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Ramalingam

Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 14, 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
Srinivasan Question by Srinivasan on Jul 14, 2024Hindi
Money

Hello Sir, I am Srinivas. 53 years. I have 5 years service remaining. I have 1.4 crores in FD. On retirement, I can get 2 crores from PF, Superannuation & Gratuity. I do not have any loans. I can save 1.3 lakhs per month till my retirement. I have a son working. I need to keep 10 lakhs for his wedding. I have 2 flats - one given on rent & getting 1.5 lakhs per year on rent. I need 1 lakh per month for regular expenses. How I need to plan my finance considering my retirement. Request your advice. Thanks.

Ans: Hello Srinivas,

Firstly, it's commendable that you have planned ahead and saved significantly. Let's explore the best strategies to ensure a comfortable and secure retirement for you.

Current Financial Snapshot
You are 53 years old with five years until retirement. Here’s a quick overview of your current financial position:

Fixed Deposits: Rs 1.4 crores
Expected Retirement Corpus: Rs 2 crores from PF, Superannuation, and Gratuity
Monthly Savings Potential: Rs 1.3 lakhs
Monthly Expenses: Rs 1 lakh
Rental Income: Rs 1.5 lakhs per year
Upcoming Expense: Rs 10 lakhs for your son's wedding
No existing loans
This is a solid financial foundation. However, strategic planning will help ensure it lasts throughout your retirement.

Evaluating Fixed Deposits
Fixed Deposits (FDs) provide security and assured returns, but they often yield lower returns compared to other investment options. While FDs can be part of your portfolio for safety and liquidity, over-relying on them might not be the most efficient strategy for growth.

Transition to Actively Managed Funds
Given the disadvantages of index funds, such as lower potential returns and lack of active management, actively managed mutual funds are a preferable alternative. These funds can potentially offer higher returns through professional management. Regular funds, where you invest through a Certified Financial Planner (CFP), come with the added benefit of expert guidance and personalized strategies, ensuring that your investments are well-aligned with your financial goals.

Monthly Savings Allocation
You can save Rs 1.3 lakhs per month until retirement. Here’s how you could allocate these savings:

Mutual Funds: Diversify your investment across large-cap, mid-cap, and small-cap funds. This balance can provide stability while also leveraging growth opportunities. Actively managed funds should be the focus here.

Balanced Funds: These funds invest in a mix of equity and debt, providing growth potential with lower volatility. They can be a good addition for risk management.

Debt Funds: Considering your approaching retirement, debt funds can offer stable returns with lower risk, complementing the more aggressive equity investments.

Building a Retirement Corpus
By the time you retire, you will have accumulated a significant corpus. Let's detail how to manage this:

Existing Savings and Expected Corpus
Current FD: Rs 1.4 crores
Monthly Savings for 5 Years: Rs 1.3 lakhs x 60 months = Rs 78 lakhs
Retirement Benefits: Rs 2 crores
This totals to approximately Rs 4.18 crores (excluding interest and returns on investments).

Creating a Withdrawal Strategy
A well-planned withdrawal strategy is crucial to ensure that your retirement corpus lasts. Here are some steps:

Emergency Fund: Set aside an emergency fund equivalent to 6-12 months of expenses. This fund should be kept in liquid assets like a savings account or a liquid mutual fund.

Monthly Expenses: Your monthly expense requirement is Rs 1 lakh. With your current corpus, you need to ensure this amount is sustainably withdrawn without depleting your funds prematurely.

Systematic Withdrawal Plan (SWP): Invest a portion of your corpus in mutual funds and use an SWP to receive a fixed monthly income. This can provide regular cash flow while allowing the remaining investment to grow.

Rental Income: You have rental income of Rs 1.5 lakhs per year. Consider this as supplementary income for unexpected expenses or lifestyle enhancements.

Managing Your Son’s Wedding Expense
You have planned Rs 10 lakhs for your son's wedding. Here’s how to manage this without disrupting your financial plan:

Short-Term Investment: Place this amount in a short-term debt fund or a fixed deposit. This will keep the funds safe and liquid, ready for use when needed.

Liquid Funds: These funds can provide slightly better returns than a savings account and are easily accessible for large expenses like a wedding.

Ensuring Healthcare Security
Healthcare costs can be significant during retirement. Ensure you have adequate health insurance coverage:

Health Insurance: Review your current health insurance policies. Consider enhancing your coverage if needed, given rising medical costs.

Critical Illness Insurance: This can provide a lump sum amount upon diagnosis of a critical illness, safeguarding your retirement corpus.

Estate Planning
Estate planning ensures that your assets are distributed according to your wishes and can also provide for your dependents after your passing. Consider the following:

Will: Draft a will to clearly state how you want your assets distributed. This can prevent legal disputes and ensure your family is taken care of.

Nominees and Beneficiaries: Ensure that all your investments, insurance policies, and bank accounts have updated nominees.

Adjusting Investments Post-Retirement
Upon retirement, your investment strategy should shift towards preservation and income generation. Here’s how to adjust:

Shift to Debt-Oriented Investments: Move a significant portion of your corpus into debt-oriented instruments to reduce risk. This includes debt mutual funds, fixed deposits, and government bonds.

Income Funds: These funds focus on generating regular income with lower risk. They can be a reliable source of monthly income.

Hybrid Funds: These funds invest in both equity and debt, offering a balance of growth and stability. They can be a part of your post-retirement portfolio.

Addressing Inflation
Inflation can erode your purchasing power over time. It’s essential to factor this into your retirement planning:

Equity Exposure: Maintain a small portion of your investments in equity even after retirement. Equities typically provide higher returns, helping to combat inflation.

Real Estate Income: Your rental income can also increase over time, providing a hedge against inflation.

