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Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 17, 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 27, 2023Hindi
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Hi Sir, I do have a home loan of 30 lac and it will be paid via monthly emi till next 22 years. After paying my emi, other necessary things I do get to save around 4k to 5k monthly. Please suggest in which SIP I can invest so that after 10 years I can pay my loan.

Ans: Considering your goal to pay off your home loan in 10 years through SIPs, you can invest in equity mutual funds for potentially higher returns. Opt for SIPs in diversified equity funds or balanced funds to balance risk and return. Regularly review and adjust your SIPs to align with your goal and risk tolerance.
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  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 22, 2024

Money
Hi..I am 41 and currently having a home loan of around 50 lakhs...I am planning to repay the loan within next 5 years..I can invest around 50000 per month for the same...pls suggest which type of funds should I do SIP in? Flexi Cap or Agressive Hybrid funds are advisable in this case? I would want to continue investing in these SIPs even after my loan is repaid as my long term investment..Thanks in advance!!
Ans: Your plan to repay your home loan of ?50 lakhs within the next five years is commendable. Investing ?50,000 monthly in Systematic Investment Plans (SIPs) to achieve this goal, while also considering long-term investments, requires strategic planning. Let's explore the best options for your needs.

Understanding Your Financial Goals
Short-Term Goal
Your short-term goal is to repay your home loan within five years. This requires a focused investment strategy that balances risk and returns.

Long-Term Investment
After repaying your loan, you plan to continue investing in SIPs for long-term wealth creation. This necessitates choosing funds that can adapt to both short-term and long-term financial goals.

Investment Options: Flexi Cap vs Aggressive Hybrid Funds
Flexi Cap Funds
What Are Flexi Cap Funds?
Flexi cap funds invest in companies of different market capitalizations—large, mid, and small caps—without any predefined proportion. Fund managers have the flexibility to change the investment mix based on market conditions.

Benefits of Flexi Cap Funds
Diversification: Flexi cap funds offer a diversified portfolio, reducing risk while aiming for moderate to high returns.
Adaptability: Fund managers can adapt to market trends, optimizing returns.
Long-Term Growth: Suitable for long-term investment due to the potential for high growth across different market caps.
Aggressive Hybrid Funds
What Are Aggressive Hybrid Funds?
Aggressive hybrid funds invest in a mix of equities (65-80%) and debt instruments (20-35%). This combination aims to balance high returns from equities and stability from debt.

Benefits of Aggressive Hybrid Funds
Balanced Risk: The equity portion drives growth, while the debt portion reduces volatility.
Stability: Provides more stability compared to pure equity funds, especially during market downturns.
Consistent Returns: Suitable for investors seeking consistent returns with moderate risk.
Evaluating Suitability for Your Goals
Short-Term Goal: Home Loan Repayment
Flexi Cap Funds
Flexi cap funds can offer high returns due to their dynamic investment strategy. However, they come with higher risk, which might not align with a five-year horizon focused on loan repayment.

Aggressive Hybrid Funds
Aggressive hybrid funds balance growth and stability, making them more suitable for a five-year investment aimed at repaying a home loan. The debt component reduces risk, offering more predictable returns.

Long-Term Goal: Continued Investment
Flexi Cap Funds
For long-term investment, flexi cap funds are highly suitable. Their ability to invest across market capitalizations can capture growth in various sectors and companies over time.

Aggressive Hybrid Funds
Aggressive hybrid funds can also be suitable for long-term investment, providing a balanced approach to growth and stability. They can be a good option for conservative investors seeking steady returns.

Recommended Strategy
Initial Focus: Aggressive Hybrid Funds
Reasoning
Start with aggressive hybrid funds for the next five years to repay your home loan. This strategy offers a balance of growth and stability, reducing the risk of market volatility impacting your repayment plan.

Transition to Flexi Cap Funds
Post-Loan Repayment
Once your loan is repaid, consider transitioning a portion of your investment into flexi cap funds. This will help capture higher growth potential for your long-term goals.

Continued Investment Strategy
Diversification
Maintain a diversified portfolio by investing in both aggressive hybrid funds and flexi cap funds. This approach balances risk and returns, catering to your evolving financial needs.

Additional Considerations
Regular Monitoring and Rebalancing
Importance
Regularly monitor your investments and rebalance your portfolio as needed. Market conditions and personal financial goals can change, requiring adjustments to your investment strategy.

