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Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 04, 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 - Nov 02, 2024Hindi
Money

I have FD money in banks upto 42 lakhs. Iam retired. I want to generate income from this amount bbu banks give low interest. I have my own house and pension

Ans: Since you have Rs 42 lakh in fixed deposits, let’s explore income-generating options that balance safety and growth. Fixed deposits provide stability, but their low-interest rates may not meet your income needs. Here are several ways to maximise returns on your retirement corpus while maintaining an acceptable risk level.

 

1. Assessing Your Current Financial Needs and Safety Preferences
Your FD corpus serves as a safety net, so let's assess your comfort level with alternatives. Given that you have a house and pension, you may not rely entirely on FD income. We’ll look at ways to boost returns while retaining the overall safety of your investments.

 

Define Your Income Requirement: Calculate your current expenses and determine how much additional monthly income you need.

Consider Risk Tolerance: Understand that alternatives to FDs may have higher returns, but also come with varying degrees of risk.

 

Recommendation: A mix of safer and slightly riskier options can help generate a reliable income without exposing the full corpus to market fluctuations.

 

2. Senior Citizen Savings Scheme (SCSS) for Guaranteed Returns
The Senior Citizen Savings Scheme is an excellent choice for guaranteed returns. It offers higher interest rates than standard bank FDs and is government-backed, making it very secure.

 

High Interest: SCSS rates are generally higher than traditional FDs, making it an ideal option for retirees.

Quarterly Interest Payouts: SCSS provides regular income, which is helpful for monthly expenses.

 

Recommendation: You can invest up to Rs 30 lakh in SCSS, providing a substantial and safe income. Ensure you’re comfortable with the five-year lock-in period.

 

3. Monthly Income Plans for Regular Cash Flow
Monthly Income Plans (MIPs) can be a reliable source of regular income. These hybrid funds invest in debt and a smaller portion in equities, aiming to generate monthly payouts while preserving capital.

 

Moderate Risk: MIPs are less volatile than pure equity funds, which is suitable for risk-conscious retirees.

Tax-Efficiency: MIPs are more tax-efficient than bank FDs, especially if you hold them long-term.

 

Recommendation: Allocate a portion of your FD corpus to MIPs. They offer a mix of stability and the potential for higher returns compared to bank FDs.

 

4. Balanced Advantage Funds for Growth and Stability
Balanced Advantage Funds (BAFs) dynamically manage equity and debt based on market conditions, aiming to minimise risk while ensuring growth.

 

Adaptability: These funds adjust their exposure to equities and debt, providing stable returns over time.

Potential for Higher Returns: BAFs typically outperform FDs in the long term, making them a suitable option for retirees who want moderate growth.

 

Recommendation: Invest part of your corpus in a BAF to benefit from both stability and moderate returns. Consult your Certified Financial Planner to choose funds suited to your income needs.

 

5. Systematic Withdrawal Plans (SWP) for Monthly Income
With a Systematic Withdrawal Plan, you can invest a lump sum in a balanced mutual fund and set up regular withdrawals. This allows you to customise the frequency and amount of withdrawals based on your monthly needs.

 

Flexibility: SWPs let you decide how much and when to withdraw, giving you control over your income stream.

Tax Benefits: Unlike FDs, SWP withdrawals are more tax-efficient, as long-term capital gains taxes apply.

 

Recommendation: Consider placing a portion of your corpus in an SWP for tax-efficient income. This method also allows your principal to grow over time, providing a steady income source.

 

6. Post Office Monthly Income Scheme (POMIS) for Consistent Returns
The Post Office Monthly Income Scheme (POMIS) is another safe, government-backed option for generating monthly income.

 

Monthly Payouts: POMIS provides fixed monthly interest payouts, ensuring a consistent income stream.

No Market Risk: As a fixed-income scheme, POMIS is not affected by market fluctuations, adding security to your investment.

 

Recommendation: You can invest up to Rs 9 lakh jointly in POMIS. This is suitable if you prefer assured returns without any market risk.

