Home > Money > Question
Need Expert Advice?Our Gurus Can Help

33-Year-Old in Mumbai: How to Build Wealth with Combined Income of 4.1 Lacs per Month?

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 22, 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
Anindita Question by Anindita on Jun 14, 2024Hindi
Money

Hello sir... I am 33 years old living in mumbai.. I earn 90k per month out of which I am able to save 25k. Me and my husband had combined lost 40 lacs of savings into option trading last year and got into some big loans. We have started savings recently into large and medium cap mutual fund sips. I am left with a savings of 7lacs mostly into mf and some stocks and my husband is left with 2lacs after the options massacre. My husband earns 3.2lacs monthly now and after all family obligations, rent, car emi and loans we can combined save 1lac a month. Kindly advice how to maximum wealth in order to plan for a child in coming years, buy a house 5 10 years from now.. We would like to retire by 50 55... How much can we expect to save it we go at current rate .. and increasing as our salaries grow..

Ans: You and your husband have experienced a significant financial setback. Losing Rs 40 lakhs in option trading is unfortunate, but it's commendable that you've started rebuilding. You both earn well, with a combined income of Rs 4.1 lakhs per month, and can save Rs 1 lakh monthly despite existing obligations. This shows strong financial discipline.

You are 33 years old and living in Mumbai, which comes with its own financial challenges due to the high cost of living. You have Rs 7 lakhs in savings, mostly in mutual funds and some stocks, while your husband has Rs 2 lakhs left after the trading losses. The good news is that you've begun investing in large and mid-cap mutual fund SIPs. Let's explore how to maximize your wealth given your current situation and goals.

Understanding Your Financial Goals

Before diving into specific strategies, it's important to clearly outline your financial goals:

Planning for a Child: This is likely a short-term goal. Planning for education and child-related expenses requires building a robust savings plan now.

Buying a House: You aim to buy a house within 5-10 years. This requires a significant down payment and careful planning.

Retirement Planning: You both wish to retire by 50-55 years. This is a medium to long-term goal, needing substantial wealth accumulation.

Key Priorities and Challenges

Given your goals, the key challenges are:

Rebuilding Wealth: After the significant loss in trading, the focus should be on stable, long-term wealth accumulation.

Balancing Obligations: Managing current loans, EMIs, and family expenses while saving for future goals.

Maximizing Savings: You both save Rs 1 lakh monthly, which is a strong start, but it’s crucial to optimize how this money is invested.

Revisiting Your Investment Strategy

Since you have experienced losses in high-risk trading, it’s wise to focus on more stable, long-term investments. Your current focus on large and mid-cap mutual funds is a good start. These funds provide growth potential while managing risk better than speculative trading.

Equity Mutual Funds: Continue with your SIPs in large and mid-cap funds. These funds balance risk and reward, with potential returns of 12-15% annually over the long term. The power of compounding will help grow your wealth substantially.

Avoid Index Funds: While index funds are often recommended for their simplicity, they may not be the best fit for your goals. Index funds track the market and cannot outperform it. Actively managed funds, on the other hand, offer the potential for higher returns through skilled fund management.

Regular Funds over Direct Funds: While direct funds might seem appealing due to lower expense ratios, they require you to manage investments without professional guidance. Investing through regular funds with the help of a Certified Financial Planner (CFP) ensures that your portfolio is professionally managed, which can lead to better long-term outcomes.

Building an Emergency Fund

Before making any further investments, ensure you have an adequate emergency fund. This should cover at least 6-12 months of your household expenses. Given the current situation, this fund is crucial to avoid financial strain if unexpected expenses arise.

Your Rs 7 lakhs in savings can partly serve as your emergency fund. However, considering your income and obligations, it may be wise to keep Rs 3-4 lakhs in a liquid fund or a high-interest savings account. This provides quick access to cash without the risk associated with market-linked investments.

Debt Management and Loan Repayment

You mentioned having loans, including a car EMI and other obligations. While investing for the future is important, it's equally crucial to manage and reduce debt.

Prioritize High-Interest Debt: Focus on repaying any high-interest debt first. This could include personal loans or credit card debt. The interest on these debts often outweighs the returns you might earn from investments.

Home Loan Planning: If you plan to buy a house in 5-10 years, consider how much you need for the down payment. Start a separate investment plan for this goal, focusing on a mix of debt and equity mutual funds. Debt funds can offer stability, while equity funds provide growth.

Planning for Your Child

Planning for a child brings additional financial responsibilities. From birth expenses to education costs, it’s essential to start saving early.

