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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

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 - Jun 24, 2025Hindi

Hello sir, I am 36 years old bank employee. Net take home after Loan EMI and NPS is 70000. My details are as follows:- Debt- 1. Staff Housing loan Rs. 54 lakhs 27 years ( Emi 22000/-) fully insured with credit life insurance 2. staff car loan Rs. 13 lakhs for 15 years (emi 15000/-) fully insured with credit life insurance. 3. Staff Overdraft 10 lakhs ( interest 65000/- p.a) Investments 1.Equity- portfolio 5 lakhs 2. Mutual fund sip 11500/- pm. (5.5 lakhs portfolio) 3. Gold bond 2.5 lakhs 4. 3 Lic 98000/- pa. Since 2018 5. FD/Rd(emergency fund)- 4.7 lakhs 6. NPS- 14 lakhs portfolio. 7. Health insurance 50 lakhs for family of 3. Kindly advise on how to proceed forward and what is needed to create wealth in long term and also to keep my family future secure.

Ans: ? Income and Cash Flow – Present Stability Evaluation
– Your monthly income is Rs 70,000 after EMI and NPS.
– Your expenses are under control, which is good.
– EMI outgo totals Rs 37,000 per month.
– This is around 53% of your in-hand income.
– This is slightly high for financial safety.
– You also have an overdraft, which adds pressure.
– SIP of Rs 11,500 is a good saving habit.
– You are balancing loans and investments well.

? Debt Position – Needs Careful Structuring
– Staff housing loan of Rs 54 lakhs is a long-term commitment.
– EMI is manageable now, but will last 27 years.
– Car loan of Rs 13 lakhs is for 15 years.
– A car loan for 15 years is not efficient.
– Overdraft of Rs 10 lakhs with Rs 65,000 interest is costly.
– Overdraft is a short-term tool, not long-term borrowing.
– Aim to reduce overdraft first before fresh investments.
– Try to close car loan earlier if possible.
– Don’t prepay housing loan unless other debts are cleared.
– Housing loan gives tax benefits. Prioritise other loans first.

? Investment Portfolio – Broad But Needs Tight Structure
– Equity of Rs 5 lakhs is a good start.
– Mutual fund SIP of Rs 11,500 is the key wealth creator.
– MF portfolio is at Rs 5.5 lakhs now.
– You are investing around 16% of your income in SIPs.
– This percentage is healthy for long-term growth.
– Keep SIPs going consistently for compounding effect.
– SIPs in regular funds through MFD with CFP is ideal.
– Avoid direct funds, they lack expert support and reviews.
– Direct funds can look cheaper but can underperform.
– Regular funds offer better guidance and risk management.

? LIC Policies – Review Is Needed
– You are paying Rs 98,000 yearly in LIC plans.
– These are likely traditional or endowment type plans.
– They offer low returns and lack transparency.
– Since they started in 2018, check surrender value.
– Compare return expectation with mutual fund alternatives.
– If surrender value is decent, consider exiting.
– Reinvest in SIPs for long-term goals with better returns.
– ULIPs or insurance-cum-investments must be avoided.
– Keep insurance and investment separate always.

? FD and RD Holdings – Emergency Safety
– Rs 4.7 lakhs in FD/RD is your emergency fund.
– This is a wise buffer in your current situation.
– Ideally keep 6 months' expenses here.
– Try to keep Rs 5–6 lakhs minimum always available.
– Avoid breaking FD for discretionary expenses.
– Use only for medical or job emergencies.

? Gold Bonds – Useful for Long-Term Diversification
– Rs 2.5 lakhs in gold bonds adds portfolio stability.
– Do not increase allocation too much beyond this.
– Gold is not a wealth creator. It protects value.
– Keep gold under 10% of your net worth.

? NPS Portfolio – Foundation for Retirement
– Rs 14 lakhs in NPS is well structured for retirement.
– It builds your retirement base with tax benefits.
– Don’t depend only on NPS for retirement corpus.
– Supplement it with equity mutual funds.
– Monitor asset allocation in NPS yearly.
– Adjust equity-debt mix as per age and goals.

? Insurance Protection – Well Done on Health Front
– Rs 50 lakhs family cover is sufficient for three members.
– Credit life insurance on loans is an added safety net.
– Still, add term life cover of Rs 1 crore.
– Separate term cover gives clarity and flexibility.
– Premiums are low for your age.
– Don't mix insurance and investment.

? Prioritising Debt vs Investment – Balanced Approach Needed
– Overdraft must be cleared in 6–12 months.
– Reduce lifestyle expenses to pay it faster.
– Car loan tenure should be shortened.
– Use bonus or surplus to reduce this burden.
– Keep SIPs running while clearing debt.
– Don’t stop mutual fund SIP unless in emergency.
– Over time, increase SIP to Rs 15,000 monthly.
– Gradually grow this as income improves.

? Wealth Creation Strategy – For Long-Term Growth
– Stick to equity mutual fund SIP for 10+ years.
– Choose diversified, actively managed funds only.
– Avoid index funds – they don’t beat market returns.
– Index funds lack fund manager expertise.
– Active funds can handle market corrections better.
– They rebalance and protect during crashes.
– Always invest through an MFD with CFP certification.
– Review portfolio performance every 6–12 months.

? Goal-Based Planning – Bring Structure to Vision
– List your future goals with timelines.
– Retirement, child education, home upgrades, etc.
– Assign investments to each goal clearly.
– Don’t fund long-term goals from short-term sources.
– Allocate SIPs to retirement and child goals.
– Use emergency fund only for real emergencies.
– Avoid mixing FD funds with equity goals.

? Tax Planning – Optimise and Align
– You’re already saving through NPS and LIC for 80C.
– But returns from LIC are low.
– Use ELSS for tax savings with higher returns.
– Also gives 3-year lock-in for goal-linked discipline.
– Keep track of capital gains on equity funds.
– As per new rules:
• Equity LTCG above Rs 1.25 lakhs taxed at 12.5%
• Equity STCG taxed at 20%
• Debt MF gains taxed as per your slab
– Rebalance portfolio keeping tax impact in mind.

? Key Milestones to Focus Next 3–5 Years
– Close overdraft by next financial year.
– Shorten car loan by 3–5 years.
– Increase SIP as income rises.
– Build Rs 6 lakh emergency fund.
– Consider surrender of LIC policies in next 2 years.
– Start new term life insurance policy.
– Define goals clearly and assign investment plans.

? What You Must Avoid
– Don’t buy more insurance-linked investments.
– Don’t increase gold beyond current level.
– Don’t stop SIPs for discretionary spending.
– Don’t use FDs for long-term goals.
– Don’t switch to direct mutual funds.
– Direct funds give no monitoring support.
– Regular funds with MFD and CFP offer better outcomes.
– Don’t consider index funds even if returns look attractive.
– Actively managed funds are better for Indian markets.

? Finally
– You are on the right track with discipline.
– But some actions need fine tuning now.
– Focus on reducing bad debt in next 12 months.
– Keep increasing SIP step by step.
– Shift from LIC to mutual funds gradually.
– Build clear roadmap for goals like retirement and child.
– Get professional review once a year.
– Keep insurance and investment separate.
– Stay invested long term for compounding to work.
– Keep risk moderate. Don’t chase fast profits.
– Create wealth with consistency and patience.

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

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