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Ramalingam Kalirajan  |7838 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 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
Nitesh Question by Nitesh on Jul 11, 2024Hindi
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Hello, I am 38, monthly Salary 80K. I have a Term Plan of 75L +33Lacs Group Term Cover, 10Lacs Mediclaim + 6Lacs Group Health Cover. I do 13.5K Sip in following 7K - BSL India Gennext fund 1500 -BSL Frontline Equity 1000 -BSL Focused Equity 4000 - Ipru Focused Equity. Current Portfolio value of above -13Lacs. Equities - 3Lacs EPF - 3.5Lacs. I have a son,11Yrs, I would like to accumulate 30-40Lacs for his Higher education in next 6-7Years. Would like to accumulate a corpus of 1-1.5 Cr for my retirement in say next 10-15Years. Pls suggest. Nitesh Bhatia

Ans: Hi Nitesh,

You’ve done a great job managing your finances so far! Let's dive into your financial goals and how to achieve them. I’ll provide a detailed plan to help you accumulate funds for your son’s higher education and your retirement.

Understanding Your Current Financial Situation
You have a good mix of investments and insurance coverage. Here’s a quick overview:

Salary: Rs. 80,000 per month.
Term Plan: Rs. 75 lakhs + Rs. 33 lakhs Group Term Cover.
Mediclaim: Rs. 10 lakhs + Rs. 6 lakhs Group Health Cover.
SIPs: Rs. 13,500 per month across different funds, valued at Rs. 13 lakhs.
Equities: Rs. 3 lakhs.
EPF: Rs. 3.5 lakhs.
You aim to accumulate Rs. 30-40 lakhs for your son’s education in 6-7 years and Rs. 1-1.5 crore for retirement in 10-15 years.

Investment Strategy for Your Son’s Education
First, let’s address the goal of saving Rs. 30-40 lakhs for your son’s education.

1. Evaluating Your Current SIPs
You’re investing in multiple funds, which is excellent for diversification. Here’s a brief look:

Balanced Allocation: Investing Rs. 13,500 monthly in a mix of funds is a good strategy.
Current Portfolio Value: Rs. 13 lakhs indicates a solid start.
2. Increasing Monthly SIPs
To achieve Rs. 30-40 lakhs in 6-7 years, consider increasing your monthly SIPs. With an increase, compounding will work more effectively. Aim to raise your SIPs to Rs. 18,000-20,000 per month.

3. Choosing the Right Funds
Focus on funds with a strong track record. Your current mix is good, but ensure you’re investing in funds with consistent performance over 5-10 years. Avoid index funds and prefer actively managed funds for better returns.

4. Regular Monitoring and Rebalancing
Monitor your investments regularly. If a fund consistently underperforms, consider switching to a better-performing fund. Rebalance your portfolio annually to stay aligned with your goals.

Investment Strategy for Retirement
Now, let’s focus on accumulating Rs. 1-1.5 crore for your retirement in 10-15 years.

1. Maximizing EPF Contributions
EPF is a secure way to build your retirement corpus. Continue contributing regularly and consider voluntary contributions if possible.

2. Increasing SIPs for Long-Term Growth
Long-term investments benefit significantly from the power of compounding. Increase your SIPs dedicated to retirement to Rs. 20,000-25,000 per month. This will help in building a substantial corpus over 10-15 years.

3. Diversifying Across Asset Classes
Diversification reduces risk. Alongside mutual funds, consider adding debt funds for stability and balanced funds for moderate growth.

4. Reviewing and Rebalancing
Review your retirement portfolio annually. Adjust your investments based on performance and market conditions. This helps in staying on track towards your retirement goal.

Advantages of Mutual Funds
Mutual funds are excellent for wealth creation due to:

Diversification: Reduces risk by spreading investments across various securities.
Professional Management: Fund managers have expertise and resources to manage investments.
Liquidity: Easy to buy and sell, providing flexibility.
Systematic Investment Plans (SIPs): Allows disciplined investing and benefits from rupee cost averaging.
Compounding: Long-term investments grow significantly due to the power of compounding.
Addressing Risk and Rewards
Investing involves risks, but with careful planning, you can mitigate them:

Market Risks: Diversify across sectors and asset classes.
Interest Rate Risks: Keep a mix of short-term and long-term investments.
Inflation Risks: Equity investments help in beating inflation over time.
Power of Compounding
Compounding is powerful in wealth creation. Regular investments and reinvesting returns lead to exponential growth. Starting early and staying invested long-term maximizes this benefit.

Insurance and Contingency Planning
Ensure your term plan and health cover are adequate. Review them periodically to align with your changing needs. Additionally, maintain an emergency fund equivalent to 6-12 months of expenses for unforeseen circumstances.

