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Ramalingam

Ramalingam Kalirajan  |9213 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 15, 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
Nawaz Question by Nawaz on Apr 12, 2024Hindi
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Hello sir My MF Portfolio: I've already invested 5lac with an xirr of 24%, total amount 7 lac now with profit . 1. Axis smallcap- 2. Quant smallcap 3. Hdfc index sensex plan 4. Parag parekh flexi cap 5. Invesco contra fund 6. Navi nifty NEXT 50 I am investing 50k pm, all in direct funds Any suggestions?

Ans: Reviewing Your Mutual Fund Portfolio

Congratulations on your successful investment journey and achieving an impressive XIRR of 24%! Let's review your existing mutual fund portfolio and provide suggestions for optimization.

Assessment of Current Portfolio

Your mutual fund portfolio comprises the following funds:

Axis Smallcap Fund
Quant Smallcap Fund
HDFC Index Sensex Plan
Parag Parikh Flexi Cap Fund
Invesco Contra Fund
Navi Nifty Next 50 Fund
Analysis and Suggestions

Axis Smallcap Fund and Quant Smallcap Fund: Small-cap funds offer high growth potential but come with higher volatility. Since you're already invested in two small-cap funds, assess the overlap between these funds and consider consolidating your small-cap exposure into a single fund to streamline your portfolio and reduce concentration risk.

HDFC Index Sensex Plan and Navi Nifty Next 50 Fund: Index funds provide cost-effective exposure to market indices. While investing in index funds can be beneficial, ensure that these investments complement your overall portfolio strategy and are not overweighted in comparison to actively managed funds.

Parag Parikh Flexi Cap Fund: This fund follows a flexible investment approach, investing across large-cap, mid-cap, and small-cap stocks. Given its diversified nature and focus on quality stocks, it's a suitable choice for your portfolio and aligns well with your investment objectives.

Invesco Contra Fund: Contra funds aim to invest in fundamentally strong but undervalued stocks. While this strategy can potentially generate higher returns over the long term, ensure that the fund's investment approach aligns with your risk tolerance and investment horizon.

Recommended Action Plan

Consolidate Small-Cap Exposure: Evaluate the performance and overlap between Axis Smallcap Fund and Quant Smallcap Fund. Consider consolidating your small-cap exposure into one fund to simplify your portfolio and reduce duplication.

Monitor Index Fund Exposure: Review the allocation to HDFC Index Sensex Plan and Navi Nifty Next 50 Fund to ensure they complement your overall portfolio strategy. Consider rebalancing if necessary to maintain optimal diversification across asset classes.

Regular Review: Continuously monitor the performance of your mutual fund portfolio and periodically rebalance as needed to align with your financial goals, risk tolerance, and market conditions.

By optimizing your mutual fund portfolio and ensuring diversification across asset classes and investment styles, you can enhance the potential for long-term wealth accumulation and achieve your financial objectives.

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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Asked by Anonymous - Apr 03, 2024Hindi
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I am 50 working professional. Below is my MF portfolio . 1. Parag Parikh Flexi Cap Fund 2.6 lakhs + 10K SIP 2. PGIM India Midcap Opportunities Fund 1.85 L Value + 5K SIP 3. Quant ELSS Tax Saver Fund 80K 4. Axis Small Cap Fund 1.85 Lakhs Value + 5K SIP 5. Axis Gold Fund 75K Value + 5K SIP 6. Canara Robeco Bluechip Equity Fund 70K 7. Quant Multi Asset Fund 50K 8. SBI Magnum Income Fund 50K 9. ICICI Prudential Equity & Debt Fund 50K 10. Quant Active Fund 50K 11. ICICI Prudential Bluechip Fund 25K I want to build a retirement corpus of 2 crore in 10 years. I am planning to invest around 50K every month. Plus i have. surplus of 4Lakks which i want to invest in few of the MFs above. Planning to exit Canara Robeco bluechip and Axis Small cap soon. Please suggest if any changes you want me to do.
Ans: Given your goal of building a retirement corpus of 2 crores in 10 years and your current portfolio, here are some suggestions:

Increase SIP Contributions: Consider increasing your SIP amounts in high-performing funds like Parag Parikh Flexi Cap and PGIM India Midcap Opportunities Fund, which have shown good potential for long-term growth.

