Home > Money > Question
Need Expert Advice?Our Gurus Can Help

Heavily in Debt at 42: Can I Still Recover?

T S Khurana

T S Khurana   |186 Answers  |Ask -

Tax Expert - Answered on Oct 05, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more
Asked by Anonymous - Oct 04, 2024Hindi
Listen
Money

Hello Sir, i am 42 years old, got duped due to online scams and lost about 20 lakhs, currently earning 110000 per month, to clear the debt took PL and I have a housing loan as well of 14 lakhs which is already 3 years passed. i am doing a sip of 2k and now its about 1.87 lakhs and my PF is about 9 lakhs, doing bajaj policy 3k and 2k market like policy.. apart from these I don't have any other savings. my goal is to clear my debts soon. any suggestions on how to do that. let me know if there are any questions that you need.

Ans: 01. You first try to settle your PL (Personal Loan), because its rate of Interest is high, as compared with Housing Loan. Second reason is that you get certain exemption against re-payment of housing loan.
02. You may further discontinue you SIP and funds in it may be utilized for payment of loan.
03. Kindly review your investment in Bajaj Policy & other market like policy, to further arrange funds for repayment of P/Loan.
Hope this will ease your situation. However, Most welcome for any further clarifications. Thanks.
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 11, 2024

Asked by Anonymous - May 27, 2024Hindi
Money
Hello sir, namste. Sir, I'm a contractual delivery person working in Bangalore. I have a net debt of around 7.5 lakh rupees which is accumulated by credit cards ~ 3.6 lakh (facing 4.5% interest and other charges monthly), personal loans - 2.9 lakh and ~ 1 lakh from relatives. I feel totally devasted Sir and many times I feel miserable. I have only studied till 10th class and so not a many job roles are available the market. In Zomato , I can hardly save around 20k-25k/ month after cutting all the expenses. Can you please show me a way ahead to clear my Debts ASAP. I want to live a life sir. And should I go with credit card settlement? The charges are so huge that around 12k is increasing each month just from charges. Should I first clear my credit card outstanding and then move towards other loans? And what should I do further sir, what skills can I learn that will serve the market needs in the future? I want to own a car and a house till 30 and have a sustainable business of mines. Please show me the way sir. I really need some expert advice on this. My image has all got dumped accross my family and friends. I didn't used to be like this before. To be Frank with you, I have done mistakes sir, I spent most of the money on drugs ..but now I want and need to change. I have already put a stop. Now I want to erase and write beautifully again. I hope you treat me like your brother
Ans: It's very courageous of you to reach out and share your situation. Acknowledging your past mistakes and showing a willingness to change is the first and most significant step toward a brighter future. Let's explore a practical and comprehensive plan to help you clear your debts and improve your financial situation.

Understanding Your Current Financial Situation
Total Debt: Rs 7.5 lakh

Credit Cards: Rs 3.6 lakh (4.5% monthly interest and other charges)
Personal Loans: Rs 2.9 lakh
Loan from Relatives: Rs 1 lakh
Monthly Savings: Rs 20,000 - Rs 25,000

Immediate Steps to Address Debt
Prioritizing Debts
High-Interest Debt First: Credit card debt should be your top priority due to its high-interest rate. The monthly interest of 4.5% can quickly accumulate, making it crucial to pay this off first.

Personal Loans and Relatives: After addressing credit card debt, focus on personal loans and the amount owed to relatives.

Credit Card Settlement
Contact Your Credit Card Companies: Explain your situation and request a lower interest rate or a settlement plan. Many companies are willing to negotiate if they see you are making a genuine effort to pay off your debt.

Avoid Settlement as a First Option: Settling credit card debt can affect your credit score negatively. It should be considered if negotiations for lower interest rates or payment plans fail.

