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

Should I break my 50 lakh FD to make 35k?

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 16, 2025

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 19, 2024Hindi
Listen
Money

How can I make 35k by 50lakh fd

Ans: If you wish to generate Rs 35,000 per month from a Rs 50 lakh fixed deposit, you need to assess the interest rate and the returns on your FD. Let’s evaluate your options thoroughly.

1. Understanding the Current Interest Rates
Fixed deposits typically yield interest ranging from 5% to 7% annually.
The return will depend on the tenure and the bank or financial institution.
Interest rates vary from one institution to another and can change based on economic conditions.
2. Calculating the Expected Returns
For example, if the FD earns 6% annually, you would earn Rs 3 lakh yearly (6% of Rs 50 lakh).
This translates to around Rs 25,000 per month (Rs 3 lakh divided by 12 months).
At a 7% interest rate, the yearly income would increase to Rs 3.5 lakh, which equals about Rs 29,167 per month.
3. What Do You Need to Reach Rs 35,000 Per Month?
To earn Rs 35,000 per month, you would need an interest rate of about 8.4%.
Unfortunately, most fixed deposits in India offer interest rates that are lower than this.
Higher returns might be available in specific institutions, but risks may also increase.
4. Exploring Other Income-Generating Options
Debt Mutual Funds: A more reliable and higher-return option is debt mutual funds.
These funds usually provide returns higher than fixed deposits, especially if you invest in long-term options.
Debt funds can deliver returns of around 8-10%, which would generate Rs 33,000 to Rs 41,000 per month, based on your investment.
5. Evaluating Actively Managed Funds
Actively managed funds can provide higher returns than fixed deposits.
These funds are managed by experts, who analyze the market and adjust investments accordingly.
Actively managed funds have the potential to deliver returns of 10% or more in the long run, which is above FD returns.
With this approach, your Rs 50 lakh could yield Rs 41,666 per month if invested wisely.
6. Risk Factors to Consider
Fixed deposits have lower risk and provide guaranteed returns.
Debt mutual funds are relatively safer than equities but come with market risk.
Actively managed funds carry more risk compared to FD but also offer better growth potential.
Always align your risk tolerance with your investment choice.
7. Tax Implications to Keep in Mind
Fixed deposit interest is taxable according to your income tax slab.
In mutual funds, long-term capital gains on debt funds above Rs 1 lakh are taxed at 20%.
For equity funds, long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.
These taxes will affect the overall return from mutual funds or FDs, so plan accordingly.
8. Benefits of Debt Mutual Funds Over Fixed Deposits
Higher returns: Debt mutual funds offer higher returns compared to fixed deposits.
Flexibility: Unlike FDs, mutual funds provide liquidity, allowing you to withdraw at any time.
Professional management: Funds are managed by certified financial planners, ensuring optimal investment strategy.
Tax benefits: Mutual funds might offer better post-tax returns in the long run.
9. Should You Stick With Fixed Deposits?
If you are risk-averse and prefer guaranteed returns, FDs are ideal.
However, if you are open to a small amount of risk for higher returns, debt mutual funds might be the way to go.
Fixed deposits offer peace of mind, but mutual funds provide better growth potential, especially in the long run.
Final Insights
Fixed deposits can only generate around Rs 25,000 to Rs 30,000 per month from Rs 50 lakh at current interest rates.
To reach Rs 35,000 per month, you would likely need to explore other investment options such as debt mutual funds.
While debt mutual funds come with higher risks, they can offer a better return than fixed deposits in the long term.
Actively managed funds could be another option for generating more substantial monthly returns.
Always weigh your risk tolerance, tax implications, and long-term goals before making a decision.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 2024

Listen
Money
HOW CAN GET 50 K PER MONTH WITH INVESTMENT KINDLY SUGGEST
Ans: To achieve a monthly income of 50,000 from investments without going into detailed calculations:

Investment Horizon:
A longer investment horizon provides more time for your investments to grow and recover from market downturns. With a horizon of 15-20 years, you can consider a mix of equity and debt investments.
Asset Allocation:
Diversify your investments across different asset classes like equities, debt, and possibly real estate or gold. This diversification helps in balancing the risk and potential returns.
Equity Mutual Funds:
For wealth creation over the long term, equity mutual funds have historically offered higher returns. However, they come with higher volatility.
Debt Mutual Funds:
These funds provide stability and regular income with lower volatility compared to equities. They are suitable for investors with a medium risk appetite.
Systematic Investment Plan (SIP):
Investing through SIPs allows you to invest a fixed amount regularly. This disciplined approach to investing can help in achieving your financial goals over time.
Review and Rebalance:
Regularly review your investment portfolio to ensure it aligns with your financial goals and risk tolerance. Rebalance your portfolio if necessary, based on market conditions and your financial situation.
Inflation:
Consider the impact of inflation on your future income needs. Ensure that your investments aim to provide returns that beat inflation to maintain your purchasing power.
Consult a Financial Advisor:
For personalized advice tailored to your financial situation and goals, consult with a financial advisor. They can help you create a customized investment plan and guide you on how to achieve your target income of 50,000 per month.
Remember, investing is a journey, and it's essential to stay committed to your financial goals while being flexible to adapt to changing market conditions.

..Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

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

Listen
Money
Sir I am 44and have got 3lakhs in hand how could I make this as 30 lakhs in 5yrs
Ans: Your goal of turning 3 lakhs into 30 lakhs in 5 years is ambitious, but with careful planning and disciplined investing, it's definitely achievable. Let's explore some strategies:

• Firstly, kudos on having a clear financial goal in mind. Setting specific targets is the first step towards success.
• Given your time horizon of 5 years, consider investment avenues that offer higher growth potential but also entail higher risk.
• Equity investments, such as mutual funds or stocks, could be a suitable option for you. These assets have the potential to generate significant returns over the long term.
• However, it's essential to approach equity investments with caution and conduct thorough research or seek professional advice to mitigate risks.
• Diversification is key. Instead of putting all your eggs in one basket, consider spreading your investment across different asset classes and sectors.
• Keep in mind that higher potential returns often come with higher volatility. Be prepared to ride out market fluctuations and stay invested for the long term.
• Regularly monitor your investments and make adjustments as needed based on changing market conditions or your financial goals.
• Remember, patience and discipline are crucial virtues in wealth creation. Stick to your investment plan and avoid making impulsive decisions based on short-term market movements.
• Lastly, consider consulting with a Certified Financial Planner to create a personalized investment strategy tailored to your specific needs and objectives.

With careful planning, disciplined investing, and a long-term perspective, you can work towards turning your 3 lakhs into 30 lakhs over the next 5 years. Stay focused on your goal, and best of luck on your financial journey!

..Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

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

Listen
Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

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

Asked by Anonymous - Sep 29, 2024Hindi
Money
i am earning 50k how to make 2cr pls guide me
Ans: It’s excellent that you are thinking about creating wealth over time. With disciplined saving and smart investments, you can achieve your goal of Rs 2 crore. Your current salary of Rs 50,000 per month allows you the opportunity to build a secure financial future.

Let’s explore how you can make this happen.

Start Small but Stay Consistent
The key to wealth creation is consistency. With your current salary, you can allocate 20% of your income to investments. This means you will invest Rs 10,000 per month.

This Rs 10,000 monthly SIP (Systematic Investment Plan) is a great way to start.

By investing consistently, you are laying the foundation for future growth.

Remember, small amounts invested regularly over a long period can yield significant results.

Increasing SIP Contributions Gradually
As your income grows, so should your investment. To ensure that your investment keeps pace with your lifestyle and inflation, step up your SIP contributions by 10% each year.

For example, if you start with Rs 10,000 per month, increase it to Rs 11,000 in the next year, Rs 12,100 the year after, and so on.

This “step-up” ensures that your contributions grow alongside your income, helping you reach your Rs 2 crore target faster.

With a 10% step-up in SIP, your investment will grow more effectively without putting too much strain on your finances.

Power of Compounding
One of the most powerful aspects of long-term investing is the compounding effect. The longer you invest, the greater the effect of compounding.

Over a period of 20 years, your investment can potentially grow at an average rate of 12% per annum.

By consistently investing Rs 10,000 every month with a 10% annual step-up, your portfolio can grow to around Rs 2 crore by the end of 20 years.

Compounding works best when you remain invested and let your money grow over time.

Choose Actively Managed Mutual Funds
When investing for the long term, actively managed mutual funds can offer better growth compared to passive index funds.