Review and Consolidate: Evaluate the performance of all your funds and consider consolidating your portfolio to fewer, well-performing funds to simplify management and potentially enhance returns.

Focus on Quality: Prioritize funds with strong track records, consistent performance, and experienced fund management teams. Consider adding large-cap and diversified equity funds for stability and balanced growth.

Asset Allocation: Ensure a balanced asset allocation across equity, debt, and gold funds based on your risk tolerance and investment horizon. Reallocate surplus funds strategically to maintain a diversified portfolio.

Regular Review: Monitor your portfolio regularly and make adjustments as needed based on changes in market conditions, fund performance, and your financial goals.

Consider consulting with a financial advisor for personalized advice tailored to your specific circumstances and goals.

..Read more

Ramalingam

Ramalingam Kalirajan  |9213 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 03, 2024

Asked by Anonymous - Sep 02, 2024Hindi
Money
Investment horizon is 4-5 years, high risk taking capacity. Please evaluate the MF portfolio. HDFC Infrastructure Fund 1000 HDFC Index Fund BSE Sensex Plan 5000 Nippon India Small Cap Fund 5000 Canara Robeco Bluechip Equity Fund (G) 5000 Bandhan core equity fund 5000 Motilal Oswal Midcap Fund 5000 JM Flexicap Fund 5000
Ans: Your current mutual fund portfolio reflects a mix of investment strategies. This blend of funds covers large-cap, mid-cap, small-cap, and sector-specific investments. Such diversification is a smart approach, as it spreads risk across different market segments.

However, there are some concerns, particularly with the choice of funds, that may impact your portfolio's overall performance.

Active vs. Index Funds
Let's start with the HDFC Index Fund BSE Sensex Plan. While index funds track a specific market index and are generally low-cost, they may not always deliver the best returns, especially in a dynamic market like India. The Indian market offers plenty of opportunities for skilled fund managers to outperform the index. Actively managed funds, guided by experienced fund managers, have the potential to capitalize on market inefficiencies, offering better returns over time.

Index funds lack this flexibility. They mirror the index, meaning they can't take advantage of market opportunities or avoid underperforming sectors. In an actively managed fund, the fund manager can make timely adjustments, potentially enhancing returns and managing risk better. Given your investment horizon of 4-5 years, you might find that actively managed funds offer a better risk-adjusted return.

Importance of Sectoral Funds
Now, looking at the HDFC Infrastructure Fund, sectoral funds like this one focus on specific industries, which can lead to higher volatility. While the infrastructure sector has growth potential, it is also subject to various risks, such as regulatory changes, economic cycles, and policy shifts. Over-reliance on a single sector can lead to significant fluctuations in your portfolio's value.

Given your short investment horizon of 4-5 years, it might be wise to reconsider such a sectoral focus. Instead, a diversified fund with exposure to multiple sectors can offer more stability and better risk management.

Evaluating Small Cap and Mid Cap Funds
Your portfolio includes Nippon India Small Cap Fund and Motilal Oswal Midcap Fund. Small and mid-cap funds are known for their potential to deliver high returns, but they come with higher volatility. These funds invest in smaller companies that can grow rapidly but are also more susceptible to market downturns.

Given your high-risk tolerance, these funds could align with your goals. However, it is essential to balance them with other funds in your portfolio. The key here is not to over-allocate to small and mid-cap funds, as this could expose you to unnecessary risk.

Large Cap and Flexicap Funds
The inclusion of Canara Robeco Bluechip Equity Fund (G) and Bandhan Core Equity Fund in your portfolio provides a good foundation. Large-cap funds tend to be more stable, offering consistent returns over time. They invest in established companies with strong market positions, which can provide a safety net in volatile markets.

JM Flexicap Fund offers flexibility by investing across market capitalizations, which can be beneficial. It allows the fund manager to shift allocations based on market conditions, enhancing potential returns and managing risk effectively.

Assessment of Your Portfolio
You have invested in several mutual funds with different focuses:

HDFC Infrastructure Fund

Focus: This fund primarily invests in infrastructure companies.

Risk Level: High, given the sector's cyclical nature and dependency on economic conditions.

