Hello I am a 55 year old Mechanical Engineer worked in MNC automotive OEM & Tier 1 companies for many years. But I lost job about 5 months back. I have now started MF Distributor & Insurance Advisory business after passing required exams. I have...

Hello I am a 55 year old Mechanical Engineer worked in MNC automotive OEM & Tier 1 companies for many years. But I lost job about 5 months back. I have now started MF Distributor & Insurance Advisory business after passing required exams. I have a PF of 57lac, Insurance maturity amounts worth 60 lac expected from 2028 onwards till 2032. MF worth 17lac SIP in progress , FD 5 lac, Living Flat worth 1.8cr, Plot worth 25 lac. I also get rental income of 20k pm. MF & Insurance business is for long term for next 15 to 20 years as long as it permits. I am also trying for a regular job to wirk for 5 to 6 years. How to go about Financial management in case I don't land up a job. Inam worried as Inncome from MF & Insurance will take longer.

Ans: I appreciate your determination and proactive approach in starting a mutual fund and insurance advisory business. At 55, transitioning from a corporate job to entrepreneurship can be daunting, but it’s commendable. Let’s build a solid financial plan to secure your future, assuming you don't find another job.

Understanding Your Current Financial Situation
Assets and Income
Provident Fund (PF): Rs 57 lakhs
Insurance Maturity Amounts: Rs 60 lakhs (expected from 2028 to 2032)
Mutual Funds (MF): Rs 17 lakhs (SIP in progress)
Fixed Deposit (FD): Rs 5 lakhs
Living Flat: Rs 1.8 crores
Plot: Rs 25 lakhs
Rental Income: Rs 20,000 per month
Business and Career Goals
MF and Insurance Advisory: Aiming for long-term business (15-20 years)
Potential Regular Job: Trying to find a job for the next 5-6 years
Prioritizing Financial Goals
Ensure Regular Income: Cover monthly expenses
Maintain and Grow Investments: Secure long-term financial stability
Plan for Retirement: Prepare for a comfortable retirement
Ensuring Regular Income
Rental Income
Current Rental Income: Rs 20,000 per month
Mutual Fund SIPs
Continue SIPs: Keep the SIPs active to build wealth over time.
Systematic Withdrawal Plan (SWP): Consider SWP from mutual funds after a year or two for regular income.
Emergency Fund
Emergency Fund: Ensure you have an emergency fund to cover 6-12 months of expenses.
Liquid Funds: Keep the emergency fund in liquid or ultra-short-term funds for easy access.
Income from MF and Insurance Business
Growing Your Business
Client Base: Focus on growing your client base to increase income.
Networking: Leverage your industry contacts to get clients.
Online Presence: Build a strong online presence to attract clients.
Income Management
Diversify Income Sources: Apart from MF and insurance, consider providing financial planning services.
Training and Development: Invest in continuous learning to stay updated and offer better services.
Managing Expenses
Monthly Budget
Track Expenses: Use budgeting tools or apps to track and manage your expenses.
Cut Unnecessary Costs: Identify areas where you can reduce expenses.
Loan Repayment
Avoid New Debt: Try to avoid taking on new debt during this transition period.
Prepay Existing Loans: If possible, prepay any high-interest loans to reduce the financial burden.
Investment Strategy
Existing Investments
Provident Fund: Keep the PF invested for long-term growth.
Insurance Policies: Let the policies mature as planned for future financial support.
Mutual Funds: Continue SIPs and review the portfolio regularly.
New Investment Opportunities
Diversify Portfolio: Invest in a mix of large-cap, mid-cap, and small-cap funds.
Debt Funds: Consider investing in debt funds for stable returns and low risk.
Avoid Real Estate: Given the illiquidity and high transaction costs, avoid new real estate investments.
Tax Planning
Utilize Tax Benefits
Section 80C: Maximize the Rs 1.5 lakh limit under Section 80C.
NPS Contributions: Consider additional NPS contributions for extra tax benefits.
Tax-Efficient Investments
Long-Term Capital Gains: Focus on investments that offer tax-efficient returns.
Tax Harvesting: Use tax harvesting strategies to manage tax liabilities on mutual fund gains.
Retirement Planning
Creating a Retirement Corpus
Calculate Retirement Needs: Estimate the amount needed for a comfortable retirement.
Invest in Growth Assets: Focus on equity mutual funds for long-term growth.
Regular Review
Annual Review: Review your retirement plan annually to ensure it aligns with your goals.
Adjustments: Make necessary adjustments based on market conditions and personal circumstances.
Final Insights
Your proactive approach to starting a new business and managing your finances is commendable. Focus on growing your MF and insurance advisory business, managing your expenses, and making strategic investments. With careful planning and disciplined execution, you can achieve financial stability and a comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Appreciate your honest and detailed inputs.
You are 34 and earning steadily.
Your spouse is working too, but her job has risk ahead.
You have a home loan, a small SIP, and some policies.
Your daughter’s schooling is coming soon.
You’re already thinking ahead. That’s a big strength.

