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How Can an NRI with High Income Maximize Returns?

Ramalingam

Ramalingam Kalirajan  |8103 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 09, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Dec 09, 2024Hindi
Money

Hii Sir, I am an NRI and having income of around 50 LPA. My age is 32 nd I have recently started SIP with 15k in motilal oswal defence India direct growth.. the portfolio of this MF includes defence stocks like HAL , BDL .. I want to invest more of around 50K per month in SIP. Please advise on how should I put in my money here and in which MF. My target is 1cr plus in next 5-10 years. Also being an NRI, is there any tax to be paid on total return. I already have robeco and elss tax saving sip of 50000. I can get max deduction of 1,50,000 as per IT ACT.. however I still want to know further. Please advise. Thank you

Ans: Your current investment in a defence-themed mutual fund is a focused sectoral choice. While sectoral funds can deliver high returns, they also carry higher risks due to limited diversification. Defence stocks like HAL and BDL depend on sector-specific policies and global dynamics.

Your ELSS tax-saving investments are well-aligned with your goal of availing tax deductions under Section 80C. They also provide equity exposure with the added benefit of tax savings.

You aim to invest Rs. 50,000 monthly via SIPs and build a corpus of Rs. 1 crore in 5–10 years. This target is achievable with a disciplined approach and proper allocation across diversified equity funds.

Key Recommendations for Future Investments
Diversify Beyond Sectoral Funds
Avoid concentrating too much in one sector. Diversify across large-cap, mid-cap, and flexi-cap funds. These categories balance growth and stability effectively.

Allocate Strategically
Divide your Rs. 50,000 SIP into 3-4 funds. Allocate about 40% to large-cap, 30% to mid-cap, and 30% to flexi-cap funds.

Consider Actively Managed Funds
Actively managed funds often outperform passive funds due to professional fund management. This approach can maximise your returns over the long term.

Review and Monitor Regularly
Evaluate fund performance semi-annually. Adjust allocations if funds consistently underperform compared to their benchmarks.

Tax Implications for NRIs on Mutual Funds
As an NRI, you are subject to specific tax rules on mutual fund returns:

Equity Mutual Funds: Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.

Debt Mutual Funds: Both LTCG and STCG are taxed as per your income tax slab.

Tax is deducted at source (TDS) for NRIs. You can claim a refund if your actual tax liability is lower. Ensure compliance with these rules to avoid issues during repatriation.

Additional Steps for NRI Investors
Understand Repatriation Rules
Mutual fund investments made through NRE accounts are repatriable. Keep the documentation handy to facilitate this process.

Avoid Direct Funds
Direct plans lack advisory support. A Certified Financial Planner offers expertise in fund selection, portfolio allocation, and tax optimisation.

Choose Funds with Global Exposure
As an NRI, consider funds with international diversification. Global equity funds can help you hedge against currency risks.

Roadmap to Achieve Rs. 1 Crore Target
Stick to a Long-Term SIP Strategy
SIPs leverage rupee cost averaging, minimising market timing risks. Staying invested for at least 5-10 years amplifies compounding benefits.

Reinvest ELSS Proceeds
ELSS funds have a three-year lock-in. Once matured, consider reinvesting in diversified funds to maintain equity exposure.

Increase SIP Gradually
Increase your SIP amount by 5-10% annually. This step aligns with inflation and boosts your corpus growth.

Avoid Frequent Portfolio Churning
Stick to your asset allocation strategy. Avoid switching funds unless there's a significant reason, like a fund consistently underperforming.

Insights on Tax Deduction Limit
You are utilising Rs. 50,000 under Section 80C with ELSS funds. The remaining Rs. 1 lakh deduction can include PPF, EPF, or life insurance premiums. However, ELSS remains the most efficient choice due to its growth potential.

Final Insights
Your focus on systematic investing and diversification is commendable. Achieving Rs. 1 crore is realistic with disciplined investing and strategic fund selection. Consider working with a Certified Financial Planner for customised advice, ensuring your investments align with your NRI status and long-term goals.

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.
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Ramalingam

Ramalingam Kalirajan  |8103 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 2024