Performance: Sector funds can deliver strong returns during growth phases but may underperform in downturns.

Suitability: Given your 4-5 year horizon, this fund adds sector-specific risk. Consider reducing exposure to mitigate volatility.

HDFC Index Fund BSE Sensex Plan

Focus: This fund mirrors the BSE Sensex index.

Risk Level: Moderate, as it tracks the performance of top 30 companies in India.

Performance: Index funds generally have lower costs but also limited potential for outperformance.

Disadvantages: The lack of active management may result in missed opportunities for better returns. Actively managed funds often outperform in volatile markets.

Suitability: For a high-risk taker with a 4-5 year horizon, active management could provide better returns than this index fund.

Nippon India Small Cap Fund

Focus: This fund invests in small-cap companies with high growth potential.

Risk Level: High, due to the volatile nature of small-cap stocks.

Performance: Small-cap funds can deliver significant returns, but they are also prone to sharp declines during market corrections.

Suitability: Given your high-risk tolerance, this fund is suitable for growth, but it should be balanced with less volatile funds.

Canara Robeco Bluechip Equity Fund (G)

Focus: This fund invests in large-cap companies, providing stability and steady growth.

Risk Level: Moderate, as large-cap companies are usually more stable.

Performance: Large-cap funds offer consistent returns and are less volatile than mid or small-cap funds.

Suitability: This fund is well-suited to balance the higher risk funds in your portfolio.

Bandhan Core Equity Fund

Focus: This fund invests across market capitalizations, providing diversification.

Risk Level: Moderate to high, depending on its allocation to mid and small-cap stocks.

Performance: Flexi-cap funds can adapt to market conditions, offering growth potential with some risk.

Suitability: This fund adds flexibility to your portfolio, making it a good choice for your investment horizon.

Motilal Oswal Midcap Fund

Focus: This fund invests in midcap companies, which offer growth potential with moderate risk.

Risk Level: High, but generally less volatile than small-cap funds.

Performance: Midcap funds can outperform in a growing economy but may lag in uncertain times.

Suitability: This fund is suitable for your risk profile and adds growth potential to your portfolio.

JM Flexicap Fund

Focus: This fund invests across large, mid, and small-cap stocks.

Risk Level: Moderate to high, with the ability to shift focus based on market conditions.

Performance: Flexi-cap funds offer a balance of growth and stability, depending on market conditions.

Suitability: This fund’s flexibility is an advantage, making it a good fit for your portfolio.

Portfolio Analysis
Your portfolio is diversified across sectors, market capitalizations, and investment strategies, which is commendable. However, there are areas where adjustments could improve your potential returns while managing risk.

Sector Exposure: The HDFC Infrastructure Fund adds concentrated sector risk. Sector funds can be volatile, so it's wise to limit exposure, especially with a 4-5 year horizon.

Index Fund Allocation: The HDFC Index Fund BSE Sensex Plan has limitations. While it provides market exposure, actively managed funds might offer better returns due to professional stock selection, particularly in a high-risk, shorter investment horizon.

Small and Midcap Funds: You have a strong allocation to small and midcap funds. This is aligned with your risk tolerance, but ensure these funds do not dominate your portfolio. Balance is key.

Flexibility and Stability: Funds like Canara Robeco Bluechip Equity Fund and JM Flexicap Fund add necessary stability and flexibility. These should remain core holdings in your portfolio.

Suggested Portfolio Adjustments
To enhance your portfolio, consider the following adjustments:

Reduce Sector-Specific Risk: Consider reducing your exposure to the HDFC Infrastructure Fund. Reallocate this to a diversified equity fund or a balanced fund that offers growth with less sector concentration.

Increase Actively Managed Funds: Shift from the HDFC Index Fund to an actively managed large-cap or flexi-cap fund. This shift could provide better returns by leveraging the expertise of fund managers.

Maintain Small and Midcap Exposure: Continue your investments in Nippon India Small Cap Fund and Motilal Oswal Midcap Fund. These funds align with your risk tolerance, but monitor their performance and rebalance if they underperform.

Balance with Large-Cap Stability: Continue with Canara Robeco Bluechip Equity Fund and Bandhan Core Equity Fund. They provide stability and diversification, helping to smooth out the volatility from small and midcap funds.

