Hello sir, I am 39 years old and having monthly in-hand salary of 1.7L. I took SBI home loan of 95L at 8.5% ROI in April 2023. EMI is 73K. I am doing regular prepayment of 77K in addition to EMI. Can you please advise if this is correct approach or I shall invest in market rather than doing prepayment?

Ans: Dear Anonymous,
Well, your opinion of yourself matters the most!
People will judge anywhere; social media, within friends and family circle, at your work place...are you planning om running after each and change the way you are for them? That will be a huge energy drainer and time consuming activity; oh, and not to mention very stressful as you are experiencing it now.

This is YOU...now, you can do what you like to change your appearance; but own it...whether you wear a wig or not is noone's business except yours...do you need to justify why you do something? And if new people are going to judge you if theys ee your older pictures, then you can please say goodbye to them and if the current people in your life have an issue with your wearing a wig, then you really need to evaluate if these people are actually nurturing you. If it's a core relationship like that with your spouse, I guess you and he need to sit down and have a conversation on it. If you feel that he is judging you, truly find out if that is the case.

Also, guard yourself against unwanted assumptions...your self-esteem is going to define your self-image. So, feeling good and worthy and doing things in that effect will give you a positive self-image. So, cut all the assumptions and OWN your truth...it will not just set you free but also let you define your space your way...try it!

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

Ans: I am not sure what us your height. 61 kg, even after losing weight, if it is within normal weight for your height, please do not worry.
Lets say, if your height is around 165 cm, or less, this is a good weight.
However, if you suspect some other health condition which is causing your weight loss, please consult a physician.

Ans: What you have indicated are blood sugar levels and HbA1c in a normal and healthy individual, who is not a diabetic person.

At least, for blood sugar levels, you dont have to worry.

As far as diet and physical activity is concerned, these benefits everyone. So, adopt and continue a healthy and active lifestyle.

There is a word of caution. Normal parameters on one aspect does not mean person may not have other health issues.
Having a hold of your health mean you need to take care of your health and be aware about all key parameters of health.

Ans: 01. As per details provided of the Income, your total Income is not below Taxable Limits & you shall pay tax, as per calculations.
02. However, you should also check tax calculations as per new regime. This is not possible for me, since you have mentioned your annual income after deductions.
Most welcome for any further clarifications. Thanks.
02.

Ans: Long term means atleast 5yrs plus. Stocks to keep: CDSL,BEL,IOCL,TATASTEEL,TATAMOTORS,NHPC

Ans: Hello;

For goal under heading "a", I recommend you the following;

1. Invest 10 L in Arbitrage type of mutual fund (low risk) for the education funding requirement of your daughter.

2. Buy an immediate annuity for 40 L from a life insurance company which may yield you a monthly income of 20 K as desired. 6 % annuity rate considered.

3. Invest MF corpus(5.6 L) and FD sum(2 L) into an equity savings type mutual fund (low to moderate risk)
This will help fund your international vacations. Value 9.84 L in 3 years considering 9 % returns.

For achievement of goal under heading "b" invest 10 L lumpsum in a pure equity mutual fund for 20 years after which it will provide you a sum of 1.15 Cr. Top-up this investment as and when possible to prepone your target achievement in 15 or 12 years.(13% return considered)

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

Ans: For providing advice on weight, I need to know your weight and BMI. However, as you can see in my responses to some of the previous queries, a dietary modifications is very personalised in case of Diabetes. Moreover, person with diabetes should take smaller meals rather than heavy few meals.
More importantly, I need to know your HbA1c and Fasting and PP blood sugar levels and other lipid parameters to comment about the sufficiency of anti diabetic medication you are taking.

Your schedule indicate that you seem to be doing intermittent or time restricted fasting. This has proven benefit as the VLCD or very low calorie diet. VLCD with around 800 Kilo Calories a day, is a standard of diabetes care in many country including the UK. However, please ensure that you are not developing hypoglycemia or low sugar levels.

Regarding weight reduction strategies and reversal/remission of diabetes, a more personalised discussion with a physician is needed.