Professional Guidance
Consider consulting a Certified Financial Planner (CFP) for personalized advice. They can provide tailored strategies based on your unique financial situation and goals.

Final Insights
You’ve set admirable goals for your son’s education and your retirement. With disciplined investing, regular monitoring, and strategic adjustments, you can achieve these targets.

Keep increasing your SIPs, diversifying your portfolio, and leveraging the power of compounding. Regular reviews and rebalancing will ensure you stay on track.

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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Dear Sir, I am 44 yrs old with wife and 2 kids of age 9&11.I have been investing my money into the following sectors over the last few years back. 1.LIC and SBI money back policies of 8.5L and will be mature in 2034. 2.Life cover for self of 50L has to pay till 2047 annually of 20K. 3.Max life ULIP plan SA 6L mature in 2031. 4.Family floater Health I surance of 5L 4.HDFC life click 2I combo plan invest of 9L 5.SSA till date for both children 1L each 5.SIP of 20K since last 4.5yrs monthly 6.SIP lumpsum of 1L invested in Axis medium cap fund invested 4yrs back My question is to secure my child education and retirement life after 55 yrs , corpus should be 2 Crore what else I have to do
Ans: It's commendable that you've been diligently planning for your family's future. Your commitment to securing your children's education and ensuring a comfortable retirement is truly admirable.

Considering your current investments, it's essential to evaluate if they align with your long-term goals. While your existing plans offer some protection and potential growth, diversifying your portfolio could provide added stability and growth potential. Have you explored avenues beyond traditional insurance policies and mutual funds?

Certified Financial Planners can offer personalized strategies tailored to your aspirations and risk tolerance. They can suggest options that balance growth potential with risk mitigation, guiding you towards achieving your desired corpus. Have you considered consulting one to fine-tune your financial roadmap?

Remember, the journey to financial security is not just about numbers—it's about ensuring peace of mind and enabling your loved ones to pursue their dreams. By proactively seeking guidance and exploring diverse investment avenues, you're laying a robust foundation for a fulfilling future. Keep nurturing your financial garden, and the seeds you sow today will bloom into a prosperous tomorrow.

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Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

Asked by Anonymous - May 20, 2024Hindi
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Hi am 35 years ,with income of 1.5lak per month..I have 15lak in shares , 7 lak in mutual fund as sip invested 3 to 4 thousand in each fund ( regular and index funds) ,7lak in gold bond , 16lak in gold, LIFE INSURANCE -pli of 20lak ( 6.7k /month) , ICICI PRUDENTIAL (1LAK/ YEAR), TATA AIA (4k/month), NPS 2lak( monthly 18k ),9lak in monthly income scheme which gets 5550 investing that into my daughter sukanya samruddhi yogana,FD of 5lak .....I need a corpus of 4 to 5 crore in next 10year ...I have monthly expenses of 20 to 30k please guide me
Ans: Assessing Your Financial Goals
Introduction
You have a strong income and diversified investments. Achieving a corpus of ?4-5 crore in 10 years is ambitious but feasible with strategic adjustments.

Current Investments
Shares: ?15 lakh
Mutual Funds (SIP): ?7 lakh
Gold Bonds: ?7 lakh
Physical Gold: ?16 lakh
Life Insurance (PLI): ?20 lakh (?6.7k/month)
ICICI Prudential: ?1 lakh/year
Tata AIA: ?4k/month
NPS: ?2 lakh (?18k/month)
Monthly Income Scheme: ?9 lakh (?5550/month reinvested in Sukanya Samriddhi Yojana)
Fixed Deposit: ?5 lakh
Monthly Expenses and Income
Monthly Income: ?1.5 lakh
Monthly Expenses: ?20-30k
Investment Strategy
Surrender Unnecessary Insurance Policies

Insurance policies like PLI, ICICI Prudential, and Tata AIA may not yield high returns. Consider surrendering these and redirecting the funds to higher-yield investments.

Enhance Mutual Fund Investments

Regular and index funds are a good start. Actively managed mutual funds can offer higher returns than index funds. Focus on diversifying across equity and debt funds.

Increase SIP Contributions

Increase your SIP investments gradually. Start with an additional 10-15% increase and review every 6 months.

Maximise NPS Contributions

NPS offers good returns and tax benefits. Continue the ?18k/month contribution and increase if possible.

Reinvesting Surrendered Insurance Funds
Mutual Funds

Redirect funds from surrendered insurance policies to mutual funds. Choose a mix of large-cap, mid-cap, and small-cap funds.

Equity Investments

With ?15 lakh already in shares, consider blue-chip stocks for stability and growth. Diversify across different sectors.

Debt Investments

Maintain a portion of your portfolio in debt instruments for stability. Consider debt mutual funds or fixed deposits.