Creating a Debt Repayment Plan
Step 1: Assess Monthly Expenses
List all essential expenses (rent, food, utilities, etc.).
Identify non-essential expenses and reduce or eliminate them.
Step 2: Allocate Savings to Debt Repayment
Dedicate as much of your monthly savings (Rs 20,000 - Rs 25,000) as possible to paying off your credit card debt.
Use the avalanche method: pay off debts with the highest interest rate first while making minimum payments on other debts.
Step 3: Extra Income
Consider taking on additional delivery shifts or part-time work to increase your income.
Look for freelance or gig opportunities that can be done in your spare time.
Developing Skills for Future Opportunities
Step 1: Identify Marketable Skills
Digital Skills: Basic computer skills, digital marketing, data entry, or social media management are in demand and can be learned online.
Technical Skills: Courses in web development, coding, or app development can open up job opportunities. Platforms like Coursera, Udemy, and Khan Academy offer affordable courses.
Language Skills: Improving English or learning a new language can enhance job prospects.
Step 2: Affordable Learning Resources
Online Courses: Use free or low-cost online courses to build new skills. Websites like Coursera, Udemy, and edX offer courses in various fields.
Local Community Centers: Check for workshops or courses offered by community centers or NGOs in Bangalore.
Step 3: Practical Experience
Internships: Look for internships or volunteer opportunities to gain practical experience.
Networking: Connect with professionals in your desired field through social media platforms like LinkedIn.
Long-Term Financial Goals
Goal 1: Owning a Car
Saving Plan: After clearing your debts, start a savings plan specifically for purchasing a car. Set aside a fixed amount each month.
Consider Pre-Owned: Initially, consider buying a pre-owned car to reduce costs.
Goal 2: Owning a House
Saving and Investing: Start saving for a down payment. Consider mutual funds for long-term growth once you have an emergency fund in place.
Government Schemes: Explore government schemes for first-time homebuyers, which can offer subsidies or lower interest rates.
Goal 3: Starting a Business
Business Plan: Develop a detailed business plan for your mining business. Research the market, competition, and legal requirements.
Small Start: Consider starting small and expanding as you gain experience and financial stability.
Funding: Look for government grants, small business loans, or investors willing to support your business idea.
Additional Tips for Financial Stability
Emergency Fund
Establish an Emergency Fund: Save at least 3-6 months' worth of living expenses in a separate account for emergencies.
Budgeting
Create a Budget: Track your income and expenses to identify areas where you can save more.
Stick to the Budget: Consistently adhere to your budget to avoid unnecessary spending.
Financial Discipline
Avoid High-Interest Debt: After clearing your debts, avoid using credit cards or taking loans unless absolutely necessary.
Regular Review: Regularly review your financial situation and adjust your budget and goals as needed.
Final Insights
Clearing your debts and achieving financial stability is a challenging but achievable goal. Prioritize paying off high-interest debt, such as credit cards, first. Consider negotiating with credit card companies for better terms. Allocate as much of your monthly savings as possible towards debt repayment and look for additional income opportunities.

Invest in learning new skills that are in demand in the market. Utilize online resources and practical experiences to enhance your employability. Set realistic long-term goals like owning a car, a house, and starting a business, and develop a step-by-step plan to achieve them.

Your determination to change and improve your life is admirable. Stay focused, disciplined, and proactive in managing your finances. With consistent effort and careful planning, you can overcome your current challenges and build a secure and prosperous future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 22, 2024

Asked by Anonymous - Jun 15, 2024Hindi
Money
Sir my monthly salary is 20625 and I took a personal loan of 300000 lacs multiple loan app last 2 year and I have credit card also but with my daily expenses I couldn't pay the total emis and bills so I took some credit from cred application it's almost 100000 lacs and now I'm unable to pay any of them as my salary is very low to pay so many emis I can't stop thinking about all this I'm facing anxiety and depression due to debts. I want to come out of this debt and get clean from all this problem. I want to save money and live a normal life. I couldn't share it with anyone also. My father us retired and he couldn't help me.
Ans: You’re facing a tough financial challenge, and it’s understandable. Managing multiple loans and credit card debts on a low salary is stressful. You’ve taken a loan of Rs. 3,00,000 and additional credit of Rs. 1,00,000, leading to overwhelming EMIs. Your daily expenses make it hard to manage these debts, causing anxiety and depression. Let's explore a plan to get you out of this situation and towards financial stability.

Prioritising Mental Health
First and foremost, your mental health is crucial. Financial stress can take a heavy toll. Please know that you’re not alone, and it’s okay to seek help. Talking to a trusted friend, family member, or professional can ease the burden. Remember, mental well-being is as important as financial stability.

Assessing Your Debts
Let’s break down your debts:

Personal Loans: Rs. 3,00,000
Credit Card Debt: Rs. 1,00,000
Your total debt stands at Rs. 4,00,000. Given your monthly salary of Rs. 20,625, this debt load is unsustainable. The first step is to understand the exact EMIs and interest rates associated with each loan and credit card.

Creating a Debt Repayment Plan
1. List All Debts

Write down all your debts with their respective EMIs, interest rates, and remaining balances. This helps you see the full picture.

2. Prioritise High-Interest Debts

Focus on paying off high-interest debts first, usually credit cards. These debts grow faster due to high interest, making them harder to repay if not tackled early.

3. Debt Consolidation

If possible, consolidate your loans. This means combining all your loans into one with a lower interest rate. It simplifies repayment and reduces the overall interest burden. Contact your bank for options. They may offer a consolidation loan.

4. Negotiate with Creditors

Approach your creditors and explain your situation. Sometimes, they can offer reduced EMIs, lower interest rates, or extend the loan tenure. This can ease your monthly payment burden.

