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Ramalingam Kalirajan |10872 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 29, 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 29, 2025Hindi

Hello, I am 42 years old with two daughters (7 years old & 2 months old). I want to plan for their education, marriage & my retirement. Currently I have 10 lakhs in Mutual Funds, FD of 4 lakhs, term insurance of 50 lakhs, health insurance. I am self employed and my business has gone down is past one year. I am earning only 40-50k per month right now. I have following insurances running: Me & my wife have 3 LIC running for which I am paying 1.1 lakh premium per annum. These 3 LIC will mature by 2033 and we will get near about 35 lakhs. HDFC Life ULIP plan - 50k premium to be paid for 2025 & 2026. Taken in 2022. 5 year payment plan. Can withdraw after Dec 2027. Pramerica Life Insurance - 58k premium - left for 3 years. Taken in 2018 for my elder daughter. Payment plan of 10 years and maturity is in 2038. will get nearly 13 lakhs. I have bought another LIC New Jeevan Labh Plan for my wife 2 years back for which premium of 70000 per annum is being paid. Payment to be paid for 16 years and policy will mature in 2049 and approx. 40 lakhs will be paid after maturity. I have few loans running.. Car loan Emi 14389 for next 5 years personal loan of 2.5 lakh - emi - 6600 (9 installments pending) personal loan of 3 & 1.5 lakh - emi - 11300 (42 installments pending) CC pending - 2.5 lakhs How do I manage my finances and also plan for future. Currently I am too much cash burdened.

Ans: – You are taking financial planning seriously at the right time.
– You have already secured health and life cover, which is very important.
– You have also started mutual fund investments, which shows good awareness.
– Despite reduced income, you are focused on family’s future. This deserves appreciation.

» Current Income and Cash Flow Stress
– Your present income of Rs.40,000–50,000 is limiting cash flow.
– Fixed EMIs and high insurance premiums are creating heavy pressure.
– This leaves very little margin for fresh investments or emergencies.
– Immediate focus must be on reducing this monthly burden.

» Evaluation of Existing Insurance Policies
– You already hold term insurance of Rs.50 lakh, which is good.
– Other policies like LIC, ULIP, and endowment plans are eating cash flow.
– They combine insurance with investment, but returns are low and locking period is long.
– Current premiums: Rs.1.1 lakh LIC + Rs.50,000 ULIP + Rs.58,000 Pramerica + Rs.70,000 Jeevan Labh.
– Total yearly premium is too high compared to your income.
– These policies are making you cash-strapped without delivering efficient returns.

» Recommended Action on Policies
– Term insurance must be continued. It is the most cost-effective protection.
– LIC policies, ULIP, and Jeevan Labh are investment-cum-insurance.
– They give long-term maturity, but very low returns compared to mutual funds.
– You are paying heavy premiums which can be better deployed.
– It is wise to surrender or make these policies paid-up.
– Reinvest the released money into diversified mutual funds through a Certified Financial Planner.
– Regular funds through a CFP give professional monitoring, discipline, and handholding.
– ULIPs have high charges and low flexibility till lock-in.
– Pramerica and Jeevan Labh too are long-dated with limited growth potential.

» Analysis of Debt Burden
– Car loan EMI is Rs.14,389 for 5 more years.
– Personal loans total nearly Rs.7.1 lakh with EMIs of Rs.17,900 approx.
– Credit card outstanding is Rs.2.5 lakh, which is very costly debt.
– EMI plus insurance premium is eating away almost all your monthly income.
– Managing debt should be your immediate priority.

» Debt Management Roadmap
– First, target clearing credit card outstanding as interest rate is very high.
– Use any surplus, bonus, or liquidation of non-performing policies for this.
– Next, clear the small personal loan with 9 months pending.
– Once smaller loans are gone, cash flow will slightly ease.
– Avoid prepaying car loan now, as it is long-term and secured.
– Ensure no new loans are taken until current ones are cleared.