 

7. Diversifying Across Mutual Fund Categories
While FDs ensure safety, diversifying into debt and hybrid mutual funds can increase income potential. Debt funds, in particular, offer better returns than FDs and remain relatively stable.

 

Debt Funds for Low Risk: Consider short-term and ultra-short-term debt funds. They carry lower risk compared to equity and provide higher returns than FDs.

Hybrid Funds for Balanced Growth: Hybrid funds are a mix of equity and debt, balancing stability with moderate growth.

 

Recommendation: Allocate a portion of your FD corpus into a combination of debt and hybrid mutual funds, keeping risk low but returns above typical FDs.

 

8. Avoiding Over-Reliance on Fixed Deposits
Fixed deposits are safe but may not suffice for long-term income. Diversifying into alternative income-generating options offers a balanced approach.

 

Lower Interest Rates: FDs provide lower returns than alternative debt or hybrid mutual funds, especially after taxes.

Capital Preservation with Moderate Growth: Diversifying your corpus beyond FDs can help in maintaining the purchasing power of your retirement income.

 

Recommendation: Avoid keeping your entire retirement corpus in FDs, as inflation could erode your wealth over time. A diversified strategy will help balance risk with growth.

 

Final Insights
To generate a steady income, consider a mix of safe investments and low-risk mutual funds. SCSS, MIPs, and POMIS offer stability, while Balanced Advantage Funds and SWPs provide income with moderate growth. By balancing these options, you can increase monthly income and preserve wealth in retirement.

 

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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Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 16, 2024

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I have 5 crores in Mutual funds and 3 crores in FDs. I am retiring in April 2026. I need monthly income of 3 lakhs. Please advise
Ans: Retiring with a substantial corpus of ?5 crores in mutual funds and ?3 crores in fixed deposits is a significant achievement. Let's devise a strategy to generate a monthly income of ?3 lakhs to sustain your retirement lifestyle.

Evaluating Investment Options
Mutual Funds: While mutual funds offer potential for higher returns, they also carry market risk. Your ?5 crores invested in mutual funds can generate income through systematic withdrawals or dividend payouts.

Fixed Deposits: Fixed deposits provide stability and guaranteed returns but typically offer lower interest rates compared to mutual funds. Your ?3 crores in fixed deposits can serve as a reliable source of income.

Designing a Retirement Income Plan
Systematic Withdrawal Plan (SWP): Consider setting up an SWP from your mutual fund investments to generate a monthly income of ?3 lakhs. Calculate the withdrawal amount based on your expected rate of return and desired monthly income.

Fixed Deposit Interest: The interest earned from your fixed deposits can supplement your monthly income. Calculate the interest income from ?3 crores at the prevailing interest rate to determine the additional monthly income generated.

Managing Portfolio Risks
Asset Allocation: Maintain a balanced asset allocation to mitigate risk and ensure steady income. Allocate a portion of your portfolio to equity funds for growth potential and the remainder to debt funds for stability.

Diversification: Diversify your mutual fund investments across different asset classes and fund categories to spread risk. Consider a mix of equity, debt, and hybrid funds to optimize returns while managing volatility.

Regular Portfolio Review
Monitoring Performance: Monitor the performance of your mutual fund investments regularly and make adjustments as needed. Review your asset allocation, fund selection, and withdrawal strategy to ensure they align with your retirement income goals.
Tax Implications
Tax-Efficient Withdrawals: Structure your withdrawals strategically to minimize tax liabilities. Take advantage of tax-saving investment options like Equity Linked Savings Schemes (ELSS) and tax-free bonds where applicable.
Contingency Planning
Emergency Fund: Set aside a portion of your corpus as an emergency fund to cover unexpected expenses or market downturns. Aim to maintain at least 6-12 months' worth of living expenses in a liquid and accessible account.
Conclusion
With a well-structured retirement income plan combining mutual funds and fixed deposits, you can achieve your goal of generating a monthly income of ?3 lakhs post-retirement. Regular monitoring and adjustments will be essential to ensure the sustainability of your income stream throughout retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

Money
I have 50 Lacs in fd. I am saving 1.7lpm how to invest effectively to generate money. I am 26 year old now.
Ans: Let’s break down your investment strategy step-by-step. You have Rs 50 lakhs in a fixed deposit, and you save Rs 1.7 lakhs per month. That's an amazing start at 26 years old. Your commitment to saving and investing wisely will help you build a strong financial future. Let’s dive into how you can invest this money effectively.