5. Avoid Taking More Loans

It’s crucial to stop borrowing more money. Avoid any more personal loans or credit. Taking more loans will only worsen your financial situation.

6. Automate Payments

Set up automatic payments for your EMIs. This ensures that you don’t miss payments and incur late fees, which add to your debt.

Cutting Down Expenses
1. Create a Budget

List your essential expenses—rent, groceries, utilities—and allocate your salary accordingly. See where you can cut down unnecessary spending.

2. Reduce Discretionary Spending

Limit spending on non-essentials like dining out, entertainment, and shopping. Redirect this money towards paying off your debt.

3. Focus on Essentials

Stick to spending on essentials only. Avoid any luxury purchases until your financial situation improves.

Exploring Additional Income Sources
1. Part-Time Work

Consider taking up part-time or freelance work. Even a few extra hours a week can significantly increase your income, helping you pay off debts faster.

2. Sell Unnecessary Assets

If you have items at home that you no longer need—gadgets, furniture, etc.—consider selling them. The extra money can be used to pay off debts.

3. Rent Out Space

If you have extra space in your home, consider renting it out. This could bring in additional income to help with debt repayment.

Building an Emergency Fund
Even while paying off debts, it’s essential to build a small emergency fund. Start with a goal of Rs. 5,000. This fund is for unexpected expenses, so you don’t need to rely on credit cards or loans in emergencies.

Planning for the Future
1. Start Small Savings

Once you’ve stabilised your debt situation, start saving a small portion of your income. Even Rs. 500 a month can make a difference over time.

2. Invest Wisely

When you’re ready, consider investing in mutual funds through a Certified Financial Planner (CFP). Start with small SIPs. These offer better returns than traditional savings methods like FDs.

3. Focus on Long-Term Goals

Think about your long-term financial goals—buying a house, retirement, etc. Start planning for these once your debts are under control.

Final Insights
You’ve acknowledged your financial difficulties, which is the first step toward solving them. With a structured plan and disciplined approach, you can overcome this challenge. Focus on repaying high-interest debts first, reduce unnecessary expenses, and explore additional income sources. Building a small emergency fund and planning for future investments are also key steps.

Remember, there’s a way out of every problem. It might take time, but with persistence, you can regain control over your finances and live a stress-free life.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 06, 2024

Asked by Anonymous - Jun 20, 2024Hindi
Money
Sir my monthly salary is 20625 and I took a personal loan of 300000 lacs multiple loan app last 2 year and I have credit card also but with my daily expenses I couldn't pay the total emis and bills so I took some credit from cred application it's almost 1 lacs and now I'm unable to pay any of them as my salary is very low to pay so many emis I can't stop thinking about all this I'm facing anxiety and depression due to debts. I want to come out of this debt and get clean from all this problem. I want to save money and live a normal life. I couldn't share it with anyone also. My father us retired and he couldn't help me.
Ans: I truly understand how stressful financial difficulties can be. It's commendable that you're seeking help to resolve your debts and plan for a better future. Let's develop a comprehensive strategy to tackle your debts and set you on the path to financial stability.

Understanding Your Financial Situation
Firstly, it’s crucial to understand the full picture of your financial situation. Here’s what we know:

Monthly salary: Rs. 20,625
Personal loan: Rs. 3,00,000
Additional credit: Rs. 1,00,000
Total debt: Rs. 4,00,000
Monthly expenses are high, making it difficult to pay EMIs and bills.
Emotional and Mental Well-being
Debt and financial stress can lead to anxiety and depression. It's important to take care of your mental health. Try to talk to a trusted friend or family member about your situation. Sometimes, sharing your burden can make it feel lighter. Professional counseling can also be very helpful.

Immediate Steps to Manage Debt
1. Create a Detailed Budget
List all your monthly income and expenses. This will help you see where your money is going and identify areas where you can cut costs.

2. Prioritize Essential Expenses
Ensure that your basic needs such as food, rent, and utilities are covered first. Allocate funds for these before paying off debts.

3. Negotiate with Creditors
Contact your lenders and explain your situation. They might be willing to restructure your loans or provide a more manageable repayment plan. Some may even offer a temporary reduction in payments.

4. Avoid Taking More Loans
Stop taking new loans or using credit cards. This will only add to your debt and make the situation worse.

Debt Repayment Strategies
1. Debt Consolidation
Consider consolidating all your debts into one loan with a lower interest rate. This can simplify your payments and reduce the overall interest you pay.

2. Debt Snowball Method
Focus on paying off the smallest debts first while making minimum payments on larger ones. Once a small debt is cleared, move on to the next smallest. This method gives you a psychological boost as you see debts being eliminated.

