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Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 11, 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 - Apr 11, 2024Hindi
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Hi Gurus, I'm 37+, monthly take home salary 2.17 Lakhs, married (wife working, earning decent salary, no kid as of yet). I contribute 32.4k pm (12% EPF + 10% VPF) towards PF (balance ~27 Lakhs), 14.7k pm towards NPS as Employer's contribution + 50k yearly towards Tier2 (balance ~11.6 Lakhs), 1.5 Lakhs yearly towards PPF (balance ~11.3 Lakhs) and have couple of LIC plans with SA ~11 lakhs maturing in 10 years. I also have MF SIP of 50k pm as below (total portfolio value ~19.7 Lakhs with small holdings in International Funds) which I wish to top up by 15% every year. 1. Kotak Small Cap - 3000 2. Axis Small Cap - 3000 3. Edelweiss Mid Cap - 3000 4. PGIM Mid Cap - 3000 5. PGIM Flexi Cap - 3000 6. Parag Parikh Flexi Cap - 5000 7. Quant Active Fund - 5000 8. Edelweiss Bal. Advtg. Fund - 3000 9. Mirae Assets L&M Cap - 5000 10. Canara Robeco Emerging Equity - 3000 11. Canara Robeco Bluechip - 3000 12. SBI Focused Equity - 5000 13. ICICI Pru. Focused Equity - 3000 14. Edelweiss US Tech ETF FoF - 3000 I have my own loan free home, health insurance from the company, no term insurance and a liquid emergency fund of 12 Lakhs. My average monthly expenses are around 1.3 Lakhs. I know I'm heavily into equity without having the balance of Debt or Gold, but for that reason I contribute towards FI instruments like PF, PPF as much as possible. Also I'm aware that my MF portfolio has become over diversified over the years. My ultimate financial target is to accumulate 10cr by my late 50s. Could you please suggest how far or diverted I am from my target and what all adjustments should I make to my overall investment portfolio.

Ans: ou have a well-diversified investment portfolio with a strong focus on equity through both mutual funds and retirement savings. However, there are a few areas you may consider adjusting:

Diversification: While equity can provide high returns over the long term, ensure you have adequate diversification across asset classes. Consider allocating a portion of your portfolio to debt instruments like bonds or fixed deposits for stability.

Insurance: Since you don't have term insurance, consider purchasing a policy to provide financial security to your dependents in case of any unfortunate event.

Review MF Portfolio: Consolidate and streamline your mutual fund holdings to avoid over-diversification. Focus on high-quality funds with proven track records and consider reducing the number of funds to simplify your portfolio management.

Goal Planning: Reassess your financial goals and time horizon periodically to ensure your investments are aligned with your objectives. Consider seeking professional advice to develop a comprehensive financial plan tailored to your needs.

Regular Review: Continuously monitor the performance of your investments and make adjustments as necessary to stay on track towards your long-term financial goals.

By making these adjustments and staying disciplined in your investment approach, you can work towards achieving your target of accumulating 10 crores by your late 50s.
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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Hardik

Hardik Parikh  |106 Answers  |Ask -

Tax, Mutual Fund Expert - Answered on Apr 11, 2023

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Dear Sir, Iam 51 and I have been investing in diversified mutual funds since last 10 years and accumulated around Rs 1.28 Crores and continuing SIP's in following funds. Quant Large cap - Rs 9000, SBI Health care fund - Rs 5000, UTI Flexi cap fund - Rs 5000, Kotak Flexi cap fund - Rs 13000, Mirae asset hybrid equity fund - Rs 8000. I have also accumulated corpus of Rs 13 lakhs in NPS tier 1 and doing SIP of Rs 5000 every months. Further i have combine corpus of Rs 43 Lakhs in EPF and PPF accounts. I have invested Rs 4.72 Lakhs in 20 Year bonds of HUDCO, PFC tax free bonds in 2013 and receiving Rs 42000 every year as interest. I want to have Rs 50000 every month from the above from next year. I will try to continue SIP's till next 2-3 years from other expected incomes from parents.Iam also getting Rs 15000 per month as rent and do not have nay debt.
Ans: Dear Srinivasa,

First of all, congratulations on your disciplined investment approach over the past decade. You have built a considerable corpus that should serve you well in the coming years.

Based on the information you provided, you currently have:

Mutual Funds: Rs 1.28 Crores
NPS (Tier 1): Rs 13 Lakhs
EPF and PPF: Rs 43 Lakhs
HUDCO and PFC Bonds: Rs 4.72 Lakhs (Rs 42,000 annual interest)
Rental Income: Rs 15,000 per month
Your goal is to generate Rs 50,000 per month starting next year.