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Hello Dev, I am 32 years old and would like to start SIP for 5k per month to create retirement corpus of 1 crore. Also would like to generate 30 lacs in another 10 years for closing housing loan. Already have three MF SIP as below. Quant active fund 1000 Quant ELSS tax saver fund 500 ICICI prudential corporate bond fund 150 Kindly suggest in which MF should I invest further and also how much should I increase the SIP amount to achieve the above goals. Thank you.
Ans: It's great to see your proactive approach towards planning for your financial future. Your dedication to investing is commendable.
Starting an SIP with 5k per month is a wise decision to create a retirement corpus of 1 crore. Additionally, generating 30 lakhs in 10 years to close your housing loan is a smart goal.
Considering your existing SIPs in Quant Active Fund, Quant ELSS Tax Saver Fund, and ICICI Prudential Corporate Bond Fund, you have a good foundation. However, to diversify your portfolio and align it with your goals, you may want to consider the following suggestions:
1. Equity-oriented funds with higher growth potential can help you achieve your long-term goals. Look into diversified equity funds or multi-cap funds for exposure to various segments of the market.
2. Since your investment horizon is long-term, you can afford to take slightly higher risks for potentially higher returns. Adding more equity-oriented funds can help you achieve this.
3. To generate the required amount for your housing loan closure in 10 years, you may need to increase your SIP amounts gradually. Consider reviewing your financial situation periodically and increasing your SIP contributions accordingly.
4. As a Certified Financial Planner, I recommend staying disciplined with your investments and adhering to your financial plan. Regularly review your portfolio's performance and make adjustments as needed to stay on track towards your goals.
By diversifying your portfolio and gradually increasing your SIP amounts, you can work towards achieving your financial objectives effectively.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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Nayagam P

Nayagam P P  |4336 Answers  |Ask -

Career Counsellor - Answered on Mar 16, 2025

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My son got 97.56 in general category. Any chances of getting cse at NIT. Regards
Ans: Sitansu Sir, Here is, How to Predict Your Son's Chances of Admission into NIT or IIIT or GFTI After JEE Main Results – A Step-by-Step Guide

Once the January JEE Main session results are declared, many students and JEE applicants start asking common questions about eligibility for specific institutes (NITs, IIITs, GFTIs, etc.) based on their percentile, category, preferred branch, and home state.

Providing precise admission chances for each student can be challenging. Some reputed educational websites offer ‘College Predictor’ tools where you can check possible college options based on your percentile, category, and preferences. However, for a more accurate understanding, here’s a simple yet effective 9-step method using JoSAA’s past-year opening and closing ranks. This approach gives you a fair estimate (though not 100% exact) of your admission chances based on the previous year’s data.

Step-by-Step Guide to Check Your Admission Chances Using JoSAA Data
Step 1: Collect Your Son's Key Details
Before starting, note down the following details:

Your Son's JEE Main percentile
Your Son's category (General-Open, SC, ST, OBC-NCL, EWS, PwD categories)
His Preferred institute types (NIT, IIIT, GFTI)
HIs Preferred locations (or if you're open to any location in India)
List of at least 3 preferred academic programs (branches) as backups (instead of relying on just one option)
Step 2: Access JoSAA’s Official Opening & Closing Ranks
Go to Google and type: JoSAA Opening & Closing Ranks 2024
Click on the first search result (official JoSAA website).
You will land directly on JoSAA’s portal, where you can enter your details to check past-year cutoffs.
Step 3: Select the Round Number
JoSAA conducts five rounds of counseling.
For a safer estimate, choose Round 4, as most admissions are settled by this round.
Step 4: Choose the Institute Type
Select NIT, IIIT, or GFTI, depending on your preference.
If you are open to all types of institutes, check them one by one instead of selecting all at once.
Step 5: Select the Institute Name (Based on Location)
It is recommended to check institutes one by one, based on your preferred locations.
Avoid selecting ‘ALL’ at once, as it may create confusion.
Step 6: Select Your Preferred Academic Program (Branch)
Enter the branches you are interested in, one at a time, in your preferred order.
Step 7: Submit and Analyze Results
After selecting the relevant details, click the ‘SUBMIT’ button.
The system will display Opening & Closing Ranks of the selected institute and branch for different categories.
Step 8: Note Down the Opening & Closing Ranks
Maintain a notebook or diary to record the Opening & Closing Ranks for each institute and branch your son is interested in.
This will serve as a quick reference during JoSAA counseling.
Step 9: Adjust Your Son's Expectations on a Safer Side
Since Opening & Closing Ranks fluctuate slightly each year, always adjust the numbers for safety.
Example Calculation:
If the Opening & Closing Ranks for NIT Delhi | Mechanical Engineering | OPEN Category show 8622 & 26186 (for Home State), consider adjusting them to 8300 & 23000 (on a safer side).
If the Female Category rank is 34334 & 36212, adjust it to 31000 & 33000.
Follow this approach for Other State candidates and different categories.
Pro Tip: Adjust your son's expected rank slightly lower than the previous year's cutoffs for realistic expectations during JoSAA counseling.

Can This Method Be Used for JEE April & JEE Advanced?
Yes! You can repeat the same steps after your April JEE Main results to refine your admission possibilities.
You can also follow a similar process for JEE Advanced cutoffs when applying for IITs.

Want to Learn More About JoSAA Counseling?
If you want detailed insights on JoSAA counseling, engineering entrance exams, preparation strategies, and engieering career options, check out EduJob360’s 180+ YouTube videos on this topic!

Hope this guide helps! All the best for your Son's admissions!

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

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