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Ramalingam

Ramalingam Kalirajan  |7002 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 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
Venky Question by Venky on Jun 03, 2024Hindi
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Sir...need a guidance. Had taken a loan from HFC of which 20L have been disbursed.... the project is not moving and I am struck with EMI. I have one FD maturing for 25L next month... would it be prudent to have the funds into the loan account and preclose the outstanding OR should I continue with EMI. which currently is around 15000 pm. it has run a tenure of 2 years .

Ans: Evaluating Your Current Financial Situation
You have a loan from a Housing Finance Company (HFC) with Rs. 20 lakhs disbursed.

The project is not moving, and you are stuck with EMIs.

Your EMI is around Rs. 15,000 per month, and you have paid for 2 years.

You also have a Fixed Deposit (FD) maturing for Rs. 25 lakhs next month.

Understanding Loan Prepayment Benefits
Prepaying your loan can save you interest over the long term.

By reducing your principal amount, you decrease the interest burden.

It provides peace of mind as you eliminate the debt.

Evaluating Loan Interest vs. FD Interest
Compare the interest rate on your loan with the interest rate on your FD.

If the loan interest rate is higher than FD returns, prepayment is wise.

This way, you save more money by reducing high-interest debt.

Calculating Potential Savings
Let's calculate the interest savings if you prepay your loan.

Assuming your loan interest rate is 8% per annum.

The total interest saved can be significant over the remaining tenure.

Considering EMI Continuation
Continuing with EMIs means retaining liquidity.

You can use the FD maturity amount for other financial needs.

Evaluate if this liquidity is necessary for your future plans.

Assessing Liquidity Needs
Consider your immediate and future financial requirements.

If you foresee significant expenses, maintaining liquidity is essential.

Emergency funds, educational expenses, or medical needs may require cash.

Impact on Financial Goals
Align your decision with your long-term financial goals.

Prepaying the loan reduces debt but may impact liquidity.

Evaluate how each option affects your overall financial strategy.

Tax Implications
Understand the tax benefits associated with home loan interest.

Section 24(b) allows a deduction on home loan interest payments.

Evaluate if prepaying affects your tax-saving strategy.

Emergency Fund Consideration
Ensure you maintain an emergency fund even after prepayment.

An emergency fund covers unforeseen expenses and provides financial security.

Do not exhaust your liquidity completely.

Alternative Investment Options
Explore alternative investment options if you do not prepay.

Mutual funds, fixed income securities, or other investments can offer better returns.

Ensure these investments align with your risk tolerance and financial goals.

Consulting a Certified Financial Planner
Consider consulting a Certified Financial Planner (CFP) for personalized advice.

A CFP can provide a detailed analysis based on your financial situation.

They help you make an informed decision considering all factors.

Making an Informed Decision
Evaluate all aspects including interest rates, liquidity needs, and tax implications.

Make an informed decision that aligns with your financial goals.

Both prepayment and continuation of EMIs have their pros and cons.

Final Recommendation
Based on the analysis, if the loan interest rate is higher than FD returns, prepaying is beneficial.

However, ensure you have enough liquidity for emergencies and future needs.

Consult a CFP to tailor the decision to your specific financial situation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Asked on - Jun 04, 2024 | Answered on Jun 05, 2024
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Many thanks for your detailed guidance. Really helps much and being in clarity. Thanks again
Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!

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  |7002 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 01, 2024

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Income - 30k Monthly rent -14k Emi is 32k with help of my family I am paying. I want to close all emi and pay small amount. Will it be a good option if I take a 1lakh loan for 35% and reduce the monthly emi burden I have gold loan 1.9l Outside loan 65k O/s rent 28000 App loans total o/s 60k I failed to repay few app loans for the past months, cibil got affected and too many loans. No bank is ready to offer any loan. One offer I have is 1l in Bajaj at 35% interest. What should I do and which way works best? Please help me
Ans: I understand your situation is challenging, and you need to find a way to manage your debts effectively. Here are a few steps to help you navigate this financial difficulty:

Assess Your Financial Situation
Income and Expenses:
Monthly Income: Rs. 30,000
Rent: Rs. 14,000
EMI: Rs. 32,000 (with family support)
Gold Loan: Rs. 1.9 lakh
Other Loans: Rs. 65,000
Outstanding Rent: Rs. 28,000
App Loans: Rs. 60,000
Immediate Steps to Take
Avoid High-Interest Loans:

Taking a Rs. 1 lakh loan at 35% interest from Bajaj is very costly and will worsen your financial burden.
Negotiate with Lenders:

Reach out to your existing lenders, explain your situation, and request a restructuring of your loans. They may offer lower EMIs, extended tenure, or a temporary moratorium.
Family Support:

Continue to seek help from family if possible. Consider discussing a temporary increase in their support to ease your immediate burden.
Sell Assets:

If you have any assets that can be sold without significant loss, consider doing so to repay high-interest loans first.
Medium-Term Strategies
Debt Consolidation:

Look for a debt consolidation plan with a lower interest rate. This might be hard given your current credit score, but some non-bank financial companies (NBFCs) offer such services.
Increase Income:

Look for additional income sources, such as part-time work, freelance jobs, or selling unused items.
Financial Counseling:

Consult a Certified Financial Planner (CFP) or a credit counseling agency. They can provide personalized advice and may help negotiate with creditors.
Long-Term Planning
Credit Score Repair:

Once your immediate financial crisis is managed, work on improving your credit score by paying all your dues on time and reducing outstanding debts.
Budgeting:

Create a strict budget to control expenses and prioritize debt repayment.
Final Insights
Taking a high-interest loan to manage current debt can lead to a debt trap. Focus on negotiating with current lenders, seeking family support, and avoiding any additional high-cost loans. Consider selling assets if possible and look for ways to increase your income. Consult a financial counselor for personalized assistance.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7002 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

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Hi, I have 43L and I'm planning to buy a flat worth 1.4Cr. It is due completion in 2029. So I can either put in more now or at the end. I have decided to do below. Pay 10% since it's compulsion, now I have 30lacks with me. My biggest advantage now is time. So I have invested lumpsum of 20L in PPFAS Flexi cap and 10L in HDFC Balanced Fund. I have a loan sanctioned of remaining amount 1.2Cr. My question is, in 5yrs time, should I use 87L from loan and use whatever I get from these MF's or should I stay invested in MF's and use full loan amount of 1.2cr instead? My plan was to pump in additional 30k per month if I use only 87L from loan as my EMI would be less and 8-10yrs down the line, I can apply for PreClosure. What's the best way forward? Use full loan amount and pay higher emi and keep my 30L in MF intact or use partial loan amount, pump in additional sip and utilize what I get to foreclosure of loan? Other details, 30M, Monthly Exp around 50k. I am investing 35k in SIP, 50k for various plans, ULIP, insurance ROP, Assured returns etc. I consider these as debt instruments in my investments. End goal is to save enough for retirement and an additional real estate asset worth 1.5cr before retiring.
Ans: You have Rs 43 lakhs and plan to buy a flat worth Rs 1.4 crores due for completion in 2029. Here's an analysis of your options:

Current Investment Plan
1. Initial Payment:

Paid 10% (Rs 14 lakhs) upfront.
Remaining Rs 30 lakhs available.
2. Investment Allocation:

Rs 20 lakhs in PPFAS Flexi Cap Fund.
Rs 10 lakhs in HDFC Balanced Fund.
3. Loan Details:

Sanctioned loan amount: Rs 1.2 crores.
Option 1: Partial Loan and Additional SIP
1. Plan:

Use Rs 87 lakhs from the loan.
Use returns from mutual funds for the rest.
Pump in an additional Rs 30k per month as SIP.
2. Benefits:

Lower EMI, making it easier to manage monthly expenses.
Ability to invest more monthly, enhancing wealth creation.
Option to pre-close the loan in 8-10 years.
3. Considerations:

Assess the expected returns from mutual funds.
Ensure the investments outperform the loan interest rate.
Option 2: Full Loan Amount
1. Plan:

Use the full Rs 1.2 crores loan.
Keep the Rs 30 lakhs in mutual funds.
2. Benefits:

Larger loan amount may offer tax benefits.
Investments remain intact and grow over time.
Flexibility to use investment returns for other goals.
3. Considerations:

Higher EMI impacts monthly cash flow.
Loan tenure may be longer, increasing interest paid.
Comparative Analysis
1. Loan Interest vs. Investment Returns:

Compare the loan interest rate with the expected returns from mutual funds.
If mutual fund returns are higher, keeping investments intact might be beneficial.
2. Monthly Cash Flow:

Evaluate your ability to manage higher EMIs.
Consider the impact on your overall financial stability.
3. Pre-closure Option:

With lower EMIs, pre-closure of the loan becomes feasible.
Additional SIP investments can create a pre-closure fund.
Recommendations
1. Balanced Approach:

Use a mix of both options.
Opt for a partial loan and keep some investments intact.
2. Regular Review:

Monitor your mutual fund performance regularly.
Adjust investments and loan repayments based on market conditions.
3. Financial Goals:

Align your investments with long-term goals like retirement.
Diversify your portfolio to balance risk and returns.
Final Insights
Considering your goals, a balanced approach of partial loan and maintaining investments is optimal. Regularly review and adjust based on performance and market conditions.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Sir, I have got your contact from RediffGurus. I approach you to guide me in my present situation. I have more than 30 years experience in export sales and also import procurement. Have been successful in developing new export markets and also importing quality material from abroad at competitive prices. All these activities have been under employment only, Where employers earned a lot, and brought me only wah wah, shabash, but no financial gains. Now I am retired, but still quite active mentally and physically. I have an idea which if backed with right financial background, can be a money spinner . The idea is to deal in metal import export trading. I can source international standard quality copper, aluminium, stainless steel etc., from China and other countries at 20 to 30% below market price. These can be sold to hungry Indian buyers here. I can assure, subject to investment, a profit of approx. Rs. 5 to 10 crore in first year itself. And of course a huge, unlimited market exists for these metals in vast Africa, where I have travelled many times and understand how business is conducted there . Now may I request you to tell me if it is possible to get a silent investor. For security purpose, I am ready to conduct entire business in investor's or his company's name, provided my interests are safe. Wahaj Nuri.
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Nripen Bhatt  |6 Answers  |Ask -

Start-Up Expert - Answered on Nov 10, 2024

Asked by Anonymous - Nov 08, 2024Hindi
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Hi Nripen Sir, I am started my own market research(Secondary Research) firm bootstrapped without team and working on it. I want to know how to do customer or client acquisition. I have 10 years of market research experience. I am sole person to handle this. Also, I want to know do i need investment for this type of firms.
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Tourist planners.
Medical startups.
You have huge market for your service, start from here and you may ask time to time for further steps.
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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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