Child Education Fund: Start a dedicated SIP for your future child's education. Equity mutual funds are a good option as they can provide substantial growth over 15-18 years. A small monthly contribution now can grow significantly, helping you cover education expenses without stress.

Health Insurance: Ensure you have adequate health insurance coverage, especially when planning for a child. The costs associated with childbirth and pediatric care can be high. A comprehensive family floater policy can safeguard your savings.

Buying a House: Strategic Planning

Purchasing a house in Mumbai is a significant financial goal, given the high real estate prices. Start by estimating the down payment and other associated costs.

Dedicated Savings Plan: Open a separate account or start a specific SIP to build your house down payment fund. Aim to save at least 20-30% of the property value as a down payment. This fund should be a mix of equity and debt investments, balancing growth with stability.

Avoid Real Estate Investment: While real estate might seem like a good investment, it can be illiquid and involves high costs. Focus on building your portfolio through mutual funds instead, which offer better liquidity and diversification.

Retirement Planning: Securing the Future

Retiring by 50-55 years requires disciplined savings and smart investments. Given that you are both 33 years old, you have about 17-22 years to build your retirement corpus.

Estimate Retirement Corpus: Based on your current lifestyle, estimate how much you’ll need annually during retirement. Factor in inflation and rising healthcare costs. A Certified Financial Planner (CFP) can help with detailed retirement planning.

Continue SIPs: Your current SIPs in large and mid-cap funds should continue. Consider increasing the SIP amount as your income grows. This disciplined approach will help you build a substantial retirement corpus.

Diversify Portfolio: As you approach retirement, gradually diversify your portfolio. Introduce debt funds and other low-risk investments to safeguard your corpus from market volatility.

Expected Savings Growth

If you continue saving Rs 1 lakh per month and invest it wisely, your savings will grow significantly. Assuming a conservative 12% return from your equity mutual funds, you could accumulate around Rs 3.5-4 crores in the next 17-22 years. This is a simplified estimate and actual returns may vary, but it gives you a ballpark figure.

As your income grows, aim to increase your savings rate. Even a slight increase in your monthly savings can have a substantial impact on your overall wealth due to the compounding effect.

Best Practices Moving Forward

Regularly Review Investments: Make it a habit to review your investments periodically. Adjust your portfolio as needed based on market conditions and changes in your financial situation.

Seek Professional Guidance: Working with a Certified Financial Planner (CFP) will help you stay on track with your financial goals. They can provide personalized advice and ensure your investment strategy aligns with your long-term objectives.

Avoid High-Risk Investments: Given your past experience with option trading, it’s wise to avoid high-risk investments. Stick to mutual funds, which offer a balanced approach to wealth creation.

Focus on Long-Term Goals: Keep your long-term goals in mind when making financial decisions. Whether it's buying a house, planning for a child, or retirement, every financial move should contribute to these objectives.

Finally

Your financial recovery is already on a positive trajectory. With disciplined saving and smart investing, you can rebuild your wealth and achieve your goals. Focus on stable, long-term investments like equity mutual funds, manage your debts wisely, and plan for key life events such as buying a house and having a child.

Remember, the key to financial success is consistency and patience. Stay committed to your savings plan, increase your contributions as your income grows, and seek professional guidance to optimize your investments.

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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 2024

Listen
Money
Hello , My age is 30 and have investments as follows: 15 lacs in fd , 15 lacs in nsc, 5.5 lacs in ppf which will go upto 10 lacs in next 3 years (during maturity), 5 lacs in stocks and 2 sip 10k in quant elss tax saver fund & 6k in kotak elss tax fund , 5k/m contribution in nps.I have housing rent which is 35k/m and monthly expense upto ?6k. I am the only one earning at home. I want to generate wealth to cover my childs education and higher studies.
Ans: You have a good start in your investment journey. Your age is 30, and you have a well-diversified portfolio. Your goal is to generate wealth for your child's education and higher studies. Let's analyse your current investments and provide insights for future growth.

Current Investment Overview
Fixed Deposits: Rs 15 lakhs

National Savings Certificate (NSC): Rs 15 lakhs

Public Provident Fund (PPF): Rs 5.5 lakhs (expected to grow to Rs 10 lakhs in 3 years)

Stocks: Rs 5 lakhs

SIPs: Rs 10,000 in ELSS tax saver fund, Rs 6,000 in another ELSS tax fund

National Pension System (NPS): Rs 5,000 monthly

Housing Rent: Rs 35,000 monthly

Monthly Expenses: Rs 6,000

Analysis of Your Current Portfolio
Fixed Deposits and NSC: These are low-risk, but returns are often low. They provide stability but may not keep pace with inflation.