Dr Chandrakant Lahariya
Senior Consultant Physician & Diabetologist
Centre for Health: The Speciality Practice, New Delhi

Ans: You are 27 years old, earning Rs. 1 lakh per month, and have made good strides toward securing your financial future. You’ve already taken the right steps by securing health insurance for yourself and your parents, as well as a term life insurance plan. Along with your investments in PPF, NPS, and mutual funds, you’re on the right track. However, it's important to assess whether you're overinvesting or underinvesting based on your financial goals, expenses, and savings potential.

Let’s take a comprehensive look at your current financial scenario and provide insights into whether your investments are aligned with your future needs.

Investment Overview and Breakdown
Based on the information you've provided, here's a summary of your current investments:

Provident Fund (PF): Rs. 6,000 per month
Public Provident Fund (PPF): Rs. 5,000 per month
National Pension System (NPS): Rs. 5,000 per month
Mutual Funds: Rs. 8,000 per month
Total Monthly Investments: Rs. 24,000
You’re currently investing 24% of your monthly income (Rs. 1 lakh) into these schemes. This is a solid saving percentage, particularly for your age. Typically, financial planners recommend saving at least 20-30% of your income, so you're within a good range.

However, let's dig deeper to see if you are over-investing or under-investing based on your goals, expenses, and risk profile.

Evaluating Your Current Investment Mix
1. Provident Fund (PF):

Your PF deduction is Rs. 6,000 per month, which helps in building a solid retirement corpus. It also offers tax benefits under Section 80C.

Insight: PF is a safe and long-term wealth-building tool. Since it’s mandatory and part of your salary structure, it continues without requiring active management from you.
2. Public Provident Fund (PPF):

You are investing Rs. 5,000 per month in PPF. This is another excellent long-term investment vehicle with a lock-in of 15 years.

Insight: PPF offers tax-free returns and is considered a very safe investment. However, its liquidity is limited due to the long lock-in period, which may restrict your access to funds in case of emergencies.
3. National Pension System (NPS):

You’ve also committed Rs. 5,000 per month to NPS, which is a pension scheme that helps build a retirement corpus with some equity exposure.

Insight: NPS is a good addition to your retirement plan, as it offers market-linked returns with tax benefits. However, keep in mind that a portion of your retirement corpus will be locked in for purchasing annuities upon maturity.
4. Mutual Funds:

Your investment in mutual funds is Rs. 8,000 per month. Since this is market-linked, it adds an element of growth to your portfolio.

Insight: Mutual funds can help you build wealth over the long term, especially if you diversify into different types like large-cap, mid-cap, and small-cap funds. Actively managed mutual funds provide you with opportunities to outperform the market when handled by a Certified Financial Planner through regular funds. Avoid index funds and direct funds, as they limit active management advantages.
Assessing Your Risk Profile and Investment Allocation
Since you're 27 years old, you have a high risk-taking ability. Younger investors can typically afford to allocate more funds toward equity-based investments to maximize long-term growth.

Equity Exposure: Your mutual fund investments (Rs. 8,000 per month) provide equity exposure, but it only constitutes 33% of your total monthly investment. You may want to consider increasing this allocation, especially since equities have the potential for higher returns in the long run.

Debt Exposure: Your investments in PF, PPF, and NPS are all relatively safe debt instruments. They offer stability and security but are generally lower in returns compared to equity.

Balancing Your Investments: Are You Over or Under-Investing?
1. Over-Investing or Under-Investing?

You are currently investing Rs. 24,000 per month, which is 24% of your income. This is a healthy saving rate. You are not over-investing, as you are balancing both equity and debt instruments.

The key question is whether you have sufficient funds left for your monthly expenses and lifestyle needs. Ensure that your day-to-day expenses, emergency fund, and any upcoming goals (such as travel or buying a car) are also considered.

2. Emergency Fund:

While you’ve made smart investments, it’s equally important to have an emergency fund. This fund should cover 6-12 months of your expenses. Based on your salary, aim to have around Rs. 2-3 lakh in liquid assets like a savings account or liquid mutual funds. If you haven't started this yet, it’s advisable to set aside some money for emergencies.