Reviewing and Rebalancing
Regular review and rebalancing of your portfolio are crucial to ensure it remains aligned with your financial goals:

Annual Reviews: Conduct an annual review of your investments and financial plan. This helps to make necessary adjustments based on performance and changing needs.

Rebalancing: Adjust the asset allocation of your portfolio periodically to maintain the desired balance between risk and return.

Final Insights
Srinivas, you have a strong foundation and clear goals. With careful planning and disciplined investing, you can ensure a financially secure and comfortable retirement. Diversify your investments, focus on actively managed funds, and regularly review your portfolio.

It's also essential to maintain a balance between growth and safety, ensuring that your funds last throughout your retirement. Seek the guidance of a Certified Financial Planner to refine and implement these strategies effectively.

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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Good day Mr Ramalingam, I am 43 years in govt service PGrade 12A and scheduled to retire in 2036. I have a pensionable service. I have 2 children- son is 14 years who want to join Merchant Navy or study law after 10 + 2. My daughter is 9 yrs and has 65% disabilities. I own a house worth 50 L for which i have a HBL till 2032 and pay 30000 EMI. I have MF of 9 L and invest 15k monthly. I get a monthly rent of 16 k from my house. I have no rental outflow as i stay in govt accommodation. I invest monthly 2 K in SSY which has a balance of 2L. I have 3 LICs which will mature in 2030-35 and give value of 30-40 L. My wife has a house from her father worth 50 L but the rent is being used by her father. Pl advice me how to plan my finances till 2036 and thereafter post retirement.
Ans: Given your financial situation and goals, here's a comprehensive plan to manage your finances till retirement in 2036 and beyond:

Evaluate LIC Policies: Assess the terms and conditions of your LIC policies to determine if surrendering them is a viable option. Consider factors like surrender value, potential penalties, and the returns you could get from alternative investments.
Education Planning for Children:
For your son: If he wants to join the Merchant Navy or study law, start setting aside funds for his education accordingly. Consider investment options like mutual funds or education-specific savings plans to ensure you have sufficient funds when needed.
For your daughter: Given her disability, prioritize setting up a special needs trust or account to ensure she's financially supported throughout her life.
Retirement Planning:
Calculate your retirement corpus requirement based on your current expenses, expected inflation, and post-retirement lifestyle.
Continue investing in instruments like Mutual Funds (MF) to build a retirement corpus. Since you have a pensionable service, factor in your pension benefits while estimating your retirement income.
Consider diversifying your investments to reduce risk and maximize returns. Consult a financial advisor to tailor an investment strategy that aligns with your risk tolerance and goals.
Real Estate Management:
Continue paying off your Home Loan (HBL) until its maturity in 2032. Consider increasing your EMI payments if possible to shorten the loan tenure and reduce interest payments.
Monitor the rental income from your house and ensure it covers your EMI payments and provides additional income. Consider revising the rent periodically to reflect market rates.
Health and Insurance:
Review your health insurance coverage to ensure it adequately covers your family's medical needs, especially considering your daughter's disability.
Consider purchasing disability insurance to provide financial protection in case of unexpected events.
Post-Retirement Lifestyle:
Estimate your post-retirement expenses, including healthcare, leisure activities, and any additional support your daughter may require.
Explore options for generating passive income post-retirement, such as rental income, dividends from investments, or annuities.
Estate Planning:
Create or update your will to ensure your assets are distributed according to your wishes, taking into account your daughter's special needs.
Consider setting up a trust to manage your assets for the benefit of your daughter and other beneficiaries after your lifetime.
Regular Review and Adjustments:
Regularly review your financial plan to track progress towards your goals and make adjustments as needed, considering changes in income, expenses, and market conditions.
By following these steps and seeking professional financial advice when needed, you can effectively manage your finances till retirement and secure a comfortable future for you and your family.

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Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 30, 2024

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hello sir, Prem here. I am 60yrs. need the financial planning. Going to retire. I have NPS of 55 lakh, FD of 1.2 Cr, PPF 15lakh, MF 35lakh. Now need the pension 1.5lakh/month. Own house. no loan. all children settled. What to do and how to plan ahead. Please guide step by step. regards
Ans: Dear Prem,

Congratulations on reaching this significant milestone in your life. Retirement is a time to enjoy the fruits of your labor and ensure financial stability. You have a substantial portfolio, and with careful planning, you can achieve your goal of a Rs. 1.5 lakh monthly pension. Here’s a step-by-step guide to help you plan ahead.

Assessing Your Current Financial Position
You have a well-diversified portfolio:

NPS: Rs. 55 lakh
Fixed Deposit: Rs. 1.2 crore
PPF: Rs. 15 lakh
Mutual Funds: Rs. 35 lakh
This gives you a total corpus of Rs. 2.25 crore.

Step 1: Evaluate Your Monthly Expenses and Goals
Before we plan the investment, it’s crucial to understand your monthly expenses and financial goals.

Monthly Pension Requirement: Rs. 1.5 lakh
Other Goals: Healthcare, travel, and emergencies
Step 2: Creating an Income Stream
Systematic Withdrawal Plan (SWP)
SWP from mutual funds can provide a regular income while keeping your investment growing. Here’s how it works:

Select the Mutual Funds: Choose funds that have a good track record and match your risk profile.
Set the Withdrawal Amount: Decide on a fixed amount to withdraw monthly.
Benefit: This method allows you to get regular income while the remaining funds continue to grow.
Annuity from NPS
NPS offers an annuity option, which can provide a steady income. You can allocate a portion of your NPS corpus to an annuity plan. Here’s how:

Use 40% of NPS Corpus: Use at least 40% of your NPS corpus to buy an annuity.
Choose the Right Annuity Plan: Select an annuity plan that offers a lifetime payout.
Benefits: An annuity ensures a guaranteed monthly income for life.
Fixed Deposit and PPF Interest
Fixed Deposit Interest: The interest from your FD can provide a regular income. Reinvest the principal amount at maturity to continue receiving interest.
PPF Withdrawals: After retirement, you can start withdrawing from your PPF account as needed.
Step 3: Allocating Your Corpus
Diversify Your Investments
Debt Instruments: Allocate a portion of your corpus to debt instruments for stable and secure returns. This includes fixed deposits, PPF, and debt mutual funds.
Equity Instruments: To keep up with inflation, maintain a portion in equity mutual funds. This helps in growing your corpus over time.
Example Allocation
Equity Mutual Funds: Rs. 35 lakh (for growth and SWP)
Debt Mutual Funds: Rs. 20 lakh (for stability and SWP)
Fixed Deposits: Rs. 1 crore (for regular interest income)
PPF: Rs. 15 lakh (for secure returns)
NPS Annuity: Rs. 22 lakh (for guaranteed monthly income)
Step 4: Planning for Healthcare and Emergencies
Health Insurance
Ensure you have adequate health insurance to cover medical expenses. This will protect your savings from being depleted due to healthcare costs.

Emergency Fund
Maintain an emergency fund of at least 6-12 months of your expenses. This should be easily accessible and invested in liquid funds or a savings account.

Step 5: Regularly Review and Adjust Your Plan
Your financial needs and market conditions will change over time. Regularly review your investment plan and adjust it as needed. Here’s how:

Annual Reviews: Conduct annual reviews to assess the performance of your investments.
Rebalance Portfolio: Rebalance your portfolio to maintain the desired asset allocation.
Consult a Certified Financial Planner: A CFP can provide personalized advice and help you create a customized roadmap with specific analysis and calculations.
Benefits of Consulting a Certified Financial Planner
A CFP can help you:

Analyze Your Financial Situation: Assess your current financial status and future needs.
Create a Customized Plan: Develop a tailored plan that aligns with your goals.
Monitor and Adjust: Regularly monitor your investments and make adjustments as needed.
Provide Peace of Mind: Ensure that your financial future is secure and well-planned.
Conclusion
By following these steps, you can create a solid financial plan for your retirement. Diversify your investments, utilize SWP and annuities, and regularly review your plan. Consulting a Certified Financial Planner can provide additional guidance and peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 11, 2024

Asked by Anonymous - Jun 07, 2024Hindi
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hello sir, I am 53 yrs,working in private sector soon to be redundant,(in a year)I have my own house in a appartment my savings are 50 L in FD,s 30 L in Mutual fund ,10L in equity shares.LIC of 10L .3L in as emergency fund,my liabilities are children's education (son in class 10 daughter in class 8. no health insurance(presently company provided)spouse is a housewife please advise me for financial planning including for retirement planning.
Ans: Comprehensive Financial Plan for Redundancy and Retirement
Understanding Your Current Financial Situation
You are 53 years old, working in the private sector, and facing redundancy in a year. You own a house in an apartment and have Rs 50 lakh in fixed deposits, Rs 30 lakh in mutual funds, Rs 10 lakh in equity shares, and Rs 10 lakh in LIC. Additionally, you have Rs 3 lakh as an emergency fund. Your spouse is a housewife, and you have two children in school. You currently lack personal health insurance, relying on company-provided coverage.

Setting Clear Financial Goals
Immediate Goals
Redundancy Preparation: Ensure a smooth financial transition after redundancy.
Health Insurance: Secure comprehensive health insurance for your family.
Short-term Goals
Children's Education: Allocate funds for your children's ongoing and future education needs.
Emergency Fund: Strengthen your emergency fund to cover unforeseen expenses.
Long-term Goals
Retirement Planning: Create a sustainable retirement plan to maintain your lifestyle.
Wealth Preservation and Growth: Ensure your investments continue to grow while preserving capital.
Analyzing Your Current Assets
Fixed Deposits
You have Rs 50 lakh in fixed deposits. While FDs offer safety, their returns may not beat inflation in the long term. Consider rebalancing a portion for higher returns.

Mutual Funds
Your mutual fund portfolio is Rs 30 lakh. Mutual funds are good for long-term growth due to their compounding benefits. Review the performance and diversify if necessary.

Equity Shares
Your equity shares amount to Rs 10 lakh. Equities can provide high returns but come with higher risks. Balance them with safer investments to reduce risk.

LIC Policy
You have an LIC policy with a maturity amount of Rs 10 lakh. Review the policy benefits and consider if it meets your insurance needs.

Emergency Fund
Your emergency fund stands at Rs 3 lakh. Aim to increase this to cover at least 6-12 months of expenses for financial security.

Securing Health Insurance
Comprehensive Health Coverage
With redundancy approaching, securing health insurance is crucial. Opt for a comprehensive family floater plan with a high sum insured to cover medical emergencies.

Preparing for Redundancy
Income Replacement Strategies
Exploring New Opportunities: Start exploring new job opportunities or freelance work to replace your income.
Utilizing Skills and Experience: Leverage your experience for consulting or part-time roles in your industry.
Managing Children's Education Expenses
Creating an Education Fund
Education SIPs: Start a Systematic Investment Plan (SIP) in child-specific mutual funds to grow a dedicated education fund.
PPF and Sukanya Samriddhi Yojana: Consider PPF for your son's education and Sukanya Samriddhi Yojana for your daughter, offering tax benefits and secure returns.
Strengthening Your Emergency Fund
Building a Robust Safety Net
Increase your emergency fund to cover at least 6-12 months of living expenses. Use liquid mutual funds or high-yield savings accounts for easy access.

Retirement Planning
Calculating Retirement Corpus
Estimate your post-retirement expenses considering inflation and lifestyle needs. Use retirement calculators to determine the required corpus. For example, if you need Rs 50,000 per month today, with 6% inflation, you’ll need a higher amount in 10 years.

