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Ramalingam Kalirajan |10879 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 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

Question by Karan on Jul 02, 2025Hindi

Hello sir, I am currently 26 M unmarried living with parents home ,my monthly income is 60k in IT sector I am currently doing sip of 30k per month in small cap and 10k in flexi cap. Currently I accumulated 10lac doing SIP. I want to know what else can I do to achieve financial freedom as early as possible. Or am I on right track?. I am planning to retire early how much should I expect to saving until then.

Ans: ? You Are on the Right Track with Your Discipline
– You are just 26 and already saving Rs.?40,000 monthly.
– That’s two-thirds of your income. That’s not common at your age.
– You live with parents and don’t have many expenses.
– This is the best time to build your base.
– Your discipline and early focus deserve appreciation.

? Early Retirement Is Possible but Needs Planning
– You want to retire early, which is a big life goal.
– Early retirement is not only about savings.
– It needs strategy, preparation, and risk control.
– Without proper guidance, it may become risky.
– With structured steps, it is surely achievable.

? SIP Amount Is Very Impressive
– Rs.?40,000 SIP from Rs.?60,000 income is excellent.
– You are saving nearly 66% of income.
– But high saving rate alone isn’t enough.
– Proper allocation also plays a big role.
– Right mix of funds gives better outcome.

? Small Cap Overexposure May Create Volatility
– Rs.?30,000 monthly is going into small cap.
– Small caps give high returns but carry high risk.
– They drop heavily in market crashes.
– Recovery takes longer than large or flexi cap.
– This may disturb your long-term wealth building.

? Reduce Risk with Balanced Diversification
– Avoid putting too much in one category.
– Flexi cap offers dynamic allocation across all sizes.
– You should also add large and midcap allocation.
– This makes the portfolio more stable over time.
– It gives smoother compounding without high stress.

? Avoid Index Funds for Financial Freedom Goal
– Index funds follow passive style.
– They copy the index and don’t beat it.
– There is no expert research or fund manager input.
– During market falls, they fall as much as index.
– No one takes action to protect your wealth.

– Actively managed funds can outperform in good and bad times.
– They rebalance based on market conditions.
– They use research to avoid poor performing stocks.
– You should prefer regular plans with guidance.

? Avoid Direct Funds for Your Long-Term Goal
– Direct funds seem cheaper but have hidden risks.
– You are fully on your own with them.
– Many investors panic and exit at wrong time.
– They don’t review funds or rebalance regularly.
– Wrong fund choice affects the full portfolio.

– Regular funds via a trusted MFD with CFP help more.
– They give review, guidance and long-term handholding.
– They help in keeping emotional discipline intact.
– Mistakes cost more than expense ratio savings.

? You Already Have Rs.?10 Lakhs Corpus
– This is an excellent base for your age.
– With continued savings and right funds, it will grow.
– But wealth alone does not ensure financial freedom.
– You need clarity on retirement expenses and lifestyle.
– That helps define the right retirement number.

? Define Your Early Retirement Age
– Decide the age you want to stop working.
– Is it 40, 45 or 50 years?
– Each of these will give different planning path.
– Shorter working years mean longer retirement period.
– That requires a larger retirement corpus.

? Estimate Monthly Expenses Post Retirement
– Think about your lifestyle after early retirement.
– Include food, travel, medical and leisure.
– Also add rising expenses due to inflation.
– This monthly expense decides your required corpus.
– A Certified Financial Planner can help estimate correctly.

? Retirement Is Not the End of Income
– Early retirement doesn’t always mean zero work.
– Many pursue hobbies or part-time income.
– This reduces pressure on corpus in early years.
– Having some post-retirement income is always helpful.
– It keeps you active and lowers money stress.

? Protect Yourself with Emergency Fund
– You must build 6 months’ worth expenses as reserve.
– Keep it in liquid funds or bank FD.
– It protects you during job loss or health events.
– Don’t use SIP corpus for emergencies.
– It must continue without interruption.

? Take Health Insurance Now
– Don’t wait to get older for health cover.
– Health insurance is cheaper when taken early.
– It also ensures better coverage without exclusions.
– If you plan early retirement, employer cover will stop.
– You must be self-insured well before that.

? Also Take Term Insurance
– If your parents are financially dependent, this is important.
– Choose a simple term plan, not investment-linked.
– It’s low cost and high protection.
– It secures your family if anything happens.
– A CFP can help calculate the right cover.

? Increase SIPs with Income Growth
– Your salary will increase in future.
– Increase SIPs with every raise.
– Even Rs.?5,000 increase yearly adds huge impact.
– Don’t increase expenses with salary.
– Grow SIPs and reduce time to retirement.

? Track and Review Your Progress Every Year
– Once a year, sit with a Certified Financial Planner.
– Review fund performance and asset allocation.
– Rebalance if small caps grow too much.
– Switch poor funds to better performing ones.
– This keeps your portfolio on right path.

? Avoid Real Estate as Investment
– Real estate looks attractive but lacks liquidity.
– You can’t exit quickly during emergencies.
– It also has legal, maintenance, and tenant issues.
– It blocks a lot of capital without steady growth.
– SIPs in mutual funds offer more flexibility and control.

? Consider Adding Debt Mutual Funds Later
– Right now, you can focus more on equity.
– But as corpus grows, add some debt funds.
– They reduce volatility as you near retirement.
– Debt funds are better than FDs or endowment plans.
– They suit medium-term and short-term goals too.

? Know the Mutual Fund Taxation Rules
– Equity mutual funds taxed at 12.5% after Rs.?1.25 lakh LTCG.
– Short-term gains taxed at 20%.
– Debt fund gains taxed as per your tax slab.
– Proper planning helps reduce tax outflow.
– Long-term holding and goal-based withdrawals help most.

? Start Listing Future Financial Goals
– Financial freedom is your top goal.
– But also plan for wedding, car, travel, etc.
– Make separate SIPs for each future goal.
– It helps avoid disturbing your retirement corpus.
– Goal-based investing gives more clarity and focus.

? Avoid ULIPs, Endowment, or Traditional Policies
– These offer low returns and long lock-in.
– They mix insurance with investment. That reduces value.
– Stay with term insurance for cover.
– Use mutual funds only for wealth creation.
– If you have any of these, surrender and switch.

? Have a Clear Exit Strategy
– Know when and how you will stop working.
– Also decide how you will withdraw money post-retirement.
– Monthly withdrawal needs tax planning and risk control.
– Don’t keep entire amount in equity till the end.
– Create a withdrawal plan with a CFP.

? Build Multiple Buckets for Retirement
– Divide corpus into 3 parts.
– Short-term bucket for next 1–3 years expenses.
– Medium bucket for 3–7 years.
– Long-term bucket for 7+ years.
– This helps manage market risk better.
– A CFP can guide on how much in each.

? You Are Doing Most Things Right
– High SIP rate, low expenses, good fund choices.
– You are already far ahead of many people.
– But don’t take unnecessary risks with small caps.
– Diversify across types and categories.
– Get a Certified Financial Planner for detailed plan.

? Finally
– Financial freedom is possible with consistent efforts.
– You have started early and with great focus.
– Small caps alone are risky for early retirement.
– Add flexi, large, and balanced exposure.
– Avoid index and direct funds. They lack active control.
– Use regular funds with expert support.
– Increase SIPs with each hike.
– Keep emergency and insurance ready.
– Focus on clarity and discipline, not only returns.
– Review plan every year with a professional.
– Retirement at 40 or 45 can be real with this.

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

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