Consult a Certified Financial Planner
Professional Advice
Consulting a Certified Financial Planner (CFP) can provide personalized advice tailored to your financial situation. A CFP can help optimize your investment strategy and ensure alignment with your goals.

Conclusion
Investing ?50,000 monthly in SIPs to repay your home loan and continue long-term investments requires a balanced approach. Aggressive hybrid funds are advisable for the initial five-year period focused on loan repayment. After repaying the loan, transitioning to flexi cap funds can capture higher growth potential for long-term wealth creation. Regular monitoring and professional advice will ensure your investment strategy remains effective and aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

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

Asked by Anonymous - May 17, 2024Hindi
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Money
Hi..I am 41 and currently having a home loan of around 50 lakhs...I am planning to repay the loan within next 5 years..I can invest around 50000 per month for the same...pls suggest which type of funds should I do SIP in? Flexi Cap or Agressive Hybrid funds are advisable in this case? I would want to continue investing in these SIPs even after my loan is repaid as my long term investment.
Ans: Investment Strategy for Home Loan Repayment and Long-Term Wealth Creation
Assessing Your Financial Goals
At 41, with a goal to repay a home loan of 50 lakhs in the next 5 years while continuing to invest for the long term, you need an investment strategy that balances stability and growth. You can invest 50,000 per month to achieve these objectives.

Recommended Investment Approach
Flexi Cap Funds for Growth and Flexibility:

Diversification: Flexi cap funds provide the flexibility to invest across market capitalizations (large, mid, and small caps) based on market conditions and fund manager expertise.
Growth Potential: These funds can adjust allocations dynamically to capture growth opportunities, making them suitable for both medium and long-term investments.
Risk Management: The diversified nature helps in managing risks, offering a balanced approach suitable for investors looking for growth with moderate risk.
Aggressive Hybrid Funds for Balanced Risk:

Equity-Debt Mix: Aggressive hybrid funds typically invest 65-80% in equities and the rest in debt instruments, providing a balance of growth and stability.
Moderate Risk: These funds are less volatile than pure equity funds due to their debt component, making them suitable for medium-term goals like loan repayment.
Stable Returns: The debt portion helps in cushioning against market volatility, providing relatively stable returns.
Suggested Strategy
Initial Focus on Debt Reduction:

Higher Allocation to Aggressive Hybrid Funds: For the next 5 years, prioritize aggressive hybrid funds to balance risk while aiming for steady returns. This will help you build a corpus for loan prepayments.
Example Allocation: Invest 30,000 per month in aggressive hybrid funds and 20,000 per month in flexi cap funds. This balance ensures that you can manage volatility while aiming for decent growth.
Post Loan Repayment Strategy:

Increase Allocation to Flexi Cap Funds: Once the home loan is repaid, you can shift a larger portion of your SIPs towards flexi cap funds to maximize growth for long-term goals.
Continued SIPs: Continue with the SIPs to build wealth over the long term, adjusting the allocation based on your risk appetite and market conditions.
Monitoring and Adjustment
Regular Review: Periodically review the performance of your funds and make adjustments if necessary. Ensure that your portfolio aligns with your financial goals and risk tolerance.
Rebalancing: Rebalance your portfolio annually to maintain the desired allocation between flexi cap and aggressive hybrid funds.
Conclusion
By investing in a mix of aggressive hybrid and flexi cap funds, you can effectively manage the repayment of your home loan while continuing to build long-term wealth. This strategy balances risk and growth, ensuring financial stability and growth potential.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Money
Hi Sir/Mam Could you please help me out to close my housing loan of 39L in 10 years. Kindly suggest me regarding investment in SIP how/which SIP/ how much should I invest regularly
Ans: To close your housing loan of Rs. 39 lakhs in 10 years and to strategically invest in SIPs, we need a comprehensive plan that aligns with your financial goals, risk appetite, and time horizon. I appreciate your diligence in seeking a well-rounded financial strategy, and I am here to guide you through the process. Let’s break down the approach into clear, manageable steps:

Understanding Your Financial Position
Firstly, it’s essential to evaluate your current financial standing. This involves a detailed review of your income, expenses, existing investments, and liabilities. You earn Rs. 80,000 per month and have monthly expenses of Rs. 30,000. This leaves you with a disposable income of Rs. 50,000.

You have existing investments in mutual funds, stocks, PPF, NPS, and a car loan. Understanding this will help us allocate funds effectively towards your loan repayment and SIP investments.