3. Debt Avalanche Method
Prioritize paying off the debt with the highest interest rate first while making minimum payments on others. This method reduces the total interest you pay over time.

Boosting Your Income
1. Part-time Jobs or Freelancing
Look for opportunities to earn extra income through part-time jobs or freelancing. Even a small additional income can help reduce your debt faster.

2. Sell Unused Items
Consider selling items you no longer need. This can provide a quick influx of cash to put towards your debts.

Long-term Financial Planning
Once your immediate debts are under control, focus on building a stable financial future.

1. Emergency Fund
Start building an emergency fund to cover 3-6 months of expenses. This will provide a cushion for unexpected financial challenges.

2. Systematic Savings Plan
Begin saving a small portion of your income regularly. Even a small amount can grow over time through disciplined saving.

3. Avoid Unnecessary Spending
Be mindful of your spending habits. Prioritize needs over wants and avoid impulse purchases.

Investment Planning
After stabilizing your financial situation, consider investing to grow your wealth. Here's a simple guide on different investment options.

1. Mutual Funds
Mutual funds pool money from many investors to purchase securities. They offer diversification and professional management.

Equity Funds: Invest in stocks, providing high returns but with higher risk.
Debt Funds: Invest in bonds, offering stable returns with lower risk.
Hybrid Funds: Combine equity and debt, balancing risk and return.
2. Power of Compounding
Investing early allows you to benefit from compounding, where your earnings generate more earnings. This can significantly grow your wealth over time.

Disadvantages of Index Funds
Index funds aim to replicate the performance of a market index. Here are some drawbacks:

Lack of Flexibility: Cannot adapt to market changes.
Market Risk: Entirely exposed to market fluctuations.
Lower Returns: Often underperform actively managed funds.
Benefits of Actively Managed Funds
Actively managed funds are managed by professionals who make investment decisions to outperform the market.

Flexibility: Managers can adapt to market changes.
Potential for Higher Returns: Aim to beat the market.
Risk Management: Professional managers can mitigate risks.
Disadvantages of Direct Funds
Direct funds have no intermediary, potentially saving costs but have drawbacks:

Lack of Guidance: No professional advice.
Time-Consuming: Requires active management and monitoring.
Higher Risk: Without expert guidance, risk of poor decisions increases.
Benefits of Regular Funds Through CFP
Investing through a Certified Financial Planner (CFP) offers numerous advantages:

Professional Advice: Expert guidance on fund selection and portfolio management.
Regular Monitoring: Continuous review and adjustments to optimize returns.
Tailored Portfolio: Customized investment strategy to meet your specific goals.
Tax Planning
Effective tax planning can enhance your savings and investment returns.

1. Utilize Tax Deductions
Maximize deductions under sections like 80C through investments in PPF, ELSS, and other eligible instruments.

2. Health Insurance
Premiums paid for health insurance can be deducted under Section 80D, reducing your taxable income.

Estate Planning
Ensure your assets are distributed according to your wishes through proper estate planning.

1. Draft a Will
Clearly state how your assets should be distributed. This prevents legal complications and ensures your wishes are honored.

2. Appoint Nominees
Appoint nominees for your bank accounts, insurance policies, and investments. This simplifies the transfer of assets in case of your absence.

Final Insights
Financial challenges can be overwhelming, but with a structured approach, you can overcome them. Prioritize your debts, create a budget, and look for ways to boost your income. Once your debts are under control, focus on building a stable financial future through disciplined saving and investing.

Consult a Certified Financial Planner (CFP) for personalized advice and guidance. Stay disciplined, and remember, small steps can lead to significant progress.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Asked by Anonymous - Jul 02, 2024Hindi
Money
I am 22 years old with a monthly salary of 36 thousand in hand after deductions i have a health insurance of 5 lacks and for both parents 3 lacks and a family loan of 17 lacks in total. Epf of 40 thousand. My monthly living expenses are around 20 thousand and how can i clear the loans, can it be done by investing, kindly guild me.
Ans: Congratulations on starting your financial journey at such a young age. It’s commendable that you are thinking about clearing loans and planning your investments early. With proper planning and disciplined execution, you can achieve your financial goals. Let's analyze your current situation and explore potential strategies to help you manage and clear your loans effectively.

Understanding Your Financial Position

Let's break down your current financial position:

Monthly salary: Rs 36,000
Health insurance: Rs 5 lakhs
Parents' health insurance: Rs 3 lakhs
Family loan: Rs 17 lakhs
EPF: Rs 40,000
Monthly expenses: Rs 20,000
Assessing Your Loan Situation

Your total family loan stands at Rs 17 lakhs. It's essential to understand the interest rates, tenure, and monthly EMIs for these loans. This will help us determine the best strategy for repayment.

