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Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 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
Shaily Question by Shaily on Jun 16, 2024Hindi
Money

Hello All. I am 46 and my earning is 40k pm. . I have investment in various equity and sgb of around 1lac. I have around 5lac in bank. What can do so that I can buy flat or plot in coming years.

Ans: At 46, with a monthly income of Rs 40,000 and a goal to buy a flat or plot, it's essential to plan strategically. Let's explore the steps to help you achieve this goal.

Understanding Your Financial Situation
Income and Savings

Your monthly income is Rs 40,000. You have Rs 1 lakh invested in equity and SGBs, and Rs 5 lakh in the bank.

Expenses and Savings Rate

Understanding your monthly expenses will help determine your savings rate. Aim to save at least 20-30% of your income, i.e., Rs 8,000 to Rs 12,000 monthly.

Setting Clear Financial Goals
Primary Goal

Save enough to buy a flat or plot in the coming years. Determine the approximate cost of the property you wish to purchase.

Secondary Goals

Ensure financial security for emergencies, retirement, and other long-term needs.

Building an Emergency Fund
1. Emergency Fund

Maintain an emergency fund covering 6-12 months of expenses. This will safeguard you against unexpected financial setbacks.

2. Liquid Assets

Keep this fund in liquid assets like a savings account or short-term fixed deposits for easy access.

Optimizing Your Investments
1. Equity Investments

You have Rs 1 lakh in equity and SGBs. Continue investing in these for long-term growth. Equity can provide higher returns over time.

2. Bank Savings

Your Rs 5 lakh in the bank is a good start. However, bank savings offer low returns. Consider moving some funds to higher-yield investments.

Monthly Investment Strategy
1. Systematic Investment Plan (SIP)

Start SIPs in mutual funds. Invest Rs 8,000 to Rs 12,000 monthly. Choose a mix of large-cap, mid-cap, and small-cap funds for diversification.

2. Gold Investments

Continue with SGBs as part of your investment portfolio. Gold can act as a hedge against inflation and economic uncertainty.

Loan Repayment Strategy
1. Avoid Unnecessary Debt

Avoid taking on high-interest debt. Focus on saving and investing rather than borrowing.

2. Efficient Loan Management

If you need to take a loan for the property, plan for a manageable EMI. Aim for a tenure that balances EMI and interest payments effectively.

Enhancing Your Income
1. Side Income Opportunities

Explore ways to increase your income. This could be through freelance work, part-time jobs, or leveraging any skills you have.

2. Skill Development

Invest in learning new skills that can help you get a better-paying job or a promotion. This can significantly boost your income.

Tax Planning
1. Tax-saving Investments

Maximize your tax-saving investments under Section 80C, like PPF, EPF, and ELSS (Equity Linked Savings Scheme). This will help reduce your tax liability.

2. Tax-efficient Returns

Opt for investments that offer tax-efficient returns. For example, long-term capital gains from equity mutual funds are taxed favorably.

Retirement Planning
1. Retirement Corpus

While your immediate goal is buying a property, ensure you also save for retirement. A diversified portfolio can help build a substantial retirement corpus.

2. Retirement Accounts

Continue with EPF and PPF, and consider investing in the National Pension System (NPS) for additional retirement savings.

Children's Education and Future Needs
1. Education Fund

If you have children, start a dedicated investment plan for their education. SIPs in equity mutual funds can help accumulate a significant corpus over time.

2. Future Expenses

Plan for future expenses like children's marriage or any other significant financial commitments. SIPs and long-term investments can aid in this.

Role of Certified Financial Planner (CFP)
1. Professional Guidance

Consulting a CFP can provide personalized advice and help in optimizing your investment strategy. They can guide you in selecting the right funds and managing your portfolio.

2. Regular Reviews

A CFP will regularly review your portfolio, ensuring it remains aligned with your goals and market conditions.

Benefits of Regular Funds Over Direct Funds
1. Expert Management

Regular funds offer expert management and advice, which can lead to better investment decisions and optimized returns.

2. Convenience

Your CFP handles all the paperwork, portfolio reviews, and rebalancing, providing convenience and peace of mind.

3. Cost vs. Benefit

The slightly higher expense ratio of regular funds is justified by the professional guidance and better portfolio management they offer.

Achieving Your Property Purchase Goal
1. Consistent Investments

Invest consistently in mutual funds through SIPs. Rs 8,000 to Rs 12,000 monthly for several years can grow significantly with compounding.

2. Higher Returns

Equity mutual funds can provide higher returns over the long term compared to traditional investments like FD or PPF.

3. Disciplined Approach

Maintain a disciplined approach to investing. Avoid high-risk investments and focus on long-term growth.