3. Long-Term Goals:

It’s important to clarify your long-term financial goals. Whether it’s buying a home, planning for marriage, or retirement, these goals will determine whether your current investment mix is appropriate.

For Retirement: Your PF, PPF, and NPS will contribute toward your retirement, but you should ensure your equity investments (through mutual funds) grow as well.

Other Goals: For mid-term goals (5-10 years), such as buying a house or car, ensure you are not overly invested in long-term lock-in schemes like PPF and NPS. Keep some flexibility in your portfolio.

Is Your Investment Mix Optimal?
Your current investments are well-diversified between safe, government-backed schemes like PPF and NPS, and market-linked instruments like mutual funds. However, there are a few areas where adjustments may be beneficial.

1. Increase Equity Exposure:

Since you are 27, consider allocating more funds to equity-based mutual funds. You could increase your mutual fund SIPs from Rs. 8,000 to Rs. 12,000 or even Rs. 15,000. This will give your portfolio a better growth potential over the long term.
2. Tax Planning:

You’re already maximizing Section 80C benefits with your PF, PPF, and NPS contributions. If needed, you can increase your NPS contribution to take advantage of Section 80CCD(1B), which provides an additional Rs. 50,000 tax deduction.
3. Avoid Direct Funds and Index Funds:

As mentioned earlier, direct funds limit the advantage of professional management. Investing through a Certified Financial Planner (CFP) in regular funds gives you access to expert insights and active management. This can lead to better long-term returns.

Index funds, while low cost, tend to mirror the market. Actively managed funds, on the other hand, offer the potential to outperform the market and should be preferred for long-term growth.

Final Insights
At 27, you’re on the right track with your investments. You are neither over-investing nor under-investing. Your current savings rate is commendable, but there’s room to adjust your portfolio to maximize returns.

Increase Equity Exposure: Consider increasing your mutual fund SIPs to give your portfolio more growth potential.

Maintain an Emergency Fund: Ensure you have liquidity to cover 6-12 months of expenses for emergencies.

Tax Efficiency: Review your NPS contributions to maximize tax benefits under Section 80CCD(1B).

Avoid Index Funds and Direct Funds: Focus on actively managed funds through a trusted Certified Financial Planner for better performance.

By making these adjustments, you’ll build a more robust, well-balanced portfolio that supports your long-term financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: You are planning to invest Rs 5,000 per month for your daughter’s education or marriage expenses, with a timeframe of 20 to 25 years. This is a great step towards securing her future. It gives you a long-term horizon to grow your wealth. Let's explore the best way to approach this.

Systematic Investment Plan (SIP) for Long-Term Goals
For a long-term goal like your daughter's education or marriage, SIP is a smart choice. SIPs offer disciplined investing, and the power of compounding can work in your favour over 20-25 years.

Equity Mutual Funds: Since your goal is long-term, equity mutual funds are a good option. They tend to perform better than other investment options over longer durations.

Flexibility of SIP: One of the advantages of SIP is that you can start small and increase the amount later as your income grows. This flexibility ensures that you can stay consistent with your contributions.

Ruled by Market Cycles: Equity mutual funds are subject to market ups and downs. But over a 20-25 year horizon, these fluctuations tend to even out. Historically, equity mutual funds have delivered inflation-beating returns over the long term.

Actively Managed Funds vs Index Funds: Actively managed funds could be a better option than index funds in this case. While index funds track a market index, they might miss out on the ability to outperform the market. Fund managers in actively managed funds can take advantage of market opportunities to generate better returns.

Importance of Diversification
Diversification reduces risk and gives better stability to your portfolio. Over 20 to 25 years, market conditions will vary. A well-diversified portfolio ensures your money grows steadily.

Equity Diversification: You can diversify within equity by investing in a mix of large-cap, mid-cap, and small-cap funds. Large-cap funds are more stable, while mid-cap and small-cap funds have the potential for higher returns but come with higher risk.

