Home > Money > Question
Need Expert Advice?Our Gurus Can Help

How can I increase my income with a low income and contractual job in a small town in Odisha?

Ramalingam

Ramalingam Kalirajan  |8182 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 01, 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
Khirod Question by Khirod on Oct 22, 2024Hindi
Money

Hello Patel Sir, I am a middle class person income of Rs. 25000/- pm through contractual job resides in small town in Odisha. How could I increase my income by investing or doing extra work in future .

Ans: Your question reflects a sincere and goal-oriented approach towards financial growth. With careful planning and some extra efforts, you can lay the groundwork for increasing your income, whether through investments or additional sources of income. Below, let’s discuss actionable and effective strategies for increasing your income from a 360-degree perspective.

1. Assess and Optimise Your Monthly Budget

Understanding your spending is the first step. Track your expenses to identify savings. Prioritising your essential expenses helps you set aside funds for investments. Even small savings can compound into a solid base over time.

2. Start Building an Emergency Fund

An emergency fund safeguards you during unexpected times. Aim to set aside at least six months’ worth of expenses. Use a liquid fund or recurring deposit, which keeps funds accessible and offers moderate returns. Once stable, move to long-term investments.

3. Increase Skills and Seek Additional Job Opportunities

Improving your skills can open doors to better job opportunities. Look for skill courses in your field or learn something new online. Skilled professionals can command higher pay, whether in current roles or new opportunities. Additionally, part-time freelance or contract work is a viable option. Platforms like Upwork or Fiverr connect you to work-from-home opportunities, bringing extra income.

4. Systematic Investment in Mutual Funds

Mutual funds can be a significant addition to your income-building strategy. As a beginner, consider starting small, investing as little as Rs. 500 to Rs. 1,000 each month. SIPs (Systematic Investment Plans) are accessible, offer compounding growth, and support disciplined investing. Avoid direct funds as these can be challenging to track and manage. Opting for regular plans through a trusted CFP is advisable. A Certified Financial Planner can help you select funds aligned with your financial goals and needs. Regular plans offer the advantage of continuous guidance, portfolio reviews, and support from financial experts.

5. Side Business or Passive Income Options

Consider starting a small side business or exploring passive income options. If you have skills like cooking, gardening, or teaching, you can monetise these in your local community. Passive income options like creating content online or renting equipment may require some initial work but generate consistent revenue. Research local demand to choose the best opportunities in your area.

6. Low-Cost Investment Options

To maximise returns, choose cost-effective investments. For instance, actively managed mutual funds help outperform standard returns, unlike index funds which may not suit your goal of increasing income. Actively managed funds enable you to benefit from expert decision-making, improving growth prospects. Index funds lack flexibility and often fall short in uncertain markets.

7. Avoid Insurance-Linked Investments

Since you are considering investments, avoid mixing insurance with investment, like ULIPs or endowment plans. Insurance-linked investments often have higher fees, locking you into long terms without high returns. Opt for pure insurance for protection and separate investments for growth.

8. Focus on Equity-Oriented Funds for Higher Returns

Equity mutual funds can offer higher returns but come with market-related risks. If you invest with a long-term horizon of 5-7 years, equity mutual funds can be rewarding. They require patience, but equity-based funds have a history of outperforming inflation, making them suitable for your income-increasing goal. Stay invested and avoid frequent withdrawals to benefit from compounding.

9. Create a Long-Term Investment Plan

A well-structured investment plan helps you achieve both short and long-term goals. Alongside monthly investments in mutual funds, create a roadmap for career progression, additional skills, and other investment avenues. A long-term plan provides stability and keeps you on track to increasing income and wealth.

10. Look into Debt Mutual Funds for Stability

Debt mutual funds are suitable for shorter-term goals, offering stability with low to moderate returns. When you need capital preservation or prefer steady growth, debt funds serve well. While equity offers growth, debt funds balance your portfolio. Remember, income from debt funds is taxed based on your tax slab.

11. Minimise Tax Liability on Gains

Investing in mutual funds comes with tax implications. Equity mutual funds are taxed on long-term gains over Rs. 1.25 lakh at 12.5%, and short-term gains at 20%. Proper planning can help you minimise tax outgo, maximising returns.

12. Review and Adjust Portfolio Regularly

As a beginner, you might need help with adjusting investments. Working with a Certified Financial Planner can ensure your portfolio is regularly reviewed and adjusted as per market conditions. This guidance is beneficial in maximising returns and staying on track with your financial goals.

Final Insights

Increasing income requires a balance between smart investments and skill development. By focusing on regular investments, building skills, and exploring passive income, you lay a strong foundation for financial growth. Working closely with a Certified Financial Planner helps ensure your investments align with your goals, providing the guidance you need to progress confidently.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8182 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 06, 2024

Money
Hi sir I'm hemanth working in postal department with 21k and doing sip of 7k in 9 Mfs from past 3 years and 1 lakh in direct stocks....can u suggest me to do something else to increase my passive income
Ans: Hi Hemanth! First, let me congratulate you on your disciplined investment approach. Investing Rs. 7,000 monthly in SIPs and holding Rs. 1 lakh in direct stocks is commendable. Let’s explore how you can increase your passive income.

Understanding Your Current Investment Portfolio
You’re currently investing Rs. 7,000 per month in 9 mutual funds and have Rs. 1 lakh in direct stocks. This is a great start and shows your commitment to building wealth. Here’s how you can optimize and diversify further.

Diversifying Mutual Funds
While investing in mutual funds, diversification is key. You’ve chosen 9 mutual funds, but it's essential to review their categories and performance regularly.

Types of Mutual Funds
Equity Funds: High risk, high return. Suitable for long-term goals.
Debt Funds: Low risk, stable returns. Ideal for short to medium-term goals.
Hybrid Funds: Mix of equity and debt. Balances risk and return.
Advantages of Mutual Funds
Professional Management: Managed by experts.
Diversification: Spreads risk across various securities.
Liquidity: Easy to buy and sell.
Evaluating Direct Stocks
You have Rs. 1 lakh in direct stocks. It’s crucial to regularly review and assess their performance.

Benefits of Direct Stocks
Potential for High Returns: Direct ownership of company shares.
Control: You decide when to buy or sell.
Risks of Direct Stocks
Market Volatility: Prices can fluctuate widely.
Need for Research: Requires constant monitoring and analysis.
Exploring Other Investment Options
To increase your passive income, consider diversifying into other investment avenues. Here are some options:

1. Systematic Investment Plan (SIP)
Continue with your SIPs but ensure they are well-diversified. SIPs offer the benefit of rupee cost averaging, reducing the impact of market volatility.

2. Fixed Deposits (FDs)
FDs are a safe investment option offering fixed returns. Though the returns are lower compared to equities, they provide stability.

3. Public Provident Fund (PPF)
PPF is a long-term, government-backed investment. It offers tax benefits and a decent return, making it a safe and attractive option.

Generating Passive Income
Passive income streams can provide financial stability and additional income. Here are some ideas:

1. Systematic Withdrawal Plan (SWP)
SWP allows you to withdraw a fixed amount from your mutual fund investments at regular intervals. This can provide a steady income stream while your remaining investment continues to grow.

Benefits of SWP
Regular Income: Provides a predictable cash flow.
Capital Preservation: Only part of your investment is withdrawn, leaving the rest to grow.
Tax Efficiency: Only the gains portion is taxed, which can be more tax-efficient than regular income.
Power of SWP
SWP harnesses the power of compounding and market growth. By withdrawing only a portion, your principal amount continues to earn returns. This can provide a sustainable income stream over a long period.

Importance of Financial Planning
A solid financial plan is crucial for achieving your financial goals. Here’s how to go about it:

1. Set Clear Goals
Define your financial goals, both short-term and long-term. This helps in creating a focused investment strategy.

2. Budgeting
Create a monthly budget to track your income and expenses. This ensures you have enough savings to invest.

3. Emergency Fund
Maintain an emergency fund to cover 6-12 months of expenses. This provides financial security in case of unforeseen events.

Power of Compounding
The power of compounding is a critical aspect of wealth creation. It allows your investments to grow exponentially over time.

Example of Compounding
Investing Rs. 10,000 monthly at an average annual return of 12% for 20 years can significantly grow your wealth due to compounding.

Regular Review and Rebalancing
Regularly review your investment portfolio. Rebalance it annually to maintain the desired asset allocation and achieve optimal returns.

Benefits of Actively Managed Funds
Actively managed funds are controlled by fund managers who make strategic decisions. Here’s why they are beneficial:

Flexibility: Managers can adapt to market changes.
Potential for Higher Returns: Can outperform the market.
Risk Management: Fund managers can mitigate risks.
Disadvantages of Index Funds
Index funds mimic the performance of a market index. Here are some disadvantages:

Lack of Flexibility: Cannot adapt to market changes.
Market Risk: Exposed to the entire market’s ups and downs.
Lower Returns: May not outperform actively managed funds.
Disadvantages of Direct Funds
Direct funds have no intermediary, so you save on commission. However, there are drawbacks:

Lack of Guidance: No professional advice.
Time-Consuming: Requires constant monitoring.
Higher Risk: Without expert advice, the risk of poor decisions increases.
Benefits of Regular Funds through CFP
Investing through a Certified Financial Planner (CFP) offers several benefits:

Professional Advice: Expert guidance on fund selection.
Regular Monitoring: Continuous review and adjustments.
Tailored Portfolio: Customized investment strategy based on your goals.
Tax Planning
Effective tax planning enhances your savings and investment returns.

1. Utilize Section 80C
Maximize your deductions under Section 80C through investments in PPF, ELSS, and other eligible instruments.

2. Leverage Section 80CCD
NPS contributions offer additional tax benefits under Section 80CCD.

3. Health Insurance
Premiums paid for health insurance provide deductions under Section 80D.

Estate Planning
Estate planning ensures your assets are distributed as per your wishes.

1. Will
Draft a will to specify asset distribution. This prevents legal complications and ensures your wishes are honored.

2. Nominees
Appoint nominees for your bank accounts, insurance policies, and investments. This simplifies the transfer of assets in case of your absence.

Final Insights
You’re doing a fantastic job with your investments. To increase your passive income, consider diversifying further and exploring new investment avenues. Regularly review and rebalance your portfolio, and consult a Certified Financial Planner (CFP) for personalized advice.

Stay disciplined and focused on your financial goals. Small, consistent efforts can lead to significant financial growth over time.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8182 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 20, 2024

Money
I worked in IT industry for 18 years and 5 Years in MFG, lost job was getting 1.4 lakh/month , have loan of 13 lakh, rental income 20k ,PF 10 Lakh saving 5 Lakh . how to improve to income for children 12 & 3 studies and other expenses
Ans: You have a solid financial base, including rental income, PF, and savings. Losing your job is a difficult phase, but it also offers an opportunity to reassess your goals. Your priorities—managing expenses, repaying loans, and planning for your children’s future—are achievable with a systematic approach.

Let’s analyse your situation from all angles and create a comprehensive financial plan.

Detailed Analysis of Your Assets and Liabilities
1. Loan Liabilities

Your outstanding loan of Rs 13 lakh is a major priority.
Paying EMIs consistently while maintaining liquidity will help ease this burden.
2. Rental Income

Rs 20,000 per month is a valuable, steady income source.
This income can support loan repayment or household expenses.
3. Provident Fund (PF)

Rs 10 lakh in PF is a significant safety net for your retirement.
Avoid using PF for immediate needs unless absolutely necessary.
4. Savings

Rs 5 lakh in savings can be utilised strategically.
Reserve a part for emergencies, and use the rest for growth-oriented investments.
Strategies to Improve Income
A. Leverage Professional Experience

Your 18 years in IT and 5 years in MFG offer opportunities to monetise your skills.
Seek freelance consulting or project-based roles in IT, supply chain, or manufacturing.
Register on platforms that connect experienced professionals to global employers.
B. Upskill for High-Demand Roles

Enrol in short-term certifications in areas like cloud computing, AI, or supply chain analytics.
Consider online platforms offering affordable courses to boost employability.
C. Explore Passive Income Streams

Convert savings into investments that generate steady returns.
Look for low-risk instruments that complement your rental income.
Loan Management
A. Prioritising Debt Repayment

Allocate rental income of Rs 20,000 monthly towards loan EMIs.
Ensure timely payments to avoid penalties and maintain your credit score.
B. Negotiating Loan Terms

Approach your lender to explore refinancing options for better interest rates.
If possible, restructure the loan to lower monthly EMIs.
C. Avoid Aggressive Prepayment

Prepay only when you have surplus funds beyond emergency reserves.
Maintaining liquidity is crucial to address unexpected expenses.
Building a Secure Financial Base
A. Emergency Fund Creation

Set aside Rs 3 lakh from your savings as an emergency fund.
Keep this fund in a liquid or ultra-safe investment to access it quickly.
B. Children’s Education Planning

Your children, aged 12 and 3, will require significant educational funds.
Start systematic investments now to meet these future needs.
C. Protecting Your Family’s Future

Ensure adequate life and health insurance coverage to protect against uncertainties.
Reassess existing policies to confirm they align with your financial goals.
Expense Management
A. Streamlining Monthly Expenses

Identify and reduce non-essential spending.
Use expense-tracking apps to monitor and control your budget.
B. Prioritising Education Costs

Focus on allocating a portion of income towards your elder child’s school fees.
Plan for higher education expenses well in advance by estimating future costs.
C. Accounting for Inflation

Factor in annual inflation, especially for education and healthcare.
Adjust your savings and investments to account for these rising costs.
Enhancing Investment Strategy
A. Systematic Investment Planning (SIP)

Start SIPs in mutual funds with a balanced mix of equity and debt exposure.
Use regular funds through a Certified Financial Planner (CFP) for expert guidance.
B. Advantages of Regular Funds Over Direct Funds

Direct funds lack the professional advice and market insights provided by CFPs.
Regular funds allow you to focus on long-term goals with less personal effort.
C. Avoid Index Funds for Better Returns

Index funds only replicate market performance without active risk management.
Actively managed funds adapt to market changes, potentially delivering higher returns.
Tax Planning for Maximum Efficiency
A. Utilising Tax Deductions

Maximise deductions under Section 80C by investing in tax-saving instruments.
Consider ELSS funds, which combine tax benefits with wealth creation.
B. Planning Withdrawals for Lower Tax Impact

Withdraw investments strategically to minimise taxable income.
Understand the latest mutual fund tax rules to optimise gains.
C. Investing for Tax Efficiency

Allocate savings in instruments offering tax-free or tax-deferred returns.
Use systematic transfer plans (STPs) to transition funds between debt and equity.
Focusing on Children’s Education
A. Long-Term Education Planning

Begin investing specifically for your children’s higher education.
Use diversified instruments to build a substantial corpus over the years.
B. Setting Milestone-Based Goals

Break down education costs into milestones (e.g., school, college, post-graduation).
Align investment timelines to meet these milestones effectively.
C. Combining Growth and Stability

Choose a balanced investment strategy to ensure growth without excessive risk.
Review your portfolio yearly to align with evolving financial goals.
Planning for Retirement
A. Preserving Your PF for Retirement

Keep PF untouched as your retirement base.
Complement it with long-term investments in growth-oriented funds.
B. Building a Secondary Corpus

Invest systematically in debt and equity funds to create an additional retirement corpus.
Maintain a diversified portfolio to reduce overall risk.
C. Ensuring Financial Independence

Target investments that generate a steady income during retirement.
Reinvest returns to grow your corpus until retirement.
Continuous Monitoring and Professional Guidance
A. Collaborate with a Certified Financial Planner

Work with a CFP to create a tailored financial plan.
Review your progress regularly and adjust as needed.
B. Monitoring Investments

Track the performance of all investments every six months.
Rebalance your portfolio to adapt to changing market conditions.
C. Staying Updated

Stay informed about new financial products and investment opportunities.
Use financial literacy to make better decisions for your family’s future.
Final Insights
You have a strong foundation with your rental income, PF, and savings. By focusing on income enhancement, debt management, and systematic investing, you can secure your family’s future. Plan strategically for your children’s education and retirement, ensuring financial stability. Stay disciplined, adaptable, and focused on long-term 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  |8182 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 03, 2025

Listen
Money
Dear Sir, I am 47 years old IT professional. My current salary is 1.5 lakhs per month. I have a daughter who just completed her 10th board exam. My corpus is around 1.6Cr FD&PPF; 30 lakhs in MF & stocks; 50 lakhs in EPF. I have no debt and living in my own house. Please suggest if I can plan for retirement
Ans: Your financial position is strong, and planning for retirement at 47 is a smart decision. Below is a detailed 360-degree approach to assess whether you can retire comfortably and how to ensure financial security.

Understanding Your Current Financial Position
Income: Rs 1.5 lakh per month.

Corpus:

Rs 1.6 crore in Fixed Deposits (FD) and Public Provident Fund (PPF).

Rs 30 lakh in mutual funds and stocks.

Rs 50 lakh in Employees' Provident Fund (EPF).

Liabilities: No debts.

Assets: Own house, ensuring no rent or EMI burden.

Family Responsibility:

Daughter has just completed the 10th board exam.

Higher education expenses need to be planned.

Key Considerations Before Retirement
Expected Retirement Age

If you plan to retire early (before 55), corpus sustainability needs careful assessment.

If you work till 60, it will provide a larger financial cushion.

Post-Retirement Expenses

Living expenses, healthcare, travel, and lifestyle costs must be considered.

Inflation will increase future expenses.

Daughter’s Education

Higher education costs are significant.

Corpus should cover both education and retirement without compromise.

Medical Expenses

Health costs increase with age.

A high health insurance cover is essential.

Wealth Growth vs. Safety

A mix of equity and debt investments ensures growth while preserving capital.

Excessive reliance on FDs and PPF may limit long-term wealth accumulation.

Assessing If You Can Retire Comfortably
Current Corpus Size

Rs 2.4 crore (excluding house) is a strong starting point.

But, inflation will reduce its real value over time.

Expected Corpus Growth

Investments in mutual funds and stocks should continue to grow.

PPF and EPF offer stable but lower returns.

Withdrawals Post-Retirement

Sustainable withdrawals should not deplete the corpus too soon.

A balanced investment strategy is required.

Gaps in Planning

Heavy reliance on FDs and PPF may not be ideal.

More equity exposure can ensure inflation-beating returns.

Steps to Strengthen Your Retirement Plan
1. Optimising Investment Strategy
Continue investing in mutual funds with a mix of large-cap, mid-cap, and flexi-cap funds.

Reduce dependence on FDs for long-term needs.

Equity mutual funds help counter inflation and grow wealth.

Avoid index funds as they provide average returns without active management.

Regular funds through a Certified Financial Planner (CFP) offer expert monitoring.

Diversify investments between equity, debt, and fixed-income products.

2. Planning for Daughter’s Education
Higher education costs can be Rs 30-50 lakh in the next 5-7 years.

Separate this goal from your retirement plan.

Increase equity investment to build an education corpus.

Avoid withdrawing from retirement savings for education.

3. Building a Healthcare Safety Net
Health insurance should cover at least Rs 30-50 lakh.

Consider super top-up plans for additional coverage.

Maintain an emergency medical fund to cover non-insured expenses.

Review insurance policies periodically.

4. Creating a Sustainable Withdrawal Plan
Avoid withdrawing a large portion of the corpus in early retirement years.

Keep at least 5 years of expenses in liquid assets.

Equity exposure should reduce gradually as retirement progresses.

Use dividends and interest income before selling assets.

Final Insights
Retirement is possible, but adjustments are needed for long-term security.

Continue investing aggressively for the next few years.

Ensure daughter's education is planned separately.

Review investments and insurance regularly.

Keep flexibility in withdrawal strategy post-retirement.

A structured plan will ensure a financially secure and comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8182 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 03, 2025

Asked by Anonymous - Apr 03, 2025Hindi
Listen
Money
My employer offers a salary sacrifice scheme for pension contributions, but I don't fully understand how it works. What are the potential advantages and disadvantages of joining such a scheme, and how does it affect my take-home pay and long-term financial planning?
Ans: A salary sacrifice scheme for pension contributions allows you to give up a portion of your salary in exchange for increased employer contributions to your pension. It has tax and National Insurance (NI) advantages but also some potential drawbacks.

How Salary Sacrifice for Pension Works
You agree to reduce your gross salary by a chosen amount.

Your employer contributes this amount directly to your pension.

Since your taxable salary is lower, you pay less income tax and NI.

Your employer also saves on NI and may pass on some or all of this saving to your pension.

Advantages
1. Tax and NI Savings
You don’t pay income tax or NI on the sacrificed amount.

Your employer saves on NI (currently 13.8%) and may increase your pension with these savings.

2. Higher Pension Contributions
Since more money goes into your pension, your retirement corpus grows faster.

Compounding over time enhances long-term wealth.

3. Increased Take-Home Pay
Although you sacrifice part of your salary, the NI savings may offset some of the reduction.

Depending on employer policies, your net pay may not drop significantly.

4. Potential Employer Matching
Some employers pass their NI savings into your pension, increasing your total contributions.

Disadvantages
1. Reduced Gross Salary
A lower salary means reduced future pay rises if they are percentage-based.

Life cover, sick pay, and redundancy pay linked to salary may be affected.

2. Lower Borrowing Capacity
Mortgage applications consider salary; a lower reported income might reduce borrowing potential.

3. Impact on State Benefits
If salary drops below certain thresholds, statutory benefits like maternity pay and state pension could be affected.

4. Restricted Access to Pension
The extra pension savings cannot be accessed before retirement (except under specific conditions).

Effect on Take-Home Pay
Your net pay will be slightly lower, but less than the actual amount sacrificed.

The tax and NI savings cushion the impact.

If your employer adds their NI savings, your total retirement savings increase.

Effect on Long-Term Financial Planning
Your pension fund grows faster, improving retirement security.

Short-term disposable income is slightly reduced, so budget planning is important.

Consider how the reduced salary affects other financial goals like buying a house or saving for education.

Should You Opt for It?
If employer NI savings are passed to your pension, it’s highly beneficial.

If you are close to lower tax bands or state benefit thresholds, assess the impact.

If you plan to apply for a mortgage, check how it affects your eligibility.

A Certified Financial Planner (CFP) can help assess your personal situation before making a decision.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Ramalingam

Ramalingam Kalirajan  |8182 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 03, 2025

Asked by Anonymous - Apr 03, 2025Hindi
Listen
Money
Hi Sir , Greetings of the day!! hope you are doing well !! I want to do a savings of 50 lacs in as much less time span as possible because I want to buy a property in Gurgaon. My monthly salary is 1 lac 11k and I am currently investing 10k in mutual fund monthly and 50k in nps yearly. Can you please guide me how can I save 50 lacs and in how much time ?
Ans: Your goal of saving Rs 50 lakh for a property in Gurgaon is ambitious but achievable with the right strategy. Below is a structured approach to help you reach your target in the shortest possible time.

Understanding Your Current Financial Position
Your monthly salary is Rs 1.11 lakh.

You invest Rs 10,000 per month in mutual funds.

Your annual NPS contribution is Rs 50,000.

You haven't mentioned any liabilities or existing savings. If you have any ongoing EMIs or debts, they should be factored in.

Key Considerations for Achieving Rs 50 Lakh Target
The speed of reaching Rs 50 lakh depends on savings rate and returns.

High savings rate is the most reliable way to accumulate wealth.

Investment returns are uncertain and depend on market conditions.

A balanced approach is necessary to ensure stability and growth.

Increasing Your Savings Rate
Currently, you are investing Rs 10,000 per month.

If you can increase it to Rs 50,000 per month, you will reach Rs 50 lakh faster.

Cutting discretionary expenses will free up more money for investments.

Consider reducing unnecessary spending on dining out, luxury items, and vacations.

Redirect bonuses, incentives, or salary hikes towards savings.

Choosing the Right Investment Instruments
Mutual Funds for Growth
Actively managed equity mutual funds can generate better returns than fixed deposits.

A mix of large-cap, mid-cap, and small-cap funds can balance risk and reward.

Mid-cap and small-cap funds have higher growth potential but also higher volatility.

Avoid index funds as they provide average returns and lack active risk management.

Debt Investments for Stability
Fixed deposits, debt mutual funds, and PPF provide stability.

These should be used for short-term parking rather than long-term growth.

Debt mutual funds are taxed based on your income tax slab.

Avoid locking too much money in low-return instruments.

Balancing Risk and Return
Investing entirely in equity mutual funds can generate high returns but comes with volatility.

A mix of 80% equity and 20% debt can provide stability.

As your target nears, shift more funds towards safer instruments.

Avoid speculation and high-risk investments like cryptocurrency.

Role of NPS in Your Goal
NPS is good for retirement but not ideal for short-term goals.

Partial withdrawal is allowed only under specific conditions.

Do not rely on NPS for your property purchase.

Managing Tax Efficiency
Equity mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.

Short-term capital gains (STCG) are taxed at 20%.

Debt mutual fund gains are taxed as per your income slab.

Investing in tax-efficient instruments will maximize returns.

Estimating the Timeframe
If you invest Rs 50,000 per month, you can accumulate Rs 50 lakh in about 7-8 years with moderate returns.

If you invest Rs 75,000 per month, you can reach Rs 50 lakh in about 5 years.

The faster you increase your savings, the sooner you will achieve your goal.

Final Insights
Increase your monthly investment to at least Rs 50,000.

Focus on actively managed equity mutual funds.

Keep a small portion in debt for stability.

Avoid unnecessary expenses and invest salary increments.

Do not depend on NPS for this goal.

Monitor and adjust your portfolio as needed.

Stay disciplined and patient to achieve your target.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

Dr Dipankar

Dr Dipankar Dutta  |1092 Answers  |Ask -

Tech Careers and Skill Development Expert - Answered on Apr 03, 2025

Dr Dipankar

Dr Dipankar Dutta  |1092 Answers  |Ask -

Tech Careers and Skill Development Expert - Answered on Apr 03, 2025

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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x