Final Insights
Your goal of buying a flat or plot in the coming years is achievable with a structured and disciplined investment plan. Focus on mutual funds, avoid unnecessary debt, and regularly review your portfolio. Consulting a Certified Financial Planner can provide valuable guidance and help you stay on track to meet your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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 Kalirajan  |6568 Answers  |Ask -

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

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Hello Sir. I'm 34, married and currently employed in Govt. sector with ~90k gross salary. Present investments include LIC policies worth 60k/year in me and my spouse's name, LIC policy worth 70k/year in my 3 yo daughter's name, PLI 70k/year, NPS 1.20 lac/year, mutual funds with value worth 5.8 lac, PPF with value at 80k and several other small investments. I live in parent's house and have not invested in land/house anywhere. I don't have any loans ongoing and credit card usage is minimal. I have approximately 3 L cash in hand and need to save for purchasing a property in short term. Kindly guide if I am on the right path and what else can I do to make my dream come true. With regards, Aamir
Ans: Dear Aamir,

Thank you for sharing your financial details with me. It's evident that you've made some thoughtful investments and are taking steps towards securing your financial future.

Firstly, I must commend you on your disciplined approach to savings and investment. Your commitment to contributing towards LIC policies, PLI, NPS, mutual funds, and PPF reflects your proactive attitude towards long-term financial planning.

Your decision to live in your parent's house and minimize credit card usage demonstrates a prudent approach to managing expenses and avoiding unnecessary debt. It's essential to maintain this financial discipline to ensure stability and security in the long run.

Now, let's address your goal of purchasing a property in the short term. Given your current cash reserves and investment portfolio, you're in a good position to work towards this objective. Here are some suggestions to help you achieve your dream:

• Continue Investing Wisely: Keep up with your regular contributions towards LIC policies, PLI, NPS, mutual funds, and PPF. These investments will continue to grow over time and provide you with a stable financial foundation.

• Build a Dedicated Property Fund: Since you have a specific goal of purchasing a property, consider creating a separate savings fund specifically earmarked for this purpose. Allocate a portion of your monthly savings towards this fund to accumulate the required down payment.

• Explore Additional Income Opportunities: Look for opportunities to increase your income, such as taking up part-time work, freelancing, or exploring alternative investment options. Additional income streams can accelerate your savings and help you reach your goal faster.

• Research Property Options: Start researching potential properties in your desired location and price range. Consider factors such as location, amenities, future appreciation potential, and financing options before making a decision.

• Review and Adjust: Regularly review your financial plan and make adjustments as needed based on changes in your circumstances or goals. Stay informed about market trends and investment opportunities to optimize your portfolio.

Remember, achieving financial goals requires patience, perseverance, and strategic planning. Stay focused on your objectives, and don't hesitate to seek professional guidance if needed.

Wishing you all the best in your journey towards purchasing your dream property!

..Read more

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Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 18, 2024

Asked by Anonymous - Jun 18, 2024Hindi
Money
Hi , I am 44 yrs old and having working wife and two son of 17 yrs & 5 yrs... elder son is down syndrom.. joint monthly take home is 2 lacs.. having 85 lacs of mutual fund.. 18 lacs in PPF, 32 lacs in EPF, & around 25 lacs in others like FD, saving, shares etc.. monthly saving around 1.2 lacs including 75K SIP, 18K PPF, 25K EPF etc... Having Own home at my native place.... Want to know that should I go for new Flat purchase at location where I am residing in rented house of monthly 14K excluding electricity or continue my investment in place of Home loan... I hv opted new tax slab and my wife is in old tax... my target to have 15 CR at the age of 60
Ans: Assessing Your Current Financial Situation
Income and Savings
Your combined monthly take-home income is Rs. 2 lakhs. Your current savings include:

Mutual Funds: Rs. 85 lakhs
Public Provident Fund (PPF): Rs. 18 lakhs
Employees’ Provident Fund (EPF): Rs. 32 lakhs
Other Investments (FD, Savings, Shares): Rs. 25 lakhs
Your monthly savings distribution is as follows:

SIP in Mutual Funds: Rs. 75,000
PPF: Rs. 18,000
EPF: Rs. 25,000
You live in a rented house with a rent of Rs. 14,000 per month.

Evaluating the Decision to Buy a New Flat
Current Housing Situation
Living in a rented house at Rs. 14,000 per month is relatively affordable, especially given your high monthly income. Renting provides flexibility and lower maintenance costs compared to owning.

Financial Impact of Buying a New Flat
Purchasing a new flat would involve a significant financial commitment, including a home loan, maintenance costs, property taxes, and other associated expenses. This would reduce your investable surplus and potentially impact your ability to meet your financial goals.