Budgeting for Loan Repayment

You have a monthly income of Rs 36,000 and expenses of Rs 20,000, leaving you with Rs 16,000. This surplus can be utilized for loan repayment and investments.

Creating a Repayment Strategy

Prioritize High-Interest Loans:
Identify which loans have the highest interest rates. Prioritize paying these off first to reduce your overall interest burden.

Debt Consolidation:
If you have multiple loans with varying interest rates, consider consolidating them into a single loan with a lower interest rate. This can simplify your repayments and potentially reduce your interest costs.

Increase EMI Payments:
If possible, increase your monthly EMI payments. This will help you clear the loans faster and save on interest payments.

Emergency Fund

Before aggressively paying off your loans, ensure you have an emergency fund in place. This should cover at least 3-6 months' worth of living expenses. Given your monthly expenses are Rs 20,000, aim for an emergency fund of Rs 60,000 to Rs 1,20,000. This will provide a safety net in case of any unforeseen expenses or loss of income.

Investing While Repaying Loans

Investing while repaying loans can seem challenging, but it’s possible with careful planning.

Start Small:
Begin with a small portion of your surplus, say Rs 5,000 per month. This can be increased as you gain more control over your finances.

Systematic Investment Plan (SIP):
Invest in mutual funds through SIPs. This allows you to invest a fixed amount regularly and benefit from rupee cost averaging.

Diversify Your Investments:
Allocate your investments across different asset classes such as equity and debt. This balances risk and potential returns.

Benefits of Actively Managed Funds

While index funds may seem attractive due to lower fees, actively managed funds offer several advantages:

Expert Management:
Actively managed funds are handled by professional fund managers who make investment decisions based on research and market conditions.

Potential for Higher Returns:
These funds aim to outperform the market index, offering the potential for higher returns.

Flexibility:
Fund managers can adjust the portfolio in response to market changes, potentially reducing risk.

Disadvantages of Direct Funds

Investing in direct funds may seem cost-effective but has drawbacks:

Lack of Guidance:
Direct funds don’t provide access to professional advice, which can be crucial for making informed investment decisions.

Time and Effort:
Managing your own investments requires significant time and effort to research and monitor the market.

Potential for Mistakes:
Without expert guidance, there is a higher risk of making poor investment decisions.

The Importance of Professional Guidance

Working with a Certified Financial Planner (CFP) can offer several benefits:

Personalized Advice:
A CFP can provide tailored advice based on your financial goals, risk tolerance, and current situation.

Holistic Planning:
They consider all aspects of your financial life, including loans, investments, insurance, and retirement planning.

Regular Reviews:
A CFP can help you regularly review and adjust your financial plan to stay on track.

Steps to Clear Loans and Build Wealth

Create a Detailed Budget:
Track your income and expenses meticulously. This will help you identify areas where you can cut back and allocate more towards loan repayment and investments.

Automate Savings and Investments:
Set up automatic transfers for loan EMIs, savings, and investments. This ensures consistency and prevents the temptation to spend surplus money.

Monitor Your Progress:
Regularly review your loan balances and investment portfolio. Celebrate small milestones to stay motivated.

Increase Income:
Look for opportunities to increase your income, such as taking on freelance work, pursuing additional qualifications, or seeking a higher-paying job.

Avoid New Debt:
Refrain from taking on new debt unless absolutely necessary. This will help you focus on clearing existing loans faster.

Maintaining a Balanced Approach

While it’s important to focus on clearing your loans, don’t neglect your investments. A balanced approach ensures you’re not only reducing debt but also building wealth for the future.

Reviewing Insurance Coverage

Your current health insurance covers Rs 5 lakhs for yourself and Rs 3 lakhs for your parents. Ensure this coverage is adequate for potential medical emergencies. If necessary, consider increasing your coverage or adding critical illness insurance.

Exploring Tax Benefits

Take advantage of tax deductions available on loan interest payments and investments. This can reduce your taxable income and increase your savings.

Communicate with Family

Discuss your financial goals and repayment strategy with your family. Their support and understanding can make the journey smoother.

Final Insights

Your financial journey is off to a great start. With disciplined budgeting, strategic loan repayment, and smart investing, you can achieve your goals. Stay committed, seek professional guidance when needed, and regularly review your progress.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Pradeep