Monitoring and Rebalancing Portfolio
Regular Reviews

Review your portfolio quarterly. Ensure your investments align with your risk tolerance and goals.

Adjust Allocations

Adjust your allocations based on market conditions. Increase exposure to equities in a growing market and shift to debt in volatile times.

Planning for Corpus Growth
Targeted Growth Rate

Aim for a balanced portfolio with an average return of 10-12% annually. Equity investments should drive growth, while debt instruments provide stability.

Reinvestment of Returns

Reinvest all returns and dividends. Compounding will significantly boost your corpus over time.

Achieving Your Goal
Projected Corpus

With disciplined investing and strategic adjustments, reaching ?4-5 crore is achievable. Utilize the power of compounding and regular contributions.

Avoid Real Estate

Real estate may not provide liquidity and returns comparable to equities and mutual funds. Focus on market-linked instruments.

Final Recommendations
Consult a CFP

Regular consultations with a Certified Financial Planner (CFP) will help fine-tune your strategy and keep you on track.

Stay Disciplined

Maintain your investment discipline. Avoid impulsive decisions based on market fluctuations.

Conclusion
Your financial foundation is strong, and with strategic adjustments, your goal of ?4-5 crore in 10 years is achievable. Focus on high-yield investments, regular reviews, and disciplined investing.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |7838 Answers  |Ask -

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

Asked by Anonymous - Jul 20, 2024Hindi
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Hello Sir, I am 32 yrs old, Engineer, Married, expecting 1st kid by nxt yr, Parents getting pension of 50k. Income: 60k in Hand + 20-30k (perks separate) Needs: 25k max Investments: Saving account: 60k Emergency fund: For 12 months+ (2.5 lacs)- returns 5.5-6% RoR EPF: 0 ULIP funds: 3 lacs (CV 4.6 lacs, 10 years left) 60k/yr 1Cr Term Plan + 10 lacs critical illness cover (5 yrs left) 36k/yr Assets: Owns a 3 Bhk flat with own income Ancestral property (value 20 lacs approx, 2 Floored house- expected rent 15k/mnth in next 1 yr) Gold: 90-100 gms Own a car & a 2 wheeler X No health insurance for self & wife till 35 yrs of age Goals: Plz guide me for: 1. Early retirement by the age of 50 yrs. 2. Investment strategy for SIP, PPF, RBI Bond funds, mutual funds, SGBs or any other funds which you find suitable. 3. Buying a term plan of 1-2cr for my wife. 4. Buying a house as per my wants @ 43 yrs (PV in 2024: 70-80 lacs) 5. Build a corpus for kids higher education & marraige Thanks & Regards
Ans: Current Financial Situation
Age: 32 years old

Profession: Engineer

Family: Married, expecting first child next year

Parents: Receiving a pension of Rs. 50k

Income: Rs. 60k in hand + Rs. 20-30k perks

Needs: Rs. 25k max

Investments:

Saving account: Rs. 60k
Emergency fund: Rs. 2.5 lakhs (12 months+)
ULIP funds: Rs. 3 lakhs (Current value Rs. 4.6 lakhs, 10 years left, Rs. 60k/year)
Term Plan: Rs. 1 crore + Rs. 10 lakhs critical illness cover (5 years left, Rs. 36k/year)
Assets:

Owns a 3 BHK flat with own income
Ancestral property (value Rs. 20 lakhs, 2-floored house, expected rent Rs. 15k/month in next year)
Gold: 90-100 grams
Own a car & a 2-wheeler
Insurance: No health insurance for self and wife till 35 years of age

Financial Goals
Early retirement by age 50.
Investment strategy for SIP, PPF, RBI Bond funds, mutual funds, SGBs, or any other suitable funds.
Buy a term plan of Rs. 1-2 crore for wife.
Buy a house at age 43 (PV in 2024: Rs. 70-80 lakhs).
Build a corpus for child’s higher education and marriage.
Assessment of Current Strategy
Emergency Fund
You have a good emergency fund. This is a crucial safety net.

ULIP Funds
Your ULIP has a high cost. Consider moving to more efficient investment options.

Term Insurance
Your current term plan is good. Consider adding more coverage.

Ancestral Property
The expected rent will provide a steady income stream.

Gold
Gold is a stable asset but consider other investment avenues for growth.