Actively managed funds are overseen by experienced fund managers who make strategic decisions to maximize returns.

Unlike index funds, which simply track market indexes, actively managed funds offer better potential for outperformance.

In your case, choosing actively managed equity mutual funds will help you achieve better returns and reach your Rs 2 crore target.

Why Direct Funds May Not Be the Best Choice
Some investors might consider investing directly in mutual funds. However, it’s worth noting that direct funds often require you to monitor and manage the portfolio yourself. This may not be the best option for everyone.

Investing in direct funds requires time, expertise, and regular tracking of market trends.

In contrast, investing through a Certified Financial Planner (CFP) or Mutual Fund Distributor (MFD) allows you to get professional guidance and support.

This professional guidance helps you build a well-diversified portfolio, reducing the risks involved with direct investing.

Stick to the Plan
Wealth creation doesn’t happen overnight. The most important thing is to stick to your investment plan. Avoid the temptation to withdraw or stop your SIPs.

Market fluctuations are normal, and there will be times when returns may seem lower. Stay invested.

Your long-term commitment to regular SIPs will help you build a substantial corpus over time.

The disciplined approach is what separates successful investors from the rest.

Adjusting for Life Changes
As your life circumstances change, such as job changes, promotions, or personal events, you may need to review your financial plan.

Always re-evaluate your investment goals and adjust your SIP contributions accordingly.

For instance, if your salary increases, try to allocate more than 20% to your investments. This will help you achieve your goals even faster.

Review Your Portfolio Regularly
It’s essential to review your portfolio regularly. Your financial situation and the market environment may change over time, so a regular review will help you stay on track.

Every year, sit down with a Certified Financial Planner to review your portfolio.

Adjust your investments based on market trends, your financial goals, and life events.

Regular reviews ensure that your investment strategy remains aligned with your long-term objectives.

Benefits of a Diversified Portfolio
Investing all your money in one type of mutual fund may expose you to unnecessary risks. Instead, focus on building a diversified portfolio that spreads your investment across different sectors and asset classes.

A diversified equity mutual fund portfolio helps minimize risks while still offering good growth potential.

Diversification reduces your exposure to any single asset class or sector, ensuring stability in your portfolio.

Over the long term, a balanced portfolio offers a smoother journey towards wealth creation.

Avoid Unrealistic Expectations
It’s important to have realistic expectations about your investments. Equity mutual funds can provide excellent returns over the long term, but they are not without risks.

Don’t expect overnight returns. The equity market can be volatile, especially in the short term.

Stick to your long-term plan and avoid making impulsive decisions based on market fluctuations.

The average return of 12% per annum is a realistic target for long-term investors.

Final Insights
Achieving Rs 2 crore with a Rs 50,000 salary is possible, but it requires discipline, consistency, and a long-term approach. By investing 20% of your income in SIPs and stepping up your contributions by 10% each year, you can grow your wealth steadily over time.

Start with a Rs 10,000 monthly SIP and increase it every year.

Choose actively managed mutual funds for better returns.

Stay committed to your plan for 20 years to reach your Rs 2 crore goal.

Regularly review your portfolio and adjust your investments as needed.

By following these strategies and giving your investments time to grow, you can achieve your financial goals and secure your future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Latest Questions
Moneywize

Moneywize   |178 Answers  |Ask -

Financial Planner - Answered on Feb 06, 2025

Asked by Anonymous - Feb 06, 2025Hindi
Listen
Money
I am 34, earning 15 LPA planning to retire at the age of 45. I want to invest 20 lakhs lump sum to generate corpus of 7 cr. Where and how should I invest?
Ans: To generate a corpus of Rs 7 crore by the time you are 45, starting with a Rs 20 lakh lump sum investment at 34, you need to consider the power of compounding, high-return investments, and disciplined portfolio management. Here's how you can structure your investments:
Key Assumptions:
1. Time Frame: 11 years (from age 34 to 45).
2. Required Corpus: Rs 7 crore.
3. Initial Investment: Rs 20 lakh.
To grow Rs 20 lakh to Rs 7 crore, the required annual return would be approximately 24% compounded annually. Achieving such high returns involves a significant degree of risk, so it's important to balance the portfolio carefully.
Investment Strategy:
1. Equity Mutual Funds (High Risk, High Return):
• Equity is the primary asset class to generate high returns over the long term. Historically, equity mutual funds can provide returns of around 12-18% annually, but this is subject to market performance.
• Suggested Funds:
o Large-cap funds: For stability and steady growth (e.g., HDFC Top 100 Fund, Mirae Asset Large Cap Fund).
o Mid-cap and Small-cap funds: Higher growth potential but more volatile (e.g., Axis Midcap Fund, Nippon India Small Cap Fund, Motilal Oswal Midcap Fund).
o Flexi-cap funds: These provide exposure to both large and mid-cap stocks (e.g., Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund).
• Allocation for Equity Funds: Around 70-80% of your lump sum (Rs 14 lakh - Rs 16 lakh) can be invested in equity funds, targeting high growth.
2. SIP Investments (For Dollar-Cost Averaging):
• While you have a lump sum, consider continuing SIPs in equity funds over the years to help with dollar-cost averaging (DCA), which reduces the risk of investing a lump sum at market highs.
• Start SIPs of Rs 30,000-Rs 40,000 per month, targeting high-growth equity funds to further compound your wealth.
3. Hybrid Funds (Moderate Risk):
• To balance the portfolio, invest in hybrid funds, which include a mix of equity and debt. They can moderate volatility and provide steady growth.
• Suggested Funds: HDFC Hybrid Equity Fund, ICICI Prudential Balanced Advantage Fund.
• Allocation for Hybrid Funds: Around 10-15% (Rs 2 lakh - Rs 3 lakh).
4. Real Estate (Optional):
• If you have any plans of investing in real estate, a portion of your portfolio can be used here. Though real estate generally appreciates at a slower rate, it can be a good long-term investment. However, avoid allocating too much to it since real estate is illiquid.
• Allocation for Real Estate: Optional, but around 5-10% of the lump sum (Rs 1-2 lakh).
5. Debt Instruments (Low Risk, Capital Protection):
• While the primary focus should be on high-return equity, it's prudent to keep a small portion in debt funds or bonds for stability.
• Suggested Funds: HDFC Corporate Bond Fund, ICICI Prudential Liquid Fund.
• Allocation for Debt Instruments: Around 5% (Rs 1 lakh).
Expected Returns:
1. Equity Funds: Targeting returns of 15-20% annually.
2. Hybrid Funds: Targeting returns of around 10-12% annually.
3. Debt Funds: Targeting returns of 6-7% annually.
Tracking and Adjusting:
1. Monitor Portfolio: Review the portfolio every 6-12 months to ensure the investments are aligned with your goal. Consider reallocating based on market conditions.
2. Tax Considerations: Ensure tax efficiency by investing in tax-efficient funds and making use of tax exemptions (e.g., ELSS for tax saving under 80C).
3. Rebalancing: As your investment grows, shift gradually from high-risk assets (equity) to lower-risk assets (debt/hybrid) as you approach the target.
Potential Outcome:
Assuming you achieve the required return of 24% annually (through a combination of equities, SIPs, and compounding), your Rs 20 lakh investment can grow significantly by 45. However, the exact growth rate will depend on market performance, the consistency of returns, and your disciplined investment approach.
Conclusion:
Achieving a Rs 7 crore corpus from Rs 20 lakh in 11 years is ambitious but possible with a high-risk, high-return strategy. By focusing on equity mutual funds, balancing with hybrid and debt funds, and continuing SIPs, you can potentially achieve your goal. However, monitor the portfolio periodically and adjust your strategy based on market conditions and risk tolerance.

...Read more

Moneywize

Moneywize   |178 Answers  |Ask -

Financial Planner - Answered on Feb 06, 2025

Asked by Anonymous - Feb 06, 2025Hindi
Money
I am 38, living with my parents who have savings of Rs 40 lakhs and monthly pension of Rs 15,000. I live in a house valued at 1.5 crore, a car and a corpus of 50 lakh. My annual salary is 15 lakh, my wife, 32, a teacher, earns 8 lakh per annum. Our daughter is 11 years and we have invested 30 lakh for her education. Will it be a good idea to retire at 48? Hopefully my daughter will be a graduate by then.
Ans: Retiring at 48 is an ambitious goal, especially given that your daughter will be in the later stages of her education at that time. However, it can be achievable with the right strategy, keeping in mind that both your current and future financial needs (such as your daughter's education, living expenses, and healthcare) should be carefully planned.
Key Financial Points:
1. Current Assets & Liabilities:
o Savings and investments: Rs 50 lakh corpus + Rs 40 lakh savings from your parents.
o House: Rs 1.5 crore (valuable asset, no immediate cash flow but provides stability).
o Car: An asset, though it depreciates.
o Monthly Pension: Rs 15,000 (provides additional cash flow).
2. Income:
o Your Salary: Rs 15 lakh per annum.
o Wife's Salary: Rs 8 lakh per annum.
o Total household income: Rs 23 lakh annually (pre-tax).
3. Daughter’s Education:
o You’ve already invested Rs 30 lakh for her education, which can cover part of her expenses, but you need to plan for the balance.
4. Retirement Goal:
o Retiring at 48 means you’ll need a substantial retirement corpus to cover your lifestyle expenses, especially since you plan to live without any active income.
o Estimate your monthly living expenses (post-retirement) considering inflation, healthcare, and contingencies.
Key Considerations for Retirement at 48:
1. Monthly Expenses Post-Retirement:
o Assuming your family needs Rs 60,000 per month (inflated from your current expenses) and an additional Rs 30,000 for health and emergency purposes, your annual expenses would be approximately Rs 10 lakh. This figure may rise over time due to inflation.
2. Corpus Needed:
o If you plan to live on Rs 10 lakh per year post-retirement, assuming a withdrawal rate of 4% (a standard guideline for sustainable withdrawals), you would need a retirement corpus of Rs 2.5 crore.
o If your daughter's education expenses require more funding, factor that in as well.
3. Current Assets & Future Growth:
o Savings Growth: Your Rs 50 lakh corpus can grow if invested well in equity mutual funds, stocks, or balanced funds (expected returns of around 10-12% p.a.).
o Parents’ Savings: The Rs 40 lakh savings from your parents can be used to generate returns in low-risk avenues like debt funds or fixed deposits, if they plan to support your retirement plans.
4. Planning for Future Education & Miscellaneous Expenses:
o Your daughter’s education will likely require more than Rs 30 lakh for her undergrad and possibly postgraduate education. Estimate the total requirement (say Rs 50-60 lakh for the complete course, including inflation) and plan for it.
5. Retirement Income Strategy:
o Pension or Annuity: Consider a monthly income plan or annuity products to ensure a steady stream of income during retirement. For example, a monthly annuity from your parents' corpus or part of your own corpus can provide financial stability.
6. Investment Strategy:
o Equity Mutual Funds: Start or increase SIPs in equity mutual funds (for long-term capital growth). Equity can provide high returns but also carries risk, so it’s ideal for long-term goals like retirement.
o Debt Funds: Consider shifting to debt or hybrid funds as you approach retirement to preserve capital.
o Real Estate: Your house is a valuable asset, and if you plan to sell or downsize in the future, it can be a key part of your retirement corpus.
Steps to Achieve Your Retirement Goal:
1. Increase Savings:
o Save a higher portion of your monthly salary towards retirement, even increasing your SIPs or contributions in the coming years. Aim to invest at least 30-40% of your combined income in SIPs or mutual funds.
2. Asset Allocation:
o Focus on equity funds for growth in the early years. As retirement nears, shift some of the corpus to safer instruments like debt funds or bonds.
3. Plan for Healthcare:
o Healthcare costs can significantly impact retirement. Ensure you have adequate health insurance for yourself and your family, considering long-term care as well.
4. Create a Contingency Fund:
o Have an emergency fund equivalent to 12-18 months of expenses to avoid dipping into retirement savings during emergencies.
5. Revisit Your Goal Periodically:
o Regularly check your progress and adjust your investments based on market performance, income changes, and any unexpected expenses (e.g., your daughter’s education needs).
Conclusion:
• Retiring at 48 is a feasible goal, but it will require diligent planning and a disciplined investment approach. Your savings and investments should aim to grow sufficiently over the next 10 years to generate a steady income stream, along with provisions for your daughter’s higher education.
• With careful asset allocation and savings growth, your goal of retiring by 48 and managing your family’s finances can be well within reach.