PPF: This is a safe and tax-efficient option. It is a good long-term investment.

Stocks: High-risk, high-reward. Requires careful selection and monitoring.

SIPs in ELSS Funds: These offer tax benefits and potential for good returns. However, avoid duplication in fund choices.

NPS: Good for retirement planning. Offers tax benefits and disciplined savings.

Recommendations for Wealth Generation
Diversify Investments: Avoid putting too much in low-return options. Consider increasing exposure to equity mutual funds for higher growth potential.

Review ELSS Funds: Having two ELSS funds is redundant. Opt for one well-performing ELSS fund. This simplifies management and can boost returns.

Increase Equity Exposure: Allocate more to equity mutual funds. These funds generally offer better returns over the long term.

Regular Fund Investing: Consider investing through regular funds with a Certified Financial Planner. This ensures professional guidance and avoids common investment mistakes.

Avoid Direct Funds: Direct funds lack professional advice. Regular funds with CFP help are better for most investors.

Benefits of Actively Managed Funds
Professional Management: Fund managers actively manage the portfolio for optimal returns.

Flexibility: They can adjust holdings based on market conditions.

Potential for Higher Returns: Actively managed funds often outperform index funds.

Additional Steps for Financial Security
Emergency Fund: Maintain an emergency fund equal to 6-12 months of expenses. This covers unexpected financial needs.

Insurance Coverage: Ensure adequate life and health insurance. This protects your family from unforeseen events.

Regular Portfolio Review: Regularly review and rebalance your portfolio. This keeps your investments aligned with your goals and market conditions.

Final Insights
Your investment portfolio is well-diversified but can benefit from adjustments. Shift some funds from low-return options to equity mutual funds. Simplify your ELSS investments and increase equity exposure. Regular funds with Certified Financial Planner guidance offer better returns and convenience. Maintain an emergency fund and ensure adequate insurance coverage. Regular reviews and rebalancing keep your portfolio on track. This approach will help you generate wealth for your child's education and secure your financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

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

Asked by Anonymous - Jul 28, 2024Hindi
Listen
Money
Hi Vivek, I am 45 year old. Myself and wife together earning 2.3L p.m. We have kids of aged 11 years and 3 years. Our monthly expenses are around 90K. We have home loan of 75L with 80k EMI for a tenure of 13 years and need to pay 30L for our new property in one year period. We have 50L worth apartment, 40L in PPF, 55L in PF, 20L in NPS, 40L in MF, 10L in stocks and 10L in ULIPs. We have monthly MF SIP of 40K and 10K pm for term and health insurances. We are expecting around 1cr expenses for children education till their graduation.We want to retire in next 10 years with 1L monthly income. Please advice on how to invest and plan for our future.
Ans: Existing Financial Position
Sources of Income and Expenses:

Monthly income: 2.3 lakhs
Monthly expenditure: Rs 90,000
Home loan EMI: Rs 80,000 (13 years tenure)
Probable payment towards new property: Rs 30 lakhs (can be within one year)
Assets and Investments:

Apartment value: Rs 50 lakhs
PPF: Rs 40 lakhs
PF: Rs 55 lakhs
NPS: Rs 20 lakhs
Mutual Funds: Rs 40 lakhs
Shares and Stocks: Rs 10 lakhs
ULIPs: Rs 10 lakhs
Insurance:

Insurance premium payment by month: Rs 10,000 (Term and Health Insurance)
SIP:

Monthly SIP: Rs 40,000
Education Expenses:

Child's education expense : Rs 1 crore
Retirement Goals
Retirement Plan:

Retirement age: 55 years
Desired monthly income post-retirement: Rs 1 lakh
Analysis and Recommendations
Debt Management:

Firstly, try to repay the home loan.
If possible, prepay the loan to lessen interest burden.
Investment Strategy:

Continue with existing SIPs.
If possible, increase SIPs to enlarge the corpus.
Diversification:

Your investments are very well diversified.
There needs to be a balance between equity and debt.
Education Fund:

Set aside a dedicated fund for children's education.
Use a mix of PPF, mutual funds, and fixed deposits.
Emergency Fund:

Maintain an emergency fund equivalent to 6-12 months of expenses.
Use liquid funds or a savings account for this purpose.
Retirement Corpus:

Calculate the required corpus for Rs 1 lakh monthly income.
Take into consideration inflation and healthcare costs.
Health and Term Insurance:

Take stock of your insurance coverage
Ensure that it is adequate to cover possible medical expenses.
Action Plan
Increase SIPs:

Gradually increase the amount of the monthly SIP.
Mix of large-cap, mid-cap and balanced funds.
Education of Children:

Allocate some mutual funds for education.
Child-specific education plans can be invested in if they are better in terms of returns.
Prepayment of Home Loan:

Utilize excess income and bonus for pre-paying the home loan.
The burden on the tenure and interest decreases.
Regular Review:

Yearly review of your financial plan
Investments alter with the market condition and change in goals.
Final Takeaways
You are doing well on the financial front. Now, increase your SIPs and try to prepay on your home loan. Diversify your portfolio appropriately with adequate insurance coverage. Such disciplined planning with periodic reviews will help you achieve retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 27, 2024

Asked by Anonymous - Aug 21, 2024Hindi
Money
Hello sir.I am 37 year male.I have 2 children.I am earning 85000 per month . Monthly expenses are 35/40 k I have saved 1) 15 lakhs in mutual funds 2) 5.5 lakhs in shares 3)7.5 lakhs in PPF 4)NPS IS SHOWING 16 LAKHS TOTAL WITH GOVT CONTRIBUTION 5)LIC JEEVAN ANAND WORTH 60 K PREMIUM IS RUNNING SINCE 2015 ,will mature on 2040. I AM LOAN FREE AT PRESENT. .I want to buy a house after 6 years which has 75 lakhs value in today market. How to maximum my savings for kids future education,marriage etc .Kindly tell.
Ans: To help you maximize your savings and achieve your goals, let's assess your current financial situation. We will evaluate your assets, investments, and future plans. We'll then provide a comprehensive strategy to help you save for your children's future education, marriage, and the purchase of a house.

1. Overview of Current Financial Position
Income and Expenses
Monthly Income: Rs 85,000
Monthly Expenses: Rs 35,000 to Rs 40,000
Net Savings per Month: Rs 45,000 to Rs 50,000
Current Savings and Investments
Mutual Funds: Rs 15 lakh
Shares: Rs 5.5 lakh
PPF: Rs 7.5 lakh
NPS: Rs 16 lakh (including government contribution)
LIC Jeevan Anand: Premium of Rs 60,000 annually, maturing in 2040
2. Investment Evaluation
Mutual Funds
Your investment in mutual funds indicates a good start. Mutual funds offer diversification and professional management. They can potentially provide good returns, which is beneficial for long-term goals.

Strengths: Mutual funds can offer higher returns compared to traditional savings options. They are managed by professionals, reducing the need for you to make day-to-day investment decisions.

Risks: Mutual funds are subject to market risks. The performance depends on the market conditions and the fund manager’s decisions.

Shares
Investing in shares shows an inclination towards direct equity investment. This can offer high returns but comes with higher risk.

Strengths: Direct investments in shares can provide significant capital appreciation.

Risks: Shares are volatile. Lack of diversification and market fluctuations can impact your returns.

PPF
Your Public Provident Fund (PPF) investment is a safe option with guaranteed returns and tax benefits. It’s a good long-term investment for building a secure corpus.

Strengths: PPF offers safety, tax benefits, and a fixed interest rate. It’s a good tool for long-term savings.

Risks: The returns are lower compared to equity investments. The interest rate is subject to change based on government policies.

NPS
The National Pension System (NPS) is a retirement-focused investment. It provides a mix of equity and debt, which is beneficial for long-term growth.

Strengths: NPS offers tax benefits and is designed for retirement savings. It combines equity and debt investments, providing balanced growth.

Risks: NPS has restrictions on withdrawals before retirement. The returns can vary based on the market performance of the underlying assets.

LIC Jeevan Anand
The LIC Jeevan Anand policy is a combination of endowment and life insurance. It provides both savings and insurance benefits.

Strengths: It offers life coverage along with a savings component. The policy benefits can be used for future financial needs.

Risks: The returns on LIC policies are generally lower compared to market-linked investments. The policy matures in 2040, which might be too long for your immediate goals.

3. Strategy for Buying a House
Goal Setting
You plan to buy a house worth Rs 75 lakh in 6 years. This requires careful financial planning to accumulate the necessary funds.

Savings Requirement: Calculate the total amount needed for the house purchase, considering a down payment and any additional costs.
Investment Strategy
To maximize your savings for the house purchase, consider the following steps:

Increase Monthly Savings: With Rs 45,000 to Rs 50,000 savings per month, allocate a portion specifically for the house fund. Increase your savings rate if possible.

Diversify Investments: Consider investing in a mix of mutual funds and fixed-income options to achieve growth while maintaining safety.

