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Ramalingam

Ramalingam Kalirajan  |8272 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 15, 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
Asked by Anonymous - Apr 14, 2024Hindi
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Hello sir, I am 42 years old and want to retire by age of 55. My current savings is 303L in EPF. 307L in equity, 9.6L in nps. Investment I does as follows 1. Epf - 45000 by employer and same contribution by me as well which combined around 90000/- 2. 27000/- monthly sip , Nippon small cap 6000, axis small cap 6000, quant infrastructure fund 6000/-, quant small cap 6000/-l miarae asset blue chi large cap 3000/- all started very soon having corpus of 4L as of today. 3. Investing 25000/- in nps monthly. 4. Around 50k monthly in equity I have a liability of 50L home loan which I have planned to get rid off by 2028. I have another home loan which will be closed by end of 2025. I have a daughter which is doing CA and for marriage it will be required around 1 cr. I have a son who are going to persue medical which will cost me 50-75L. How I can plan my retirement to get atleast 3L monthly by age of 55. My current monthly take home salary is 3L around.

Ans: Given your goal to retire by 55 with a monthly income of ?3L, you have a comprehensive plan with a mix of investments and savings. Here's a suggested strategy:

EPF: Continue the contribution as it offers tax benefits and stable returns.

SIPs: Your SIPs in small and large-cap funds are good for growth. Consider adding a diversified equity fund for balance. Monitor and rebalance annually.

NPS: Since you're investing ?25,000 monthly, ensure you choose the auto-choice option for a balanced allocation between equity, corporate bonds, and government securities.

Home Loans: Prioritize closing the higher interest rate loan first while maintaining EMIs for both.

Children’s Education and Marriage: Start separate SIPs or investments earmarked for these goals to reach 1 cr for your daughter's marriage and 50-75L for your son's medical studies.

Emergency Fund: Maintain an emergency fund of at least 6 months' expenses.

Retirement Corpus: Aim to build a corpus that can generate ?3L/month. Based on a conservative estimate, a corpus of around ?6-7 crores by 55 might be needed. Regularly review and adjust your investments to align with this target.

Professional Advice: Consult a financial advisor to fine-tune your plan and ensure you're on track to meet your retirement and other financial goals.
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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Ramalingam

Ramalingam Kalirajan  |8272 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 09, 2024

Asked by Anonymous - Oct 08, 2024Hindi
Money
Good evening sir. i am 66year old senior citizen retired last year.wife is 60 years n home.maker.My.investments r as follows..Shares.1.4.cr.Muttual funds.50.lakhs.Sip 75k per month for another 3 years.Real estate plot 1cr.ppf 45 lakhs valid till.2026.Gold around 80 lakhs Daughters married n settled.Son.engineering graduate recently n searching for job.How do i plan for retirement assuming lie span.upto.85.I.have.a family health insurance of 7 lakhs. Looking forward for your valuable guidance.No.liabilities n.own house.
Ans: Your investment portfolio looks quite healthy. You have a variety of assets:

Rs 1.4 crore in shares
Rs 50 lakh in mutual funds
SIP of Rs 75,000 per month for another 3 years
Rs 1 crore real estate plot
Rs 45 lakh in PPF
Rs 80 lakh in gold
You also have a health insurance cover of Rs 7 lakh and no liabilities. With your wife being a homemaker, and your children settled, the focus should be on planning for sustainable retirement income.

Let’s analyse the situation and guide you on how to ensure your funds last throughout your retirement. Your goal is to maintain financial security till the age of 85, which means planning for the next 19 years.

Evaluating Your Current Assets
Shares (Rs 1.4 crore)
This is a substantial part of your portfolio. Shares can provide high returns but are volatile. Since you are retired, you need stability more than high-risk exposure. I suggest reviewing your shareholding and considering shifting a portion of this into less risky assets.

You may continue holding some of these shares for capital appreciation.
Shift part of the portfolio into less volatile instruments for regular income.
Mutual Funds (Rs 50 lakh) and SIPs
You have Rs 50 lakh in mutual funds and an ongoing SIP of Rs 75,000 per month for another three years. This systematic investment is a good approach, as it helps build wealth.