Utilize Flexi-Cap Funds: Keep JM Flexicap Fund in your portfolio. Its flexibility to shift between large, mid, and small caps based on market conditions will benefit your portfolio during different market phases.

Disadvantages of Direct Funds
Direct funds often appear attractive because of the lower expense ratios compared to regular funds. However, investing in direct funds means you miss out on the valuable advice and support of a Certified Financial Planner (CFP). The lower cost can sometimes be a false economy, especially if you're not well-versed in market trends and fund management.

A CFP provides guidance on fund selection, portfolio rebalancing, and overall financial planning. This professional support can lead to better long-term outcomes. Additionally, regular funds, while slightly more expensive, offer access to this expertise, which can more than offset the higher cost.

Benefits of Regular Funds Through a Certified Financial Planner (CFP)
You may wonder why regular funds are preferred over direct funds, especially when there’s a small difference in expense ratios. Here’s why:

Expertise and Guidance: A Certified Financial Planner (CFP) provides expert advice tailored to your financial goals. They help you navigate complex financial decisions, ensuring your investments align with your objectives.

Active Monitoring: Regular funds managed through a CFP are actively monitored. The CFP can make timely adjustments to your portfolio, optimizing returns and managing risks.

Peace of Mind: Investing through a CFP relieves you of the burden of constantly monitoring the market. You benefit from their experience and insights, which can be invaluable in volatile markets.

Disadvantages of Direct Funds: Direct funds require you to manage your investments independently. This can be challenging if you lack the time or expertise to make informed decisions. Additionally, direct funds might not offer the same level of service and advice as regular funds managed through a CFP.

Rebalancing Your Portfolio
Given your short investment horizon and high-risk tolerance, it may be wise to rebalance your portfolio. You could reduce exposure to sectoral and small-cap funds, which are more volatile. Instead, consider increasing allocations to large-cap and flexicap funds, which offer a better balance of risk and return.

Focusing on Diversification
Diversification is key to managing risk. While your current portfolio is diversified across market caps, consider further diversification across asset classes, such as debt funds, to reduce risk. This is especially important given your investment horizon of 4-5 years, where market fluctuations can have a significant impact on your returns.

Reviewing Fund Performance Regularly
Regularly reviewing the performance of your funds is essential. Markets change, and so do the performance of funds. A fund that performs well today may not do so in the future. A Certified Financial Planner can help you assess whether your current funds are meeting your objectives or if adjustments are needed.

Final Insights
Your current portfolio is well-diversified, but there are opportunities to optimize it further.

Reducing sector-specific risk and increasing exposure to actively managed funds can enhance returns while managing volatility.

Maintaining a balance between small, mid, and large-cap funds will provide growth potential with stability.

Working with a Certified Financial Planner (CFP) ensures that your investments are professionally managed, providing peace of mind and potentially better returns over time.

Investing is a journey, and with careful planning and regular reviews, you can achieve your financial goals within your desired time frame.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9213 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 28, 2025

Money
pl see my mf portfolio and advise, icici bluechip fund rs 5000/- parag flexi cap rs 5000/-, hdfc flexi cap rs 5000/-,m/o large and mid cap rs 5000/- and nippon india small cap rs 5000/-(all sip monthly )
Ans: You have selected five different mutual fund schemes.

Your SIP contribution is Rs 5000 each in all five funds.

Your total monthly SIP is Rs 25000.

Your portfolio is a mix of large cap, flexi cap, large and mid cap, and small cap funds.

This shows a healthy diversification across market capitalisations.

You have chosen a good combination of growth-oriented equity categories.

Very thoughtful and appreciable planning is visible in your fund selection.

Assessment of Asset Allocation

Your portfolio has strong exposure to large caps through the bluechip fund.

Large cap funds are generally more stable and less volatile.

Flexi cap funds offer diversification across large, mid, and small companies.

Large and mid cap category bridges the gap between stability and higher growth.

Small cap exposure can give potential high returns over the long term.

Small caps are risky but rewarding if you stay invested patiently.

Your asset allocation is balanced towards growth with moderate risk.

Diversification Analysis

You are spreading investments across different market segments.

This is a smart way to balance risk and reward.

You are not overexposed to a single market capitalisation.