Pradeep Pramanik  |186 Answers  |Ask -

Career And Placement Consultant - Answered on Nov 21, 2024

Listen
Career
I am looking for a job, I had uploaded my resume in job site. A consultant called me & introduced himself telling he know some of the openings. He had a detailed discussion about my job & my skills. He told need to register to his consultancy for scheduling interview. I registered with him & he got me a interview. Interview was done by the company through skype. I could not see the company persons. They told only they can see me. Interview went on well & regarding salary I told my expectation but they told it is not possible & they told their proposal. Finally I agreed to them. They gave me code & told to visit the company for next round. Consultant called me after first round & told recruiter is very happy with the interview. Regarding salary he told why I agreed for the proposal,he will discuss again & asked to pay charges for some of his services which he will refund the day I visit to the company & take the orders. I paid him. He told there is a increase in salary he has discussed with recruiter & again asked for the money I did only partial payment & further will not pay anything. Second round also happened through skype instead of in person. Interview went on well & salary offered was good comparing to before & there was a big jump. Recruiter told they have planned to give additional responsibilities so they have increased. Finally they gave me a date to visit company. I asked when will I get the order, he replied he will send to consultant as I was taken by them. Till now i did not get the orders, consultant is keep on postponing. Now he told visit to company date is also postponed, he will update in next week & not to worry as job is confirmed. Now not understanding what to do, am I been cheated or wait.
Ans: Dear Mr. Keshava ,

There are many unscruplous job agents who are fake and claim themselves to be a Placement consultant. In short You have been cheated . Before paying any fee for registration , you must ensure that the agency is genuine . If not don't even upload your resume . You may write to company , lodge a complaint against the agency. If the amount is very high , pl. take the help of police . .

...Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Listen
Money
I hv started sip in 2008 and still continued , now the monthly sip is 55k and total value is 1.85cr. Need to accumulate 7cr with in next 4 yrs pls guide how can i achieve. - Deepak J. Hajari
Ans: Deepak, your long-term SIP discipline is impressive. Accumulating Rs. 7 crore in 4 years is ambitious. Achieving this goal requires a strategic approach, as time is limited. Let's create an actionable plan for your success.

Current Financial Snapshot
Ongoing SIPs: Rs. 55,000 monthly.
Current Portfolio Value: Rs. 1.85 crore.
Target Corpus: Rs. 7 crore within 4 years.
Your consistent investing habits have built a solid foundation. However, to achieve your target, adjustments are needed.

Key Challenges
Short Time Frame: Four years is a limited period for aggressive wealth accumulation.
Significant Gap: A gap of Rs. 5.15 crore remains to meet the Rs. 7 crore goal.
Market Volatility: Equity investments might face short-term volatility.
Recommendations to Bridge the Gap
1. Increase Your SIP Contributions
Raise your SIP amount to Rs. 1.25 lakh per month.
This increase ensures faster wealth creation through compounding.
Prioritise high-growth funds in equity-oriented categories.
2. Invest Lump Sum Amounts
Consider deploying a lump sum if you have idle savings or low-yield investments.
Invest in aggressive equity mutual funds for higher potential returns.
Break down the lump sum into tranches for better market timing.
3. Diversify into High-Growth Mutual Funds
Focus on small-cap and mid-cap mutual funds for higher growth potential.
Maintain a balance with some large-cap exposure for stability.
Ensure the portfolio aligns with your high-return requirements.
4. Avoid Overexposure to Debt or Low-Yield Instruments
Limit debt investments during this aggressive growth phase.
Avoid instruments like FDs or debt mutual funds with lower returns.
Rely on equity for the next four years to maximise growth.
5. Rebalance Your Portfolio Regularly
Conduct a portfolio review every 6 months.
Reallocate funds based on underperforming or outperforming sectors.
Keep your portfolio aligned with market trends and your goals.
6. Capitalize on Bonus or Windfall Gains
Direct any bonuses, salary hikes, or windfall gains towards your target.
Avoid unnecessary expenses during this focused phase.
Tax Efficiency Matters
Equity Mutual Funds Taxation: Gains above Rs. 1.25 lakh are taxed at 12.5%.
Debt Mutual Funds Taxation: Taxed as per your income slab.
Plan redemptions strategically to minimise tax liabilities.
Leverage Market Opportunities
Benefit from Market Corrections: Use corrections as opportunities to invest lump sums.
Stay Invested for Compounding: Avoid early redemptions to let compounding work fully.
Role of Regular Monitoring
Track Performance: Ensure funds are performing as per expectations.
Switch Funds if Needed: Shift from underperforming funds to high-growth options.
Final Insights
Deepak, achieving Rs. 7 crore in 4 years requires aggressive yet calculated strategies. Increase your SIPs, deploy lump sums, and focus on high-growth funds. Regular monitoring and disciplined investing are key to your success. Stay patient and consistent.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 20, 2024Hindi
Listen
Money
I am 50 yrs old. If I invest 60k per month for 10 yrs in SIPs of MF then will I be able to achieve the corpus of Rs. 2.50 Crs and if not how much shall I invest per month and in which SIP schemes
Ans: You have a clear goal to invest Rs. 60,000 per month for 10 years. The goal is to accumulate Rs. 2.5 crore through mutual fund SIPs. Let us analyse your query in detail and provide actionable insights.

