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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 11, 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 - Sep 08, 2025Hindi

Hello. I am 42 years old and my current salary is around 1.3 lakhs. I have 10 lakhs in PPF which is completing 15 years of maturity in 2026. I have 4.5 lakhs in NPS and I contribute 50 K every year in NPS. I have ICICI Pru Insurance in which I contribute 12500 every month and it is completing the 5 years of its lock in in 2026. The current value of this is around 8 lakhs. I contribute around 22000 every month in SIP. The breakup is Axis large & Mid cap, DSP mid cap, DSP small cap, HDFC multicap, Kotak small cap, Mahindra manulife, Aditya birla SL largecap, Axis ELSS tax saving, SBI focused and Sundaram mid cap ranging from 1000 to 3000. I seek your expert advice to revive my portfolio and want to get retire at 50. I am willing to increase my MF investments by 8 K and take it upto 30K

Ans: You are already on the right track. Your effort to increase SIP and streamline investments shows maturity. Aiming for retirement at 50 is ambitious, but possible. Let us optimise your portfolio with clarity and care.

Below is a 360-degree strategy to revive and align your portfolio for early retirement.

» Assessing the Current Structure

– Monthly salary of Rs. 1.3 lakhs offers decent surplus for long-term goals.
– Existing SIP of Rs. 22K/month is a disciplined start.
– Rs. 10 lakhs in PPF is a low-risk long-term reserve.
– NPS corpus is small but growing steadily.
– Insurance-linked investment needs urgent review.
– Goal to retire at 50 means just 8 years left.

» Review of Mutual Fund Portfolio

– You hold 10 mutual funds across categories.
– Some funds may overlap in style or holdings.
– Over-diversification causes inefficiency and dilution.
– Returns may reduce as categories eat into each other.

Axis Large & Mid Cap, HDFC Multicap, Aditya Birla Large Cap
– These offer good large-cap and multicap exposure.
– One large cap and one multicap is enough.

DSP Midcap, DSP Small Cap, Kotak Small Cap, Sundaram Midcap
– Too much mid and small-cap exposure increases risk.
– Retain two at most—one midcap and one small cap.

SBI Focused, Mahindra Manulife, Axis ELSS
– Focused funds are high conviction. Hold only one.
– ELSS is useful if you need Section 80C.
– Don’t hold more than one focused or ELSS fund.

– Reduce from 10 schemes to 5-6 carefully selected ones.
– Ensure each fund serves a unique asset class purpose.

» Fund Selection Strategy

– Avoid index funds. They lack downside protection.
– Index funds follow the market passively.
– In sharp corrections, they offer no active risk control.
– Actively managed funds outperform in down markets.
– Fund manager flexibility improves long-term outcomes.

– Avoid direct funds too.
– Direct funds need close tracking and time.
– You are working full time. Monitoring risk is hard.
– Regular plans through a MFD with CFP helps.
– They hand-hold, rebalance, and offer suitable asset allocation.
– The commission is worth the active advisory you receive.

» ULIP or Insurance-Linked Investment Policy

– ICICI Pru insurance with Rs. 12,500 monthly is inefficient.
– It gives neither adequate cover nor returns.
– Surrender the policy after 2026 once lock-in ends.
– Redeem proceeds and reinvest into mutual funds.
– Take pure term insurance instead.
– It offers high cover at a low premium.

» PPF Strategy

– Rs. 10 lakhs in PPF maturing in 2026 is good.
– Consider extending it in blocks of 5 years.
– Use it for your debt allocation in retirement.
– Don’t redeem unless needed. It compounds well.

» NPS Strategy

– NPS is tax efficient.
– But liquidity is limited before age 60.
– Continue Rs. 50K annual for 80CCD(1B) benefit.
– Don’t over-invest as early retirement won’t access it.
– Treat it as a secondary retirement pool.

» Recommended SIP Structure (Post Review)

– Consolidate SIP to 5-6 schemes.
– Large Cap: 1 scheme – 6000
– Multicap: 1 scheme – 6000
– Mid Cap: 1 scheme – 5000
– Small Cap: 1 scheme – 4000
– ELSS (if needed): 1 scheme – 3000
– International or Thematic: optional – 3000
– Total: Around Rs. 30,000/month

– Choose schemes via MFD with CFP certification.
– Ensure long-term consistency, low turnover, and active tracking.

» Corpus Estimation for Retirement at 50

– You have 8 years to retire.
– You invest Rs. 2.64 lakhs yearly in NPS.
– Plus Rs. 3.6 lakhs yearly in SIP.
– ICICI Pru policy adds Rs. 1.5 lakhs yearly till 2026.

– Increase SIP from Rs. 22K to Rs. 30K immediately.
– Add any surplus bonuses or incentives as lumpsum to MFs.
– From 2026, surrender ULIP and reinvest Rs. 8+ lakhs.
– Add more SIP post-2026 if income rises.
– Keep Rs. 50K PPF maturity aside as retirement buffer.

– Retire with at least Rs. 3-4 crores of investible liquid assets.
– Exclude NPS, PPF and property from monthly retirement income estimate.
– This corpus should sustain 35+ years of retirement.

– Target corpus depends on monthly income goal.
– Include inflation, longevity, medical expenses, and travel.

» Additional Actionable Steps

– Start a separate emergency fund of 6 months expenses.
– Use liquid or ultra-short debt mutual funds for this.
– Don’t use FDs for long term.
– FDs give low post-tax returns.
– Debt MFs offer better tax-adjusted gains.

– Take adequate term life insurance.
– Based on income, age, and dependent needs.
– Rs. 1.5 Cr sum assured is a minimum thumb rule.
– Buy it immediately if not done.

– Take health insurance outside your employer too.
– Choose family floater for you and spouse.
– Consider Rs. 10 lakhs cover with top-up plan.

» Rebalancing Strategy

– Review MF performance every 12 months.
– Rebalance allocation once a year.
– Increase debt exposure slowly as retirement nears.
– Shift equity profits to short-term debt funds after 2028.
– Create 2 buckets—growth (equity) and income (debt).

– Growth bucket grows post-retirement.
– Income bucket gives monthly withdrawals.
– Bucket system ensures no panic selling in market fall.

» Retirement Income Strategy After 50

– Use SWP (Systematic Withdrawal Plan) from mutual funds.
– SWP gives monthly income from equity-debt corpus.
– Keeps tax efficient structure.
– LTCG above Rs. 1.25 lakh taxed at 12.5%.
– STCG taxed at 20%. Plan withdrawals smartly.

– Use combination of SWP + PPF interest + rental (if any).
– NPS will give annuity and lump sum at 60.
– Use NPS only for future long-term healthcare and fixed cash needs.

» Final Insights

– You are already doing better than many salaried individuals.
– Increasing SIP is the best decision now.
– Simplify your mutual fund list for better compounding.
– Surrender insurance policy post-lock-in.
– Build solid emergency and health covers.
– Stay invested with discipline till 50.

– With 8 focused years, you can retire with confidence.
– Avoid real estate for investment. Keep existing properties only.
– Don’t chase market returns. Stick to goal-based investing.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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

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.