Diversifying Investments
Equity Mutual Funds: Allocate a portion of your savings to equity mutual funds for higher growth potential.
Debt Mutual Funds: Invest in debt funds for stable returns and reduced risk.
Hybrid Funds: Combine equity and debt for balanced growth.
Systematic Withdrawal Plan
Creating a Withdrawal Strategy
Plan a systematic withdrawal strategy from your investments to ensure regular income post-retirement. Consider the 4% rule for sustainable withdrawals.

Tax-efficient Investments
Maximizing Tax Benefits
ELSS Funds: Invest in Equity Linked Savings Scheme for tax-saving benefits under Section 80C.
NPS Contributions: Consider the National Pension System for additional tax benefits under Section 80CCD.
Reviewing and Adjusting Insurance Coverage
Adequate Life Insurance
Ensure your life insurance cover is sufficient to meet your family’s needs in your absence. Term insurance offers high coverage at low premiums. Review your existing LIC policy and consider additional term insurance if necessary.

Diversified Investment Portfolio
Regular Monitoring and Rebalancing
Regularly monitor your investment portfolio and rebalance to align with your financial goals. Adjust asset allocation based on market conditions and personal circumstances.

Professional Guidance
Consulting a Certified Financial Planner (CFP)
Engage a Certified Financial Planner to create a detailed, personalized financial plan. A CFP provides professional insights and strategies tailored to your financial situation and goals.

Final Insights
Securing your financial future involves strategic planning and disciplined investing. Address immediate needs, such as health insurance and redundancy preparation, while building a robust retirement corpus. Regularly review and adjust your investments for optimal growth and risk management. With careful planning, you can achieve financial security and peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Asked by Anonymous - Jun 20, 2024Hindi
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Hello Sir, I am 53 years old. Have 5 years of service remaining. I have 1.5 Crores in FD, I can save 16 lakhs per year for another 5 years. I have two houses - one I am staying & another given on rent - getting 13000 per month rent. No outstanding loans. I can get 2 Crores on retirement from PF & gratuity. I have a son working. Our monthly expenses are 80000. My son will get married in another 3 years. My son can save 30000 per month. Please give me directions for my financial planning.
Ans: Current Financial Situation
You are in a solid financial position. You have five years of service remaining. You possess Rs 1.5 crores in fixed deposits. You can save Rs 16 lakhs per year for the next five years. You own two houses, one of which generates Rs 13,000 per month in rent. You have no outstanding loans. Upon retirement, you expect Rs 2 crores from PF and gratuity. Your monthly expenses are Rs 80,000. Your son, who is working, will get married in three years and can save Rs 30,000 per month.

Investment Strategy
Diversifying Fixed Deposits
Debt Funds

Consider moving a portion of your fixed deposits into debt funds. These funds offer higher returns than fixed deposits while maintaining relative safety. Diversify into corporate bond funds and short duration funds to balance risk and returns.

Monthly Income Plans (MIPs)

Monthly Income Plans can be an excellent alternative. They invest in a mix of debt and equity, providing regular income. This can help you generate steady returns while preserving capital.

Planning for Retirement
Systematic Investment Plan (SIP)
Investing Rs 16 lakhs annually through SIPs in diversified mutual funds can build a robust corpus. This strategy provides the benefit of rupee cost averaging, reducing market volatility risk over time.

Retirement Corpus Management
Upon retirement, your Rs 2 crores from PF and gratuity should be managed wisely. Consider allocating this corpus into a mix of debt and balanced funds to generate a regular income stream while ensuring capital protection.

Ensuring Monthly Expenses and Future Needs
Rental Income Utilization
Utilize your rental income of Rs 13,000 per month to supplement your monthly expenses. This reduces the strain on your investment portfolio.

Emergency Fund
Maintain an emergency fund equivalent to at least 12 months of expenses. This fund should be easily accessible and can be parked in liquid funds for safety and liquidity.

Planning for Son’s Marriage
Dedicated Marriage Fund
Start a dedicated fund for your son’s marriage. Investing in a balanced mutual fund or a conservative hybrid fund can be a suitable choice. This ensures the required amount is available in three years.

Your Son’s Financial Planning
SIP for Savings
Your son should continue saving Rs 30,000 per month. Investing this amount through SIPs in equity mutual funds can help build a significant corpus over time. This can be beneficial for his future goals, including marriage expenses.

Tax Efficiency
Tax-Saving Instruments
Consider investing in tax-saving instruments like ELSS (Equity Linked Savings Scheme) to reduce your tax liability. This can also provide the added benefit of capital growth.

HRA and Other Deductions
Ensure you are maximizing all available tax deductions, including HRA, 80C, and 80D, to optimize your tax efficiency.

Final Insights
Your financial situation is strong, with a good mix of assets and income streams. Diversifying your fixed deposits into debt funds and MIPs can enhance returns while maintaining safety. Investing systematically through SIPs will build a substantial corpus for retirement. Managing your retirement corpus wisely will ensure a steady income post-retirement. Utilize rental income and maintain an emergency fund for added security. Plan for your son’s marriage with a dedicated fund, and encourage his systematic savings. Ensure tax efficiency through appropriate instruments and deductions. With these strategies, you can achieve financial stability and security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Archana