Let’s give a full 360-degree review and plan.

? Understanding your current financial picture

– You earn Rs. 1 lakh monthly.
– Your spouse earns Rs. 1.25 lakh monthly.
– Combined take-home is Rs. 2.25 lakh.

– You have a home loan of Rs. 80 lakh.
– Personal loan of Rs. 4 lakh ends in October 2027.

– You invest Rs. 2,500 in SIP.
– LIC premium is Rs. 2,450 monthly.
– A savings scheme of Rs. 8,500 monthly runs for 6 years.
– You also have term insurance with Rs. 2,400 premium monthly.

– You have a young daughter, age 2.5 years.
– Schooling expenses will begin soon.

– Spouse’s job may stop in 2 years.
– So, planning ahead is smart and necessary.

? Break-up of current cash flow and commitments

– Your fixed outgo:

Home loan EMI (not mentioned but assumed high due to Rs. 80 lakh loan)

Personal loan EMI till 2027

SIP, LIC, savings scheme

Household and child expenses

– Total financial burden may be close to Rs. 1.5 lakh or more monthly.
– This is okay while both earn.
– But if one income stops, pressure will increase.

– Let’s prepare now, so you don’t feel strain later.

? Review of current investments and policies

– Your SIP is too low for your goals.
– Rs. 2,500 per month will not build long-term wealth.

– LIC policy with maturity in 2051 is too long.
– Returns are likely 4% to 5% yearly.

– Insurance and investment should not be mixed.
– LIC is an investment-cum-insurance plan.

– It is better to surrender such policies.
– Use the money in mutual funds through regular plan route.

– Mutual funds offer higher growth potential than insurance plans.
– Also, they give flexibility and liquidity.

– The savings scheme with Rs. 8,500 monthly is a guaranteed plan.
– These give safety but very low returns, usually less than inflation.

– These don’t build real wealth.
– You lose growth opportunities with such schemes.

? Preparing for spouse’s job risk ahead

– Her job may stop after 2 years.
– Your income alone should be ready to handle all expenses.

– Begin building a large emergency fund now.
– Keep 6–9 months of total expenses in a liquid fund.

– You may already have Rs. 20,000+ monthly surplus from combined income.
– Start diverting this surplus into a liquid mutual fund from now.

– By the time spouse exits job, you will have a good backup.
– This gives cushion for expenses and loan EMIs.

– Don’t stop her income suddenly.
– Try for alternate job options or freelance work later.

– But even if income stops, be ready.
– That’s why strong emergency corpus is key.

? Managing your home loan smartly

– Rs. 80 lakh loan is a big liability.
– EMI must be large, possibly Rs. 65,000 or more monthly.

– Loan tenure not mentioned.
– But try to finish home loan by your age 50.