Flexi cap funds automatically adjust between different sizes based on opportunities.

It reduces your need to constantly track and rebalance.

Your approach reflects a strong understanding of portfolio construction.

This will help during different market cycles.

Fund Selection Quality

All selected funds belong to reputed fund houses.

Fund houses with a strong track record are always preferable.

The selected schemes are managed by experienced fund managers.

Experienced fund managers can navigate market volatility better.

Your selection of actively managed funds is excellent.

Actively managed funds outperform index funds in India due to inefficiencies.

Index funds often just mirror the market and do not beat it.

Active funds can take advantage of opportunities and protect against downturns.

Hence your preference towards active management is well appreciated.

SIP Strategy Evaluation

You are investing Rs 25000 monthly, which is Rs 3 lakh annually.

SIP method is highly beneficial as it averages cost across market ups and downs.

SIPs encourage disciplined investing without timing the market.

Your regular SIPs will help you build substantial wealth over the years.

Continuation of SIP during market corrections will add great advantage.

You are on the right track with your consistent approach.

Risk Assessment

Small cap funds bring higher risk but also higher potential returns.

Small caps are volatile in the short term but rewarding over 7 to 10 years.

Your portfolio has limited exposure to small caps, which is prudent.

Majority of your investments are in large and flexi cap categories.

This keeps your portfolio volatility under control.

Your risk appetite seems suitable for the portfolio you have built.

Gaps or Missing Elements

One point to highlight is sector diversification within funds.

Most flexi caps and large-mid caps internally manage sector exposure.

You need not add more sector-specific funds to this portfolio.

You have rightly avoided thematic or sectoral funds which are risky.

Global diversification is missing but optional depending on your goals.

For now, it is acceptable to focus on Indian growth story.

Taxation Impact

Equity mutual fund taxation needs careful understanding.

Short-term capital gains within one year are taxed at 20%.

Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.

If you redeem after one year, you benefit from long-term tax rates.

Keep this taxation aspect in mind while planning redemptions.

SIP units are treated separately for tax based on their holding period.

Sustainability and Future Readiness

Your SIP amount of Rs 25000 monthly is good but review it yearly.

As your income or savings increase, step-up your SIP amount.

Step-up SIPs ensure that your investments match inflation and life goals.

Monitor fund performance once a year but do not churn frequently.

Give your funds enough time to perform over complete market cycles.

Importance of Investing Through Certified Financial Planner

Regular plans through MFDs with CFPs add tremendous value.

Direct plans require you to do all research, monitoring, and rebalancing.

Regular plans offer expert advice, portfolio reviews, and emotional counselling.

Investors often make mistakes like selling during market falls without guidance.

CFPs ensure discipline, goal mapping, risk profiling, and tax efficiency.

The additional cost of regular plans is very minimal compared to the benefits.

You have made the right decision to invest through an expert channel.

Additional Recommendations for Better Portfolio Health

Maintain an emergency fund separately in liquid funds or savings account.

Emergency fund should be at least six months of monthly expenses.

This ensures that SIPs are not interrupted due to cash flow issues.

Continue SIPs even during market downturns without stopping.

Avoid booking profits too early from equity funds.

Rebalancing can be done once a year to maintain original allocation.

Review your financial goals annually and align investments accordingly.

Insure yourself adequately with pure term insurance, if not already done.

Avoid mixing insurance and investments like ULIPs or endowment plans.

Final Insights

Your mutual fund portfolio is well designed with a good mix.

You have selected quality funds across different market capitalisations.

SIP mode is the right approach for steady wealth creation.

Active fund selection gives you better potential than passive index investing.

Your risk profile matches your current portfolio.

Regular monitoring with the help of a Certified Financial Planner is key.

Stay invested with patience and discipline for long-term success.

Avoid unnecessary changes based on short-term market movements.

Increase SIP amount gradually in line with income growth.

Keep separate provisions for emergencies, insurance, and short-term needs.

You are on a solid path towards achieving your financial goals.