Prioritizing Loan Repayment
Closing your housing loan in 10 years is a prudent financial decision. To achieve this, we need a disciplined repayment strategy. Here’s a step-by-step approach:

Increase EMI Payments:

The most straightforward way to close your loan faster is to increase your EMI payments. By increasing your EMI amount, you can reduce the principal faster, thus saving on interest costs. Allocate a portion of your disposable income towards higher EMI payments.

Make Lump Sum Payments:

Whenever you receive a bonus, incentive, or any windfall gain, channel it towards your home loan. This will significantly reduce the outstanding principal and the interest burden.

Consider Part Prepayments:

Set a goal to make part prepayments annually. This will also help in reducing the loan tenure and overall interest.

Review Loan Terms Regularly:

Periodically review the interest rates and terms of your loan. If you find a better deal with a lower interest rate, consider refinancing your loan.

Strategic Investment in SIPs
Investing in SIPs (Systematic Investment Plans) is an excellent way to build wealth over time. Here’s how you can approach SIP investments to achieve your financial goals:

Determine Investment Goals:

Clearly define your financial goals. These could be retirement planning, children’s education, or building a corpus for future needs. Having specific goals will help in selecting the right SIPs.

Assess Risk Tolerance:

Your risk tolerance will dictate the type of SIPs you should invest in. Since you have a 10-year horizon for loan repayment and longer for other goals, a balanced approach with a mix of equity and debt funds is advisable.

Choose Actively Managed Funds:

Actively managed funds, unlike index funds, are managed by professional fund managers who aim to outperform the market. They offer the potential for higher returns and flexibility in managing the portfolio based on market conditions.

Avoid Direct Funds:

Investing through regular funds with the help of a Certified Financial Planner (CFP) is beneficial. A CFP can provide professional advice, monitor your investments, and make necessary adjustments, ensuring your portfolio remains aligned with your goals.

Recommended Allocation for SIPs
Given your financial goals and current position, here’s a suggested allocation for your SIP investments:

Equity Funds:

Allocate a significant portion of your SIPs to equity funds. These include large-cap, mid-cap, and small-cap funds. Equity funds offer higher returns over the long term, essential for wealth creation.

Debt Funds:

Invest in debt funds to balance the risk. Debt funds provide stable returns and are less volatile compared to equity funds. This is crucial for preserving capital and providing liquidity.

Hybrid Funds:

Consider hybrid funds, which invest in a mix of equities and debt. They offer a balanced risk-return profile, suitable for moderate risk tolerance.

Detailed SIP Strategy
Large-Cap Equity Funds:

Large-cap funds invest in well-established companies with a strong track record. They offer stability and steady returns. Allocate around 30% of your SIPs to large-cap funds.

Mid-Cap Equity Funds:

Mid-cap funds invest in medium-sized companies with high growth potential. They are slightly riskier than large-cap funds but can provide higher returns. Allocate around 20% to mid-cap funds.

Small-Cap Equity Funds:

Small-cap funds invest in smaller companies with significant growth potential. They are riskier but can yield high returns. Allocate around 10% to small-cap funds.

Hybrid Funds:

Hybrid funds offer a balanced mix of equity and debt, suitable for moderate risk tolerance. Allocate around 20% to hybrid funds.

Debt Funds:

Debt funds provide stability and regular income. They are less risky and suitable for short to medium-term goals. Allocate around 20% to debt funds.

SIP Amount and Frequency
Monthly SIP Investment:

Based on your disposable income and financial goals, a monthly SIP investment of Rs. 25,000 is feasible. This amount can be distributed across the suggested fund categories.

Automatic Investments:

Set up automatic SIP investments to ensure consistency and discipline. This will help in averaging the cost of investments over time.

Monitoring and Review
Regularly monitor your SIP investments and loan repayment progress. Here’s how you can stay on track:

Annual Reviews:

Conduct annual reviews of your investment portfolio. Assess the performance of your SIPs and make necessary adjustments based on market conditions and your financial goals.

Rebalance Portfolio:

Rebalance your portfolio periodically to maintain the desired asset allocation. This ensures that your investments remain aligned with your risk tolerance and goals.

Stay Informed:

Keep yourself informed about market trends and economic developments. This will help you make informed decisions and adjust your investment strategy as needed.

Final Insights
Closing your housing loan in 10 years and building a robust investment portfolio through SIPs requires discipline and strategic planning. By increasing your EMI payments, making part prepayments, and investing in a balanced mix of equity and debt funds, you can achieve your financial goals.