Equity Mutual Funds: Continue investing in equity mutual funds for higher returns. Choose funds with a strong performance history and align with your risk tolerance.

Debt Instruments: Allocate a portion of your savings to fixed deposits or other debt instruments for safety and stability.

Systematic Investment Plan (SIP): Increase your SIP contributions in mutual funds if feasible. This will help in accumulating a larger corpus over time.

4. Planning for Children's Future
Education and Marriage
Your financial goals include saving for your children’s education and marriage. Here’s how to approach this:

Education Fund: Start a dedicated education fund for your children. Use a mix of equity mutual funds and debt instruments to ensure growth and stability.

Marriage Fund: Create a separate fund for your children’s marriage. Invest in long-term growth options to build the required corpus.

Investment Vehicles
Mutual Funds: Invest in growth-oriented mutual funds for long-term goals. Diversify across various funds to spread risk.

PPF and NPS: Continue investing in PPF and NPS for tax benefits and secure growth. Use these instruments to build a portion of your children’s future funds.

5. Optimizing Your Financial Plan
Review and Adjust Investments
Regular Reviews: Periodically review your investments and financial plan. Adjust based on performance and changes in your financial situation.

Rebalancing: Rebalance your portfolio to ensure it aligns with your financial goals and risk tolerance.

Tax Efficiency
Tax Planning: Utilize tax-saving investments and deductions. Ensure you’re maximizing the benefits from instruments like PPF, NPS, and mutual funds.
6. Final Insights
To achieve your goals of buying a house, funding your children’s education, and marriage, follow these steps:

Increase Savings Rate: Allocate a significant portion of your monthly savings towards your house fund.

Diversify Investments: Use a mix of equity mutual funds, debt instruments, and secure savings options to grow your wealth.

Dedicated Funds: Create separate funds for your children’s education and marriage to ensure you meet these future expenses.

Regular Reviews: Continuously review and adjust your financial plan to stay on track with your goals.

By following this comprehensive approach, you will enhance your chances of achieving your financial goals and securing your family’s future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 24, 2024

Asked by Anonymous - Oct 23, 2024Hindi
Money
Dear Sir/Ma'am, I am 43 years old and need some wealth planning advise. My take home salary after PF deduction is 3 lakhs per month. I have following savings: PF - 77 Lakhs ; PPF (Between me and my wife) - 20 Lakhs ; Superannuation - 25 Lakhs ; ULIP - 15 Lakhs ; MF - 20 Lakhs ; Stocks (under loss of 3 lakhs) - 6 Lakhs ; Cash - 3 Lakhs. I have a 6 year old son for whom I invest 1.5 lakhs every year under ICICI perfect scheme. Post retirement (I am planning when I am 50), I want 1 lakh Rs per month. I have no debts as of now. Have one flat already occupied worth 1.5 Cr and booked another recently 1.1 CR which will be delivered in 2029 Mid. I stay in Bangalore
Ans: you are in a strong financial position with a diversified portfolio. Your goal is clear—to retire at 50 and secure a monthly income of Rs 1 lakh. Let’s carefully analyse your current savings and investments, and develop a strategy that ensures a comfortable retirement.

Review of Current Savings and Investments
Provident Fund (PF): Rs 77 Lakhs
This is a stable, long-term investment with tax-free benefits upon withdrawal. The balance will grow further until you retire, making it a solid base for your retirement corpus.

Public Provident Fund (PPF): Rs 20 Lakhs (combined between you and your wife)
PPF offers safe returns, though the lock-in period must be considered. It matures soon, and you can either withdraw or reinvest.

Superannuation: Rs 25 Lakhs
Your superannuation fund can serve as a key retirement income generator, especially since it offers regular payouts upon maturity.

ULIP: Rs 15 Lakhs
ULIP can sometimes have high charges. You may want to review the charges and see if switching to a better investment makes sense. However, if you hold it for a longer duration, it may deliver decent returns.

Mutual Funds (MF): Rs 20 Lakhs
Mutual funds are a crucial part of your portfolio. This investment needs to be nurtured with a balanced strategy. Keep your portfolio well-diversified with large-cap and mid-cap actively managed funds to boost growth potential.

Stocks: Rs 6 Lakhs (with Rs 3 lakh loss)
The stock market can be volatile, but it can also offer higher returns in the long run. Consider whether holding onto underperforming stocks is worth it or if reallocating to more stable options would benefit your overall portfolio.

Cash: Rs 3 Lakhs
This is useful for emergencies but earns no returns. You could consider investing some of this for better returns while keeping some liquidity for short-term needs.