» Mutual Fund Investment Assessment
– You already have Rs.10 lakh in mutual funds.
– This is a strong base for long-term wealth creation.
– Continue these investments without disturbing them, as they grow well over time.
– Actively managed mutual funds, through regular plan with CFP guidance, are more beneficial.
– Index funds lack human judgment and may underperform in volatile markets.
– Actively managed funds bring expert decisions, rebalancing, and better chances of higher growth.

» Fixed Deposit Position
– You have Rs.4 lakh in FD.
– FD offers safety but lower returns, not enough to beat inflation.
– This money can act as emergency reserve for now.
– Avoid breaking it unless there is debt emergency.

» Education Goal for Daughters
– Elder daughter has 11 years until higher education.
– Younger daughter has 18 years until higher education.
– Both goals need inflation-beating investments.
– Mutual funds are the most suitable option for this time horizon.
– You may start goal-based SIPs once debt is cleared and income improves.
– For now, continue with existing MF corpus and avoid withdrawals.

» Marriage Goal for Daughters
– Elder daughter’s marriage will be around 20–25 years from now.
– Younger daughter’s marriage will be around 25–30 years from now.
– Such long horizons require equity-oriented mutual funds.
– These can compound wealth strongly over 20–30 years.
– Again, regular plan with CFP guidance gives disciplined progress and monitoring.

» Retirement Planning Needs
– At age 42, you have about 18 years to retirement.
– Your business income is not stable, so retirement plan becomes more important.
– Mutual funds are suitable for this long-term goal as well.
– Retirement goal should not be compromised while focusing on education and marriage.
– But immediate priority remains debt clearance and easing cash flow.
– Once debt is under control, restart SIPs towards retirement.

» Insurance Protection Adequacy
– Term cover of Rs.50 lakh is moderate but may not be enough for two children.
– Ideal cover should be around 15–20 times your annual income plus liabilities.
– As income improves, increase term insurance cover gradually.
– Health insurance is already in place, which is very good.
– Avoid taking any more investment-linked insurance plans.

» Importance of Cash Flow Discipline
– Right now, insurance premiums and EMIs are overloading monthly budget.
– By reducing or surrendering policies, you will free up cash.
– This freed cash can be redirected towards systematic investments.
– Create a strict budget and track monthly spending.
– Avoid lifestyle expenses until debt pressure reduces.

» Tax Planning Aspects
– Mutual funds are tax efficient compared to insurance policies and FDs.
– New taxation for equity funds: LTCG above Rs.1.25 lakh taxed at 12.5%.
– STCG taxed at 20%.
– Debt funds taxed as per income slab.
– Still, after-tax returns from MFs are higher than insurance maturity benefits.
– Insurance maturity is mostly taxable if not a pure term cover.

» Regular Funds vs Direct Funds
– Direct funds may look cheaper due to lower expense ratio.
– But they demand your active monitoring, research, and rebalancing.
– This is risky given your business and family commitments.
– Regular funds via Certified Financial Planner provide professional oversight.
– CFP ensures goal tracking, discipline, and timely switches.
– This gives higher long-term value than saving a small cost on direct funds.

» Psychological Relief of Streamlining Finances
– Heavy policies and loans create stress and worry.
– Streamlining by surrendering low-return policies gives mental peace.
– Reducing debt will also free your mind for business growth.
– With clear goals and SIP planning, you will gain confidence.
– Every small step in this direction adds long-term security.

» Family Security in Case of Emergency
– Term plan ensures family’s protection in case of any mishap.
– Health cover prevents medical costs from eating into savings.
– Emergency fund in FD acts as backup for unexpected expenses.
– These three give a strong protection base for your family.

» Finally
– Immediate step: Focus on debt clearance and reducing premium burden.
– Make existing policies paid-up or surrender and shift to mutual funds.
– Do not touch existing MF corpus; let it compound.
– Maintain FD as emergency reserve until income grows.
– Gradually increase SIPs in actively managed regular funds.
– Education, marriage, and retirement goals are achievable with proper cash flow management.
– Hope is strong, because you already took good first steps.
– With right discipline, you can rebuild financial stability and long-term wealth.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

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