You could switch some of these mutual funds from growth-oriented funds to regular income-oriented funds.
This will ensure a steady stream of income while still enjoying some growth.
Note: Actively managed funds could be a better option for you at this stage of life. They are guided by professional fund managers who adjust the portfolio based on market conditions. Index funds, on the other hand, follow the market passively and can be volatile.

PPF (Rs 45 lakh, Valid Till 2026)
The PPF is a safe investment, giving tax-free returns. With Rs 45 lakh, it serves as a stable part of your portfolio.

You should continue holding it until maturity in 2026.
Upon maturity, reinvesting the proceeds into senior citizen schemes or low-risk instruments can ensure steady income.
Gold (Rs 80 lakh)
Your gold holding is quite significant. While gold can act as a hedge against inflation, it does not generate regular income.

I suggest retaining some portion of the gold.
Consider liquidating part of the gold and shifting the proceeds into low-risk, income-generating investments.
Real Estate Plot (Rs 1 crore)
You have a real estate plot valued at Rs 1 crore. However, real estate is an illiquid asset and may not provide regular income unless rented or sold.

You can explore selling this property if it doesn’t generate regular cash flow.
Reinvest the proceeds into safer, more liquid instruments that provide monthly income.
Retirement Corpus and Monthly Income
At this stage, it's crucial to build a consistent monthly income stream to meet your expenses.

Look at investing a portion of your shares, mutual funds, or real estate sale proceeds into debt instruments.
Debt mutual funds, bonds, or government-backed schemes can provide a steady flow of income without high risk.
You need to evaluate your monthly expenses and match them with the income from investments. Based on your assets, there are several options that offer predictable returns:

Senior Citizens' Savings Scheme (SCSS): Offers regular income, government-backed, and safe.
Debt Funds: These are relatively safe mutual funds focusing on fixed-income securities.
Monthly Income Plans (MIPs): These are hybrid mutual funds designed to give regular income, ideal for retirees.
These options can ensure that you have a regular monthly income to meet your lifestyle needs without depending on volatile assets like shares.

Emergency Fund Planning
You should keep aside 1-2 years’ worth of expenses in a very liquid form. This ensures you are prepared for any unexpected emergencies without liquidating long-term assets.

Liquid funds or bank fixed deposits can be a suitable place to park these emergency funds.
It will give you quick access to money, should the need arise.
Health Insurance Review
You currently have health insurance of Rs 7 lakh. At your age, healthcare expenses can rise, so reviewing your health cover is essential.

I recommend increasing your coverage to at least Rs 15-20 lakh.
You can do this by either upgrading your existing policy or taking a top-up plan.
Healthcare expenses are unpredictable and can put a strain on your savings. A larger health cover can protect your retirement corpus from being eroded.

Plan for Your Wife
Since your wife is a homemaker, it is important to ensure that she has financial security. If anything were to happen to you, she must have access to regular income and health coverage.

You can consider setting up joint investment accounts with your wife.
Ensure that your will and nominations are up to date.
Also, review her health insurance separately. Since she is 60 years old, it’s important that she has adequate cover in case of emergencies.

Structuring Your Retirement Income
Given the wide range of assets you have, structuring them properly is key to meeting your retirement goals. Here's how you can proceed:

Short-term needs (1-3 years): Keep money in highly liquid assets like bank FDs or liquid funds for emergencies.

Medium-term needs (3-10 years): Invest in debt mutual funds, bonds, or SCSS for regular income.

Long-term needs (10-15 years): Keep a portion of your shares and mutual funds invested for growth, but gradually move some into safer instruments.

Inflation Protection
You must also account for inflation in your retirement planning. Inflation will erode the value of your savings over time.

Consider keeping a portion of your funds invested in growth-oriented assets like mutual funds.
Gold also acts as a hedge against inflation, so maintaining some of your gold holdings will help.
Estate Planning
Since you own significant assets, it’s important to ensure a smooth transfer to your heirs.

Create a will if you haven’t already.
Review your nominations in all investment accounts and insurance policies to avoid legal complications.
You should ensure that your son, daughter, and wife are clear about your financial plans. This will help them manage assets if you are no longer able to.

Finally
You are in a strong financial position, but retirement requires careful planning. Diversifying your assets into more stable, income-generating options will give you the peace of mind that your money will last for the rest of your life.