Real Estate (Two Flats): Occupied flat worth Rs 1.5 Cr and another booked for Rs 1.1 Cr (due for delivery in 2029)
While real estate offers stability, the second property should be carefully evaluated. It locks up a large sum until completion. Focus on liquidity and other investments to support your retirement goals.

Addressing Your Retirement Goal
You plan to retire in 7 years, at 50, and need Rs 1 lakh per month post-retirement. Let’s analyse whether your current savings and investments can support this.

PF and Superannuation:
Your PF and superannuation combined will likely grow substantially by 50. This corpus will serve as a foundation for generating a steady income post-retirement. You can withdraw or set up a Systematic Withdrawal Plan (SWP) to draw monthly income from these funds.

PPF and ULIP:
When your PPF matures, reinvesting the proceeds in a safer option could ensure steady growth without much risk. Similarly, you can evaluate if continuing ULIP is beneficial or if switching is a better option.

Mutual Funds and Stocks:
These should continue to form a core part of your portfolio. For consistent post-retirement income, you may consider shifting some of your mutual fund holdings to a balanced or conservative fund as you near retirement.

Investment Planning for Son's Education
You’ve been regularly investing Rs 1.5 lakhs per year for your son's future under the ICICI Perfect Scheme. This is a good start, but do ensure that this investment is flexible enough to adjust to changing financial needs. Review the scheme’s performance to see if it matches your long-term educational goals for your son.

Suggested Strategy for Your Portfolio
Diversify Further:
You have a strong base of investments, but further diversification into different asset classes, especially debt and hybrid mutual funds, could balance risk and return. These will give you a steady stream of income post-retirement.

Actively Managed Funds vs Index Funds:
If you have considered index funds, keep in mind that they simply track the market. Actively managed funds, especially through a qualified Certified Financial Planner, can provide better risk management. A professional manager can rebalance the portfolio to adapt to market conditions, thus optimizing returns.

Review Your Loss-Making Stocks:
Stocks with losses could be a drag on your portfolio. Evaluate whether holding them makes sense or if reallocating to more reliable sectors or large-cap stocks would be beneficial.

Tax Efficiency and Withdrawal Planning
You should also be mindful of the tax implications of your investments.

Capital Gains Tax:
Equity mutual funds incur 12.5% tax on LTCG above Rs 1.25 lakhs, and STCG is taxed at 20%. For debt mutual funds, both LTCG and STCG are taxed as per your tax slab.

Regular Withdrawal Plan:
To generate a steady Rs 1 lakh post-retirement income, consider SWPs from mutual funds. These provide a consistent cash flow while letting the rest of your portfolio continue to grow. Balance this with a mix of debt and hybrid funds to ensure a steady income stream with minimal risk.

Final Insights
You are on a sound financial path, and with careful adjustments, you can comfortably retire at 50. Focus on:

Diversifying your mutual funds
Re-evaluating ULIP charges
Minimizing underperforming stocks
Building a tax-efficient withdrawal strategy for your post-retirement income
Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Radheshyam

Radheshyam Zanwar  |1025 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Nov 05, 2024

Asked by Anonymous - Nov 05, 2024Hindi
Listen
Career
I'm 18 years old and currently preparing for neet as a dropper student. I'm from bihar but I live in haryana since my childhood. I have a boyfriend, he is doing btech and it has been 1.5 years since we are together we love each other he supports me in everything but the problem here is I lied him about my birthplace and told him that I belong to UP as UP is a bit better place than bihar. Idk i just feel ashamed to tell anyone that I'm from bihar so I just tell everyone that I'm from UP. Now I'm feeling very guilty in my own that I lied to him about such a basic and important thing and yesterday he Also mentioned that his mother never want a bihari girl, and he is a punjabi. I just don't know what should I do how will he react after knowing the truth and also I'm afraid that he will broke up with me.. I'm also having my neet exam in 6 months. I planned that i will tell him after my exam but I'm just feeling too guilty that I'm hiding this thing from him
Ans: Hello.
Keep mum for the next 6-7 months. Keep a safe distance from your boyfriend. Focus only on NEET preparation. Try to excel in NEET. Wait till the results are out. If you score well and get admitted to Govt Medical College, then open up in front of your boyfriend. He and his family members will accept you because you are becoming a doctor! But after taking the NEET examination, if you feel that you can't score as expected, then tell the truth to your boyfriend. If he loves you from the bottom of his heart, he will forgive you. But if not. then you assume that god has saved you from him!
Last but not least:- Dedicate your 24 hours only for NEET preparation. This time will never come in your life again. You can be a KING in just a few days with solid preparation and will get lifelong respect in society. The bright future is in your hands and not in the hands of your boyfriend.
Best of luck with your upcoming NEET Examination.

