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Ramalingam Kalirajan |11060 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2026

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

Question by nikk on Feb 06, 2026Hindi

My father has just got retired. He has an outstanding home loan of Rs. 18 lakh which has 51000/- as emi. His pension is also 51000/-. His monthly expense are 20,000/-. He received gratuity of Rs. 18 lakh. What he should do either set off his home loan so that his pension is saved from emi burden or anything else ? He is also interested in investing money.. but At this time of his age , he looks for low to moderate risk plans. Guide him/me to step up his financial status.

Ans: Your father has entered a very important phase of life with stable pension income, controlled expenses, and a meaningful lump sum in hand. This gives a good base to make calm and sensible decisions. With the right steps, financial comfort and peace of mind are very much achievable.
» Understanding the Current Cash Flow Situation
– Monthly pension and home loan EMI are equal, which means the entire pension is getting blocked
– Monthly household expenses are modest and manageable
– The home loan is the only major liability
– Gratuity amount is sufficient to fully address the loan if required
This situation calls for prioritising certainty, emotional comfort, and steady income rather than chasing high returns.
» Priority of Debt Clearance at Retirement
– At retirement, protecting regular income becomes more important than growing wealth aggressively
– When EMI equals pension, it creates mental pressure and reduces flexibility
– Clearing the home loan removes interest burden and frees the pension fully for living expenses
– Being debt-free at retirement brings emotional relief, which is a big but often ignored benefit
From a Certified Financial Planner’s perspective, clearing the home loan using gratuity is a strong and sensible step in this case.
» Impact of Closing the Home Loan
– Pension of Rs. 51,000 becomes fully available
– After expenses of around Rs. 20,000, there is monthly surplus
– No dependency on investment returns to meet daily needs
– Lower stress during market ups and downs
This creates a solid foundation before thinking about investments.
» Investing After Loan Closure
– Do not invest the entire gratuity at once
– Keep sufficient amount in safe and liquid avenues for emergencies
– Investment should focus on capital protection first, income second, and growth last
– Avoid locking money for long periods
At this age, investments should support life, not control it.
» Suitable Risk Approach at This Stage
– Low to moderate risk is appropriate and practical
– Portfolio should be spread across stable income options and carefully chosen growth-oriented mutual funds
– Avoid aggressive strategies or return promises
– Regular review is more important than high returns
Actively managed mutual funds are better suited here as they adjust to market conditions and manage downside risks, which is important post-retirement.
» Creating Monthly Income and Stability
– Use part of surplus pension for simple, planned investments
– Keep some amount invested for inflation protection
– Maintain enough liquidity to avoid forced withdrawals
– Do not depend fully on markets for monthly expenses
This balanced approach gives income comfort and gradual wealth support.
» Emergency and Health Planning
– Keep at least one year of expenses in easily accessible form
– Ensure health insurance is active and adequate
– Avoid using investments for unexpected medical needs
This protects long-term investments from early disruption.
» Role of Discipline and Guidance
– Avoid reacting to short-term market movements
– Stick to simple, understandable products
– Investing through a regular plan with guidance ensures monitoring, behavioural support, and timely corrections
At this stage, guidance matters more than saving small costs.
» Final Insights
– Closing the home loan is the first and most sensible move
– Debt-free retirement improves quality of life and decision-making
– Investments should follow stability-first thinking
– A calm, structured approach will protect capital and provide confidence
Your concern for your father’s future is thoughtful and responsible. With these steps, he can enjoy retirement with dignity, peace, and financial comfort.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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