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MFs in portfolio showing less than 20% XIRR in 20+ years - What should I do?

Ramalingam

Ramalingam Kalirajan  |9810 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 11, 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
Asked by Anonymous - Nov 11, 2024Hindi
Money

Hello, following MFs in my portfolio are showing less then 20% XIRR should i hold these funds or should i go for SWP and invest in another funds? i am long term investor(20+ years) 1) Fund-Aditya Birla Sun Life Flexi Cap Fund Regular Growth Invested-28,000 Current-68,836 Return-40,836(145.85%) XIRR-16.92% Period-Jan2018 to June2020 2) Fund-Kotak Flexicap Fund Regular Growth Invested-78,000 Current-1,43,256 Return-65,258(83.67%) XIRR-17.23% Period-Jan2018 to Aug2024

Ans: A detailed evaluation of your portfolio over a long-term horizon, like 20+ years, is crucial. Below, I provide a structured analysis to help you make an informed decision on whether to hold these funds or opt for SWP and reinvest in other funds. I'll also touch on portfolio diversification, the benefits of active management, and tax implications for mutual funds to ensure a 360-degree view.

Analysing Fund Performance Based on XIRR
The funds you've mentioned have an XIRR of below 20%, with performance ranging from 16.92% to 17.23%. While these returns might appear moderate when compared to some high-performing funds, they are still within a reasonable range, especially considering market fluctuations and economic events.

Long-Term Perspective: Given your long investment horizon of 20+ years, the annualised returns around 16-17% can be quite powerful in generating wealth over time. Equity funds generally tend to perform better over longer terms due to market cycles and compounding.

Reviewing Fund Strategies: Both funds are Flexi Cap funds, which offer exposure to companies of different sizes, sectors, and growth stages. Their performance may vary depending on market conditions and fund manager strategies, but their flexibility is typically beneficial over long periods.

Pros and Cons of Holding vs. SWP and Reinvestment
Benefits of Holding the Current Funds
Consistency in Returns: While the returns are below 20%, they remain relatively stable and reliable, with compounded growth.

Lower Transaction Costs: Selling or switching funds can incur costs such as exit loads and capital gains tax. By holding, you avoid these charges and the risk of reinvestment.

Compounding Potential: Over time, consistent returns compounded in a single fund can grow significantly. Switching funds too frequently may disrupt this compounding advantage.

Potential Benefits of SWP and Reinvesting
Rebalancing the Portfolio: SWP into new funds can provide better sector or asset class diversification, depending on your current portfolio makeup.

Tax-Efficient Withdrawals: SWP can provide a regular income, if needed, and is tax-efficient as only gains are taxed, not the principal. However, ensure the SWP aligns with your needs since it would reduce the compounded growth.

Better Fund Selection: Some actively managed funds with high-quality fund managers might offer higher growth potential. With careful selection, reinvested funds could yield enhanced returns in future market cycles.

Examining Actively Managed Funds over Index Funds
If considering reinvestment, actively managed funds are generally better suited to align with specific goals. They provide:

Manager Expertise: Actively managed funds adapt to market changes and opportunities, whereas index funds are passive and less flexible.

Higher Growth Potential: Actively managed funds, particularly those with expert fund managers, often have the ability to outperform indices in the long term.

Disadvantages of Direct Plans
If you’re currently investing directly, moving to a regular plan via a Certified Financial Planner (CFP) could benefit your portfolio. Here’s why:

Professional Guidance: With a CFP, you get personalised advice based on market trends and your financial goals.

Regular Monitoring: Direct investments lack regular, professional oversight. A CFP helps monitor performance, adjusting as needed.

Strategic Diversification: A CFP can recommend funds that align with your specific needs, ensuring you avoid common pitfalls and optimise your portfolio.

Assessing Tax Implications for SWP and Fund Shifts
Since tax efficiency is essential for long-term investing, understanding capital gains tax for mutual funds is vital:

Equity Mutual Funds: For equity mutual funds, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%, and short-term capital gains (STCG) are taxed at 20%.

Impact of SWP: When opting for SWP, each withdrawal may incur LTCG or STCG based on the holding period. Ensure withdrawals align with the latest tax rules to manage liabilities effectively.

By carefully balancing withdrawals and reinvestments, you can maximise gains without facing excessive tax burdens.

Considerations for the Long Term
For a 20+ year horizon, consider the following key points to maximise growth:

Diversify Across Sectors and Capitalisation: Diversify not just in Flexi Cap funds but across different fund categories for broader exposure.

Monitor Portfolio Health: Revisit your portfolio yearly with your CFP to ensure alignment with market conditions and personal goals.

Review Financial Goals Periodically: Your goals and risk tolerance may change over time. Regular reviews ensure your investments stay aligned with your long-term objectives.

Final Insights
In summary, maintaining your investments in the current funds with an XIRR below 20% could still yield significant growth over 20 years. Consistent performance, compounded annually, has substantial growth potential, especially in a Flexi Cap strategy. While switching funds might offer short-term benefits, consider the potential transaction costs and tax impacts.

If you wish for consistent income, a carefully structured SWP can help. Just ensure that any reinvested funds are actively managed and aligned with your objectives. Lastly, working with a CFP to manage, monitor, and rebalance your portfolio periodically would enhance the overall growth and stability of your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Asked on - Nov 12, 2024 | Answered on Nov 13, 2024
Listen
Thanks for help Can you share your website or contact details I need to review my existing portfolio Thanks in advance
Ans: I appreciate your trust and willingness to connect.
Let's embark on this financial journey together.
You can reach me through my website mentioned below.
This platform has restrictions on sharing personal contact. Hope you understand.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
Insagram: https://www.instagram.com/holistic_investment_planners/
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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Ans: Given your desire for aggressive growth in the next 3 years, it's crucial to assess your current mutual fund holdings and make informed decisions. Here are some considerations:

Performance Review: Evaluate the performance of your existing funds over the past few years. Look at their consistency, returns, and how they have performed during different market cycles.
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Exit Loads and Tax Implications: Understand any exit loads or tax implications associated with redeeming your existing investments, especially if they are less than 3 years old.
Consideration of Direct Plans: Switching to direct plans can save on expenses in the long run, potentially boosting returns. However, ensure you are comfortable with managing your investments independently or seek the assistance of a fee-based advisor.
After considering these factors, you can decide whether to continue with your current holdings, reallocate investments, or explore new funds that align better with your goals and risk appetite. It's essential to periodically review your portfolio and make adjustments as needed to stay on track with your financial objectives.

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Ramalingam

Ramalingam Kalirajan  |9810 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

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I am 🥇 ng these mfs 1.Parag parekh multi cap average invesent per month 6 to 8k in last 8 months ,return 17percent 2. 360 focused equity growth siping rs 2500 since 1.5 years return 20 percent 3. Newly started since 2 months pgim small cap return 4 percent 4. Mirae Blue chip holding 500 units sipped for 2.5 years return 73 percent at present Please advise on the future action like hold or keep investing
Ans: Firstly, it's truly heartening to see your commitment to investing and the returns you've achieved reflect that dedication. You've navigated various market conditions, showcasing resilience and an ability to adapt, which is commendable.

Looking at your portfolio, you've embraced a mix of multi-cap, focused equity, small-cap, and blue-chip funds. Each has its unique characteristics and serves a purpose in a diversified portfolio.

As for your future actions, it's essential to reflect on your investment goals. Are you investing for a specific milestone or a long-term horizon? The returns you've achieved are commendable, but what's the story behind these numbers? Understanding the 'why' behind your investments can guide your future decisions.

For your existing funds, consider reviewing their performance against benchmarks and their alignment with your goals. For new investments, ponder on whether they align with your strategy or introduce a new dimension to your portfolio.

In this journey of financial growth, it's not just about numbers but also about aligning your investments with your aspirations and values. A Certified Financial Planner can provide a holistic perspective, ensuring your investments resonate with your life's broader narrative.

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Latest Questions
Ramalingam

Ramalingam Kalirajan  |9810 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2025

Money
I am 27 years old i buy LIC's New Jeevan Labh Plan Plan -936 With Commencement date:28/07/2022 With Instalment Premium: 45,027.00 Per Year and I have LIC's Jeevan Umang Plan (945) With Commencement Date:-28/07/2022 With Instalment Premium: 66386.00 Per Year . My monthly income is eighty thousand Than What should I do With LIC Policy can I Surrender it or Something else
Ans: You are 27 years old. Your income is Rs. 80,000 per month. You are paying Rs. 45,027 annually for LIC’s New Jeevan Labh (Plan 936). You are also paying Rs. 66,386 annually for LIC’s Jeevan Umang (Plan 945). Both started on 28/07/2022. Combined, you are paying Rs. 1,11,413 per year. That is around Rs. 9,284 per month.

Let’s assess this from all angles.

? Your Age and Financial Advantage

– You are just 27 years old now.
– You have long working life ahead.
– This is the best time to build wealth.
– Time is your biggest asset right now.
– Small changes now will give big results later.
– Your current income is good.
– Rs. 80,000 per month gives you high saving potential.
– You are on the right track to start financial planning early.

? What LIC Policies Really Do

– Jeevan Labh and Jeevan Umang are traditional LIC policies.
– These are investment plus insurance plans.
– They offer low life cover.
– They offer very low returns.
– Returns are around 4% to 5% only.
– This is even lower than inflation.
– So your money loses value over time.
– You pay regular premium but get poor growth.
– These plans are not good for wealth creation.

? Problems With Investment-Cum-Insurance Plans

– These plans mix two different goals.
– One is protection, other is wealth building.
– But neither goal is fully achieved.
– Insurance cover is too low for your need.
– Investment return is too small for your future.
– Your money gets locked for long term.
– There is very low liquidity in such plans.
– You can’t withdraw when you need.
– If you miss premium, policy may lapse.
– It becomes a burden without good benefit.

? Better Way to Do Insurance

– Insurance is only for protection.
– For that, buy a pure term insurance plan.
– It is cheaper and gives high life cover.
– Premium will be very low at your age.
– You can get Rs. 1 crore cover at low cost.
– That will protect your family fully.
– Don’t use LIC traditional plans for insurance needs.

? Better Way to Do Investment

– Investment is for growth of money.
– Use mutual funds for this purpose.
– Start SIPs in actively managed mutual funds.
– These funds grow with market and give better returns.
– Index funds are not good for you.
– Index funds only copy the market blindly.
– They fall badly when market crashes.
– They don’t protect your money in tough times.
– Actively managed funds adjust risk and return.
– They are better for a long-term investor like you.

? Disadvantages of Continuing LIC Plans

– You will pay high premiums every year.
– Your returns will stay very low.
– You will not be able to stop in middle.
– You lose flexibility with your money.
– In future, you may need that money.
– But these plans lock it for 15–20 years.
– If you surrender later, you get less than what you paid.
– So, more delay will lead to more loss.

? Can You Surrender Now?

– Yes, you can surrender the plans now.
– But you have completed only 2 years.
– So surrender value will be low now.
– Still, it is better to stop early than regret later.
– You can consider paid-up option also.
– But that also gives poor return.
– The best step is to stop both policies.
– Take the loss now and secure your future better.
– Redeploy that money into mutual funds.

? What You Should Do Now

– First, buy a term insurance plan.
– This gives full life protection at low cost.
– Second, stop both LIC policies immediately.
– Don’t renew premium this July 2025.
– Third, start SIPs of Rs. 9,000 monthly in mutual funds.
– Choose 2 or 3 actively managed mutual funds.
– Use different types like large-cap, flexi-cap, hybrid.
– Start with regular plans through a Certified Financial Planner.
– Don’t go with direct mutual fund apps.

? Why Regular Funds Through CFP Are Better

– Direct funds offer no support.
– No one tells you when to change funds.
– During market fall, you may panic and stop SIPs.
– That harms your goals and confidence.
– Regular funds with CFP and MFD guidance give direction.
– CFP gives full financial planning service.
– They help in goal setting, rebalancing and exit strategy.
– Regular mode is more suitable for working individuals.
– Focus on value, not just cost.

? What Happens If You Delay Action

– You will continue paying Rs. 1.1 lakh yearly.
– For 20 years, this is over Rs. 22 lakh.
– You may get Rs. 30–32 lakh after 25 years.
– But value of money will reduce due to inflation.
– You are locking your potential wealth for poor gain.
– If you act now, your money will grow better.
– Mutual funds can build Rs. 1 crore in 25 years.
– But traditional LIC plans can’t reach there.

? Tax Benefit is Not Enough Reason

– LIC policies offer 80C benefit.
– But that’s not enough to keep bad investment.
– ELSS mutual fund also gives same benefit.
– And gives higher returns than LIC plans.
– Tax-saving should not be your main reason to invest.
– Return, liquidity and flexibility are more important.

? Protecting Your Financial Future

– You are young and earning well.
– This is the best time to invest right.
– Avoid emotional attachment to LIC policies.
– Take informed decision with full calculation.
– Focus on long-term wealth creation.
– Your financial freedom depends on your decisions today.
– Choose flexible, high-growth investment options.
– Stay protected with proper term insurance.

? Role of a Certified Financial Planner

– A CFP helps build your financial foundation.
– They create a plan based on your life goals.
– They track your progress and help in rebalancing.
– They also help in choosing right SIPs and insurance.
– A CFP ensures you don’t make random decisions.
– Instead of following crowd, you follow a structured path.
– Your money works better with CFP guidance.

? Finally

– You are still early in your working life.
– But LIC policies are not suitable for you.
– They give low return, low cover, and low flexibility.
– You should stop both plans now.
– Buy a good term insurance policy.
– Start mutual fund SIPs in regular plan through CFP.
– Plan your future with full awareness and proper support.
– Take this small step today.
– It will give you peace and growth for many years ahead.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9810 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2025

Asked by Anonymous - Jun 29, 2025Hindi
Money
I am 35 year old, my family net income is 2 lakhs, have 3 residential old flats , all three are on loan the loan rate is 6.5 percent as they are subsidized and also completely own a plot....the combined circle rate of above properties is 2.5Cr. The combined outstandin loan amount for 3 flats is 1.3Cr. Also have 10 lakh personal loan with 8.5 percent and another 20 lakh with 10.5 percent for duration of 7 years and another loan of 15 lakhs with 9.5 percent for period of 15 years. The income from flats is 25k. Net deductions is around 1.5 lakh and we are left with 50 plus 25 rent, total 75k..in which expenses are 40k and savings are only 35k. NPS contribution on family is around 50 lakhs both being psu employees with 35k contribution to NPS monthly. Am i taking too much stress having high debt to income ratio...or am i on right path...?
Ans: You are 35 years old. Your total family income is Rs. 2 lakh per month. You own 3 old flats (on loan) and one plot (fully owned). Your loan burden is high, with both home and personal loans.

You’re contributing Rs. 35,000 monthly to NPS. You are left with Rs. 75,000 after EMI and deductions. Expenses are Rs. 40,000 and savings Rs. 35,000.

Let us review your situation with care and give complete clarity.

? Family Income and Monthly Flow

– Rs. 2 lakh income is stable and strong.
– You are PSU employees. So job security is high.
– Rent income is Rs. 25,000 per month.
– After EMIs and deductions, you keep Rs. 75,000 monthly.
– This includes the rent inflow.
– Your lifestyle expenses are Rs. 40,000.
– That leaves Rs. 35,000 monthly for savings.
– You are handling things, but pressure is rising.

? Loan Portfolio Evaluation

– Three home loans total to Rs. 1.3 crore.
– Personal loans are another Rs. 45 lakh in total.
– You have Rs. 10 lakh loan at 8.5% interest.
– Another Rs. 20 lakh loan at 10.5% for 7 years.
– One more Rs. 15 lakh loan at 9.5% for 15 years.
– These personal loans carry high interest.
– Your debt to income ratio is very tight.
– Most of your income goes in EMI and NPS.
– High debt can create stress later.

? Real Estate Exposure is Very High

– You have 3 flats already on loan.
– You also own a plot completely.
– Combined circle rate of all is Rs. 2.5 crore.
– But this value is not liquid.
– Real estate gives poor cash flow.
– You earn only Rs. 25,000 rent from three flats.
– That is very low return for such high asset base.
– Flats need maintenance, taxes, and tenant risk.
– Real estate is not suitable for high growth.
– It is also difficult to sell fast in need.
– Avoid adding more property now.
– You are over-exposed already.

? Personal Loans are Draining Your Cash

– Personal loans are expensive.
– Their interest is higher than home loans.
– Their tax benefit is also low.
– First priority should be to reduce these loans.
– Begin with the Rs. 10 lakh loan at 8.5%.
– After that, target Rs. 20 lakh loan at 10.5%.
– Don’t stretch repayment over long term.
– Use any lump sum or annual bonus to reduce this.

? Emergency Reserve is Missing

– No mention of emergency fund in your statement.
– You must have at least Rs. 3–4 lakh in liquid assets.
– This helps during sudden medical, job, or repair issues.
– Emergency fund should be in FD or liquid mutual fund.
– Without this, you may borrow again.
– Create this reserve before making new investments.

? NPS Corpus and Contribution

– Your family NPS corpus is already Rs. 50 lakh.
– Monthly contribution is Rs. 35,000.
– This is good for long-term retirement.
– But NPS is locked till age 60.
– It has very low liquidity.
– You cannot use NPS for education or loan repayment.
– So don’t increase NPS beyond current level.
– Focus now on flexible investments.
– SIPs in mutual funds are better for mid-term goals.

? Real Estate: Capital is Locked

– The Rs. 2.5 crore property value is not usable now.
– You cannot access that money fast.
– Also, rent returns are very low.
– Property resale takes long time.
– Price may not match the circle rate.
– So, don’t count property as investment growth tool.
– Real estate is not productive asset for your case.

? Financial Stress Indicators

– High EMI and low surplus shows financial strain.
– Rs. 1.5 lakh deduction is very high from Rs. 2 lakh income.
– Only Rs. 35,000 is left for saving.
– This is just 17.5% of income.
– Ideally, savings should be above 30–35%.
– Your income is strong, but debt is heavy.
– You are able to manage now.
– But one emergency can shake your plan.

? Steps to Reduce Financial Pressure

– Stop new property purchases immediately.
– Focus only on clearing personal loans first.
– Sell any underused flat if needed.
– Use that to reduce debt sharply.
– A one-time flat sale can free monthly EMI.
– This improves cash flow immediately.
– Also pause all non-essential expenses.
– Control lifestyle for 12–18 months strictly.

? Mutual Funds Can Offer Liquidity and Growth

– You should start monthly SIPs now.
– Actively managed mutual funds are good for growth.
– Index funds only copy the market.
– They offer no risk control in fall.
– Active funds are handled by skilled fund managers.
– They protect downside and capture upside.
– Use regular plans via Certified Financial Planner.
– Direct mutual funds give no emotional support.
– CFP and MFD will guide properly.

? Insurance Planning Must Be Reviewed

– No details given about life or health insurance.
– You must have pure term insurance policy.
– It should be 10–12 times your yearly income.
– Avoid ULIP and investment-insurance mixes.
– Also ensure family has health insurance cover.
– Dependents should not suffer due to loan pressure.
– Insurance gives mental peace during hard times.

? Children’s Future Needs Separate Planning

– If you have kids, education planning is must.
– Don’t use property for education.
– Start SIPs separately for their future.
– Keep it untouched till goal is near.
– Don’t delay children’s SIPs to clear loan.
– Balance both together with help of CFP.

? Debt Reduction Strategy

– Prioritise repayment based on interest rate.
– Begin with highest interest loan.
– Don’t break NPS or PF for loan.
– Use annual income growth to repay faster.
– Explore switching personal loan to lower interest if possible.
– Avoid balance transfer charges or hidden fees.
– Don’t take fresh loans for old loan closure.

? Tax Planning Should Be Aligned

– NPS already covers Section 80C and 80CCD.
– Avoid putting extra money into tax-saving FDs.
– Don’t use insurance for tax saving.
– Use ELSS only through regular route.
– Review tax impact on rental income also.
– CFP will structure this with clarity.

? Real Estate Exit Options

– If one flat is old and unused, consider selling.
– Don’t wait for market peak.
– Selling one flat and closing personal loans is better.
– This improves cash flow every month.
– It also increases peace of mind.
– Discuss exit planning with a CFP.

? Review and Monitor Monthly

– Every month, check EMI and saving ratio.
– Track how much loan is reducing.
– Maintain one personal cash flow sheet.
– This builds discipline and awareness.
– Meet a Certified Financial Planner every 6 months.

? Avoid New Commitments or Expenses

– Don’t upgrade car or home now.
– Don’t plan international travel soon.
– Avoid luxury or social pressure expenses.
– Focus only on stabilising your cash flow.
– In future, you will have flexibility.
– First, reduce debt and build financial strength.

? Mental and Emotional Well-Being

– High loans can impact mental peace.
– You are working hard to manage it.
– A structured plan gives relief and clarity.
– Don’t compare with others.
– Your assets are high but locked.
– Shift focus to cash flow and liquidity now.

? Finally

– Your income is strong. But loan load is very high.
– You are managing, but not freely.
– Your property assets are over-weighted.
– Rent income is not enough for value they hold.
– Sell one property if needed and reduce loan.
– Reduce personal loans first. Then focus on wealth.
– Start SIPs in mutual funds for liquidity and growth.
– Avoid real estate as investment.
– Work closely with a Certified Financial Planner.
– Recheck every 6 months for progress.
– Your peace of mind is also part of your financial health.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9810 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2025

Asked by Anonymous - Jul 12, 2025Hindi
Money
Hello sir, I am 38 year old working lady with 2 kids 11, 6 years. As a family we earn 2.25L per month (Sal + 25K rent). Have a home loan about 1CR. About 10L in PF acct for both. 5L in FD as emergency cash. Please guide what other things I can do or must do to secure the family.
Ans: You are a 38-year-old working woman. You have 2 school-going children. Your total family income is Rs. 2.25L per month including rent. You are paying a home loan of Rs. 1 crore. You have Rs. 10 lakh in PF and Rs. 5 lakh in FD.

Your question is sincere and responsible. You want to secure your family. Let’s look at all areas step by step.

? Family Income and Financial Strength

– Monthly income of Rs. 2.25L is strong and stable.
– You have a rental income of Rs. 25,000. That gives extra safety.
– Your emergency fund of Rs. 5L in FD is very thoughtful.
– You have Rs. 10L in PF combined. That adds long-term support.
– You are on the right path already. Appreciate your effort.

? Home Loan and EMI Impact

– Rs. 1 crore loan is a big responsibility.
– Monthly EMI may take a large part of income.
– Check if you are paying more than 35% of income on EMI.
– If yes, then reduce other big expenses.
– Don’t rush to prepay the loan aggressively now.
– Invest and grow wealth in parallel.
– Let the loan run if interest is low.
– Focus more on building financial assets alongside loan.

? Emergency Fund Position

– Rs. 5 lakh in FD is a good step.
– But for your income level, increase it to Rs. 7–8 lakh.
– This should cover 4 to 5 months of expenses.
– Include EMI and school fees also in that.
– Keep this fund only in FD or liquid mutual fund.
– Don’t mix this with long-term investments.
– Maintain it always. Don’t break unless emergency comes.

? Importance of Health Insurance

– Do you have a separate health insurance outside employer cover?
– If not, please buy one immediately for all four.
– Family floater policy for you, spouse and kids is a must.
– Medical inflation is rising every year.
– Corporate cover ends if job ends.
– A personal health cover is must-have.
– Also check if your parents are financially dependent.
– If yes, consider a senior citizen health cover for them too.

? Life Insurance Needs

– If you are the main income earner, then term insurance is must.
– Buy only pure term insurance, not ULIP or money-back plans.
– These investment-insurance mix plans give poor returns.
– ULIPs have high charges and very long lock-in.
– Check your current insurance policies.
– If they are traditional endowment or ULIPs, stop future premiums.
– Surrender and reinvest the surrender amount in mutual funds.
– Term insurance must be at least 10–15 times your yearly income.
– That gives enough protection for your children and spouse.

? Children's Education Planning

– Your kids are 11 and 6 years old.
– College expenses will begin in 6 to 10 years.
– You need separate investments for their higher studies.
– Start SIPs in 2-3 actively managed mutual funds.
– Equity mutual funds with a 7–10 year horizon are ideal.
– Avoid index funds. They just mirror the market.
– Index funds fall badly during crisis and don’t protect value.
– Actively managed funds are monitored by fund managers.
– They help reduce downside in tough markets.
– Start two SIPs separately—one for each child.
– This gives purpose and structure to your saving.