Here's a suggested plan:

Continue your SIPs in mutual funds for the next 2-3 years, as you mentioned. This will help your corpus grow even further.
Utilize the interest income from the HUDCO and PFC bonds (Rs 42,000 per year) as a part of your desired Rs 50,000 per month. You can reinvest the interest income in a liquid fund or a short-term debt fund to ensure its availability when needed.
You can consider allocating a portion of your mutual fund corpus to a Systematic Withdrawal Plan (SWP) in order to generate the remaining monthly income needed. Assuming you require Rs 50,000 per month (Rs 6 Lakhs per year), you can use a small portion of your Rs 1.28 Crores corpus to fund this. Start the SWP next year to meet your monthly income requirement.
Your rental income of Rs 15,000 per month will serve as an additional source of income, which can be used to cover any unforeseen expenses or to reinvest in your portfolio.
It's advisable to keep your EPF and PPF investments intact until maturity, as they provide a safe and tax-efficient option for long-term wealth creation.
Please remember that the above plan is only a suggestion, and you should consult with a certified financial planner to create a personalized plan based on your specific financial situation and goals.

Wishing you the best in your financial journey.

Warm regards,

..Read more

Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 2024

Asked by Anonymous - May 08, 2024Hindi
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Sir, I am 38 years old, working in a PSB in a managerial post (Scale 3) in Kolkata. My dependents are two sons (twins) aged 2.5 years and wife. My gross salary is 1.56 lacs, and my net salary is 91k. My current investments are EPF (mandatory for my PSB), a monthly contribution of Rs. 33,740 (employee-25%+employer-10%) with a current balance of Rs. 32 Lacs, and NPS (mandatory for my PSB), a monthly contribution of Rs. 26,840 (employee-10%+employer-14%) with a current balance of Rs. 25.50 Lacs. Both PF and NPS amounts are progressive, with increments in salary and DA in each year/ quarter and the 5 yearly bipartite settlements (next due in 2027). I have recently started SIP of Rs. 25,000 per month. Funds are PSU-2k, Infrastructure-1k, Focused Equity-2k, Small Cap-2k, Blue Chip-2k, Magnup Midcap-2k, Contra-2k, Dividend Yield-2k, Technology Opportunities-2k, Magnum Global-1k, Healthcare Opportunities-1k, Energy Opportunities-1k, Nifty Index-1k, Nifty 50 Equal Weight-1k, Nifty Midcap 150-1k, Nifty Next 50-1k, and Nifty Small Cap 250-1k. All funds are from SBIMF. The current investment value is Rs. 65k. I also buy stocks of Rs. 5k monthly (only NIFTY 50 stocks), with my current investments being Rs. 55k. Other than this, I don't have any savings. My medical and Mediclaim are taken care of by my Bank through empaneled hospitals and reimbursement of domiciliary treatments (though I need to have an emergency fund). I have a home (inherited from my parents). The house is of 2 floors, and we are only 4 people (me, my wife, and 2 sons), though I wish to buy 1 in future in a good complex. Current liabilities are OD of 12 lacs and an internal loan from my bank of 5 lacs. Both EMIs (in case of internal Loan) and Interest (in case of OD) is served from my salary and Rs. 91k is what I get post deduction of EMI, Interest, PF and NPS. Hence this is my disposable income. My monthly expenses is around RS. 60k (including everything). Now are these investments enough to serve my 2 Child's Education and My retirement (I'll retire at 60 in 2046). I'm under NPS, hence I dont have a Pension, but my PSB gives both PF and NPS along with pother retirement benefits like Leave encashment of 8 months and Gratuity. Kindly advise.
Ans: Financial Assessment and Planning for Your Future

Understanding Your Current Financial Position

You're in a stable career with a consistent income, which is a great foundation for financial planning. Your investments in EPF, NPS, SIPs, and stocks reflect a proactive approach towards securing your future and that of your family. However, it's crucial to assess whether these investments align with your long-term goals.

Assessment of Retirement Planning

Retiring at 60 in 2046 gives you approximately 18 years to prepare financially. Your EPF and NPS contributions, coupled with other retirement benefits provided by your PSB, form the backbone of your retirement corpus. However, it's essential to periodically review your retirement goals and adjust your contributions accordingly to ensure you're on track to meet your desired lifestyle post-retirement.

Evaluation of Child Education Planning

With twin sons aged 2.5 years, planning for their education is paramount. Your SIPs and stock investments can contribute towards building a corpus for their higher education expenses. Considering the rising cost of education, it's advisable to increase your monthly SIP contributions gradually to meet future educational expenses effectively.

Assessment of Emergency Fund and Liabilities

Maintaining an emergency fund is crucial to cover unexpected expenses and mitigate financial risks. Given your current liabilities, including an OD and an internal loan, it's prudent to prioritize building an emergency fund equivalent to at least 6-12 months' worth of expenses.

Recommendations for Financial Planning

Review and Adjust Contributions: Regularly review your EPF, NPS, and SIP contributions to ensure they're in line with your evolving financial goals. Consider increasing contributions to SIPs gradually to build a robust corpus for retirement and your children's education.

Diversification and Risk Management: While your investments in SIPs and stocks are commendable, ensure diversification across asset classes to manage risk effectively. Consider exploring debt funds or other conservative investment options to balance the risk in your portfolio.