Consider reducing exposure to volatile assets like shares.
Ensure regular monthly income through safer investments like debt mutual funds and senior citizen schemes.
Increase your health insurance cover to protect against rising healthcare costs.
By structuring your investments properly and making adjustments where necessary, you can ensure that you enjoy a comfortable retirement without worrying about outliving your savings.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8272 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 08, 2025

Money
Hello sir, I am a 42 year old, have a dependend wife and 10 yr old daughter (5 STD). I have a monthly income of 2.25 lakh in hand. Monthly expenses 70k. I have no debts and I am staying in my own flat. I invested 1 lakhs in equity stocks, 16 lakhs in MF lumpsum, 13 lakh in FD and 10 lakh in NSC. Till date my PF is 27 lacs. I pay 40,000 SIP monthly starting from 2023, pay PPF 1.5 lacs p.a.from 2022, pay NPS 1.3 lacs p.a from 2022 and pay SSY 1.5 lacs p.a.from 2020 and PPF for wife 1 lacs p.a from 2022 and PPF for daughter 50k p.a.from 2023. Family medical insurance of 10 lacs.. and myself term insurance of 50 lakhs and LIC of 10 lakhs. Also I purchased LIC Child Money back of 10 lacs and SBI smart chap 5 lacs for my daughter education. I want to plan my retirement at the age of 55. How should i plan my retirement 3 cr corpus??
Ans: Your financial situation is stable, with multiple investments and no liabilities.

Income: Rs. 2.25 lakh per month offers strong savings potential after expenses.

Expenses: Rs. 70,000 per month leaves ample room for investments.

Existing Investments: Equity stocks (Rs. 1 lakh), mutual funds (Rs. 16 lakh), FD (Rs. 13 lakh), NSC (Rs. 10 lakh), and PF (Rs. 27 lakh) form a diversified base.

Ongoing Commitments: SIP of Rs. 40,000, PPF contributions, and NPS add regular growth.

Insurance Coverage: Adequate health insurance (Rs. 10 lakh) and term insurance (Rs. 50 lakh).

Defining Your Retirement Goal
You aim for a Rs. 3 crore corpus by age 55. Consider inflation and lifestyle needs.

Inflation Impact: Rs. 3 crore today might not suffice in 13 years due to inflation.

Monthly Expenses: Rs. 70,000 now could double to Rs. 1.4 lakh due to 6% inflation.

Longevity Planning: Plan for a 30-year post-retirement period to ensure financial security.

Evaluating Current Investments
Equity Stocks: Rs. 1 lakh is a small allocation. Consider diversifying into mutual funds.

Mutual Funds: Rs. 16 lakh in lump sum and Rs. 40,000 SIP build growth over time.

Fixed Deposits: Rs. 13 lakh ensures safety but offers low returns.

National Savings Certificate (NSC): Rs. 10 lakh provides stability but lacks flexibility.

Provident Fund: Rs. 27 lakh builds wealth steadily, given your regular contributions.

PPF and NPS: Long-term instruments aligned with retirement goals.

SSY for Daughter: Rs. 1.5 lakh annually ensures her education expenses are planned.

Insurance Policies: LIC and child plans provide minimal returns; consider alternatives.

Key Recommendations for Retirement Planning
Optimising Investments
Increase SIP Amount: Gradually raise your SIP to benefit from compounding and market growth.

Focus on Equity Funds: Actively managed funds can generate higher returns compared to index funds.

Reduce FD Dependence: Move a portion of FDs into balanced mutual funds for better returns.

Exit Traditional Plans: Consider surrendering LIC and SBI child plans to reinvest in high-growth mutual funds.

Build Emergency Fund: Maintain 6–12 months' expenses in liquid funds or savings accounts.

Enhancing Retirement Corpus
Leverage NPS: Increase contributions to benefit from tax savings and market-linked returns.

Continue PPF Contributions: This offers tax benefits and secure, inflation-beating returns.

Diversify Equity Allocation: Explore mid- and small-cap funds for higher growth potential.

Tax Efficiency: Plan withdrawals carefully to minimise capital gains taxes.

Securing Post-Retirement Income
Systematic Withdrawal Plans (SWP): Use SWPs for a steady, tax-efficient post-retirement income.

Debt Funds: Consider debt funds for predictable, stable returns during retirement.

Hybrid Mutual Funds: These balance growth and stability, suitable for retirement years.

Rebalance Regularly: Adjust equity and debt allocations annually as retirement nears.