Comparative Analysis: Rent vs. Buy
Renting: Offers flexibility, lower upfront costs, and avoids long-term debt.
Buying: Provides stability and potential appreciation in property value but requires a large financial commitment and ongoing expenses.
Long-term Financial Goals
Target: Rs. 15 Crores by Age 60
To achieve your target of Rs. 15 crores by age 60, you need to focus on maximizing your investments' growth while maintaining a balanced risk profile.

Current Investments and Growth Potential
Mutual Funds: Your Rs. 85 lakhs in mutual funds can grow substantially with continued SIPs and market performance.
PPF and EPF: These provide stable, long-term growth with tax benefits, contributing to your retirement corpus.
Other Investments: FDs, savings, and shares add diversification but should be reviewed for optimal growth potential.
Investment Strategy
Enhancing SIP Contributions
Continuing and potentially increasing your SIP contributions will leverage the power of compounding. Focus on a mix of equity and debt funds to balance growth and risk.

Recommendation: Consider increasing your SIP by a percentage each year to keep pace with inflation and maximize returns.
Diversification and Rebalancing
Ensure your portfolio is diversified across various asset classes to minimize risk and optimize returns. Periodically review and rebalance your portfolio to stay aligned with your financial goals.

Recommendation: Include large-cap, mid-cap, and multi-cap funds for equity exposure. Balance with debt funds for stability.
Utilising Tax-efficient Investments
Maximize your contributions to tax-efficient instruments like PPF and EPF. These not only provide stable returns but also offer significant tax benefits.

Recommendation: Continue maximizing your PPF contributions and ensure your EPF contributions are optimized.
Emergency Fund Management
Maintaining a robust emergency fund is crucial. Your current Rs. 25 lakhs in FD and savings can be used to cover unexpected expenses.

Recommendation: Keep at least 6-12 months of living expenses in easily accessible liquid assets.
Estate Planning and Insurance
Life and Health Insurance
Ensure adequate life and health insurance coverage for your family, especially considering your elder son's needs. This will protect your family's financial stability in case of unforeseen events.

Recommendation: Opt for a comprehensive health insurance plan and term insurance for sufficient coverage.
Estate Planning
Create a comprehensive estate plan, including a will, to ensure your assets are distributed according to your wishes and your family is taken care of.

Recommendation: Consult a legal expert to draft a will and set up any necessary trusts.
Education and Future Planning for Children
Special Needs Planning
Given your elder son's Down syndrome, consider creating a financial plan that ensures his long-term care and support.

Recommendation: Look into setting up a special needs trust and explore government schemes and benefits available for children with disabilities.
Education Fund for Younger Son
Start a dedicated investment plan for your younger son's education. This can include child-specific mutual funds or education-focused investment plans.

Recommendation: Allocate a portion of your monthly savings towards an education fund.
Final Insights
Given your strong financial position and disciplined saving habits, you are well on your way to achieving your long-term goals. However, buying a new flat at this stage might not be the best financial decision if it significantly impacts your investment capacity.

Focusing on growing your investment portfolio and maintaining a balanced, diversified approach will help you accumulate the desired Rs. 15 crores by age 60. Ensuring adequate insurance coverage and planning for your elder son's special needs will further secure your family's future.

Stay disciplined with your investments, periodically review your portfolio, and make adjustments as needed to stay on track. Consulting with a Certified Financial Planner can provide personalized advice and help optimize your financial strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 2024

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Money
My monthly salary 60000. I have no any savings but right now I stay in rented house in Mumbai. I want purchase own flat Rs.60 Lakhs how’s is possible?
Ans: Current Financial Situation
Your monthly salary is Rs. 60,000. You live in a rented house in Mumbai. You have no savings currently.
Housing Goal
You want to buy a flat worth Rs. 60 lakhs. This is a big goal for your income level.
Challenges

Your income is limited compared to property prices in Mumbai
You have no existing savings to use as down payment
Mumbai real estate market is very expensive

Possible Strategies

Start saving aggressively from your salary each month
Look for ways to increase your income through side jobs
Consider more affordable areas in Mumbai's outskirts
Explore government housing schemes for first-time buyers
Look into home loan options from banks

Saving Plan

Aim to save at least 30-40% of your salary each month
Cut unnecessary expenses and create a strict budget
Start an automatic transfer to a separate savings account
Look for higher interest savings options like FDs

Increasing Income

Ask for a raise or promotion at your current job
Take on freelance work or a part-time job
Upgrade your skills to qualify for higher-paying roles

