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Can I get 30,000 per month for my retired father's expenses and home loan repayment using SWP in mutual funds?

Milind

Milind Vadjikar  |1125 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Feb 17, 2025

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
sasprings Question by sasprings on Feb 17, 2025Hindi
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Dear sir, My father is retiring this may and he won't get pension. He will get an amount of 40 lakhs from his savings.He has health insurance.At present he is paying home loan EMI of 35000 per month.Myself and my brother are working . After my father's retirement we want to pay home loan and my father want 30000 per month for his expenses. 1)Can we get that amount through SWP by investing in mutual funds? 2)can you give suggestions on reducing home loan burden?

Ans: Hello;

SWP in this case is absolutely ruled out because it won't work neither it is worth the risk.

You may repay home loan from the corpus to be received by your father and buy him lifetime annuity for the balance amount.(Will be much less then 30 K expected)

Else you may put entire sum received at retirement into an immediate annuity which at 6% may provide monthly income of 20 K. You and your brother may service the home loan.

You may migrate the loan to other lender with lesser rate of interest to reduce the burden.

Other option is to pay entire home loan from retirement corpus of your Dad. Then you may do reverse mortgage of the property owned by your father so that he gets monthly income.

But this option will relinquish your right to your father's home. Ofcourse you may buy from the lender later at the market rate.

Best wishes;
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  |8151 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

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Hi I am 31 yrs monthly income 95000. Home loan 30lakhs plus person loan 7lakhs doing a lic of 5000 per month and no other investment but have the balance salary gets used for monthly expenses can you pls help me to plan how to repay my home loan also my investment plan for retirement
Ans: You are 31 years old with a monthly income of Rs 95,000.

You have a home loan of Rs 30 lakhs and a personal loan of Rs 7 lakhs.

You are paying Rs 5,000 per month for LIC.

Your remaining salary is used for monthly expenses.

Financial Goals
Repay Home Loan
Investment Plan for Retirement
Repaying Your Loans
Home Loan Repayment
Increase EMI Payments: If possible, increase your EMI payments to reduce the loan tenure and interest cost.

Part-Payments: Make part-payments whenever you receive a bonus or extra income to reduce the principal amount.

Loan Restructuring: Consider restructuring your loan for better terms if interest rates decrease.

Personal Loan Repayment
Prioritize Personal Loan: Personal loans generally have higher interest rates than home loans. Focus on repaying this first.

Consolidate Loans: If feasible, consolidate your personal loan into your home loan for a lower interest rate.

Monthly Budgeting
Expense Management
Track Expenses: Use an app or spreadsheet to track your monthly expenses.

Cut Unnecessary Costs: Identify and reduce unnecessary expenses to increase savings.

Investment Plan for Retirement
Building an Emergency Fund
Emergency Fund: Save at least 6 months' worth of expenses in a liquid fund for emergencies.
Systematic Investment Plan (SIP)
Start SIPs: Invest a fixed amount monthly in mutual funds through SIPs. Diversify across large-cap, mid-cap, and multi-cap funds.

Consistent Investing: Invest consistently for long-term growth and compounding benefits.

Diversification and Risk Management
Diversified Portfolio: Create a diversified portfolio with a mix of equity, debt, and other instruments.

Regular Review: Review and rebalance your portfolio periodically to align with your financial goals.

Insurance Coverage
Health and Life Insurance
Adequate Cover: Ensure you have adequate health insurance and life insurance cover. Consider term insurance for life cover.
Professional Guidance
Consulting a CFP
Seek Advice: Consult a Certified Financial Planner (CFP) for tailored financial advice.

Avoid Mistakes: Professional guidance can help you avoid costly investment mistakes.