Planning for Daughter’s Education
SSY Continuation: Ensure contributions continue till maturity for her education needs.

Mutual Funds for Education: Invest in diversified mutual funds for additional education corpus.

Avoid Traditional Plans: LIC and child policies may underperform compared to mutual funds.

Protecting Against Risks
Health Insurance: Increase family health coverage to at least Rs. 20 lakh to cover rising medical costs.

Term Insurance: Ensure term insurance coverage matches your family’s financial needs.

Inflation-Proofing: Allocate part of the retirement corpus to equity for inflation-adjusted growth.

Emergency Fund: Keep funds easily accessible for unexpected expenses.

Final Insights
Your financial foundation is strong, and your retirement goal is achievable with better planning. Focus on optimising investments, ensuring inflation-adjusted returns, and securing your family’s future. Regular reviews with a certified financial planner will ensure alignment with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Asked by Anonymous - Apr 22, 2025Hindi
Money
Dear Sirs Please review my investment towards 7.5 CR. There are 2 components towards it , 1) Generate monthly income post tax of 4 lakhs, 2) Investment Corpus Towards Capital appreciation Towards option 1 : Investing in the following - a) Tata Motors or Chola Perpetual Bonds 1.4 cr , b) ICICI Balanced Advantage Fund 1cr, c) Kotak Balanced advantage fund 1 cr Towards option 2 ie Capital Appreciation investing in the following - a) HDFC Flexi Cap Equity fund 1.25 cr , b) Parag Parikh Flexi Cap Equity Fund 1.25 cr, c) ICICI Prudential India Opportunities Fund 80 Lakhs, d) ICICI Prudential Multi asset fund 80 lakhs I am looking at a 5 - 7 year investment timeline. Have taken early retirement at 50 years and need the funds to sustain myself. Please also advise if Perpetual bonds is a good option Thanks
Ans: Your investment strategy is thoughtfully constructed. You’ve clearly defined two components:

Monthly income of Rs. 4 lakhs

Capital appreciation with a horizon of 5 to 7 years

Let’s assess each component carefully and suggest improvements.

 

 

Monthly Income Generation Plan – Review and Insights
 

You’ve allocated the following towards income generation:

Perpetual Bonds – Rs. 1.4 crore

Two Balanced Advantage Funds – Rs. 2 crore

 

Let us look at the key strengths and areas to optimise.

 

Perpetual Bonds – Risk and Suitability

These bonds are issued with no maturity date.

Issuers can delay interest payments if they face pressure.

Tata Motors or Chola bonds offer high interest, but risk is also higher.

You need dependable income. Perpetuals may cause delays or cuts.

If rated ‘AA’ or lower, risk becomes even higher.

For safety, consider shifting part to high-rated corporate bonds.

Choose instruments with a defined maturity or high credit rating.

 

 

Balanced Advantage Funds – Regular Payout Source

You have allocated Rs. 2 crore to two funds here.

These are suitable for monthly SWP (Systematic Withdrawal Plan).

They reduce risk by shifting between equity and debt.

This provides smoother return and helps handle market volatility.

Ideal for your need of steady income.

Choose funds with a good track record of 5+ years.

Go for regular plans through a Certified Financial Planner.

They provide guidance and documentation support.

 

 

Key Adjustments to Consider for Income Plan

Don’t depend only on one instrument for income.

Keep part in ultra-short debt funds to manage emergency needs.

You may also allocate a small amount to floating rate funds.

Avoid riskier perpetuals if your lifestyle depends on this cash flow.

 

 

Capital Appreciation Portfolio – Review and Suggestions
 

You have allocated Rs. 4.1 crore across four funds:

Two Flexi Cap Funds – Rs. 2.5 crore

One Thematic Fund (Opportunities) – Rs. 80 lakhs

One Multi Asset Fund – Rs. 80 lakhs

 

This section looks well-structured. Still, here are some observations.

 

Flexi Cap Funds – Long Term Growth Drivers

These offer a mix of large, mid and small cap stocks.

Flexible allocation helps in market ups and downs.

You have spread Rs. 2.5 crore across two flexi caps.

It gives diversified equity exposure.

Good for your 5–7 year horizon.

Continue this investment.

 

 

Thematic Opportunities Fund – Aggressive but Focused

Thematic funds bet on specific trends.

They can perform well in short cycles.