Evaluating the Feasibility of Your Investment Plan
10-Year Time Frame:
Ten years is a medium-term horizon. Equity-based mutual funds offer good growth potential for this period.

Monthly SIP Contribution:
A SIP of Rs. 60,000 is significant. It shows your commitment to wealth creation.

Target Corpus Analysis:
The target of Rs. 2.5 crore depends on consistent returns. Market performance influences results.

Expected Returns:
Equity funds can give 10%-12% annualised returns in the long run. However, returns are not guaranteed.

Is Rs. 60,000 Sufficient?
Your current contribution may not be sufficient to reach Rs. 2.5 crore in 10 years.

For 10%-12% Returns:
You might accumulate Rs. 1.9–2.1 crore. There could be a shortfall of Rs. 40–60 lakh.

Solution:
Increase your SIP amount to Rs. 75,000–80,000 monthly for a better chance of achieving the goal.

Optimising Your SIP Contributions
Step-Up SIPs:
Increase your SIP amount by 5%-10% every year. This adjusts for inflation and higher earnings.

Lump Sum Boost:
If you have surplus funds, invest a lump sum. This accelerates your goal.

Diversify Investments:
Allocate across equity and hybrid funds for balanced growth and risk management.

Selecting the Right SIP Investments
Actively managed funds are suitable for your goals. Avoid index funds due to their limitations.

Equity Funds for Growth:
These funds have high growth potential over 10 years.

Diversified Portfolio:
Choose funds across large-cap, mid-cap, and multi-cap categories. This spreads risk effectively.

Hybrid Funds:
Hybrid funds provide stability by balancing equity and debt investments.

Avoiding Direct Funds
Investing through direct funds might seem cost-effective but has drawbacks.

Limited Guidance:
Direct funds lack professional advice. This could lead to suboptimal fund choices.

Benefits of Regular Plans:
A Certified Financial Planner ensures proper fund selection and portfolio review.

Managing Tax Implications
Understanding taxation helps optimise your returns.

Long-Term Gains:
LTCG above Rs. 1.25 lakh is taxed at 12.5%. Plan redemptions strategically.

Short-Term Gains:
STCG on equity is taxed at 20%. Avoid frequent withdrawals to minimise this tax.

Hybrid Funds Taxation:
Gains from hybrid funds are taxed as per your income slab.

Steps to Achieve Rs. 2.5 Crore
Increase SIP Amount:
Raise your SIP to Rs. 75,000–80,000 monthly.

Review Annually:
Monitor portfolio performance and adjust investments.

Use a Balanced Strategy:
Combine equity funds with hybrid funds to optimise risk and return.

Seek Professional Help:
Work with a Certified Financial Planner to refine your plan.

Final Insights
Your goal of Rs. 2.5 crore in 10 years is achievable with adjustments. Increase your SIP amount and maintain discipline. Diversify investments and periodically review the portfolio. A Certified Financial Planner can guide you for maximum efficiency and clarity.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7097 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 19, 2024Hindi
Money
Im a 34 year old, my father is planning on selling a property from which he would provide me with a gift of 1 Crore. At the moment , since my business has not launched, I would like to be earning interest from the Corpus amount and would also like to have a withdrawal of around 40-50K per month. Im very new to investing, and all i know is , getting half baked answers just isnt worth it. So im asking the experts, what is a realistic return that I could hope for? Provided its invested into mutual funds and debt funds. I would like to protect the corpus and make it grow while also trying to a withdrawal of 50-k per month.
Ans: Firstly, it's fantastic that you're approaching your investment decisions with a clear goal in mind. Receiving a gift of Rs 1 Crore from your father is a significant opportunity. Your desire to earn regular income while protecting and growing the principal corpus is a smart approach, especially given the current stage of your business. Let’s explore a realistic strategy for achieving your goal of monthly withdrawals while ensuring long-term growth.

Key Objectives
Preserve the Corpus: Ensuring the Rs 1 Crore grows steadily and does not erode.
Generate Monthly Income: Aiming for Rs 40,000–50,000 monthly withdrawals to meet your cash flow needs.
Balanced Risk: A mix of investments in mutual funds and debt funds to balance growth with security.
Types of Funds to Consider
To achieve your objectives, the portfolio needs to include a mix of debt and equity mutual funds. Here’s an overview of each option:

1. Debt Funds (Low-Risk)
Debt funds are ideal for stability. They typically offer steady returns with lower volatility. These funds invest in bonds, government securities, and corporate debt.

