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Ramalingam Kalirajan |11135 Answers |Ask -Follow

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

Hello I am 46 years old. Currently my portfolio stands at: MF 1.25Cr, Stocks 3L, PPF 19L, SGB - 1L, FD 4L, NPS 4L. Other than this EPF is at 38L. These investments are in mine and my spouse's name with 80% an 20% split, where I plan to use 80% for retirement and remaining 20% for kids education and future expenses. My daughter is now in 10th std and son in 5th std. My monthly SIP in MF is 1.7L (predominantly active and direct growth equity funds across categories) and NPS is 50k (25k voluntary and 25k as corporate contribution with an active choice of 75% E, 15% G and 10% C schemes). I have started SIP in MF from 2018 and year on year increasing approx 10% as step up. But I have started NPS only last year considering the tax treatment changes to LTCG and New Regime calculations. My PPF will end by next year and planning to extend for another 5 years. PPF in spouse's name will continue for another 11 years. For the past couple of years, investing 1.5L on 1st to 5th of April month in both of our account to get the full year interest benefit. I use the yearly bonus for this purpose. Also I am not interested in real estate and physical gold or silver. I have a car with corporate car lease where the EMI is 60K. Post this I get a take home of 2.5L per month. I have home loan EMI of 28K for another 3 years. My current expenses is in the range of 50 to 75k per month. Beside these, I have a term insurance plan for 5Cr with 2Cr additional riders and 10L health insurance for me and my daughter. For now, no separare health insurance for my spouse and son, apart from the office health insurance plan. In this scenario, what changes I need to make in the portfolio to grow faster to achieve financial freedom in another 5 to 7 years? I am interested in financial planning, so also thinking to do CFP certification. Will it help me to define a career post retirement for a passive income? Please advise.

Ans: You are already doing very well at 46. A strong MF base of Rs 1.25 crore, disciplined SIP of Rs 1.7 lakh monthly, NPS contributions, PPF usage, EPF balance, term insurance cover, and health cover for self and daughter. You are also clear about no interest in real estate or physical gold. This shows high clarity and discipline. Wanting financial freedom in 5–7 years is ambitious, but possible with some adjustments.

» Present financial standing
– Mutual funds stand at Rs 1.25 crore, mostly equity active funds.
– Stocks of Rs 3 lakh, SGB of Rs 1 lakh, FD of Rs 4 lakh.
– PPF of Rs 19 lakh, EPF of Rs 38 lakh.
– NPS balance of Rs 4 lakh with 75% equity choice.
– SIP of Rs 1.7 lakh monthly, with 10% yearly step-up since 2018.
– NPS contribution of Rs 50,000 monthly, split between voluntary and corporate.
– Home loan EMI of Rs 28,000, ending in three years.
– Car lease EMI of Rs 60,000.
– Monthly expenses are Rs 50,000 to Rs 75,000.
– Health insurance of Rs 10 lakh for self and daughter.
– Spouse and son are covered only under office health insurance.
– Term cover of Rs 5 crore with Rs 2 crore riders.

» Strengths of your portfolio
– High commitment to SIPs and step-up plan since 2018.
– Good spread across PPF, EPF, and NPS for stability.
– Adequate term insurance cover for family protection.
– Balanced use of debt products like PPF and EPF for risk control.
– Discipline in yearly PPF deposits early in April.
– Strong cash flow management despite EMIs.

» Weak areas to improve
– Overreliance on direct mutual funds.
– Direct funds look cheaper, but lack advisory support.
– Without a Certified Financial Planner, rebalancing can be delayed.
– Market cycles may tempt you to react emotionally.
– Regular plans through MFD with CFP guidance give better handholding.
– Lack of separate health cover for spouse and son.
– Overconcentration in equity may cause stress if market falls during retirement phase.