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |9213 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 24, 2025

Money
Hello Sir, I'm 39,a Govt Employee drawing 52k take home after CPF of 10k as my monthly Salary, I want to accumulate 1Cr by the age of 50, and I have following expenses and investment- 1- Rs 5300 LIC 'Jeevan Anand' started on 2015 for 33 years and sum assured value is 200000. Don't know how much ill get after 33 years some online platform says maturity amount 86L. What to do with this LIC someone suggest to surrender and invest elsewhere.. 2- SIP 2k UTI Nifty 50, 1k sbi contra, 1k sbi small cap and 2k sbi psu. Total accumulation around 50K till date 3- 6.5L loan, Monthly premium 14k, still 6L left for repayment. 4- CPF- 10k monthly 5- PPF bal till dat RS 6L 6- SSA of my girl child is 3k monthly 7- My monthly expenses 20k 9- no health insurance. However, I have a facility of reimburse if hospitalized but in CGHS rate. 10- no term plan as Im in a believe that LIC may help. 11- Emergency fund bal 1L PLEASE SUGGEST ME TO MANAGE MY FINANCE.
Ans: You are 39, a government employee, and take home Rs. 52,000 monthly.
You have financial discipline, which is a big strength.

You wish to build Rs. 1 crore by age 50.
That gives you 11 years.
This goal is achievable with a structured plan.

Let’s evaluate your current position first.
Then we will build a 360-degree financial strategy.

Your Current Cash Flow and Expenses
Monthly take-home: Rs. 52,000

Loan EMI: Rs. 14,000

LIC premium: Rs. 5,300

SIPs: Rs. 6,000

SSA: Rs. 3,000

Expenses: Rs. 20,000

Total outgoing = Rs. 48,300

Surplus left = Around Rs. 3,700

Your monthly flow is tight.
Surplus is very low.
Still, your savings habit is good.

But we need to reduce pressure on cash flow.
And make your money work better.

LIC Jeevan Anand Policy – The Hidden Problem
This is your biggest cash-flow drain now.
You pay Rs. 5,300 monthly (Rs. 63,600 yearly).
Policy term is 33 years. Sum assured is Rs. 2 lakh.

You mentioned some platform shows maturity value as Rs. 86 lakh.
That is not realistic. These are misleading assumptions.

Let’s understand the issue:

Actual guaranteed benefit is very low

Most return comes from non-guaranteed bonuses

These bonuses are not fixed or promised

Real return is often just 4% to 5%

Very poor return over 33 years

Life cover is only Rs. 2 lakh – too low

Not enough for your family protection

Action Plan:

Surrender this policy now

Take paid-up value if surrender is costly

Reinvest this Rs. 5,300 into better SIPs

This shift will build higher wealth

You will also free up cash flow for other needs

SIP Portfolio Review – Unbalanced Allocation
You invest Rs. 6,000 monthly as SIP.
Break-up is:

Rs. 2,000 in index fund

Rs. 1,000 in contra fund

Rs. 1,000 in small cap

Rs. 2,000 in PSU fund

Problems in current portfolio:

Overlap in themes

Too much passive index exposure

Small-cap and PSU sectors are high-risk

No diversification into balanced or flexi-cap

No large-cap active exposure

Index funds have big drawbacks:

No human judgement

Just copy market blindly

Keep bad stocks also

No chance to outperform

Only average return

Solution:

Stop index fund SIP

Shift to active large-cap or flexi-cap

Retain contra fund as it is a diversified style

Keep small-cap only if you can stay invested for 10+ years

Avoid sector-based PSU fund – very cyclical and risky

Choose funds through CFP and MFD only

Do not invest in direct plans – they give no guidance

Use regular plans for expert handholding

Loan EMI – Too High for Your Salary
You pay Rs. 14,000 EMI monthly.
Loan balance is Rs. 6 lakh.

That eats 27% of your income.
It is putting pressure on savings.

Suggestions:

Try to prepay small amounts yearly

Use any bonus, arrears, or gifts

Clear loan within 3–4 years

After loan closure, shift EMI to SIP

Reducing EMI will increase monthly surplus.
That surplus can fund your Rs. 1 crore goal.

CPF and PPF – Safe Long-Term Instruments
You contribute Rs. 10,000 to CPF.
PPF balance is Rs. 6 lakh.

These are good for long-term savings.
PPF is tax-free and secure.
CPF also builds retirement corpus.

But returns are moderate.
So, these alone can’t meet your Rs. 1 crore goal.
You need equity SIPs for growth.