Assessing Your Current Situation
First, it’s important to understand where you stand financially. You have a substantial amount saved in a fixed deposit and a healthy monthly savings rate. This shows you have a strong foundation. But fixed deposits offer low returns compared to other investment options.

Understanding Investment Goals
Before diving into specific investments, let’s define your goals. At 26, you likely have long-term goals such as retirement, buying a home, or starting a business. Identifying these goals will guide your investment choices. Here’s a breakdown of common goals:

Retirement: Aim to build a corpus that will support you post-retirement.
Buying a Home: Plan for a down payment and home loan repayment.
Children’s Education: If you plan to have children, consider their future education expenses.
Travel and Lifestyle: Fund future travel and lifestyle aspirations.
Diversifying Your Investments
Diversification is crucial. It means spreading your investments across different assets to minimize risk. Here’s a diversified investment plan tailored for you:

Mutual Funds
Mutual funds are excellent for long-term growth. They offer diversification and professional management. Here’s how you can allocate your savings in mutual funds:

Equity Mutual Funds: These are ideal for long-term growth. They invest in stocks and have the potential for high returns. They are divided into various categories:

Large Cap Funds: Invest in large, well-established companies.
Mid Cap Funds: Invest in mid-sized companies with high growth potential.
Small Cap Funds: Invest in smaller companies with high growth potential but higher risk.
Flexi Cap Funds: Invest in a mix of large, mid, and small cap stocks.
Debt Mutual Funds: These funds invest in bonds and other debt securities. They are less risky compared to equity funds and provide steady returns.

Hybrid Funds: These funds invest in a mix of equity and debt. They balance the risk and return.

Advantages of Mutual Funds
Diversification: Mutual funds invest in a variety of securities, reducing risk.
Professional Management: Managed by experienced fund managers.
Liquidity: Easy to buy and sell.
Compounding: Reinvested returns generate more returns over time.
Risks of Mutual Funds
Market Risk: Equity funds are subject to market fluctuations.
Credit Risk: Debt funds carry the risk of default by issuers.
Interest Rate Risk: Changes in interest rates affect debt fund returns.
Systematic Investment Plan (SIP)
A SIP allows you to invest a fixed amount regularly in mutual funds. It’s a disciplined way to invest and averages out the cost of investment. Considering your monthly savings, you can allocate Rs 1.7 lakhs across different SIPs:

Equity Funds: Allocate a significant portion here for long-term growth.
Debt Funds: Allocate a smaller portion for stability.
Hybrid Funds: Balance the rest between equity and debt.
Direct vs. Regular Mutual Funds
You might consider direct funds, but they have disadvantages. Direct funds require you to choose and manage funds yourself. This can be challenging without expertise. Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential has benefits:

Expert Guidance: CFPs provide personalized advice.
Regular Monitoring: Your portfolio is regularly reviewed and rebalanced.
Convenience: CFPs handle paperwork and transactions.
Avoiding Index Funds
Index funds track a market index and offer lower fees but also lower returns. Actively managed funds, on the other hand, aim to outperform the market through skilled management. Here’s why actively managed funds might be better:

Potential for Higher Returns: Fund managers can capitalize on market opportunities.
Flexibility: Managers can adjust the portfolio in response to market conditions.
Stocks
Investing in individual stocks can be rewarding but also risky. Given your age, you can allocate a portion of your portfolio to stocks for higher returns. However, stock picking requires research and understanding of the market.

Public Provident Fund (PPF)
PPF is a long-term savings scheme with tax benefits. It’s a safe investment with decent returns. You can allocate a portion of your savings here for stability and tax benefits.