» Mutual fund allocation strategy
– Equity funds should remain the core of your plan.
– But add proper diversification across large, flexi, mid, and small caps.
– Avoid index funds, as they blindly follow the market.
– Index funds cannot protect downside or adjust risk.
– Active funds can use research to create higher returns over long term.
– Keep increasing SIP yearly, even after retirement target is in sight.
– When you near goal, start shifting part of corpus to debt funds.
– This reduces the risk of market correction just before freedom.

» NPS strategy
– Current choice of 75% equity, 15% G, 10% C is aggressive.
– Since your horizon is only 5–7 years, you may reduce risk gradually.
– Over next three years, lower equity exposure to around 60%.
– This protects retirement funds against sudden equity fall.
– NPS will remain locked till 60, so do not depend on it for early retirement.
– Treat NPS as a secondary retirement reserve, not the main driver.

» PPF and EPF usage
– PPF maturity is next year, you plan to extend. Good decision.
– Continue five-year extensions in your name and spouse’s.
– These will act as safe debt allocation in your portfolio.
– EPF balance of Rs 38 lakh is very strong.
– Continue EPF till retirement, as it gives guaranteed growth and safety.
– Do not withdraw EPF early, let it grow steadily.

» Loan repayment and cash flow
– Home loan EMI ends in three years.
– This will free Rs 28,000 monthly for investments.
– Redirect full EMI amount into SIPs when loan closes.
– Car lease EMI is Rs 60,000, which is heavy.
– Ensure it is only for limited tenure, not long-term habit.
– After lease ends, avoid another high EMI for cars.
– Use that cash flow also for wealth creation.

» Health insurance protection
– Current Rs 10 lakh cover is good but not sufficient for whole family.
– Corporate health cover is not permanent, it ends with job change or retirement.
– Buy a separate family floater health plan for spouse and son.
– Add a super top-up policy of Rs 20–30 lakh to strengthen total coverage.
– Medical inflation is very high, so this step is critical.

» Children’s education and future needs
– Daughter is in 10th standard, son is in 5th standard.
– Higher education expenses will come within next 2–7 years.
– Allocate 20% of portfolio towards this goal, as you planned.
– Shift this 20% gradually into safer debt funds as children near education years.
– This ensures funds are available on time without risk of equity fall.

» Taxation awareness
– Equity mutual funds: LTCG above Rs 1.25 lakh is taxed at 12.5%.
– Short-term equity gains are taxed at 20%.
– Debt mutual funds are taxed as per income slab.
– Plan redemptions for education and retirement keeping tax rules in mind.
– Spread redemptions across financial years where possible to save tax.

» Career and CFP certification
– You are clearly interested in financial planning concepts.
– Doing CFP certification will give deep structured knowledge.
– It can also give you a second career after retirement.
– You can work as a Certified Financial Planner and earn advisory income.
– This is not passive income, but flexible and client-based.
– It will keep you engaged intellectually, while giving extra cash flow.
– It is a strong choice if you enjoy analysis and helping others.

» Risk management and rebalancing
– Review portfolio allocation every year.
– Reduce equity allocation gradually as you near target freedom.
– Keep debt at least 35% by age 55.
– This gives stability during withdrawals.
– Do not chase only high returns, balance safety and growth.
– Discipline in rebalancing is more important than chasing best returns.

» Finally
– You are on an excellent path with high savings and strong discipline.
– Direct mutual funds should be shifted to regular with CFP guidance.
– NPS equity share should be reduced gradually for safety.
– Health cover must be expanded for spouse and son.
– Continue PPF extension and keep EPF untouched till retirement.
– Redirect loan EMIs into SIPs once debt is closed.
– Plan 20% of corpus for children’s education, shift to safer assets in time.
– Rebalance portfolio yearly to control risk.
– CFP certification will help you build a meaningful second career.
– Financial freedom in 5–7 years is possible with your current pace.
– With the right adjustments, you can retire early with strong security.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,
www.holisticinvestment.in

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

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