Archana Deshpande  |75 Answers  |Ask -

Image Coach, Soft Skills Trainer - Answered on Nov 21, 2024

Asked by Anonymous - Nov 19, 2024Hindi
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I am married for 17 years. Since ours was a arranged marriage we had many ups and downs but slowly we have settled all our matters. We have three kids. Elder one is 16yrs, 11yrs and 3yr. I am having a guilt feeling that we have not been a good parent to our 16yr old. When he was born I was young and inexperienced and was always settling my difference with my husband and was not taking good care of my son. Now he is in college he is not performing well in his studies. And has become very aggressive. I am very much worried about his future. Now I want to repair the damages I have done to him and I am very much feeling guilty and blaming myself that it was all because of me and my husband's misunderstanding his life is affected. My other two kids are doing good in everything they do. I cry every day that I have done mistake with my son and pray for his successful life. Now what can I do to improve my son's overall wellbeing. Please suggest.
Ans: Dear Mom,

I can totally empathise with you...so here is what I am going to tell you out of my own experience and what I did to overcome this mom guilt and seeking forgiveness. It's good that you are have worked on your marriage and have 3 kids, pat yourself on the back for it. And it's normal in any marriage for these kind of ups and downs and then attaining peace and love, so good going for having found them!!And remember marriage is continuous work.

The solution I am going to give, I am going to divide it into two parts..

1. Forgiving yourself first..be kind to yourself, you were young, you were inexperienced, the mom you are to your 3 yr old is not the same person who brought up your first child, so quit being guilty! Every soul has a journey to take, your son chose you as a mother so that he could take that journey with you...you both had to take this journey together in order to evolve and grow into the people you are today. So, FORGIVE YOURSELF AND QUIT FEELING GUILTY, it's not easy but you have to start doing it. Be kind to the old you... and embrace the new you!! You are not the same person and so is your first born, this continuous evolving as a human being and becoming better is called life, rt?

2. Your SON is 16yrs old, the aggression that he has may not be because of what you did to him... it may be the changing hormones? When you are a guilty mother, you tend to blame yourself for all the wrongs that happen in your child's life, so quit being guilty.
Talk to him about how young you were when he was born and how guilty you feel about some things( be careful about what you say, kids are very resilient, they know how to protect themselves , so maybe how you remember things may not be the same way that he remembers), say sorry and seek his forgiveness. Check if you can have this conversation with him, don't give him the power to make you feel further more guilty. I leave this decision to you.

Don't cry dear mom, forgive yourself, heal and see what best you can do from now on with your first born...just move on from the past... be there for him, cherish him, love him and be there for him, help him navigate through life with compassion and understanding. It might take time, but it's all doable. Take care of him.. and a mother truly knows what is best for her child, trust your instincts, the mother's instincts are far too powerful, take back your power from the "guilty mother" and nourish your bond.

What "I do' and also advice all parents is to spend excusive time with each child, scheduling time with each child and doing something which they like takes the bond to new levels!! Try this out...

All the best... and wishing happy times ahead for you and your beautiful family!!

...Read more

Ramalingam

Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 11, 2024Hindi
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Hello sir, hope you’re doing well. My age is 33. I am investing 40K via SIP in MF in 5 different funds, 20K per month as EPF, 50K NPS annually, 28K EMI - 20 years for 2nd flat for investment, 1st flat home loan completed, 9K car loan for 5 years, also doing SIP 5K in momentum ETF on my own, health insurance from company side(5L) plus additional 5L but no term or life insurance yet. How am I doing financially? Scope of improvement? Please let me know
Ans: You are making commendable progress in financial planning at the age of 33. Your diversified investments and insurance indicate a proactive approach. Let us evaluate your situation and identify areas for improvement.

Current Financial Highlights
SIP in Mutual Funds (Rs. 40,000): This is a disciplined step towards wealth creation.

EPF Contribution (Rs. 20,000): Provides a stable retirement base.

NPS Contribution (Rs. 50,000 Annually): Strengthens retirement planning with tax benefits.

EMI for Second Flat (Rs. 28,000): Shows commitment to asset building.

Car Loan EMI (Rs. 9,000): Necessary, but car loans are liabilities, not assets.

Momentum ETF SIP (Rs. 5,000): Innovative but high-risk strategy.

Health Insurance (Rs. 10 Lakh): A good backup for emergencies.

No Term or Life Insurance: This is a critical gap that needs immediate attention.

Areas of Concern
1. High Loan Commitments
EMI for the second flat and car loan may strain cash flow.
The second flat as an investment can yield lower returns than mutual funds.
2. Lack of Term Insurance
Your dependents would face financial insecurity in your absence.
A term plan with at least 15 times your annual income is essential.
3. Momentum ETF Investment
ETFs are passive investments and lack active fund management benefits.
High volatility can lead to inconsistent returns.
4. Diversification of Investments
While your mutual fund SIPs are good, ensure they cover all categories: large-cap, mid-cap, small-cap, and hybrid.
Overconcentration in one type of fund or asset class can impact returns.
5. Insufficient Emergency Fund
Emergency savings for 6-12 months of expenses is crucial.
6. Tax Efficiency
Your investments and loan repayments must be optimised for tax savings.
Leverage Section 80C and 80D benefits effectively.
Recommendations for Improvement
1. Review Loan Strategy
Focus on prepaying the car loan as it carries no wealth-building advantage.
Reassess the investment potential of the second flat. If returns are poor, consider selling it and reinvesting in mutual funds.
2. Purchase Term Insurance
Opt for a term plan with Rs. 2 crore coverage.
Term insurance is cost-effective and ensures family security.
3. Optimise Mutual Fund Investments
Diversify across actively managed funds, avoiding over-reliance on ETFs.
Consult a Certified Financial Planner to refine your portfolio.
4. Enhance Emergency Fund
Save Rs. 2-3 lakh in liquid funds or high-interest savings accounts.
Use this only for unforeseen expenses.
5. Increase Health Insurance
Add a top-up plan of Rs. 10-15 lakh for better coverage.
6. Avoid Momentum ETFs
ETFs do not benefit from active management.
Actively managed funds outperform in volatile markets.
7. Plan Tax Efficiency
Invest up to Rs. 1.5 lakh under Section 80C in ELSS funds.
Claim additional tax benefits under Section 80D for health insurance premiums.
Retirement Planning
Increase your NPS contribution to Rs. 1 lakh annually.
Diversify retirement planning by investing in hybrid funds for stability.
Children’s Education and Marriage
If you have or plan to have children, start early with SIPs in child-specific funds.
These investments should align with the time horizon for each goal.
Actionable Steps
Prepay the car loan at the earliest.
Reevaluate the second flat for potential sale and reinvestment.
Start a term insurance policy immediately.
Build a robust emergency fund.
Review and diversify your mutual fund portfolio with expert guidance.
Increase health insurance coverage for better security.
Avoid ETFs and shift focus to actively managed mutual funds.
Final Insights
You are on the right path but need adjustments for financial security and growth. Address the gaps in insurance and diversify your investments further. By following these steps, you can achieve financial freedom with better peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 10, 2024Hindi
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Money
My age is 47 and I have invested 7.75 lakh in multiple stock and its grow arround 10 lakh from the past 2.5 years. I have 5.5 lakh home loan remaining . Should I withdraw these money and repay the home loan first and after that increase the SIP of that amount of mf .my current mf sip amount is 30k pm. Please suggest
Ans: Your query reflects careful consideration of financial priorities. Let's analyse whether using your stock investments to repay the home loan is the right step.