National Pension System (NPS)
NPS is designed for retirement savings. It offers tax benefits and a mix of equity and debt exposure. It’s a good option for long-term retirement planning.

Gold
Gold is a good hedge against inflation. You can invest in gold through Sovereign Gold Bonds (SGB) or gold mutual funds. It’s a safe investment but should be a smaller part of your portfolio.

Emergency Fund
Maintain an emergency fund equal to 6-12 months of your expenses. This fund should be easily accessible and kept in a savings account or liquid fund.

Insurance
Ensure you have adequate life and health insurance. This protects you and your family from unforeseen events.

Reviewing and Rebalancing
Regularly review your portfolio. Rebalance it based on market conditions and your goals. This ensures your investments stay aligned with your risk tolerance and objectives.

Long-Term Perspective
Investing is a long-term game. Be patient and avoid reacting to short-term market fluctuations. Stick to your plan and keep investing regularly.

Final Insights
You’re on a great path with your savings and financial discipline. By diversifying your investments and staying focused on your goals, you can build a substantial corpus over time. Remember, investing is not about timing the market but time in the market. Consistent and disciplined investing will yield the best results.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Ravi

Ravi Mittal  |450 Answers  |Ask -

Dating, Relationships Expert - Answered on Dec 03, 2024

Asked by Anonymous - Dec 03, 2024Hindi
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Relationship
Hello, my wife is Ugandan and I’m of English national, 30 years old and she’s 26, we met nearly a year ago and got married in uk with some of her friends and small family. We haven’t done kuchala (not sure if that’s correct spelling) yet and I’m feeling anxious for when the time comes. She said her family will kneel when they greet me and being white this is already stinging my moral (due to history). I also talked about moving in together before the meet the parents happen however she says she’s rather move in after? Currently this could take two years before going to Uganda, how should I proceed without overstepping her cultural beliefs as after all we are married and by my culture we should already be living together
Ans: Dear Anonymous,
It is very nice of you to be so considerate and sensitive while handling these cultural nuances. Let's discuss the kneeling tradition. It's a sign of respect and it's deeply rooted in Ugandan culture. While I understand your point of view, you also have to remember that it can have significant meaning to her and her family. I suggest you politely express your feelings and let her know why it is uncomfortable for you to see her family kneel. When you explain, mention how much her culture means to you as well. I am sure both of you can communicate and come to a compromise that makes you both happy. Just in case, they persist in following the ritual, just look at it as a gesture of love and respect and not submission.

About the moving in together part, in certain parts of the world, couples living together before the traditional wedding is not considered respectful. But since you are already married, you can try explaining to your wife how the living situation does not go against her cultural expectations. But if it is a really big deal for her and her family, consider seeing it from her perspective.

Communication is everything here. Look at every problem as a team; it's not your problem vs her problem. It's both of you vs the problems.

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I have received a job offer from Siecorp ,a Singapore based company though my posting would be at my hometown . They have asked me to submit all credentials related to education & job experiences which is quite normal but they have asked the following documents also which they said would help me to arrange through some agent by payment & the same would be reimbursed during first month of employment . Earlier also another overseas company asked for the same & I denied to make payment before having the job in hand . 1. Construction Health and Safety Technician (CHST) – Compulsory 2. OSHA Safety Certificate – Compulsory 3. Safety Trained Supervisor (STS) – Non-Compulsory Kindly advise whether these certificates are really required to be submitted to join any foreign company or any sort of cheating business regards,
Ans: Hello Bipradas.
From your query, it is clear that you have offered by job by a Singapore-based company and they are giving you a posting in your home town. You did not mention anything about the work culture of the company. It simply indicates that you are supposed to work from home which is always related to computers. I think there is no harm in producing the required documents through an agent if they are offering you a handsome salary. The requirement for documents differs from company to company. There is no harm in submitting the mentioned documents. If have fear in your mind, then please go through the profile of the company in detail before submitting the documents. There are many ways to check the authenticity of the company. There are some chances of cheating, but everybody is not indulged in the same category. But take the steps with utmost precaution.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
Thanks.

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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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