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Ramalingam Kalirajan |11484 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 18, 2025

Ramalingam Kalirajan has over 26 years of experience in MF distribution and wealth management. He holds an MBA in Finance from the University of Madras and is a CFP (Certified Financial Planner) credentialed professional. He is the Director of Holistic Investment, a Chennai-based AMFI-registered Mutual Fund Distribution (ARN-4188) and APMI-registered PMS Distribution firm (APRN07386), helping clients build long-term wealth through mutual funds and other investment solutions.... more

Asked by Anonymous - Aug 04, 2025Hindi

Hello sir I am earning 79k monthly. I have 32500 Personal loan EMI for 4 more years. 1.5lakhs in stocks and 1 lakh in mutual funds as I do monthly sip of 10k in icici and edelweiss fund houses every month and 2k in rd and 75k in tax saver fd and 3 lakhs in PF. Also started ssy scheme recently. I have lic new Jeevan Anand policy which is already paid for 4 years and 12 more years are pending her goes my 82k yearly. Then for monthly expenses it is 10k. How do I minimise expenses and maximize savings

Ans: You are trying well despite a high EMI burden.
Your intention to increase savings is truly appreciable.
You already have a foundation to build on.
Let us review your entire setup and suggest changes.

» Income and Fixed Obligations

– Monthly salary is Rs. 79,000
– Personal loan EMI is Rs. 32,500
– EMI takes over 40% of your salary
– This is very high for stability and saving
– Ideal EMI should be under 30% of salary

– Loan runs for 4 more years
– Try to part-prepay yearly if possible
– Use bonuses or tax refunds to reduce loan faster
– Even small prepayments reduce interest burden

– Once loan is cleared, you will get Rs. 32,500 surplus monthly
– This will boost your savings significantly

» Monthly Expenses and Savings

– Expenses are Rs. 10,000/month as per your input
– This is very reasonable
– Keep it under 15–20% of salary to stay flexible
– You are already managing lifestyle well

– Monthly savings and investments are as below:

SIP in mutual funds: Rs. 10,000

RD: Rs. 2,000

LIC policy: Rs. 6,833 (yearly Rs. 82,000)

Total monthly commitment: approx. Rs. 18,800

– This means 24% of salary goes to savings
– Plus, Rs. 10,000 expense and Rs. 32,500 EMI
– This is decent for your situation

» LIC New Jeevan Anand Policy

– This is a traditional insurance cum investment plan
– You have already paid premiums for 4 years
– Remaining period is 12 more years

– Surrendering early may lead to loss
– But continuing also gives low returns (around 4% to 5%)
– These policies give poor wealth growth
– Also, they mix insurance and investment badly

– You can consider surrendering it after 5 years
– That’s when policy gets paid-up value
– Switch to term insurance plus mutual funds

– A Certified Financial Planner can guide exact surrender timing
– Don’t let this drag your long-term returns

» Mutual Fund Investments

– SIP of Rs. 10,000/month is a good start
– Fund houses chosen are ICICI and Edelweiss
– Focus on diversification and fund performance
– Don’t over-diversify between AMCs

– Two schemes are enough now
– Review them yearly with a Certified Financial Planner
– Ensure one is a flexi-cap or multi-cap type
– Other can be mid-cap or aggressive hybrid

– Regular route through Certified Planners is preferred
– They help with tracking, rebalancing, and switching
– Direct funds miss out on these benefits

– Direct funds look cheaper, but have hidden costs
– Many DIY investors lose money due to wrong fund choices
– Regular route adds expert guidance and long-term discipline

» RD and Tax-Saver FD

– RD is Rs. 2,000/month
– It is fine for short-term goals
– Don't build large corpus in RD
– Returns are taxable and lower than inflation

– Tax-saver FD of Rs. 75,000 is a one-time locked product
– You can skip this going forward
– ELSS mutual funds give better post-tax returns

– Use ELSS only if you are in old tax regime
– Else PPF and EPF are better long-term options

» Provident Fund and SSY

– PF balance is Rs. 3 lakh
– This will grow slowly but safely
– It also gives retirement security

– Continue with EPF if your employer contributes
– Don’t make voluntary contributions for now
– Prioritise mutual funds for wealth creation

– SSY is a good choice for your daughter
– It is secure and gives higher interest than PPF
– Try to invest full limit of Rs. 1.5 lakh yearly if possible
– Even Rs. 5,000/month gives good maturity amount

– SSY is long-term and tax-free at maturity
– Don’t stop midway, stay consistent till 15 years

» Insurance Analysis

– You only have LIC endowment plan
– It is not sufficient for life cover
– Check if it gives sum assured of at least Rs. 25–30 lakh
– If not, take pure term insurance for Rs. 50 lakh or more

– Term plan premium will be low at your age
– It protects family if something happens to you
– Avoid traditional or ULIP policies going forward

– Don’t mix insurance with investments anymore
– Keep them separate for best value

» Emergency Fund Status

– You have Rs. 1.5 lakh in stocks
– But this is not liquid or low-risk
– It cannot be treated as emergency reserve

– FD of Rs. 75,000 is useful
– RD balance is also useful after 1 year
– Try to keep Rs. 1.5 to 2 lakh in ultra short debt fund
– Or increase FD gradually till 3 months of expense + EMI

– Emergency fund brings stability and reduces stress

» How to Increase Savings from Now

– Try to reduce EMI burden using part prepayments
– Control lifestyle inflation even if income rises
– Use future hikes to boost SIPs, not expenses

– Avoid further RDs and FDs
– Use mutual funds through Certified Planners instead
– Increase SIPs every year by 5–10%
– This compounds well over 10–15 years

– Avoid buying more insurance policies from agents
– Avoid new ULIPs or traditional plans

– Don’t invest in index funds or ETFs
– Index funds can’t beat markets
– They do not protect downside in market crash
– Active funds managed by experts perform better in long run

» Suggested Monthly Cash Flow Management

Income: Rs. 79,000

EMI: Rs. 32,500

Living Expenses: Rs. 10,000

Insurance Premium (LIC): Rs. 6,833

SIP: Rs. 10,000

RD: Rs. 2,000

Balance: Rs. 17,667

– Try to increase SIP with part of this balance
– Or use for LIC premium and reduce pressure
– After loan closes, redirect Rs. 32,500 to investments

» Steps to Minimise Expenses

– Track spending every week using simple app or diary
– Avoid EMI purchases for gadgets, holidays, or mobile
– Control food delivery and subscriptions
– Buy groceries in bulk
– Avoid impulse online purchases
– Sell unused items or rent extra space if possible
– Use cashback or loyalty benefits where possible
– Shift RD amount into mutual funds gradually

» Steps to Maximise Wealth Building

– Increase SIP by Rs. 1,000 every 6 months
– Review funds yearly
– Remove LIC after 5 years, switch to term plan
– Avoid tax-saving FD and RDs
– Stick with mutual funds, PPF, SSY, EPF

– Once EMI ends, increase SIP to Rs. 35,000/month
– This will help build Rs. 1 crore in 12–15 years

» Finally

– You are doing well given the EMI pressure
– Keep tracking expenses and increase SIP gradually
– Exit low-return policies and products after review
– Focus more on mutual funds with professional support
– Avoid complex or agent-pushed products
– Always choose regular funds with Certified Planners
– It will help build wealth and avoid mistakes
– Protect family with term plan
– Maintain emergency fund with discipline
– Review your plan every year

Your financial future is in your hands.
Small steps taken today will give big rewards later.

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

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