– After spouse stops working, don’t prepay aggressively.
– Instead, maintain EMI regularly.

– Avoid using long-term savings to close loan.
– Use only surplus income or bonus for part-prepayment.

– If interest rate is high, explore refinancing options.
– Certified Financial Planner can guide based on your EMI-to-income ratio.

? Upgrading your investments for long-term growth

– Rs. 2,500 SIP is not enough.
– Target at least Rs. 25,000 monthly over next 12–18 months.

– Start with gradual increase.
– Begin additional SIPs using surplus and future salary hikes.

– Don’t use index funds.
– Index funds just follow the market passively.

– They offer no active management or downside protection.
– During market crash, they fall fully.

– Instead use actively managed funds.
– These are managed by fund managers.

– They adjust portfolio based on market condition.
– They aim for higher growth and reduced downside.

– Also don’t invest through direct plans.
– Direct plans have no personalised review or support.

– Regular plans with Certified Financial Planner offer:

Goal tracking

Portfolio review

Emotional discipline

Tax optimisation

– This 360-degree support ensures better long-term outcomes.

? Planning for daughter’s school and education

– School will start in 1–2 years.
– Fees will be a new monthly burden.

– Don’t use SIP or emergency fund for school fees.
– Use part of your monthly surplus to plan this.

– Once school starts, track education costs yearly.

– For higher education and marriage, start SIPs in active mutual funds.
– Use separate SIPs for each goal.

– Use a 15-year vision for higher education.
– For marriage, use a 20–25 year goal horizon.

– Don’t rely on guaranteed products for these goals.
– Mutual funds offer better compounding potential.

– Review every year with a Certified Financial Planner.
– Rebalance and adjust based on need.

? Managing insurance and risk cover

– You have term insurance already.
– Ensure cover is at least 15–20 times your annual income.

– Spouse should also have term insurance until child becomes independent.

– LIC plan is not useful as insurance.
– Only term plans give proper risk cover.

– Surrender LIC and guaranteed plans after review.
– Use the surrender value for mutual fund investment.

– Health insurance is not mentioned.
– Buy a family floater health insurance for you, spouse, and daughter.

– Go for Rs. 15–20 lakh cover including super top-up.
– Don’t rely on company health cover only.

– Also take a personal accident cover.

– Risk protection must be strong before income gets uncertain.

? Tax planning and policy use

– Avoid overloading 80C with LIC and guaranteed plans.
– Use mutual fund ELSS to save tax and get higher return.

– You are investing in savings plan, LIC, term cover and home loan.
– These already use up 80C limit.

– Don’t buy any more insurance-linked investments.
– Use SIP in regular mutual funds for real growth.

– Mutual funds are tax-efficient too.
– For equity mutual funds:

LTCG above Rs. 1.25 lakh is taxed at 12.5%

STCG taxed at 20%

– For debt mutual funds, gains are taxed as per income slab.

– Your Certified Financial Planner will guide year-wise tax strategy.

? What to avoid going forward

– Don’t mix investment with insurance.
– Don’t increase LIC or traditional policies.

– Don’t invest more in guaranteed plans.
– These don’t beat inflation.

– Don’t go for index funds.
– They offer no active growth strategy or risk control.

– Don’t invest via direct mutual fund route.
– No professional help, no goal monitoring.

– Avoid FOMO investing or copying others.
– Your plan should suit your family needs.

? Finally

– Your income today gives good room for saving.
– Your thinking is responsible and proactive.

– Prepare early for possible loss of second income.
– Start emergency fund, increase SIP, review policies.

– Drop poor return policies.
– Focus only on term cover, mutual funds and health cover.

– Education, home loan, retirement – all can be managed well.
– Track every goal separately and adjust yearly.

– Let a Certified Financial Planner guide you regularly.
– This ensures all areas of your finances are covered properly.

– Start today. You still have time to build strong financial safety.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment