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Vivek

Vivek Lala  | Answer  |Ask -

Tax, MF Expert - Answered on Mar 11, 2023

Vivek Lala has been working as a tax planner since 2018. His expertise lies in making personalised tax budgets and tax forecasts for individuals. As a tax advisor, he takes pride in simplifying tax complications for his clients using simple, easy-to-understand language.
Lala cleared his chartered accountancy exam in 2018 and completed his articleship with Chaturvedi and Shah. ... more
Asked by Anonymous - Feb 20, 2023Hindi
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Hello sir, my mother died last month as i am only nominee i got @ 11 lacs in my account. I am salaried person of 2.5lacs pa , thus it will tax me please guide and suggest a investment plan.

Ans: The taxation depends on the source of the 11 lakhs. If you are planning to invest this money for long term , you can go for a balanced portfolio of mutual funds.
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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Ramalingam

Ramalingam Kalirajan  |8104 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2024

Asked by Anonymous - Jul 02, 2024Hindi
Money
Hello, I am having a corpse fund of 40 lacs which I want to invest Already have SIP of 1.20 lacs per month How can I these 40 lacs , what are better options to get these invested? Real estate ? Commercial space ? Mutual Funds as lumpsum? Please guide
Ans: You’re already doing a great job with your monthly SIP of Rs. 1.20 lakhs. Investing Rs. 40 lakhs wisely can further strengthen your financial portfolio. Let’s explore the best strategies to achieve this.

Understanding Your Current Situation
You have a solid financial foundation. Your existing SIP investments show your commitment to long-term wealth creation. Now, you have Rs. 40 lakhs ready for investment. Your goal should be to diversify and optimize this amount for maximum growth and safety.

Evaluating Investment Options
1. Mutual Funds (Lumpsum Investment)

Mutual funds are a versatile investment option. They offer diversification, professional management, and potential for high returns. Here’s how you can approach lumpsum investments in mutual funds:

Advantages:

Diversification: Spreads risk across various assets. This reduces the impact of poor performance by a single investment.

Professional Management: Managed by experts who make informed investment decisions.

Flexibility: Choose from various types of funds based on your risk tolerance and goals.

Liquidity: Easily redeemable, providing quick access to your money.

Categories of Mutual Funds:

a. Equity Funds: Ideal for long-term goals. Invest in these for higher returns. They come with higher risk but also higher growth potential.

b. Debt Funds: Suitable for conservative investors. These funds invest in fixed-income securities like bonds. They provide stability and regular income.

c. Hybrid Funds: A mix of equity and debt. These funds balance risk and return. They are suitable for moderate risk-takers.

Strategy for Lumpsum Investment
1. Staggered Investment Approach:

Investing a large sum at once can be risky due to market volatility. A staggered approach, like Systematic Transfer Plan (STP), can mitigate this risk. Here’s how it works:

Systematic Transfer Plan (STP): Transfer your lumpsum amount to a liquid or debt fund. From there, systematically transfer a fixed amount to an equity fund over a period (e.g., 6-12 months). This balances out market fluctuations.
2. Diversified Portfolio:

Divide your investment across different types of funds. This ensures a balanced risk-return ratio. For example:

Equity Funds: Allocate a significant portion to equity funds for long-term growth. Choose funds with a good track record and consistent performance.

Debt Funds: Allocate a portion to debt funds for stability. These funds act as a cushion during market volatility.

Hybrid Funds: Include hybrid funds for a balanced approach. They provide a mix of growth and stability.

Risk Management
Investing in mutual funds involves market risk. Here’s how to manage it:

1. Diversification:

Diversify across various fund categories. This spreads your risk and reduces the impact of any single investment performing poorly.

2. Regular Monitoring:

Regularly review your investment portfolio. Track performance and make necessary adjustments. This ensures your investments stay aligned with your goals.

3. Professional Advice:

Consider consulting a Certified Financial Planner (CFP) for personalized advice. They can help tailor your investment strategy based on your specific needs and risk tolerance.

Power of Compounding
Mutual funds benefit greatly from the power of compounding. Here’s how it works:

1. Reinvestment of Returns:

Mutual funds reinvest the returns generated. This means your earnings generate more earnings, leading to exponential growth over time.

2. Long-Term Growth:

The longer you stay invested, the more your money grows. Starting early and staying invested is key to maximizing the benefits of compounding.

Exploring Other Investment Options
While mutual funds are a strong choice, let’s briefly evaluate other common investment options and why they may not be as optimal:

1. Real Estate

Real estate can be a significant investment, but it comes with several challenges:

Illiquidity: Real estate investments are not easily liquidated. Selling property can take time, especially during market downturns.

High Transaction Costs: Buying and selling property involves high transaction costs, including registration fees, stamp duty, and agent commissions.

Market Risk: Property values can fluctuate based on market conditions, location, and other factors.

Given these factors, real estate might not be the best option compared to the flexibility and potential of mutual funds.

2. Commercial Space

Investing in commercial space has its own set of challenges:

High Initial Investment: Requires a substantial amount upfront, often more than residential real estate.

Market Dependency: The success of commercial investments depends on market demand, location, and economic conditions.

Management Hassles: Managing commercial property involves dealing with tenants, maintenance, and regulatory compliance.

These challenges make commercial space a less attractive option for many investors.

Creating a Comprehensive Investment Plan
Given your situation, here’s a detailed plan for investing your Rs. 40 lakhs:

1. Emergency Fund:

Ensure you have an emergency fund covering 6-12 months of expenses. This provides a safety net during unforeseen circumstances.

2. Lump Sum in Mutual Funds:

Allocate your Rs. 40 lakhs across different mutual funds. Use a staggered investment approach like STP to manage market risk.

3. Diversified Portfolio:

Build a diversified portfolio with a mix of equity, debt, and hybrid funds. This balances growth and stability.

4. Regular Monitoring:

Review your portfolio regularly. Track performance and adjust as needed to stay aligned with your goals.

Mutual Funds: A Closer Look
1. Equity Funds:

Equity funds are ideal for long-term growth. They invest primarily in stocks and have the potential for high returns. However, they come with higher risk.

Diversified Equity Funds: These funds invest in a wide range of stocks across different sectors. They spread risk and offer good growth potential.

Sectoral Funds: These funds focus on specific sectors like technology or healthcare. They can provide high returns but come with higher risk.

2. Debt Funds:

Debt funds invest in fixed-income securities like bonds. They offer stability and regular income, making them suitable for conservative investors.

Liquid Funds: Ideal for short-term investments. They invest in short-term money market instruments and provide quick access to your money.

Income Funds: These funds invest in bonds and other fixed-income securities. They provide regular income and are suitable for conservative investors.

3. Hybrid Funds:

Hybrid funds invest in a mix of equity and debt. They balance risk and return, making them suitable for moderate risk-takers.

Balanced Funds: These funds maintain a balanced allocation between equity and debt. They offer moderate growth and stability.

Dynamic Asset Allocation Funds: These funds adjust the allocation between equity and debt based on market conditions. They provide flexibility and balanced returns.

Importance of Regular Monitoring
Regularly monitoring your investments is crucial. Here’s why:

1. Performance Tracking:

Track the performance of your funds. This helps you understand how your investments are doing and make informed decisions.

2. Rebalancing:

Rebalance your portfolio periodically. This ensures your asset allocation remains aligned with your goals and risk tolerance.

3. Adjusting to Market Conditions:

Market conditions can change. Regular monitoring helps you adjust your investments to take advantage of opportunities and mitigate risks.

Power of Compounding: A Deep Dive
Compounding is the process where your investment earns returns, and those returns start earning returns. Here’s why it’s powerful:

1. Exponential Growth:

Compounding leads to exponential growth. The longer you stay invested, the more your money grows.

2. Reinvestment:

Mutual funds reinvest earnings, leading to compounding. This accelerates your wealth creation over time.

3. Time Horizon:

The key to maximizing compounding is a long time horizon. Start early and stay invested to reap the benefits of compounding.

Final Insights
You’ve already taken significant steps towards financial security. Investing your Rs. 40 lakhs wisely can further strengthen your portfolio. Focus on a diversified approach, regular monitoring, and leveraging the power of compounding. By doing so, you can achieve your financial goals and secure a bright future for yourself and your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8104 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 26, 2024

Asked by Anonymous - Nov 13, 2024Hindi
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Hello I am 36 years old female having a 2 year old toddler. I am not able to resume any work due to family responsibilities.however I have inherited almost a corpus of 80 lacs from parents which I need to invest for monthly income of 1 lac approx while saving the capital.my husband is working and earns 40 k per month after household expenses and basic term and health insurance we aren't left with any corpus for future expense like child education retirement corpus etc.kindly guide.
Ans: Your financial discipline is admirable, especially with consistent SIPs and LIC contributions. However, balancing between mandatory expenses and savings is critical. Let us explore ways to optimise your income for greater savings and a secure future.

Understanding Cash Flow Issues

You have a structured budget with Rs. 75,000 as your EMI, Rs. 30,000 in SIPs, Rs. 10,000 in LIC, and Rs. 15,000 for home expenses. This leaves you with Rs. 30,000. However, the lack of liquid cash at month-end signals an imbalance.

Three factors need attention:

High EMI compared to income
Lack of emergency savings
Minimal liquidity for unforeseen expenses
Let us address each systematically.

Reassessing the Home Loan EMI

Rs. 75,000 EMI forms nearly 47% of your income. Ideally, this should be below 30%.
Contact your lender to extend the loan tenure. This will reduce EMI and ease your cash flow.
Check for refinancing options with lower interest rates. Even a small reduction in interest rates will lower the EMI significantly.
Optimising SIP Contributions

Rs. 30,000 in SIPs is commendable. It reflects your commitment to long-term wealth creation.
However, assess the funds’ performance regularly.
Consider temporarily reducing SIP contributions to Rs. 20,000 until your cash flow improves. Once your financial situation stabilises, increase the amount gradually.
Evaluating the LIC Policy

Check if your LIC policy is purely insurance or investment-cum-insurance.
If it is an investment-cum-insurance policy, evaluate its returns and coverage.
Consider surrendering low-return policies and reinvesting the surrender value into mutual funds through a certified financial planner (CFP).
Building an Emergency Fund

An emergency fund should cover at least six months of expenses.
Allocate Rs. 5,000 monthly towards building this fund.
Use a high-yield savings account or liquid mutual fund for easy access.
Streamlining Monthly Expenses

Home expenses of Rs. 15,000 seem reasonable.
Review discretionary expenses such as dining out or subscriptions.
Implement cost-saving measures, such as cooking at home or choosing economical alternatives.
Boosting Monthly Savings

Automate your savings to ensure consistency.
After revising your SIPs and reducing EMI, direct surplus income to a recurring deposit.
A recurring deposit will instil discipline and grow liquidity.
Strategising for Your Daughter’s Future

At 14, her higher education costs are imminent. Start a dedicated fund for this purpose.
Invest in a balanced mutual fund with a horizon of four to five years.
Reassess the fund's allocation annually as the education expense nears.
Retirement Planning

Your current focus is understandably on immediate needs.
Once cash flow improves, allocate Rs. 5,000 monthly for retirement in a retirement-focused mutual fund.
Begin this once your emergency fund is in place.
Avoiding Common Financial Pitfalls

Do not borrow for non-essential expenses.
Avoid policies or investments with high charges and low returns.
Stay insured with adequate health and term insurance coverage.
Regular Review and Adjustment

Revisit your financial plan every six months.
Seek advice from a certified financial planner to optimise investments and tax savings.
Adjust your strategy as your income grows or expenses change.
Finally

Your current efforts show dedication to financial stability. By rebalancing EMI, SIPs, and building liquidity, you will improve cash flow significantly. Stay consistent with disciplined savings, and your future financial goals will be secure.