Adding Debt Mutual Funds: Adding some portion of debt mutual funds can provide stability, especially as you get closer to your goal. Debt funds are less volatile and can act as a cushion when the equity markets go down.

International Exposure: Some portion of your portfolio can also have international exposure, which adds a layer of diversification across geographies.

Regular vs Direct Funds: What Should You Choose?
If you have heard about direct mutual funds, it may seem tempting because they offer lower expense ratios. But direct funds are not always the best option unless you are an experienced investor who can manage everything on your own.

Direct Funds Drawbacks: Investing in direct funds means you need to track the market yourself. You will have to decide when to buy, switch or exit. It can be time-consuming and requires knowledge of market trends. There is no professional guidance or hand-holding.

Benefit of Investing Through an MFD with CFP Credential: Instead, choosing a regular plan through a certified financial planner (CFP) ensures you get expert advice. Your CFP will track the market for you, rebalance your portfolio when needed, and help you align it with your financial goals. The cost of a regular fund might be slightly higher due to the expense ratio, but the guidance and personalised planning are worth it.

Tax Implications You Should Know
When investing for such a long period, it's important to consider the tax implications as well.

Capital Gains Tax: In equity mutual funds, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%. It’s advisable to plan your withdrawals smartly, keeping these tax rates in mind.

Debt Funds Taxation: In debt mutual funds, both LTCG and STCG are taxed as per your income tax slab. Debt funds are more tax-efficient than FDs, especially over the long term.

Should You Open a Demat Account for Your Daughter?
Now, let’s address the question of whether it’s advisable to open a Demat account in your daughter’s name.

Demat Account for Minors: Technically, you can open a Demat account in your daughter's name even though she is 7 years old. However, as a minor, she won't have any control over the account until she turns 18. You, as the guardian, will have to manage it on her behalf.

Practicality of Opening a Demat Account: It’s more practical to invest in your own name and earmark these funds for your daughter's education or marriage. You can always transfer the money or investments to her when needed. Opening a Demat account at this stage might add unnecessary complexity, especially when you can manage her investments easily from your own account.

Ownership Considerations: While it may seem like a good idea to keep her investments separate, the tax liabilities will still be on you until she turns 18. Managing investments from your account simplifies the process and keeps everything in one place.

Keeping Inflation in Mind
Inflation is an important factor to consider when investing for long-term goals like education or marriage. Costs, especially in education, rise significantly over time. It’s crucial to choose investment options that can give you inflation-beating returns.

Equity for Higher Returns: Equity mutual funds can help beat inflation in the long term. Over a 20-25 year period, equity investments have the potential to generate returns higher than inflation.

Regular Review: While you don’t need to check your investments every day, it's wise to review them annually or semi-annually. This ensures that your investments are on track to meet your goals, and you can make adjustments if needed.

Don’t Depend on Insurance-Based Investment Plans
It’s common for parents to be attracted to investment-cum-insurance policies for their children's future. However, these policies often give lower returns compared to mutual funds.

Investment-Cum-Insurance Policies: Such policies may promise assured returns, but the returns are often quite low. It is better to keep your insurance and investment separate.

Consider Surrendering: If you currently hold any investment-cum-insurance policies, you might want to consider surrendering them and reinvesting the proceeds into mutual funds. A dedicated mutual fund portfolio will grow much better over the long term.

Final Insights
Your decision to invest Rs 5,000 per month in SIP for your daughter's future is a wise one. With a 20-25 year horizon, equity mutual funds offer you the best opportunity for growth. Actively managed funds, diversified across large-cap, mid-cap, and small-cap, provide stability and the potential for higher returns.

Opening a Demat account in your daughter’s name is not necessary at this stage. Managing her investments from your account is more practical, and you can transfer the funds to her when needed.

Keep insurance and investments separate. Focus on long-term growth through mutual funds, and consider investing through a certified financial planner (CFP). They can guide you to ensure your portfolio stays on track for your daughter’s future education or marriage expenses.

Best Regards,

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