Action Plan:

Continue PPF every year

Contribute at least Rs. 1 lakh yearly

Continue CPF as per government norms

Sukanya Samriddhi Account – Keep Going
You invest Rs. 3,000 monthly in SSA.
This is a good long-term choice.
Your daughter’s future is protected.

Keep in mind:

Use only for daughter’s education or marriage

This is not for your retirement or wealth-building

SSA gives fixed interest

Use SIPs for your own goals

No Health Insurance – Very Risky
You don’t have personal health insurance.
You depend on CGHS rate reimbursements.

This is dangerous.
CGHS hospitals may not be enough in serious cases.

One medical emergency can:

Drain your savings

Break your SIPs

Increase debt

Delay your goals

Action Plan:

Buy personal health cover of Rs. 5–10 lakh

Add top-up plan for higher coverage

Premium is low if taken early

Buy individual or floater policy

Claim CGHS first, then use policy if required

No Term Insurance – Big Mistake
You don’t have term insurance.
You believe LIC will help.

But your LIC policy only gives Rs. 2 lakh.
That is too low.
If anything happens, your family will struggle.

Term insurance is pure life cover.
It gives large sum assured at very low cost.

Action Plan:

Take term insurance for Rs. 50–75 lakh

Premium will be very affordable

Take policy till age 60 or 65

This gives your family protection

Do not delay this step.
It is as important as health cover.

Emergency Fund – Needs Boosting
You have Rs. 1 lakh emergency fund now.
Your monthly expense is Rs. 20,000
So, you have 5 months’ buffer.
That is good start.

Next Steps:

Build this to Rs. 1.5–2 lakh over next year

Keep in sweep-in FD or liquid account

Never use it for regular expenses

Use only for job loss, medical, urgent repairs

Goal: Rs. 1 Crore in 11 Years
You want Rs. 1 crore by age 50.
You are 39 now.
Only 11 years left.

To reach this, you need:

Higher monthly SIP

Disciplined savings

Better fund selection

Avoiding LIC-type products

Ending loan quickly

Having term and health cover

Step-by-step path:

Surrender LIC policy

Stop index and PSU funds

Choose balanced portfolio with help of CFP

Increase SIP from Rs. 6,000 to Rs. 12,000 gradually

Close loan early

Buy term insurance and health insurance now

Continue PPF and SSA regularly

Link each SIP to goal

Review fund performance every year

Rebalance if any SIP underperforms

Track progress of Rs. 1 crore goal every year

You will need guidance to build this plan.
So always invest in regular mutual funds through an MFD
who has CFP qualification.

They will guide portfolio review, risk level, tax planning, and more.
Avoid direct funds. They do not support long-term goals properly.

Finally
You are sincere and focused.
That itself is a big strength.

You are 39. Still have enough time.
But decisions must be smart and timely.

LIC is not the way to create wealth.
SIPs with proper fund selection will help.

Avoid index and direct plans.
Stay with active and guided mutual funds.

Don’t ignore health and term cover.
One medical crisis can ruin your goal.

Build your Rs. 1 crore target step by step.
Start with what is in your control.

Keep cash flow under control.
Keep expenses low.
Increase savings each year.

And track your goal with a clear path.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9213 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 24, 2025

Asked by Anonymous - Jun 24, 2025Hindi
Money
Hello sir I am 50 yr old with take home salary of 72000p/m I have EPF of6.5l so far one LIC policy of 45000 yearly premium . Doing SIP of 10000p/m from past 2yrs How can I plan my retirement. Should I focus to buy property or not .
Ans: You are 50 years old. You earn Rs. 72,000 monthly.
You have Rs. 6.5 lakh in EPF.
One LIC policy with Rs. 45,000 yearly premium.
SIP of Rs. 10,000 monthly for 2 years.
You want to plan retirement. You are also thinking of buying property.
Let us create a step-by-step financial roadmap.

Monthly Income and Expense Check

Your income is Rs. 72,000 per month.

We assume Rs. 15,000 to Rs. 20,000 is saved.

Rest likely goes to family expenses, LIC premium, and SIP.

Current saving rate is low for your age and income.

You must raise it slowly over the next 1–2 years.