Final Insights
To effectively manage your loans and plan for retirement, focus on reducing high-interest debts first. Consistently invest in a diversified portfolio through SIPs and maintain a disciplined approach to savings. Seek professional advice from a Certified Financial Planner to ensure your financial goals are met with minimal risk.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Milind

Milind Vadjikar  |1125 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 28, 2024

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First of all I want to thank you sir for sharing your advice to the persons in need.I am Shiva and I am 28 years old. My father took a home loan of 35 lakhs in January 2019 .My father's current salary is 87000 rupees after deductions .My father is paying monthly installment of 33500 rupees for home loan.My father doesn't have pension and will retire in 2years. My salary is 50000 rupees after my deductions and I have term life insurance of 1.8 cr. my brother's salary is 1 lakh after deductions and both of us are married .After retirement of my father ,he will lumpsum of 40 lakhs and we do not want to use that to pay our home loan as there was no pension for my parents. How can we pay our home loan without affecting our children education and how can we manage my expenses for my parents and also for ourselves.I and my brother are interested in investing in mutual funds .My brother has health insurance of 10 lakhs which includes my parents .please suggest a way to manage our home loan , children education expenses and we want to become debt free as soon as possible and want to build our wealth. Please give your valuable advice sir.I will be eagerly waiting for that. Thanking you, Shiva
Ans: Hello;

You are most welcome for seeking probable answers to your queries.

After the retirement of your father he may buy immediate annuity from a life insurance company. Considering annuity rate of 6% he can expect to receive a monthly payout of 20 K immediately from next month. (You can try to shop around and negotiate for a better annuity rate).

Out of the monthly payout of 20 K your parents may keep 10 K for own expenses and balance 10 K may be earmarked towards loan emi.

Since home loan emi is 33.5 K, I suggest yourself and your brother can share the balance amount(23.5 K) in equal proportion(11750 per person, per month).

As rightly pointed out your family should focus on early repayment of this home loan by pre paying the principal as much as possible.

If the loan repayment tenure is more than 10 years then yourself and brother may be added as co-owners of the property alongwith your father.

This can then enable yourself and your brother to seek income tax deductions on account of home loan repayment.

This will involve stamp duty, registration and legal expenses so it will make sense only if loan repayment term is more then 10 years.

It would be better if you seek advice from a CA to pursue this option.

Despite the monthly payout of 11750, you and your brother will have surplus funds to invest for other goals.

Good to know that your parents are covered under healthcare insurance.

Your parents may not have left a huge fortune for you both but they have ensured best education for you by virtue of which you are decently settled in life. Keep that in mind.

Happy Investing!!

..Read more

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I understand your dilemma mam. Let's look at both aspects of this relationship.

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Ramalingam

Ramalingam Kalirajan  |8151 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 25, 2025

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Hi, I need support on my retirement plan. I am based in Gulf and is planning to come back. I have an equity portfolio of 3 cr and debt portfolio 1.37 cr. My monthly expenses would turn out to be Rs 1.5 lakhs which i could get Rs 1.1 lakhs from my debt funds and balance from my equity portfolio. I want to buy a house after 10 years, currently the house would cost Rs 1.2 cr. I have to tap my equity portfolio for my two kids education of 40 lakhs each after 7 and 12 years. I have health insurance of 25 lakhs and term plan of Rs 1.5cr Let me know whether my current portfolio can support the above plans and my retirement
Ans: Your current portfolio is strong, but it needs adjustments for financial security. Below is a detailed breakdown of your plan.

Retirement Readiness Assessment
You plan to retire in five years and expect monthly expenses of Rs. 1.5 lakh.

You will withdraw Rs. 1.1 lakh from debt funds and the remaining Rs. 40,000 from equity.

Your debt portfolio of Rs. 1.37 crore will provide regular cash flow.

Your equity portfolio of Rs. 3 crore will ensure long-term wealth growth.

Key Observations
Inflation risk: Expenses will increase. A 7% inflation rate means Rs. 1.5 lakh today may become Rs. 2.1 lakh in 10 years.

Equity volatility risk: Market downturns can affect the Rs. 40,000 monthly withdrawal.

Portfolio rebalancing: Gradually shift some equity to safer instruments.

Emergency backup: Consider maintaining six months’ expenses in a liquid fund.

House Purchase Plan in 10 Years
The current cost of Rs. 1.2 crore will rise with inflation.

At 7% inflation, the future cost could be Rs. 2.4 crore in 10 years.

If you withdraw from equity, ensure it does not impact retirement needs.

Recommended Action
Create a separate investment for the house purchase.

Use a mix of debt and equity for stability.

Consider a balanced advantage fund for flexibility.

Children's Education Fund
Your two children will need Rs. 40 lakh each in 7 years and 12 years.