Home Loan Considerations

Most banks require 10-20% down payment
Your current income may not qualify for a Rs. 60 lakh loan
Work on improving your credit score for better loan terms

Government Schemes

Look into PMAY (Pradhan Mantri Awas Yojana) for subsidies
Check eligibility for Maharashtra Housing schemes

Timeline Expectations

Saving for down payment may take 3-5 years or more
Be patient and consistent with your savings plan
Property prices may change, so stay updated on market trends

Finally
Buying a Rs. 60 lakh flat on a Rs. 60,000 salary is challenging. Start saving, increase income, and explore all options. Stay focused on your goal.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6568 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 2024

Asked by Anonymous - Jul 27, 2024Hindi
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Money
I am 31 yrs old married and have 1 baby Wife and me both are working, total monthly income around @1.5lacs we are planning to buy a flat with loan amount of 70lacs Please share investment ideas ao that the i can own loan free flat and save decent amount of money in next 10 to 15 years
Ans: Financial Situation Overview

• Your combined monthly income of Rs. 1.5 lacs is impressive.
• Planning to buy a flat with a Rs. 70 lacs loan is a big step.
• Your goal to be loan-free in 10-15 years is smart.




Loan Repayment Strategy

• Consider a 15-year loan tenure for lower EMIs.
• Try to make extra payments whenever possible.
• Look for a loan with no prepayment penalties.




Investment Plan for Loan Repayment

• Start a separate investment fund for loan prepayment.
• Aim to invest 20-25% of your monthly income.
• Choose a mix of equity and debt mutual funds.




Equity Mutual Funds

• Invest in large-cap and multi-cap funds for steady growth.
• These funds can potentially give higher returns than your loan interest.
• Start Systematic Investment Plans (SIPs) for regular investing.




Debt Mutual Funds

• Include some short-term debt funds in your portfolio.
• These can provide stability and liquidity to your investments.
• Use these funds for periodic partial loan prepayments.




Tax-Saving Investments

• Maximize your Section 80C benefits (Rs. 1.5 lacs per year).
• Consider Equity Linked Saving Schemes (ELSS) for tax benefits.
• ELSS can also contribute to your loan repayment fund.




Emergency Fund

• Build an emergency fund of 6 months' expenses.
• Keep this separate from your loan repayment fund.
• Use a high-yield savings account or liquid funds for this.




Insurance Planning

• Get adequate term life insurance to cover the loan amount.
• Ensure you have proper health insurance for your family.
• Consider disability insurance to protect your income.




Child's Future Planning

• Start a separate investment for your child's future needs.
• Consider education-focused mutual funds for this purpose.
• Increase this investment as your child grows older.




Retirement Planning

• Don't neglect retirement planning while focusing on the loan.
• Start a small SIP in equity funds for long-term retirement goals.
• Increase this gradually as your income grows.




Budgeting and Expense Management

• Create a detailed monthly budget to track expenses.
• Look for areas where you can cut unnecessary spending.
• Use the saved money to increase loan prepayments or investments.




Regular Review and Rebalancing

• Review your investment portfolio every 6 months.
• Rebalance to maintain the right equity-debt mix.
• Adjust your strategy based on loan interest rates and market conditions.




Finally

• Your plan to be loan-free is commendable. Stay focused!
• Balance between loan repayment and other financial goals.
• Regular investments and disciplined spending are key to success.
• Consider consulting a Certified Financial Planner for personalized advice.

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

..Read more

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Sir the median package at ssnce for cse core is less than rvce ise .So does it make more viable option considering placement in mind .I have a dream of becoming software engineer from my childhood. But my seniors are advising for rvce ise.what to do should I follow my dream or placement.I am a Bangalore resident and Tamil is my mother tongue.
Ans: Ashwin, my son, graduated from RVCE in 2023 and secured employment through campus placement with a reputable software company. Despite being among the highest achievers in COMEDK, he opted for ECE instead of the more accessible CSE. We did not compel him to join CSE. Following his second year, he progressively shown an interest in software and obtained several certifications through NPTEL, Internshala, and similar platforms. Regarding his experience, while ISE is commendable, CSE is the superior option. Simply enter 'RV placement statistics 2024'. Select the initial result to get the Placement Statistics of RV directly. The top placements are for Computer Science Engineering, followed by Electronics and Communication Engineering, and then Information Science Engineering. The recommendations of your seniors, your personal interests, and the branch with the highest placement statistics are distinct considerations. Kindly review the Course Curriculum for both CSE and ISE and make a decision. Kindly review one of my detailed responses below, in which I have explicitly outlined the stages, recommendations, and methods that a first-year engineering student should adhere to till their fourth year for campus placement. All the BEST for Your Prosperous Future.

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