Remember, investing through regular funds with the guidance of a Certified Financial Planner offers significant benefits. A CFP can provide professional advice, monitor your investments, and make necessary adjustments to ensure your portfolio remains aligned with your goals.

Stay disciplined, review your investments regularly, and make informed decisions to secure a financially sound future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Milind

Milind Vadjikar  |737 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 07, 2024

Asked by Anonymous - Oct 05, 2024Hindi
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Money
I am having a home loan of 1200000 @8.7% for 218 per month my emi would be 10972/- PM I am also having the greed of PMAY subsidy as my loan sanctioned after 01.09.2024 and my conditions are fulfilling the criterias, so I am not going to pay any amount in principal upto subsidy completion I will start paying principal other than emi after getting full subsidy amount hopefully upto 31/03/2029 That's why I am planning to invest about rs 6000/- per month other than emi in sip or ETF or wherever the best place you suggest. please suggest where can I invest this to close the loan early also share some good investment funds of ETF and sip where I can hope to get best returns. At the moment I am not familiar to ETF specially only heard about some advantages. Need your advice
Ans: Hello;

ETFs are Exchange Traded Funds, a kind of index mutual fund traded on the exchanges.

They have low costs because they mimic the underlying index.

However their are some negative aspects as well:

You need a trading and demat account to buy and hold ETFs (annual charges to maintain demat account)

Although ETF costs are lower, brokerage and all statutory levies as on direct stocks are applicable.

Barring popular ETFs(Nippon India Nifty 50BeES, Gold BeES, Nifty Bank BeES) most other ETFs have low liquidity hence the quoted price may be different from NAV of the ETF(impact cost).

You may do an monthly sip of 6 K in HDFC balanced advantage fund for a period of 5 years. After 5 years you may expect a corpus of 5.09 L considering a return of 13%.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

..Read more

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Ravi Mittal  |450 Answers  |Ask -

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Asked by Anonymous - Dec 03, 2024Hindi
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Hello, my wife is Ugandan and I’m of English national, 30 years old and she’s 26, we met nearly a year ago and got married in uk with some of her friends and small family. We haven’t done kuchala (not sure if that’s correct spelling) yet and I’m feeling anxious for when the time comes. She said her family will kneel when they greet me and being white this is already stinging my moral (due to history). I also talked about moving in together before the meet the parents happen however she says she’s rather move in after? Currently this could take two years before going to Uganda, how should I proceed without overstepping her cultural beliefs as after all we are married and by my culture we should already be living together
Ans: Dear Anonymous,
It is very nice of you to be so considerate and sensitive while handling these cultural nuances. Let's discuss the kneeling tradition. It's a sign of respect and it's deeply rooted in Ugandan culture. While I understand your point of view, you also have to remember that it can have significant meaning to her and her family. I suggest you politely express your feelings and let her know why it is uncomfortable for you to see her family kneel. When you explain, mention how much her culture means to you as well. I am sure both of you can communicate and come to a compromise that makes you both happy. Just in case, they persist in following the ritual, just look at it as a gesture of love and respect and not submission.

About the moving in together part, in certain parts of the world, couples living together before the traditional wedding is not considered respectful. But since you are already married, you can try explaining to your wife how the living situation does not go against her cultural expectations. But if it is a really big deal for her and her family, consider seeing it from her perspective.

Communication is everything here. Look at every problem as a team; it's not your problem vs her problem. It's both of you vs the problems.

I hope this helps

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Radheshyam Zanwar  |1088 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Dec 03, 2024

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I have received a job offer from Siecorp ,a Singapore based company though my posting would be at my hometown . They have asked me to submit all credentials related to education & job experiences which is quite normal but they have asked the following documents also which they said would help me to arrange through some agent by payment & the same would be reimbursed during first month of employment . Earlier also another overseas company asked for the same & I denied to make payment before having the job in hand . 1. Construction Health and Safety Technician (CHST) – Compulsory 2. OSHA Safety Certificate – Compulsory 3. Safety Trained Supervisor (STS) – Non-Compulsory Kindly advise whether these certificates are really required to be submitted to join any foreign company or any sort of cheating business regards,
Ans: Hello Bipradas.
From your query, it is clear that you have offered by job by a Singapore-based company and they are giving you a posting in your home town. You did not mention anything about the work culture of the company. It simply indicates that you are supposed to work from home which is always related to computers. I think there is no harm in producing the required documents through an agent if they are offering you a handsome salary. The requirement for documents differs from company to company. There is no harm in submitting the mentioned documents. If have fear in your mind, then please go through the profile of the company in detail before submitting the documents. There are many ways to check the authenticity of the company. There are some chances of cheating, but everybody is not indulged in the same category. But take the steps with utmost precaution.

