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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 23, 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 - Jul 19, 2025Hindi

Hello. I am 39. My Salary is 55k. I want reach 1cr savings by my 50yrs. How can i achieve that? My current insvest is - 4k in MF(6month), 5k in PPF(6month), 5k in market link insurence(4th year running).

Ans: Your Commitment to a Financial Goal
– You are 39 and earning Rs. 55,000 per month.
– You aim to save Rs. 1 crore by age 50.
– This is a focused and time-bound goal.
– Your effort to start investing early is truly good.
– Many people delay planning. You have taken the right step early.
– You already invest in mutual funds, PPF, and a market-linked insurance policy.

? Understanding Your Goal Clearly
– You want Rs. 1 crore in savings within 11 years.
– This is a medium-term financial goal.
– It requires consistent investment discipline.
– Your current investments are a good base to build upon.
– But you will need to optimise and strengthen your plan.

? Evaluating Your Existing Investments
– You invest Rs. 4,000 in mutual funds for the last 6 months.
– Rs. 5,000 in PPF for the last 6 months.
– Rs. 5,000 in a market-linked insurance plan, running for 4 years.

? Issues with Market Linked Insurance Plans
– These plans are costly.
– They have policy charges, mortality charges and fund management charges.
– These eat into your returns.
– Also, lock-in is usually 5 years or more.
– You can’t freely change or withdraw.
– Insurance and investment should never be mixed.
– Pure insurance must come from term policies.
– Investment should come from mutual funds or other instruments.
– Market-linked plans offer neither strong protection nor strong growth.

– You have completed 4 years in this policy.
– Check surrender value now.
– Once lock-in completes (usually after 5 years), plan to exit.
– Shift this amount to mutual funds through SIPs or STPs.
– This will offer better growth and flexibility.

? Review of PPF Investment
– PPF is a safe instrument.
– It gives fixed interest and tax benefit.
– But it has a 15-year lock-in.
– Liquidity is poor in early years.
– Interest rate is not guaranteed.
– It is decided by Government every quarter.
– Returns are low compared to equity.
– It is useful for partial long-term stability.
– You may continue your Rs. 5,000 investment in PPF.
– But don’t increase it further.
– Keep it as one part of your portfolio.

? Mutual Fund Investment Strategy
– Rs. 4,000 SIP is a good start.
– Mutual funds offer higher growth for medium- to long-term goals.
– Your goal is 11 years away.
– This suits equity mutual funds.
– Increase SIP amount gradually as income increases.
– Try to increase it to Rs. 12,000 per month within next 12 months.
– Review SIP every year and step-up further.
– Use actively managed diversified equity mutual funds.

? Avoid Direct Funds – Choose Regular Funds via Certified Professionals
– Direct funds may look cheaper.
– But they do not offer guidance or service.
– Without support, wrong fund choices may happen.
– Many investors stop SIPs in panic due to market movements.
– Regular plans through a CFP and Mutual Fund Distributor (MFD) provide handholding.
– They track your funds and switch when needed.
– They provide asset allocation advice.
– You don’t lose to market noise or confusion.
– The slight extra cost is justified by better results.

? Avoid Index Funds for Your Goal
– Index funds copy a market index blindly.
– They do not beat the market.
– In falling markets, they fall fully.
– In flat markets, they do nothing.
– They don’t protect capital.
– They don’t adjust for quality of stocks.
– Actively managed funds have professional fund managers.
– These managers switch out of weak stocks.
– They seek outperforming companies.
– Actively managed funds are better for wealth creation.

? Protecting Your Goal with Pure Term Insurance
– You have a market-linked insurance plan.
– But this is not pure protection.
– It may not give your family full safety.
– You must take a pure term insurance plan.
– Coverage should be minimum 15 times your annual income.
– So, take a term plan of Rs. 1 crore or more.
– Keep nominee and documentation updated.
– Review it every 5 years.

? Step-by-Step Strategy to Reach Rs. 1 Crore in 11 Years
– Invest Rs. 12,000 per month in mutual funds (gradually step up to this level).
– Continue Rs. 5,000 in PPF as stable component.
– Exit insurance-linked investment after 5 years.
– Shift proceeds to mutual funds.
– Reinvest any annual bonus, increment or windfall.
– Review your portfolio yearly.
– Take help of a Certified Financial Planner.
– Don’t stop SIPs even during market falls.
– Stay invested. Let compounding work.

? Reducing Risk in Final 2–3 Years
– In the 9th or 10th year, reduce equity exposure slowly.
– Move to short-term debt mutual funds.
– This protects gains from market fall.
– Gradual shift avoids volatility shock.
– Don’t wait till last moment to move money.

? Tax Planning and Withdrawal
– For equity mutual funds, gains after 1 year are taxed as LTCG.
– LTCG above Rs. 1.25 lakh is taxed at 12.5%.
– STCG (less than 1 year) is taxed at 20%.
– For PPF, there is no tax at maturity.
– For market-linked insurance, maturity depends on IRDA rules.
– Plan redemptions smartly to reduce tax impact.
– Don’t redeem all in one go. Use phased withdrawal.

? Additional Tips to Accelerate Growth
– Control lifestyle expenses.
– Avoid unnecessary EMIs or credit use.
– Increase SIPs every time you get a hike.
– Even Rs. 1,000 extra per year can grow big in 11 years.
– Track monthly budget.
– Avoid random investments without plan.
– Follow asset allocation strictly.
– Rebalance portfolio every 2 years.
– Focus on consistency. Not timing the market.

? Emotional Discipline is Key
– Markets will go up and down.
– You must ignore short-term noise.
– Don’t stop SIPs when market falls.
– That is the best time to invest more.
– Stay patient. Trust the process.
– Avoid comparing with others.
– Everyone has different goals and timelines.

? Role of Certified Financial Planner
– A CFP helps you build a 360-degree strategy.
– They align investments with life goals.
– They help in rebalancing and review.
– They suggest the right product mix.
– They ensure you don’t fall into insurance traps.
– They help calculate how much SIP is enough.
– Their long-term relationship builds financial discipline.

? Common Mistakes to Avoid
– Don’t buy more insurance-cum-investment products.
– Don’t stop SIPs due to market volatility.
– Don’t take advice from unverified sources.
– Don’t withdraw mutual fund investments before your goal.
– Don’t over-invest in low return options.
– Don’t ignore inflation.
– Rs. 1 crore after 11 years may be worth less.
– So, invest more if possible, for better cushion.

? Role of Emergency Fund and Liquidity
– Keep 3–6 months of expenses in emergency fund.
– Use fixed deposits or liquid funds.
– This helps avoid withdrawing mutual funds.
– Emergency fund gives stability to your plan.

? Cash Flow and Budget Tracking
– Review cash flow regularly.
– Track all expenses monthly.
– Use budgeting apps or manual tracking.
– Identify wasteful spending.
– Redirect savings to SIPs.

? Finally
– You have a clear goal.
– You started early. That gives you an edge.
– Improve SIP amount slowly.
– Exit low-performing products smartly.
– Avoid insurance-investment combos.
– Focus on active mutual funds.
– Use regular plans through CFP-guided MFDs.
– Stay disciplined, invest regularly, and review yearly.
– This journey will surely take you to Rs. 1 crore.
– You can even surpass it with commitment.

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

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