Stability: They offer relatively stable returns with low risk to the principal.
Monthly Income: Debt funds with monthly income plans (MIPs) can provide regular payouts.
Expected Returns: Historically, debt funds return 7-9% annually, depending on the type and tenure of the bonds they invest in.
2. Equity Mutual Funds (Moderate to High-Risk)
Equity funds invest in stocks and can offer higher returns, but with more volatility. Over the long term, they have the potential to outperform debt funds, though there can be short-term fluctuations.

Growth Potential: Equity funds are essential for capital appreciation.
Risk Profile: Equity mutual funds carry more risk but can provide higher long-term returns.
Expected Returns: Historically, equity funds can offer 10-15% returns per annum, depending on market conditions and fund management.
Expected Return and Withdrawal Strategy
Given your goal of withdrawing Rs 40,000–50,000 monthly (Rs 4.8–6 lakh annually), let’s assess a realistic return scenario:

1. Required Returns for Monthly Withdrawal
To generate Rs 4.8–6 lakh annually, you need to have a combination of income and growth.
Assumption: You need a mix of debt and equity funds. If you target an average return of 8-9% per annum from debt and equity, your portfolio should generate enough income.
2. Risk-Return Balance
Debt Funds: These funds will give stability and a guaranteed income, but at a lower return rate.
Equity Funds: These can help grow your corpus and offer a better chance of increasing the monthly withdrawal amount over time.
3. Potential Returns Based on Allocation
50% Debt Funds: Target return of 7-8% annually.
50% Equity Funds: Target return of 12-14% annually.
This balanced approach provides income and growth, helping you meet your withdrawal goal while maintaining long-term growth.

Portfolio Structure Suggestions
1. Debt Fund Allocation (50%)
Why Debt?: Debt funds offer lower risk and more predictable returns, making them suitable for generating a steady income.
Types of Debt Funds to Consider:
Corporate Bond Funds: These offer better returns than government bond funds, but at slightly higher risk.
Short-Term Debt Funds: These funds invest in short-term instruments and are less sensitive to interest rate changes.
Monthly Income Plans (MIPs): These funds are specifically designed to provide monthly payouts, offering an income stream.
2. Equity Fund Allocation (50%)
Why Equity?: Equity funds will provide higher returns and help your corpus grow over time. They are necessary for long-term wealth creation.
Types of Equity Funds to Consider:
Large-Cap Funds: These invest in well-established companies with a stable growth record.
Flexi-Cap Funds: These funds invest across all market caps, allowing flexibility to choose the best opportunities.
Hybrid Funds: A mix of debt and equity, hybrid funds are suitable for balancing risk and return.
Tax Considerations for Your Portfolio
Mutual fund investments are subject to taxes on the capital gains.

Equity Funds:
Long-Term Capital Gains (LTCG): If held for more than 1 year, LTCG above Rs 1.25 lakh is taxed at 12.5%.
Short-Term Capital Gains (STCG): If sold within 1 year, STCG is taxed at 15%.
Debt Funds:
LTCG: If held for more than 3 years, debt fund gains are taxed at 20% with indexation benefits.
STCG: If sold within 3 years, gains are taxed according to your income tax slab.
You should plan your withdrawals in a way that balances both income generation and tax efficiency.

Risk Management and Capital Preservation
Your focus on preserving the corpus is essential. While debt funds provide safety, equity funds add the potential for capital appreciation. To protect your capital:

Diversify Across Different Asset Classes: Ensure a mix of debt, equity, and hybrid funds.
Review Portfolio Regularly: Market conditions change, and it’s important to keep your portfolio aligned with your risk tolerance and financial goals.
Avoid Overconcentration: Don’t put all your funds into one type of asset. Spread your investments across sectors and instruments.
Steps to Implement Your Strategy
1. Choose Mutual Funds Through an MFD with CFP Credentials
Why?: Investing through a Certified Financial Planner (CFP) ensures your investments are aligned with your long-term goals and risk profile.
Avoid Direct Funds: While direct funds have lower expense ratios, you miss out on valuable advisory support. An MFD offers curated fund selection, tax advice, and regular portfolio reviews.
2. Start with a 50-50 Debt-Equity Split
Debt: Focus on short-term and MIPs for income generation.
Equity: Invest in large-cap or flexi-cap funds for long-term growth.
3. Monitor and Rebalance
Rebalance your portfolio annually based on market performance and changing needs.
Adjust debt and equity allocations depending on your withdrawal requirements and market conditions.
Final Insights
With Rs 1 Crore, you can generate enough income for your monthly withdrawals while allowing your money to grow. A balanced approach of 50% debt funds and 50% equity funds is a realistic strategy to achieve this. Your investment portfolio will ensure that you have both stability and growth, helping you meet your cash flow needs while protecting and growing your corpus.

It's crucial to engage with a Certified Financial Planner to tailor the investment strategy to your exact needs. Their expertise will help you make better decisions for both tax efficiency and long-term wealth creation.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x