? Regular vs Direct Mutual Fund Route

– Avoid direct mutual funds through online apps.
– These don’t offer expert handholding or behavioural guidance.
– Direct funds are confusing if market falls.
– Regular plans via a Certified Financial Planner are better.
– CFP offers full 360-degree guidance.
– They review goals, risk, taxes, and adjust plans.
– Regular funds may have small cost but high peace.
– MFDs with CFP credential keep you focused and calm.

? Retirement Planning for You and Spouse

– Retirement will come in next 20 years or so.
– EPF is a good start but not enough.
– You will need large retirement corpus.
– Start equity mutual fund SIPs for long-term growth.
– Choose multi-cap or flexi-cap mutual funds with 10+ year vision.
– Review progress once in 6 months.
– Do not use these funds for kids or home loan.
– Retirement should be a separate priority.

? SIP Allocation Strategy

– Your family income is Rs. 2.25 lakh monthly.
– After EMI, rent, school fees, and household, you will have some surplus.
– Use that to invest through SIPs.
– Split SIPs into short-term and long-term.
– Short-term for child’s school fees or holiday.
– Long-term for higher education and retirement.
– This keeps purpose clear and investment focused.

? Tax Saving Plan

– You already have PF for deduction under Section 80C.
– Also check your term insurance premium.
– Avoid locking all 80C into policies or ULIPs.
– Instead use ELSS (tax-saving mutual fund).
– ELSS gives you growth and tax benefit both.
– Limit your FD usage to emergency only.
– FDs give low returns and are taxable.

? Will and Estate Planning

– You are a parent. You must write a will.
– Decide how assets should be passed.
– Nomination is not the same as a will.
– A will avoids family disputes later.
– Also teach basic finance to your spouse.
– Both should know bank, mutual fund, and insurance details.
– Keep all documents in one place.
– Update them every year.

? Protecting Children’s Future

– Make sure both kids have their education investments set.
– Review these SIPs once a year.
– Don’t touch this money for other use.
– Talk to them about money slowly.
– Teach saving and budgeting in small ways.
– Children learn from parents more than school.

? Avoiding Risky or Unfit Options

– Don’t invest in gold schemes or chit funds.
– Don’t buy real estate for investment now.
– Real estate brings stress and low liquidity.
– Avoid crypto or hot stock tips.
– No gambling with children’s future.
– Keep your focus on mutual funds with clear goals.

? Debt Management Strategy

– Review your home loan interest rate.
– If it’s above 9%, try to reduce it.
– Ask bank to recheck the rate slab.
– Don’t take personal or credit card loans.
– Avoid EMI purchases unless essential.
– Keep your CIBIL score healthy.
– Good credit history helps your kids later also.

? Review and Adjust Every 6 Months

– Financial plan is not one-time job.
– Markets and life both keep changing.
– Sit with your CFP every 6 months.
– Re-check your investments and goals.
– Adjust SIPs, targets, and fund allocation.
– Stay flexible but stay committed.

? Plan for One-Time Big Expenses

– Kids’ school fees, house repairs, travel plans need yearly funds.
– For this, use a short-term mutual fund.
– Keep this amount ready in 6-month horizon fund.
– Don’t disturb retirement or children’s SIPs.

? Keep Family Involved in Financial Planning

– Sit with your spouse once every 3 months.
– Share all updates of insurance, investments, debts.
– Include older children slowly in talks.
– This builds awareness and reduces confusion.

? Stay Disciplined and Keep Emotions Away

– Don’t get scared in market falls.
– Don’t stop SIPs when market drops.
– Volatility is part of investing.
– SIPs actually benefit in falling market.
– Keep emotions out and system in.

? Use Professional Guidance Regularly

– A Certified Financial Planner sees things in 360 degree.
– They know your risk, income, goals, and taxes.
– DIY methods fail in emotional moments.
– Let a CFP and MFD guide your family.
– Regular reviews keep plan on track.

? Final Insights

– You are already doing many right things.
– Now give your plan a proper structure.
– Secure your insurance, emergency fund, and health cover.
– Separate long-term and short-term goals clearly.
– Build wealth through mutual funds in regular mode.
– Avoid bad products like ULIP, gold schemes, and real estate.
– Keep teaching your kids slowly about money.
– Stay calm and keep reviewing regularly with a CFP.
– Your family’s future will stay protected and comfortable.

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

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