At 7% inflation, the amount could be Rs. 64 lakh per child.

You will need approximately Rs. 1.28 crore in total.

Suggested Investment Approach
Allocate funds separately in equity mutual funds for growth.

Prefer flexi-cap and large-cap funds for stability.

Consider a Systematic Transfer Plan (STP) to move money to safer instruments as the goal nears.

Portfolio Adjustments for Stability
Your current asset allocation is:

Equity: Rs. 3 crore (68%)

Debt: Rs. 1.37 crore (32%)

Suggested Adjustments
Increase debt allocation to 40-45% as you approach retirement.

Ensure tax-efficient withdrawals from debt funds.

Reduce equity withdrawals during market downturns.

Health and Insurance Considerations
You have Rs. 25 lakh health insurance, which is good but may not be enough.

Medical inflation is 12-15% annually.

Increase coverage through super top-up health insurance.

Final Insights
Your financial plan is feasible with proper adjustments.

Retirement is achievable, but monitor inflation impact.

House purchase needs a dedicated investment plan.

Children’s education fund requires a structured approach.

Health insurance coverage should be increased.

Would you like a step-by-step plan for investments?

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8151 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 25, 2025

Asked by Anonymous - Mar 10, 2025Hindi
Hi I have the following assets: Mutual Funds of Rs. 4 crores. I am investing 3.5 lakhs every month. It has been growing at an average of 18% year on year. I will continue to invest over the next five years. A house worth 2.5 crores Account balance of about 40 lakhs FD of Rs. 1 lakh Life insurance (which can be redeemed) of close to 70 lakhs. I will continue to pay premium for the next five years. PPF of close to 7.5 lakhs. I will continue to pay Rs. 75000 every year towards premium. PF of Rs. 5,00,000 that has not been withdrawn yet. Health insurance coverage of Rs.15,00,000. A house that I will inherit from my parents which is worth around 5 crores. I would like to retire in another 5 years in a very low cost place in India with water and beach. I prefer a small town with a slow life. Please advise if this is feasible. I am also an ardent traveller. I would like to reserve atleast 20 lakhs every year for travel. Please advise
Ans: Your financial position is strong. You have built a solid investment portfolio and planned for retirement. You also have clear lifestyle goals.

Let’s evaluate if your plan is feasible and provide recommendations to enhance it.

1. Strengths of Your Financial Plan
Your disciplined approach to wealth creation is remarkable. Here’s what you are doing right:

Strong Mutual Fund Portfolio – Rs. 4 crores invested with Rs. 3.5 lakh SIP monthly ensures long-term growth.

Diversified Assets – You own equity, fixed deposits, PPF, PF, and life insurance.

Adequate Liquidity – Rs. 40 lakh in a bank account provides financial flexibility.

Multiple Income Sources – Mutual funds and inherited property provide financial security.

Clear Retirement Vision – You plan to retire in 5 years and relocate to a low-cost town.

Well-Planned Travel Budget – Rs. 20 lakh per year ensures an enjoyable retirement.

Your approach sets a strong foundation for financial freedom.

2. Assessing Feasibility of Early Retirement
Your plan is achievable, but some refinements will improve sustainability.

Projected Wealth in 5 Years
Your mutual fund portfolio, growing at 18% annually, will compound significantly.

Continuing SIPs of Rs. 3.5 lakh per month will further strengthen your corpus.

Your existing assets will grow in value, providing additional financial security.

By retirement, you will have a sizable wealth base to support your lifestyle.

Retirement Expenses and Sustainability
Relocating to a low-cost town will reduce living expenses.

Your travel budget of Rs. 20 lakh per year is reasonable.

You need a structured withdrawal strategy to sustain your lifestyle.

A well-planned withdrawal strategy will ensure your retirement funds last.

3. Enhancing Your Investment Strategy
Your portfolio is strong, but some adjustments will improve efficiency.

Optimize Mutual Fund Portfolio
Avoid over-diversification and focus on high-performing funds.

Increase exposure to flexi-cap and mid-cap funds for better long-term returns.

Maintain a balance between equity and debt for stability.

A refined fund selection will maximize returns with controlled risk.

Utilize Fixed Deposits Wisely
Rs. 1 lakh in FD is low for emergency reserves.