Evaluate the Existing Stock Portfolio
Your stock portfolio has grown from Rs 7.75 lakhs to Rs 10 lakhs in 2.5 years.

This indicates a strong return of approximately 29%. If these stocks have long-term growth potential, continuing to hold them might be advantageous.

Consider whether these stocks align with your risk tolerance and long-term financial goals.

Impact of Repaying the Home Loan
Your remaining home loan is Rs 5.5 lakhs. Paying this off will eliminate your EMI burden.

Repaying the loan early saves on interest costs, but assess the prepayment charges, if any.

Compare the effective interest rate on your home loan with the expected annualised return from your stock portfolio.

Home loan interest rates are usually lower compared to stock market returns over the long term.

Increasing SIP After Loan Repayment
Repaying the loan frees up EMI money that can be channelled into mutual fund SIPs.

By increasing SIPs, you benefit from disciplined investing and rupee cost averaging.

Use the additional SIPs to diversify into funds aligned with your risk profile and financial goals.

Considerations for Long-Term Wealth Creation
Mutual funds, especially actively managed ones, provide better diversification than direct stocks.

Your current SIP of Rs 30,000 per month is a good start. Increasing this amount post-loan repayment accelerates wealth creation.

Actively managed funds can outperform index funds through skilled fund management. Avoid direct funds unless you have deep knowledge and time to manage investments.

Evaluating Stock Liquidation
Selling your stocks could trigger capital gains tax. For gains above Rs 1.25 lakh, you will pay LTCG tax at 12.5%.

Factor in transaction costs and tax implications before selling.

Retain stocks that have strong fundamentals and growth prospects. Sell only non-performing or high-risk holdings.

Holistic Financial Planning
Build an emergency fund covering 6-12 months of expenses if you don’t already have one.

Ensure you have adequate life and health insurance coverage for your family’s security.

Maintain a balanced portfolio with exposure to equity, debt, and alternative assets.

Monitor your investments regularly and rebalance them to align with changing goals and risk tolerance.

Final Insights
If your home loan interest is significantly higher than potential stock returns, repayment is wise.

Otherwise, consider maintaining the stock portfolio and continuing your SIPs.

A mix of both strategies—partial loan repayment and increased SIPs—may offer balanced benefits.

Engage a Certified Financial Planner for a tailored strategy that ensures long-term financial success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Asked by Anonymous - Nov 04, 2024Hindi
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Money
I am 38 years old and i wanted to take the retirement at the age of 45. I need to understand whether i have enough money to handle my monthly expenses after retirement. These are the details of my Assests :- a) Flat - 03 Cr. b) Flat where i am staying - 2.5 Cr. c) Working space - 40 Lakhs d) Ancestral Home - 2 Cr. e) Shop - 30 Lakhs f) FD - 50 Lakhs g) PF - 32 Lakhs h) MF = 10 Lakhs Expenses a) Health Insurance - 20Lakh (Premium around 35,000/year ) b) LIC Premium - 78,000 / Year (running for last 08 years) c) Monthly expenditure – maintenance , grocery , petrol , car insurance etc , school fees = 85,000 INR d) Monthly Electricity Bill , water , etc = 12000 INR e) Unforeseen expenditure = 10000 INR /Month h) SIP = 65,000 Per Month I) Foreign Trip – 02 times a year = 4.5 Lakhs Overall Expenses/Monthly = 35000+78000+85000*12+12000*12+10000*12+65000*12+450000 = 2,627,000 = 218,000 /Month Current Monthly Salary -03 Lakhs/month Keeping in mind that I need at least 70-80 Lakh for my daughter higher studies . Seeing the inflation of 7% -- Shall I ok to take the retirement at 45 and pursue my dream . If yes then please suggest whether i can sustain for my remaining life .
Ans: Your goal of retiring early at 45 is ambitious yet achievable with careful planning and realistic adjustments. Let us evaluate your situation step-by-step.