If satisfied, please like and follow me.
If dissatisfied with the reply, please ask again without hesitation.
Thanks.

Radheshyam

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Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 03, 2024

Asked by Anonymous - Nov 29, 2024Hindi
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Money
Hi , I am 46 year old and trying to see if i can take an early retirement in next 2 years. Below is my financial condition; - Mutual fund 40Lakh - FD 30 Lakhs - 2 rental yielding flat with total rent of 55000 per month - Own house with no loan. - PF 80 Lakhs - NPS 10 Lakhs - PPF 20 Lakhs - Term insurance 50Lakhs
Ans: Your financial position shows good planning and discipline.

Assets Summary:

Mutual Funds: Rs 40 lakh
Fixed Deposits: Rs 30 lakh
Rental Income: Rs 55,000 per month from two flats
Own House: Fully paid, no loan liabilities
Provident Fund (PF): Rs 80 lakh
National Pension System (NPS): Rs 10 lakh
Public Provident Fund (PPF): Rs 20 lakh
Term Insurance: Rs 50 lakh
You have built a diversified portfolio across multiple asset classes.

Assessing Early Retirement Feasibility
Early retirement in two years can be achieved with strategic planning.

Key Factors to Evaluate:

Monthly Expenses: Calculate post-retirement expenses, including inflation.
Income Sources: Ensure rental income, investments, and withdrawals meet your needs.
Wealth Growth: Balance corpus growth with income stability.
Monthly Expense Coverage
Assume your future monthly expense is Rs 1.25 lakh.

Existing Income Streams:

Rental Income: Rs 55,000 monthly provides 44% of estimated expenses.
Corpus Withdrawals: Use investments to cover remaining expenses.
Adjust for Inflation:

Plan for a 6% inflation rate to protect purchasing power.
Investment Strategy
Align your portfolio for growth, stability, and liquidity.

Mutual Funds:

Continue investing in equity-oriented funds for long-term growth.
Opt for actively managed funds through Certified Financial Planners.
Avoid index funds; they limit opportunities for alpha generation.
Fixed Deposits:

Reallocate a portion to debt mutual funds for better post-tax returns.
Retain some FDs for emergencies and short-term needs.
NPS and PPF:

Maximise NPS contributions for additional tax savings.
Allow PPF to mature for risk-free, tax-exempt growth.
Corpus Withdrawal Plan
A systematic withdrawal strategy ensures steady income.

Use Systematic Withdrawal Plans (SWP) in mutual funds for monthly cash flow.
Keep withdrawal rates below 4% annually to sustain the corpus.
Children’s Education Planning
Your son’s education may require significant funds.

Steps to Plan for Education Costs:

Use PPF maturity or mutual fund proceeds for higher education.
Avoid using retirement corpus for educational expenses.
Risk Management
Protecting your family is as critical as building wealth.

Term Insurance Coverage:

Rs 50 lakh is adequate for income replacement.
Ensure policies are active and nominees updated.
Health Insurance:

Opt for a comprehensive family floater policy with Rs 20–25 lakh coverage.
Keep health-related emergency funds for additional expenses.
Tax Planning
Efficient tax planning maximises post-retirement income.

Mutual Fund Taxation:

Equity fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
Short-term gains are taxed at 20%. Plan withdrawals carefully.
Fixed Deposit Interest:

FD interest is taxable as per your slab. Consider this in income planning.
Real Estate Considerations
Your rental flats provide steady income.

Points to Consider:

Avoid further real estate investments for better liquidity.
Keep properties well-maintained to ensure uninterrupted rental income.
Healthcare and Emergency Funds
Unplanned medical costs can affect your finances.

Steps to Safeguard:

Maintain Rs 10–15 lakh in liquid assets for emergencies.
Regularly review health insurance coverage to meet rising costs.
Assessing Early Retirement Timing
Your early retirement is achievable by 48 years with careful execution.

Why This is Feasible:

Rental income and portfolio can meet monthly needs.
A diversified asset base ensures sustainable returns.
Finally
Early retirement is within your reach with disciplined planning.

Review your financial plan annually and adjust for changes in needs or markets.

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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