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

Radheshyam

...Read more

Prof Suvasish

Prof Suvasish Mukhopadhyay  |7 Answers  |Ask -

Career Counsellor - Answered on Nov 05, 2024

Listen
Career
my Son has done BTech in computer Science in 2023 from NIT Jalandhar and campus placed in Indian Fintech and earning 15CTC. He is gaining experience there for more than one year for now. What is advisable for future course go for Masters in USA or any other country or continue with job in India by switching companies. Due to job market crunch he is also preparing for upto Group B level Govt jobs as Plan B. What would be best advice for long term and settling after marriage.
Ans: Please have one directional goal. No dual policy. Let him go for MS from some good American University and after that he can get a good job in USA. No point in switching companies in India. A rolling stone gathers no moss. Forget about Govt. job in India. His talent won't be utilized and there will be routine transfers. So hit the bull's eye. Have a decent GRE and TOEFL score, have three good recommendation from his professors, one good SOP (statement of purpose) and after seeing the GRE score I will suggest the universities. Mostly in all the reputed universities of USA at least one student of mine is there sas a Professor and half of the year I stay in USA. No worries. I am there to counsel him. Only he must fix one aim. No ambiguity. Have unique aim, work hard with proper decision, rest the guidance will be given by me. Recommended more than hundred students to different reputed universities of US right from Princeton to Texas A&M, Clemson to Vermont. Never forget that I AM THERE BY THE SIDE OF YOUR SON LIKE AN INVISIBLE SHADOW TO PROTECT HIM AND GUIDE HIM.

...Read more

Ramalingam

Ramalingam Kalirajan  |6970 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 05, 2024

Asked by Anonymous - Nov 05, 2024Hindi
Money
Hi I am 39 years old working professional with take home salary of Rs. 2.25 lacs/month. I have taken home loan in last month for Rs. 30 lacs with monthly EMI of Rs. 60k. My monthly House hold expenses are Rs. 50k. From 2022 I am investing Rs. 35k in MF via monthly SIP in ratio of 40:30:20:10 in Large:Mid:small:Debt. I have 2 Sons for 8 years and 3 years respectively. My Goal is to have sufficient corpus for their higher education and to achieve financial independence ASAP. Pl guide..
Ans: Your proactive approach towards securing financial independence and planning for your children’s education is commendable. At 39, you have a robust salary, structured expenses, and disciplined investments. Let's examine your financial standing, assess your goals, and outline strategies for optimal growth and security.

Current Financial Overview
Monthly Income: Rs 2.25 lakh

Home Loan EMI: Rs 60,000 (new loan of Rs 30 lakh)

Household Expenses: Rs 50,000

Monthly SIP in Mutual Funds: Rs 35,000 (split across large, mid, small-cap, and debt funds)

You have taken significant steps with a home purchase and ongoing SIPs. Let’s optimise these resources to achieve financial independence and build a corpus for your children’s education.

Goal-Based Financial Planning
1. Higher Education Corpus for Children
Education expenses rise significantly due to inflation, particularly for quality higher education.

With your sons aged 8 and 3, plan for their higher education in 10-15 years.

To achieve this, increase your SIPs in equity-focused funds. Equities provide inflation-beating returns over the long term.

Maintain a systematic approach, with SIPs focused on growth-oriented funds (large and mid-cap funds are ideal).

Regularly review this corpus every 2-3 years to ensure it aligns with educational costs.

2. Financial Independence
Early financial independence requires strategic savings and investment growth.

Aim to build a corpus that covers at least 25 times your annual expenses.

At present, Rs 50,000 monthly expenses indicate a future goal corpus of Rs 1.5-2 crore, adjusting for inflation.

Your current SIPs are a great start, but gradually increase SIPs to achieve a sizeable retirement fund.

Consider adding more equity exposure for growth and inflation protection, while adding debt as retirement nears.

Debt Management and EMI Strategy
Home loan EMI is Rs 60,000, a significant commitment for 20 years. This can limit cash flow for other investments.

Aim to prepay your loan when possible to reduce interest outflow and loan tenure.

You may consider setting aside a small portion of bonuses or salary hikes for periodic prepayments.

Reducing debt earlier will provide more cash flow to focus on investments.

Optimising Your SIP Strategy
Equity Allocation: Your SIP allocation is split 40:30:20:10 across large, mid, small, and debt categories.