Key Highlights of Your Assets and Liabilities
Real Estate Portfolio:

Two flats (Rs 3 Cr + Rs 2.5 Cr = Rs 5.5 Cr).
Working space: Rs 40 Lakhs.
Ancestral home: Rs 2 Cr.
Shop: Rs 30 Lakhs.
Total Real Estate Value: Rs 8.2 Cr.
Financial Assets:

Fixed Deposit (FD): Rs 50 Lakhs.
Provident Fund (PF): Rs 32 Lakhs.
Mutual Funds (MF): Rs 10 Lakhs.
Total Financial Assets: Rs 92 Lakhs.
Breakdown of Your Expenses
Annual Fixed Costs:

Health Insurance Premium: Rs 35,000.
LIC Premium: Rs 78,000.
Monthly Expenditures (groceries, utilities, etc.): Rs 1,07,000 x 12 = Rs 12,84,000.
SIP Contributions: Rs 65,000 x 12 = Rs 7,80,000.
Foreign Trips: Rs 4.5 Lakhs.
Total Annual Expenses: Rs 26,27,000.
Monthly Equivalent: Approximately Rs 2.18 Lakhs.

Future Commitments
Daughter’s Education: Rs 70-80 Lakhs (10-12 years away).
Inflation Impact: Annual expenses will grow at 7%.
Longevity Considerations: Plan for at least 40 years post-retirement.
Evaluation of Current Wealth vs Retirement Needs
Sustainability of Expenses:
Post-retirement, monthly expenses of Rs 2.18 Lakhs will rise significantly due to inflation. At 7%, expenses may double every 10 years.

Income from Assets:

Real estate offers limited liquidity unless sold or rented out.
FD, PF, and MF will serve as primary sources of income.
Relying only on Rs 92 Lakhs of liquid assets may not be sustainable for 40 years.
Suggestions for Financial Alignment
1. Liquidity Planning

Convert some real estate into liquid assets.
Sell non-productive properties like the shop or working space.
Invest proceeds in actively managed mutual funds for better inflation-adjusted growth.
2. Expense Management

Evaluate reducing foreign trips to once a year post-retirement.
Assess if LIC policies are yielding good returns. If not, surrender and redirect funds to mutual funds.
3. Investments for Inflation-Adjusted Growth

Increase investments in mutual funds.
Consider balanced and hybrid funds to balance growth and stability.
Allocate funds in a diversified manner across equity, debt, and international mutual funds.
4. Contingency and Health Coverage

Maintain an emergency fund equivalent to 12 months' expenses.
Review health insurance coverage to ensure it meets future medical needs.
5. Daughter’s Education Fund

Set up a dedicated portfolio with Rs 50-60 Lakhs for her education.
Invest in diversified equity mutual funds to achieve the target in 10-12 years.
Can You Retire at 45?
With your current savings and lifestyle, early retirement is challenging unless you:

Monetise part of your real estate portfolio.
Reduce discretionary expenses like frequent foreign trips.
Invest aggressively for inflation-adjusted returns.
Ensure a retirement corpus of at least Rs 8-10 Crores by 45.
What to Do Next?
Consult a Certified Financial Planner to design a personalised strategy.

Use a systematic withdrawal plan (SWP) post-retirement for regular income.

Periodically review investments to ensure they are aligned with inflation and market dynamics.

Final Insights
Early retirement requires careful planning, disciplined investing, and realistic expense management. Your current assets are a strong foundation, but adjustments are needed for long-term sustainability. With proper strategy and prudent financial decisions, you can achieve your dream of retiring at 45.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

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I was doing monthly SIP to Axis small cap fund and UTI Flexicap fund for last 4 years. But these 2 funds are not performing well. I want to switch to other funds of same category and I'm thinking of Quant Small cap and HDFC Flexicap. Are these good funds for long term (5-6 years)? Do you have any other fund in mind for suggestion?
Ans: Your decision to invest through SIPs is praiseworthy. It builds disciplined savings and offers rupee cost averaging. Your concern about performance shows an active approach towards wealth creation.

The Axis Small Cap Fund and UTI Flexicap Fund may not be delivering as expected. This could be due to market cycles, sectoral exposure, or fund management changes. Evaluating alternatives is a proactive step.

However, switching funds requires careful assessment to ensure alignment with your financial goals and risk tolerance. Let’s explore this from multiple perspectives.

Evaluating Fund Performance
1. Small-Cap Funds:

Small-cap funds are highly volatile but can deliver excellent returns over time.
Quant Small Cap Fund has been a top performer in recent years.
However, it follows an aggressive strategy, which may not suit every investor.
2. Flexicap Funds:

Flexicap funds are versatile as they invest across market capitalisation.
HDFC Flexicap Fund is a consistent performer with experienced fund management.
It provides a balanced approach to growth and stability.
Challenges of Direct Plans
Direct funds save on distributor commissions but come with their challenges:

You need in-depth research to choose and monitor funds.
Regular funds through a Certified Financial Planner (CFP) offer professional guidance.
CFPs ensure your investments align with your financial goals.
It’s advisable to use a regular plan with the support of a CFP.

Benefits of Actively Managed Funds
Actively managed funds outperform index funds in volatile markets.

Fund managers use insights to identify growth opportunities.
Active funds offer better returns during market corrections or specific sector trends.
Switching to actively managed funds is a sound decision.

Taxation Considerations
Switching funds involves redemption, triggering taxes.

For equity mutual funds, LTCG over Rs 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
Redeem strategically to optimise tax liability. Consult a CFP for effective tax planning.

Recommendations for a 360-Degree Solution
1. Assess Your Risk Appetite:

Small-cap funds are suitable for aggressive investors with a high risk tolerance.
Flexicap funds offer a safer option for moderate risk-takers.
2. Long-Term Perspective:

Ensure the selected funds align with your 5-6 years horizon.
Small-cap funds may need a longer timeframe to realise potential.
3. Diversify Investments:

Avoid concentrating in one category. Combine large-cap, mid-cap, and hybrid funds.
Diversification reduces risk and ensures balanced growth.
4. Periodic Review:

Evaluate fund performance every six months.
Replace funds only when underperformance persists across multiple market cycles.
5. Consult a CFP:

A CFP will help you design a portfolio that matches your goals.
They offer personalised advice and save you from unnecessary churn.
Funds to Explore
Although specific fund suggestions are avoided, ensure these criteria when selecting:

Consistent performance over 3-5 years.
Low expense ratio in regular plans.
Experienced fund management and strong parentage.
Final Insights
Switching to Quant Small Cap and HDFC Flexicap can be considered. However, evaluate them alongside other funds with similar objectives. Maintain a diversified portfolio and consult a CFP for tailored guidance.