Recommendations for Improvement
Health Insurance
Immediate Action: Get health insurance for yourself and your wife. This protects against unforeseen medical expenses.
Investment Strategy
SIP in Mutual Funds:

Diversified Equity Funds: Start SIPs in diversified equity mutual funds. These funds have high growth potential.
Allocation: Consider investing Rs. 15-20k monthly in SIPs.
PPF:

Tax Benefits: PPF is a good tax-saving instrument. It provides stable, risk-free returns.
Contribution: Start contributing Rs. 1.5 lakhs annually to PPF.
RBI Bonds and SGBs:

RBI Bonds: Invest in RBI Bonds for safe, long-term returns.
Sovereign Gold Bonds (SGBs): Invest in SGBs for additional gold exposure with interest.
Mutual Funds:

Actively Managed Funds: Prefer actively managed funds over index funds for better returns.
Diversification: Invest in a mix of large-cap, mid-cap, and small-cap funds.
Term Insurance for Wife
Coverage: Buy a term plan of Rs. 1-2 crore for your wife. This ensures financial security.
Future House Purchase
Savings Plan: Start saving for the house you want to buy at age 43.
Investment: Allocate a portion of your monthly savings to a dedicated house fund.
Child’s Education and Marriage Corpus
Education: Start an SIP dedicated to your child’s education. Aim for a mix of equity and debt funds.
Marriage: Similarly, start a separate SIP for your child’s marriage expenses.
Additional Recommendations
Review and Adjust:

Annual Review: Regularly review your investments. Adjust based on performance and goals.
Diversify Portfolio:

Reduce ULIP: Consider moving funds from ULIP to mutual funds for better growth.
Balanced Portfolio: Ensure a balanced mix of equity, debt, and other assets.
Tax Planning:

Maximize Benefits: Use tax-saving instruments like PPF, ELSS, and NPS.
Final Insights
Your current strategy is a good start. Health insurance is a must. Diversify your investments through SIPs, PPF, RBI Bonds, and SGBs.

Consider adding more term insurance for your wife. Plan for future house purchase and child’s education/marriage by starting dedicated SIPs.

Review and adjust your portfolio annually. Ensure a balanced mix of assets for growth and security.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Mutual Funds, Financial Planning Expert - Answered on Feb 05, 2025

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Hello Sir, this is Dhiraj DM, I am 48 year's old married with no kids, we have any flat worth 1. 5 cr given on rent around 50 lakhs of equity 20 lacs mutual funds we want to retire in next 3 years,please guide. We live in a metro no liability, we r into Gifting business now want to retire in next 3 years
Ans: Your retirement is just three years away. You have built a strong foundation with real estate, equity, and mutual funds. Now, the goal is to structure your investments for steady income, security, and long-term sustainability.

1. Assessing Your Current Financial Position
Flat Worth Rs. 1.5 Crore: This generates rental income, but liquidity is limited.
Equity Portfolio of Rs. 50 Lakh: Market-linked investments with potential for high returns but volatile.
Mutual Funds of Rs. 20 Lakh: Offers diversification and moderate risk exposure.
No Liabilities: This is a strong advantage for financial freedom.
Gifting Business: If planning to exit, ensure business-related finances are sorted before retirement.
2. Estimating Post-Retirement Income Needs
Calculate expected monthly expenses, including medical, travel, lifestyle, and emergency costs.
Factor in inflation, as expenses will rise over time.
Consider long-term costs such as medical care and home maintenance.
3. Structuring Retirement Income
Rental Income as a Fixed Source
Your flat generates rental income, which helps with stability.
Consider reinvesting this income for further growth.
Portfolio Rebalancing for Stability
Equity exposure is beneficial but risky close to retirement.
Shift some funds to low-risk instruments for safety.
Keep some allocation to equity to combat inflation.
Maintaining Liquidity for Emergencies
Create an emergency fund of at least 2 years' expenses in liquid assets.
Avoid relying solely on investments that require selling in volatile markets.
4. Health and Insurance Planning
Ensure comprehensive health insurance for both of you, at least Rs. 15-20 lakh coverage.
If you hold any old insurance policies with low returns, consider restructuring them.
Create a separate healthcare fund for long-term medical expenses.
5. Tax Efficiency in Retirement
Structure withdrawals smartly to reduce tax burden on capital gains.
Use tax-free instruments where applicable.
Rental income is taxable, so deduct maintenance expenses to lower tax outgo.
6. Planning Investments for Retirement Income
Avoid complete reliance on fixed-income instruments, as they may not beat inflation.
A mix of mutual funds, debt instruments, and systematic withdrawal plans (SWP) will ensure steady cash flow.
Keep some investments growth-oriented to sustain wealth over decades.
7. Estate and Legacy Planning
Prepare a clear will to ensure smooth asset transfer.
If you plan to donate or support causes, structure funds accordingly.
Finally
Ensure liquidity and stability in your investments.
Reduce risk in equity but keep exposure for growth.
Maintain a dedicated healthcare fund and strong insurance coverage.
Structure investments to minimise taxes and ensure steady income.
Plan legacy and succession to avoid future complications.
Would you like a detailed plan on how to allocate your investments for steady retirement income?

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

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

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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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