Large-cap funds offer stability, while mid and small caps drive growth. The debt allocation provides balance but may be increased as you approach retirement.

Avoid Index Funds: Index funds, while popular, lack active management, which can be limiting. Actively managed funds adjust to market conditions, providing a higher potential for returns. Certified Financial Planners (CFP) can guide you on the best funds for your goals, particularly with growth in mind.

Consider Regular Funds Over Direct: Regular funds provide personalised guidance, performance reviews, and rebalancing through Certified Financial Planners, which direct funds lack. Regular investments managed by certified experts offer better long-term growth.

Building Contingency and Protection
1. Emergency Fund
Ensure an emergency fund covering 6-12 months of expenses (about Rs 4-6 lakh), kept in easily accessible accounts like liquid funds.

This fund will protect your long-term investments in case of unexpected expenses.

2. Insurance Needs
Adequate life and health insurance are essential, especially with dependents and ongoing liabilities.

Life insurance should cover at least 10 times your annual income, which could be achieved with a simple term insurance policy.

Health insurance for the family is essential to avoid dipping into savings during medical emergencies. Ensure coverage is comprehensive to handle inflation in healthcare.

Tax Efficiency in Investments
New tax rules affect mutual fund capital gains. For equity funds, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%, while short-term capital gains (STCG) are taxed at 20%.

Debt mutual funds are taxed as per your income slab. Plan to withdraw strategically to minimise tax impact.

Periodic portfolio reviews and structured withdrawals can help reduce your tax liability.

Nurturing Long-Term Wealth Growth
PPF and Debt Instruments: PPF and debt mutual funds provide stability but may fall short on inflation-adjusted growth. Maintain debt instruments as a smaller part of your portfolio until retirement nears.

Equities for Wealth Accumulation: Equities remain ideal for long-term goals like retirement and education due to their inflation-beating growth.

Review your mutual fund choices periodically to ensure they are high-performing and aligned with your growth goals.

Final Insights
Achieving financial independence and funding your children’s education are achievable with disciplined investments, a focus on growth, and debt management. Regular monitoring, along with a Certified Financial Planner’s advice, will ensure you stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner

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

...Read more

Prof Suvasish

Prof Suvasish Mukhopadhyay  |7 Answers  |Ask -

Career Counsellor - Answered on Nov 05, 2024

Listen
Career
I am a 29 year old completed her Masters in Psychology 5 years ago. Presently i am working, on a contractual basis ,as a Patient Counsellor for Oncology department in a local well reputed hospital and my work contract is coming to an end. I always aspire to make a mark in the field of Psychology and contribute in a better way for Indian space, bring awareness and popularity in India. My mind also goes to UGC NET or school counseling, plus I am yet to do any M. Phil or PhD yet however I am little unsure regarding my capacity. But I do want to go ahead in my career. I need your guidance regarding taking the next step for a better career. Please help me out.
Ans: I am really very happy to see the positive mind frame of yours. I do think teaching ( i.e. College Teaching) will be the best job for you. At a time you and teach and counsel. Please don't be unsure about your capacity, from your writing it is crystal clear that you do have the required capacity to do M.Phil and Ph.D. Only your age is a bit high, because if you do M.Phil and Ph.D then it will take at least six years time and by that time you will be 35. If you are ready you can apply to some Universities of Germany for doing Ph.D directly. There M.Phil is not required. In Germany for ladies education is free. Only you need to have knowledge of primary German language for a smooth sailing. In school there is little bit use of Psychology, because the subject of Psychology is not there.
Your next step will be having a permanent job. Unless the basic needs are assured you can't concentrate. In India very few persons get job satisfaction. So if you appear for the state PSC exam, you may crack it, but Psychology won't be there, you may be a Deputy Collector or Sales Tax Officer with periodic transfer and lot of respect cum status. But don't be morose. Even being in other job you can give free counselling of Psychology online free of cost just to pursue your hobby. My basic answer is that first grab a full time job and then pursue your passion. Right now don't go for M.Phil and Ph.D.Higher degrees and age are proportional to each other. In last five years you must have completed M.Phil and started Ph.D. But no point in lamenting over the spilt milk. So two option 1) Do Ph.D from Germany 2) Grab a Govt or Private job which is not contractual. Take proper decision. That is the most important thing in career building. Never go for split mind and never try for true option. Make your aim fix and target it and I am sure you will achieve it.
Now just procure a permanent job and pursue your hobby of Psychology.Best of Luck. Prof. Mukhopadhyay

...Read more

T S Khurana

T S Khurana   |173 Answers  |Ask -

Tax Expert - Answered on Nov 05, 2024

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x