Consider keeping 6-12 months’ expenses in a liquid fund for better returns.

Bank FDs should be kept only for short-term needs.

Shifting funds to liquid investments will enhance liquidity and returns.

Redeem Life Insurance Policy
Traditional insurance policies provide low returns.

Surrendering and reinvesting in mutual funds will improve growth potential.

You can take a term insurance policy if needed.

Reinvesting insurance proceeds will enhance wealth creation.

Maximize Tax-Free Investments
Continue contributing Rs. 75,000 annually to PPF for tax-free growth.

PF should remain invested for long-term compounding.

Utilize tax-efficient withdrawals from mutual funds after retirement.

Proper tax planning will optimize post-retirement cash flow.

4. Managing Healthcare and Risk Protection
Your healthcare and risk protection measures are crucial for a stress-free retirement.

Increase Health Insurance Coverage
Rs. 15 lakh health insurance is good, but a higher cover is recommended.

Consider a super top-up plan to extend coverage affordably.

A medical emergency fund will add an extra layer of security.

Higher health coverage ensures peace of mind in retirement.

Plan for Long-Term Care
Future healthcare expenses may rise due to inflation.

Setting aside a corpus for medical emergencies is essential.

Investing in debt mutual funds for this purpose is advisable.

A medical fund will safeguard against unexpected healthcare costs.

5. Structuring Retirement Withdrawals
A structured withdrawal plan is necessary for long-term financial stability.

Segment Your Investments
Short-Term (0-5 Years): Keep liquid funds and debt mutual funds for immediate expenses.

Medium-Term (5-10 Years): Invest in balanced funds for steady returns.

Long-Term (10+ Years): Maintain equity exposure for capital appreciation.

Proper segmentation will ensure sustainable cash flow post-retirement.

Prioritize Tax-Efficient Withdrawals
Withdraw from bank accounts and FDs first to avoid tax impact.

Use capital appreciation from equity funds to maintain tax efficiency.

PPF withdrawals are tax-free and should be used strategically.

A tax-efficient approach will optimize your post-retirement income.

6. Planning for Travel and Lifestyle Goals
Your love for travel is an integral part of your retirement.

Creating a Travel Fund
Set aside Rs. 1 crore in a mix of liquid and balanced funds.

Withdraw annually for travel expenses while allowing funds to grow.

Consider international travel insurance for unforeseen medical emergencies.

A dedicated travel fund ensures uninterrupted vacations.

Choosing the Right Retirement Location
Look for coastal towns with a low cost of living and good healthcare.

Ensure access to quality hospitals, airports, and basic amenities.

Consider renting before finalizing your permanent residence.

A well-researched location will enhance your retirement experience.

Finally
Your retirement goal is realistic and achievable with proper financial planning.

Maintain a disciplined investment approach to maximize growth.

Adjust mutual fund portfolio to optimize risk and returns.

Surrender life insurance for better investment opportunities.

Increase health insurance and set up a medical fund.

Create a structured withdrawal plan for financial security.

Plan travel and retirement location carefully for a stress-free lifestyle.

With these refinements, you can retire in 5 years with complete financial freedom.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8151 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Mar 25, 2025

Money
Please review my MF portfolio. My monthly SIP is 18000/- per month. Current portfolio value is 1.5 Lakh. 1. ICICI Prudential Bluechip Fund - 4000 2. Parag Parikh Flexi Cap Fund - 4000 3. Nippon India small cap - 4000 4. HDFC balanced advantage fund- 2000 5. Motilal oswal Midcap fund - 2000 6. JM Aggressive Hybrid Fund - 1000 7. Bandhan Nifty Alpha Low Volatility 30 Index - 1000 (NFO) Traditional investments are as follows, and the current value is 15 Lakh. 1. EPF - 44000/- per month 2. NPS - 22000/- per month 3. RD - 20000/- Per month to build an emergency fund. I am planning to increase my SIP from 18000 to 60000 every month. Please let me know if I need any changes in my portfolio. I am planning to build a portfolio of 5 crore in the next 15 years. Currently, I am 35 years and planning to retire by the age of 50 years.
Ans: Your financial plan is well-structured, and your investment discipline is strong. You have a clear retirement goal and an aggressive investment approach. However, there are areas where you can optimize your portfolio for better returns and lower risk.