Prioritize Debt Repayment: Focus on repaying your current liabilities, such as the OD and internal loan, to reduce financial stress and free up cash flow for future investments and expenses.

Seek Professional Advice: Consider consulting with a Certified Financial Planner (CFP) to create a comprehensive financial plan tailored to your specific needs and goals. A CFP can provide personalized recommendations and strategies to optimize your investments and achieve long-term financial security.

Final Words of Encouragement

Your proactive approach towards financial planning is commendable. By staying disciplined, reviewing your investments regularly, and seeking professional advice when needed, you're laying a strong foundation for a secure and prosperous future for yourself and your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 14, 2024

Asked by Anonymous - May 14, 2024Hindi
Money
I am 33 years old with an in-hand salary of 57,000 per month and planning to get to 65k-75k per month by this year end, recently started investing in Mutual funds. I have a fund of 2.5 lakh in the bank for emergency and marriage related expenses in the near future as well. My current investments for a 25 year horizon are- 1)- DSP NIFTY 50 equal weight index fund growth ETF 1000rs per month 2)-DSP Natural resources and new energy fund- 500rs per month (can stop if it's not the right investment right now) 3)-ICICI INFRASTRUCTURE growth fund- 1000 per month ( can stop if the investment is too risky long term) 4)-Nippon India nifty small cap 250 index fund- 500rs per month 5)-PF Deduction from Salary 1800 per month. 6)- PPF- 1000rs Per month I am planning to invest a total of 15,000 per month in the next 6 7 months including the above investment systematically in different mutual funds for various mixtures and then increase my investment along with my salary increment. I want to have 5 crore of total earning in today's Value in next 20- 25 years and also have a Regular retirement income of 25,000 after 25 years in today's money value. I dont have kids right now and am planning to get married and have kids in the next 1-3 years depending on the finances. I have "need" expenses (parents) of 10,000 per month and 10,000 (personal expenses) per month. I don't spend much on leisure as I am introvert and I usually spend time with friends hanging out, Can you Please suggest a way to achieve this Target or if I need to increase my investment?
Ans: It's wonderful to see your proactive approach towards financial planning, especially with your long-term goals in mind. Let's break down your current situation and chart out a plan to achieve your targets:

Income & Expenses:
Your current in-hand salary of 57,000 per month is a solid foundation. It's excellent that you're aiming to increase it to 65k-75k per month by the year-end. This upward trajectory in income will provide you with more flexibility in managing your expenses and investments. Your monthly expenses of 20,000 (10,000 for parents and 10,000 personal) are well-understood, leaving you room to allocate the rest towards savings and investments.

Emergency Fund:
Maintaining an emergency fund equivalent to 6-9 months' worth of expenses is a wise move. Your emergency corpus of 2.5 lakhs covers this criterion, ensuring you're prepared for any unexpected financial emergencies without disrupting your long-term investments.

Investment Portfolio:
Your current investment portfolio consists of a mix of mutual funds and traditional savings instruments. While the DSP Nifty 50 Equal Weight Index Fund and Nippon India Nifty Small Cap 250 Index Fund offer exposure to broad market indices, the DSP Natural Resources and New Energy Fund and ICICI Infrastructure Growth Fund provide thematic exposure to specific sectors. Additionally, your contributions to PF and PPF demonstrate a commitment to long-term savings.

Future Goals:
Your goals are ambitious yet realistic. Accumulating 5 crores over 20-25 years for retirement and securing a regular retirement income of 25,000 in today's money value after 25 years require diligent planning and disciplined investing. Given your plans for marriage and starting a family in the next 1-3 years, it's crucial to factor in these additional expenses and adjust your financial strategy accordingly.

Recommendations:
Review Existing Investments:
Regularly assess the performance of each fund in your portfolio. Consider discontinuing those that consistently underperform or no longer align with your investment objectives. Focus on funds with strong track records and robust fundamentals.

Increase Savings Rate:
As your income grows, aim to increase your monthly investments proportionately. A higher savings rate will accelerate your journey towards achieving your financial goals. Review your budget periodically to identify areas where you can cut back on expenses and redirect those funds towards savings and investments.

Asset Allocation:
Diversification is key to managing risk effectively. Consider diversifying your portfolio across different asset classes, including equities, debt, and alternative investments like real estate or gold. Maintain a balanced allocation that suits your risk tolerance and investment horizon.

Retirement Planning:
Calculate the corpus required to generate a regular retirement income of 25,000 in today's value after 25 years. Use a retirement calculator to determine the monthly contribution needed to reach this target. Consider investing in retirement-focused mutual funds or pension plans to build a robust retirement portfolio.

Marriage & Family Planning:
Factor in the expenses related to marriage and starting a family when setting your financial goals. Start building a separate corpus for these milestones by allocating a portion of your savings towards dedicated savings accounts or investment vehicles tailored to short-to-medium-term goals.

Conclusion:
By implementing these recommendations and staying committed to your financial plan, you can work towards achieving financial independence and securing a comfortable retirement. Remember to review your plan regularly and make adjustments as needed to stay on track towards your goals.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

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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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