Remember, long-term investing is not about chasing returns but achieving your goals. Stay disciplined, and review your portfolio regularly.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7078 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 21, 2024

Money
Hi, I am 36 years old, married & have 1 child (3 years old). My & wife and I have combined income from a salary of 4 lakh post taxes. We are investing in the following funds & have an investment horizon of more than 15 years. Wife Aditya BSL Pure Value - 2k DSP Value Fund - 4k HDFC Small Cap - 2K JM Financial Mid Cap - 10K Kotak business cycle - 5k Kotak Emerging Equity fund - 2K Motilal Oswal large and Midcap - 10k Motila Oswal Business Cycle Fund - 10k My Self Bandhan Core Equity - 2k Baroda BNP India Consumption - 3k Franklin India Prima - 4k HDFC Mid Cap Opportunity - 2k HSBC Small Cap - 5k Kotak Special Opportunity Fund - 10K Nippon India Flexi Cap - 7.5 SBI small cap - 4k White Oak capital Large and Mid - 7.5k ICICI prudential India opportunity -10k Equity Market - 25K SGB - 10K LIC - 5.2K. I'm looking for the same investment till next 15 years. Definitely will increase the MF amount every year. I'm looking for at least 15+ Cr corpus at the age of 55. Please guide me with the existing investment
Ans: Your portfolio demonstrates impressive discipline and diversification. Your strategy aligns well with your long-term goals. Let’s evaluate your investments from different perspectives to enhance your financial journey.

Income and Savings Allocation
You and your spouse have a combined post-tax income of Rs 4 lakh monthly. This indicates a healthy cash flow for both expenses and investments.

You are currently investing a significant portion of your income. It’s commendable and reflects your commitment to wealth creation.

Ensure you have adequate emergency funds in place. Ideally, maintain 6–12 months of household expenses in liquid assets like bank deposits or liquid funds.

Regularly increase your investments in line with your income growth. This will help mitigate inflation and maintain financial discipline.

Portfolio Diversification
Your portfolio includes large-cap, mid-cap, small-cap, and thematic funds. Let’s analyse its structure:

Equity Funds: Your portfolio has a good mix of large-cap, mid-cap, and small-cap funds. However, there may be an overlap in holdings due to multiple funds in similar categories.

Thematic and Sectoral Funds: These add potential for higher returns but come with higher risk. Maintain their allocation within 10–15% of your portfolio.

Direct Stocks (Equity Market): A Rs 25K monthly allocation here adds direct exposure. This is suitable if you have expertise and time to track individual stocks.

Debt and Gold: Investments in Sovereign Gold Bonds (SGBs) and LIC provide stability. However, LIC policies may have lower returns compared to other instruments.

Steps to Optimise Your Portfolio
1. Reduce Fund Overlap
Multiple funds in similar categories can lead to duplication. Consolidate funds with similar investment styles.

For example, instead of holding several mid-cap funds, select one or two strong performers.

2. Evaluate LIC Policy
LIC is a low-return investment compared to equity funds. If you hold traditional LIC policies, consider surrendering them after a cost-benefit analysis.

Reinvest proceeds into mutual funds for better compounding over 15+ years.

3. Balance Asset Allocation
Equity investments dominate your portfolio, which is suitable for your time horizon.

Continue allocating 10–15% to debt and gold for stability. Use a debt mutual fund for better tax efficiency than LIC policies.

Keep reviewing asset allocation annually based on life events or market conditions.

4. Increase Systematic Investment Plan (SIP) Amount
Increase SIPs by at least 10–15% annually to match income growth.

This disciplined approach ensures consistent wealth accumulation.

5. Review Fund Performance Regularly
Monitor fund performance every 6–12 months. Exit funds underperforming their category for over two years.

Choose funds managed by experienced fund managers with a proven track record.

6. Tax Efficiency
LTCG above Rs 1.25 lakh is taxed at 12.5%. Keep this in mind while redeeming equity funds.

Use the tax-harvesting strategy by redeeming gains below Rs 1.25 lakh annually to minimise tax liability.

Insurance Coverage
Ensure you and your spouse have adequate term insurance covering at least 10–15 times your annual income.

A health insurance policy for the family is crucial. Consider a super top-up policy for additional coverage.

Avoid investment-linked insurance products. Term insurance is cost-effective, and mutual funds provide better returns.

Child’s Future Planning
Start a dedicated SIP for your child’s education and marriage. Allocate funds in diversified equity schemes.

Goal-based investing helps in disciplined savings and keeps you on track.

Retirement Planning
Your target corpus of Rs 15+ crore by age 55 is realistic.

Focus on equity for growth. Add balanced funds or flexi-cap funds for moderate risk-adjusted returns.

Avoid early withdrawals to benefit from compounding over 15+ years.

Thematic Investments
Funds like business cycle or thematic funds are high-risk. Keep allocation limited to avoid concentration risks.

Evaluate the suitability of these funds every three years.

Risk Management
Your equity allocation indicates a high-risk appetite. Reassess your risk profile every 3–5 years.

Avoid emotional decisions during market volatility. Stay focused on long-term goals.

Final Insights
Your financial discipline and long-term approach are excellent. Optimising your portfolio with fewer funds and higher SIP amounts will improve efficiency. Regular reviews and a clear focus on goals will ensure success.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...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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