Let’s analyze your portfolio from a 360-degree perspective.

1. Strengths of Your Current Portfolio
Your investment approach is well-planned. Here’s what you are doing right:

Disciplined SIP investment – You have a regular SIP plan in equity mutual funds.

Diversified portfolio – You have exposure to large-cap, mid-cap, small-cap, flexi-cap, and hybrid funds.

Strong traditional investments – EPF and NPS provide stability in retirement.

Emergency fund planning – Your recurring deposit ensures liquidity for unexpected expenses.

Increasing SIPs – Scaling up SIPs from Rs 18,000 to Rs 60,000 will help wealth creation.

Your financial discipline will help you reach your Rs 5 crore target.

2. Issues in Your Mutual Fund Portfolio
While your portfolio is diversified, some adjustments can improve performance.

Over-Diversification
You have too many funds across categories.

Too many funds dilute returns and make tracking difficult.

Having 4-5 well-chosen funds is better than 7-8 average funds.

Index Fund Exposure
One of your funds is an index fund.

Index funds cannot beat the market, while actively managed funds can.

A Certified Financial Planner (CFP) helps select the best actively managed funds.

Hybrid Funds and Overlapping Categories
You hold two hybrid funds, which can limit aggressive growth.

These funds are not necessary when you have EPF and NPS.

Adjusting these issues will enhance your returns.

3. Optimizing Your Mutual Fund Portfolio
Here’s how you can make your portfolio more efficient:

Reduce the Number of Funds
Keep 4-5 funds for focused wealth creation.

Large-cap, flexi-cap, mid-cap, and small-cap funds provide balanced exposure.

Avoid hybrid funds as EPF and NPS already offer stability.

Exit Index Fund
Actively managed funds provide better long-term returns.

Fund managers adjust portfolios based on market conditions.

An index fund will not protect during market corrections.

Adjust Your Portfolio Allocation
Large-cap fund – 30% allocation for stability.

Flexi-cap fund – 30% allocation for fund manager flexibility.

Mid-cap fund – 20% allocation for higher growth potential.

Small-cap fund – 20% allocation for aggressive wealth creation.

This will balance risk and return effectively.

4. Optimizing Traditional Investments
Your traditional investments are strong, but they can be more efficient.

EPF Contribution
EPF is a safe investment with tax benefits.

However, it provides lower returns compared to equity.

Consider redirecting a small portion towards equity SIPs for higher growth.

NPS Contribution
NPS is a good tax-saving tool but has withdrawal restrictions.

You can keep investing but ensure a higher allocation in equity within NPS.

Recurring Deposit for Emergency Fund
RDs are good for liquidity but offer low returns.

Instead, keep emergency funds in a liquid mutual fund for better returns.

A balanced approach between safety and growth is necessary.

5. Increasing SIPs from Rs 18,000 to Rs 60,000
Your plan to increase SIPs is excellent. However, proper allocation is required.

Large-cap fund – Increase SIP from Rs 4,000 to Rs 15,000.

Flexi-cap fund – Increase SIP from Rs 4,000 to Rs 15,000.

Mid-cap fund – Increase SIP from Rs 2,000 to Rs 10,000.

Small-cap fund – Increase SIP from Rs 4,000 to Rs 10,000.

Liquid fund – Allocate Rs 10,000 for short-term needs.

This ensures strong wealth creation while maintaining liquidity.

6. Expected Growth and Retirement Planning
With disciplined investing, you can achieve your Rs 5 crore goal.

Equity SIPs – Higher allocation ensures compounding benefits.

Traditional investments – EPF and NPS provide stability.

Emergency fund – Ensures liquidity for unexpected needs.

Your current path is excellent. Minor adjustments will enhance your wealth creation journey.

Finally
You are on the right track towards financial freedom. Your disciplined investment approach is commendable. However, some refinements will optimize your returns.

Reduce over-diversification and exit underperforming funds.

Replace index funds with actively managed funds for better returns.

Allocate SIPs strategically for better risk-reward balance.

Re-evaluate traditional investments to maximize efficiency.

Ensure liquidity through a liquid fund instead of an RD.

With these adjustments, you can achieve your Rs 5 crore target confidently.

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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