Assets and Investments So Far

Rs. 6.5 lakh in EPF is your main retirement fund now.

SIP of Rs. 10,000 per month is a good habit.

That must be continued till retirement and beyond.

LIC policy must be reviewed. It gives poor returns.

Total financial assets are still limited.

But 8–10 years of working life remain. That is helpful.

LIC Policy – Recheck and Act

You are paying Rs. 45,000 yearly into LIC policy.

These policies usually give only 4%–5% return.

Not suitable for retirement planning.

If policy is more than 5 years old, surrender it.

Use that amount in mutual funds or PPF.

You will get better growth and flexibility.

Mutual Fund Investment Plan

Your SIP is Rs. 10,000 monthly.

Equity mutual funds are ideal for long-term goals.

They grow well over 8+ years.

You have 8–10 years left for retirement.

So, equity mutual funds must form your core strategy.

Suggestions:

Continue the current SIP.

Slowly increase it by Rs. 1,000 every 6 months.

Target Rs. 20,000 monthly SIP in 3 years.

Use regular mutual funds.

Don’t use direct mutual funds.

Disadvantages of Direct Funds

No one gives fund review or advice.

You may pick wrong schemes.

Behavioural mistakes can happen during market fall.

You may stop SIP or redeem at wrong time.

Regular plans with CFP-backed MFD give support.

That improves results over 10 years.

Why You Must Avoid Index Funds

Index funds copy the market.

They fall completely in market crashes.

They don’t remove poor-performing stocks.

They don’t protect downside.

Actively managed funds are better.

They adjust portfolio based on market and sector.

They give better long-term returns.

EPF and PPF Planning

EPF corpus is Rs. 6.5 lakh.

Add more if possible through VPF.

This gives safe, tax-free return.

Start PPF if you have not already.

Put Rs. 5,000 monthly in PPF if budget allows.

This gives retirement stability.

Emergency Fund is Important

Keep at least Rs. 2–3 lakh aside as emergency fund.

Do not touch SIP or EPF for sudden needs.

Use a liquid mutual fund or sweep-in FD.

This avoids breaking long-term investments.

Health Insurance and Term Plan

Take a health insurance of Rs. 5–10 lakh.

Employer cover may stop after retirement.

Buy now when healthy. Premiums are low at 50.

If you have dependents, take a term plan.

Cover of Rs. 25–50 lakh is enough.

Retirement Corpus Target

You need Rs. 1.5 crore by age 60.

This is minimum for Rs. 30,000–40,000 monthly income.

You already have some base.

Balance must come from mutual funds and EPF.

SIP growth and discipline will help you reach goal.

Should You Buy a House?

You asked about buying a property.

Property is not suitable for retirement funding.

It is illiquid.

It does not give monthly income unless rented.

Selling takes time and cost.

Property has taxes and maintenance.

Better to rent in retirement, not own.

Use funds for retirement income tools.

What to Do Instead of Property

Increase SIP in mutual funds.

Diversify across large-cap, flexi-cap, and hybrid funds.

Build monthly income source through SWP after age 60.

SIP becomes your wealth builder.

Avoid stress of home loan or property EMI.

Retirement Action Plan in Bullet Points

Continue Rs. 10,000 SIP in equity mutual funds.

Increase SIP by Rs. 1,000 every 6 months.

Target Rs. 20,000 monthly SIP in 3 years.

Surrender LIC policy if it is 5+ years old.

Shift that to mutual fund or PPF.

Start PPF with Rs. 5,000 monthly if possible.

Build Rs. 2–3 lakh emergency fund in liquid fund.

Buy health insurance of Rs. 5–10 lakh immediately.

If family depends on you, buy term insurance.

Avoid buying property now. Focus on liquid retirement assets.

Use only regular mutual funds through Certified Financial Planner.

Avoid index and direct mutual funds completely.

Finally

You still have 8–10 active working years.
This is enough to build a solid retirement base.
Do not waste money in LIC or property.
Do not take unnecessary loans.
Avoid RD and FD for retirement.
Equity mutual funds are your main tool.
Grow SIP every year.
Track your goals with a Certified Financial Planner.
Keep insurance and emergency fund in place.
Live simply. Invest wisely. Retire peacefully.

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

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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