But they are more volatile.

Rs. 80 lakhs is a high amount in one theme.

Reduce this to Rs. 50 lakhs.

Redirect balance to diversified equity or large-cap funds.

 

 

Multi Asset Fund – Helps Manage Volatility

These funds invest across equity, debt, and gold.

They balance returns with risk.

Ideal for medium-term wealth building.

You can continue this allocation.

Add a second multi-asset fund for balance.

 

 

Direct Plan Exposure – Re-evaluate for Personalised Support

Direct plans avoid distribution cost.

But guidance is missing.

Without CFP support, wrong fund choice or exit may happen.

Regular plans through a Certified Financial Planner give tracking.

They help during market swings, taxation and rebalancing.

This becomes very important in large-value portfolios.

 

 

Asset Allocation Review – What’s Working and What Needs Tune-Up
 

Your allocation is roughly:

45% towards income (Rs. 3.4 crore)

55% towards growth (Rs. 4.1 crore)

This mix looks aligned to your goal of current income and future corpus.

Still, consider the following:

 

Review this mix yearly with your Certified Financial Planner

If market rallies too much, shift some growth to income

If interest rates rise, reduce equity withdrawal and increase debt

Keep Rs. 25–30 lakhs in liquid fund for any large emergency

 

 

Taxation on Mutual Funds – Stay Aware of Recent Rules
 

Equity mutual funds:

LTCG above Rs. 1.25 lakh is taxed at 12.5%

STCG is taxed at 20%

 

Debt mutual funds:

Both LTCG and STCG taxed as per your tax slab

Most retirees fall in lower slab but tax planning still needed

Prefer SWP for income, not dividend option

Keep P&L statement ready for advance tax filing

 

 

Tax-Free Cash Flow – Can You Improve It?
 

You can also look at these steps:

Use HUF or family member’s name for part investment

Income from their investment gets taxed in their slab

Helps reduce your tax burden

Invest Rs. 1.5 lakh yearly in PPF for guaranteed, tax-free return

Can also explore Senior Citizen Savings Scheme (SCSS) if eligible

 

 

Avoid Index Funds – Not Suitable for Your Stage
 

Index funds copy the stock market

They don’t adjust based on conditions

There’s no downside protection in falling markets

Actively managed funds give more opportunity to earn and protect

Your current selection rightly avoids index funds

 

 

Avoid Direct Plans Without Support
 

Direct plans don’t include expert guidance

No one checks asset allocation or strategy alignment

You’re investing a large corpus. Mistakes cost more here

Use regular plans via an experienced Certified Financial Planner

They help in paperwork, KYC, taxation, SWP planning, rebalancing

Their personalised help adds more value than small cost savings

 

 

Perpetual Bonds – Should You Continue or Exit?
 

Not the best for regular income seekers

Issuer can skip interest if company faces pressure

Price of these bonds also swings with interest rates

You can’t rely fully on them for Rs. 4 lakh per month

Exit partly and shift to short-duration or banking PSU debt funds

These are better for predictable income with lower risk

 

 

Review of Liquidity and Emergency Planning
 

At least Rs. 30–35 lakhs should be in liquid or overnight funds

This money is for health, family needs or urgent situations

Don’t touch your income or capital funds for this purpose

This buffer will give you confidence and reduce portfolio risk

 

 

Risk Management – How to Prepare for Unseen Events
 

Review health insurance for self and spouse

If you’ve not already done it, get Rs. 25 lakh cover each

Consider critical illness policy to protect against long illness

Update nominations in all funds and accounts

Keep estate plan or Will ready. Talk to your planner on this

 

 

Rebalancing Strategy – Keep it Dynamic
 

Review portfolio every 6 months

Don’t chase top-performing funds blindly

Instead, rebalance as per your income need and age

Reduce equity by 5% every 2 years as you age

This protects corpus and supports steady cash flow

 

 

Finally
 

You’ve structured your Rs. 7.5 crore goal very thoughtfully

You are clear about income and long-term appreciation

Your fund choice is broadly good, with only minor changes needed

Avoid risky bonds like perpetuals as your lifestyle depends on monthly cash flow

Go for actively managed regular funds via Certified Financial Planner support

Keep tax, liquidity, insurance and emergency planning all in place

This will help you enjoy your retirement peacefully and confidently

 

 

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.

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