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

..Read more

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Radheshyam

Radheshyam Zanwar  |1440 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Mar 17, 2025

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My daughter is completed her 1 PUC and has started with 2nd PUC. In college they have started with CET coaching. She is a good swimmer and want to pursue water Polo and wants to go coaching in the morning. She tells 'I don't want to write CET. I don't want to pursue Engineering. I want to take up Marine Biology. I don't neet CET for that. I will study only for Board exam and pursue Swimming classes in the morning' We wanted her to take up CET to keep Engg as an option as Marine Biology is a niche field and might be difficult to land on a job as we have less scope in India She has made it clear if you force me i will not read and write exam without reading. Actually she is capable of writing CET, but she do not want to and she is not reading. Her focus is only on swimming
Ans: Hello Aruna.
If your daughter is passionate about swimming and water polo, encourage her to continue. Support her participation in national and international competitions. If she excels in these sports and obtains a valid certificate, she may secure a government job directly after graduation in the respective field. IIT Madras has even reserved two seats for sports candidates, meaning there is no need to take the JEE (Advanced). For more details, please visit the website: ugadmissions.iitm.ac.in/scope.
As a parent, your concerns are valid. If she fails to excel in her passion, what will happen to her future? It would be wise to suggest that she attempt the state-level CET entrance examination, even without preparation. Just ask her to submit the answer sheet with random answers. Even if she scores the minimum marks, she can still gain admission to a reputable engineering college through the management quota. If she is not willing to listen to you, it may be beneficial to take her for personal counseling. It raises the question of what she is doing with the remaining hours after spending one, two, or three hours swimming. If she is hesitant to join classes, consider hiring personal tutors to keep her engaged with the syllabus and studies. While a career in sports is possible, for many, it remains just a dream. The journey is quite challenging, and in most cases, strong political connections are needed to advance in sports. Your daughter might be unaware of this reality at a young age. It is advisable to explain these truths to her so that she understands the challenges ahead. Thank you.
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My age is 25 years and my boyfriend age is 29 years. I have boyfriend and we are dating for around 2 years, we are thinking about marriage. My family members love him and his family members love me. But the situation is like this that, my elder sister is getting divorce so it will take time atleast 4 years. But we can't wait for 4 years because my boyfriend is from gujarat. So in Gujarat, families dont wait for long but in my case my boyfriend and his family members waited for 2 years. Because my family members are saying when my elder sister will get married then after my marriage will come. and my family members are brain washing me and my boyfriend saying that first elder sister should get married if it takes times 6 years still u have to wait. My family members are pressurizing me alot. Infact I discuss and my boyfriend discuss with my family members about the situation but my family is not understanding and they are just pressurizing me alot and making my life hell. Even my elder sister is saying to me that my colleagues are not getting married why u have to get married soon. But my point is that I m not kid I m 25 years old and because of her I m suffering alot because if she cant get married I cant get married this wrong. And because of taht me and boyfriend are arguing alot in this. Like If i waited for my elder sister divorce plus her marriage it will take around 4 years. But I dont think so this is right because of my elder sister I m facing issues and thats wrong. Because i dont know whether after divorce she will get married or not. So because of her I m suffering alot. And the divorce procedure will take 4 - 6 years. Because we dont know that how much time will it take for my elder sisters divorce because she is not doing normal one she has cased a file against jiju so thats why it huge procedure. So that's why we think that we will do court marriage in next month. We both have a support from his family members. His family members are saying that do court marriage without knowing any ones relatives and once your family agrees within this year then its fine but if not then you come here next year and we will do marriage for both of you. So this is right?
Ans: Dear Anonymous,
You need to make a decision for yourself after looking at all the pros and cons. How are you going to be able to handle your parents once you make the decision to go ahead with the marriage?
Also, on your part, you are right in asking, how long do you need to wait?
Before making a decision, always think far ahead as to how your environment will react and how you are going to handle all of it.

All the best!
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Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

...Read more

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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