
Investing is not a one-time activity:

Review your portfolio every six months or annually to track performance.

Rebalance your asset allocation periodically to align with your financial goals and risk appetite.

Stay committed to SIPs even during market downturns, as this ensures cost-averaging.

Additional Suggestions
Avoid Over-Reliance on PPF
While PPF is safe, it is not sufficient for wealth creation. Shift excess contributions to equity-based investments for better returns.

Avoid Direct Stocks
Direct equity investing requires time, expertise, and constant monitoring. It carries higher risk and may lead to losses without proper research. Instead, rely on equity mutual funds managed by professionals.

Avoid Mixing Insurance and Investments
Do not invest in ULIPs or endowment plans, as they offer suboptimal returns. Stick to pure insurance products for protection and mutual funds for growth.

The Role of a Certified Financial Planner
To achieve Rs. 5 crores, a well-crafted financial plan is essential. A Certified Financial Planner (CFP) can:

Analyse your current investments and recommend improvements.

Design a customised strategy tailored to your income, expenses, and goals.

Provide periodic reviews to ensure you stay on track.

Finally
Achieving Rs. 5 crores in 10 years is a realistic goal if you adopt a disciplined and diversified approach.

Optimise your PPF contributions and channel excess funds into higher-growth investments.

Build a diversified portfolio with equity and debt mutual funds.

Include a small allocation to gold and maintain an emergency fund.

Stay consistent with your SIPs and review your investments regularly.

Work with a Certified Financial Planner to create a personalised roadmap.

By following these steps, you can secure your financial future and meet your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...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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