...Read more

Moneywize

Moneywize   |178 Answers  |Ask -

Financial Planner - Answered on Feb 06, 2025

Asked by Anonymous - Feb 06, 2025Hindi
Listen
Money
I am 34 years old and have no savings or EMIs. I live with my parents and earn Rs 35,000 a month with an annual bonus of Rs 18,000. I want to retire at 50 and settle in my home town. What is the best way for me to plan and invest for my retirement?
Ans: To achieve your goal of retiring at 50 and settling in your hometown, the key is to start investing early and developing a disciplined savings strategy. Here's how you can plan:
1. Determine Your Retirement Corpus
• To retire at 50, you need to calculate how much you’ll need to live comfortably. Consider your current lifestyle and future expenses.
• You can aim for a corpus that supports 70-80% of your pre-retirement income annually. For example, if you plan to need Rs 50,000 per month (Rs 6 lakh annually) in retirement, you'll need a corpus of Rs 1.5 to Rs 2 crore, depending on the duration of your retirement.
2. Build an Emergency Fund
• Set aside an emergency fund of 3-6 months of living expenses. This provides financial security in case of unexpected situations. You can keep this fund in a high-interest savings account or liquid mutual funds.
3. Invest in Retirement-Specific Instruments
• Public Provident Fund (PPF): PPF is a great long-term investment for retirement due to its tax benefits and safety.
• National Pension Scheme (NPS): NPS is another good option that offers both equity and debt exposure. It's designed for retirement and provides tax benefits.
• Mutual Funds: Start a Systematic Investment Plan (SIP) in equity mutual funds (consider a mix of large-cap, mid-cap, and hybrid funds) for higher returns over the long term. Even though mutual funds come with some risk, they can offer substantial growth over time.
4. Invest in Stocks (for higher returns)
• If you're comfortable with higher risk, you can invest in individual stocks or equity mutual funds to generate wealth. Ensure to do thorough research before investing or consider opting for managed portfolios if you're new to investing.
5. Keep Your Expenses Low
• Since you live with your parents and don’t have major expenses, this is an opportunity to save a significant portion of your income. Consider saving and investing 30-50% of your monthly income in the beginning.
6. Automate Your Investments
• Set up automatic monthly transfers into your investment accounts (like SIPs in mutual funds) to ensure consistent investing.
7. Maximize Tax Benefits
• Contribute to tax-saving instruments like ELSS (Equity Linked Savings Schemes), PPF, and NPS to reduce your taxable income.
• For long-term capital gains, keep in mind the tax exemptions and favorable tax rates for certain investment vehicles like PPF and NPS.
8. Increase Investment with Income Growth
• As your salary increases over the years, make sure to increase your investment amount accordingly. If you receive additional bonuses or increments, allocate a portion of them to your retirement fund.
9. Diversify Your Portfolio
• Diversification can help manage risk. Apart from mutual funds, PPF, and NPS, you could consider investments in gold or real estate if suitable for your situation.
10. Track and Rebalance Your Portfolio
• Regularly review your portfolio and rebalance it based on your retirement goals and market conditions. It’s also important to monitor inflation rates and adjust your goals accordingly.
Example Plan (Rs 35,000/month income):
• Monthly Savings (30% of income): Rs 10,500
• Bonus (Annually): Rs 18,000, invest 50% of it (Rs 9,000)
• Total Monthly Investment: Rs 10,500 + Rs 750 (bonus contribution) = Rs 11,250
• Invest in equity mutual funds via SIP: Rs 8,000
• PPF: Rs 2,000
• NPS: Rs 1,250
Potential Returns:
Assuming a return of 12% per annum from equity investments, you could accumulate a substantial corpus over time. If you start early, even small, consistent investments can lead to significant wealth.
Key Takeaways:
• Start investing early to take advantage of compounding.
• Aim to save and invest a portion of your income regularly.
• Focus on building a retirement-specific portfolio with tax-saving benefits.
• Gradually increase your savings as your income grows.

...Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Listen
Money
As per Budget 2025, for income upto ₹12 Laks has zero Income Tax liability. But the Tax slabs start from ₹0 to ₹4 Laks, which should have started from ₹12 Laks to ₹16 Laks, as income up to ₹12 Laks has zero Tax applicable. Also under Budget 2025, who is required to file Return compulsorily?
Ans: In the Union Budget 2025, the Indian government introduced changes to the income tax structure. The new tax regime now offers a basic exemption limit of Rs. 4,00,000. Individuals earning up to Rs. 12,00,000 annually are eligible for a rebate under Section 87A, which effectively brings their tax liability to zero.

Addressing Your Concern

You mentioned that the tax slabs should begin from Rs. 12,00,000, given the exemption up to Rs. 12,00,000.However, the tax slabs are designed to follow a progressive system. The initial slab of Rs. 0 to Rs. 4,00,000 ensures tax relief for lower-income groups.

Additionally, the Rs. 12,00,000 limit is specifically available as a rebate for income from salary and business/professional sources only. For individuals earning other income (such as rental income, capital gains, etc.), the tax will apply starting from Rs. 4,00,000. This is why the slab starts from Rs. 0 to Rs. 4,00,000.

Thus, the tax liability structure is based on the source of income, with the rebate applicable only for salary and business/professional income. The objective is to provide targeted relief to salaried individuals and small businesses while still taxing other types of income starting from Rs. 4,00,000.

Mandatory Income Tax Return Filing

As per Budget 2025, the requirement to file an Income Tax Return (ITR) remains unchanged. Individuals whose total income exceeds the basic exemption limit (Rs. 4,00,000) are required to file an ITR. Even if your income is below the taxable limit, filing an ITR can be advantageous for reasons like claiming refunds, applying for loans, or proving your income for future financial planning.

Final Insights

The revised tax slabs aim to provide relief to those with lower incomes while ensuring a fair contribution from all income groups. The structure encourages compliance and simplifies the tax process for salaried and small-business earners, while still ensuring taxes on other sources of income.

Best Regards,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Listen
Money
How partial withdrawal from NPS Tire 2 account for house building construction will be taxed? Is it true that Principle/invested amount also attract tax ?
Ans: NPS Tier 2 is a voluntary savings account linked to NPS. It allows flexible withdrawals. However, the taxation rules for withdrawals are different from NPS Tier 1.

Understanding Tax on NPS Tier 2 Withdrawals
1) Entire Withdrawal is Taxable
Withdrawals from NPS Tier 2 do not get any tax exemption.

The entire amount, including the principal and gains, is taxed as per your income slab.

2) No Special Tax Benefits for House Construction
There are no separate tax exemptions for withdrawing from NPS Tier 2 for house construction.

Unlike NPS Tier 1, which has some tax-free components, Tier 2 is treated like a regular investment.

3) Principle Amount is Also Taxed
The invested amount (principal) was not taxed earlier because there was no tax benefit on investment.

However, when withdrawn, it is added to your total income and taxed as per your slab.

4) Tax Deducted at Source (TDS) May Apply
If the withdrawal amount is large, TDS may be deducted.

The withdrawn amount is still subject to final tax calculation based on your total income.

Better Alternatives for Funding House Construction
If you need funds for house construction, consider other investment withdrawals that have tax benefits.

Withdrawing from a mutual fund with long-term capital gains benefit may be more tax-efficient.

Fixed deposits may be an option, but the interest earned is taxable.

Finally
NPS Tier 2 withdrawals are fully taxable.

The entire amount, including the principal, is added to your income.

There is no special tax exemption for withdrawing for house construction.

Explore other tax-efficient sources for funding home construction.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Asked by Anonymous - Jan 30, 2025Hindi
Listen
Money
Hello, Myself and wife are NRI s and maintaining a joint bank account, when we retire and get back home, how the tds refund going to affect? Is it shared or one person have to claim?
Ans: Your situation is common among NRIs returning to India. A proper tax strategy ensures smooth financial management.

Understanding TDS on NRI Accounts
Banks deduct TDS on interest earned in NRI accounts.
The rate depends on the type of account and applicable tax laws.
NRIs can claim a refund if the tax deducted is higher than their actual tax liability.
Knowing how tax works helps in efficient tax planning.

Who Should Claim the TDS Refund?
Refund claims depend on whose income is being taxed.
In joint accounts, only the primary holder is taxed.
The TDS refund must be claimed by the person whose PAN is linked to the account.
Only one person can claim the refund in most cases.

How to File the TDS Refund Claim?
The person claiming must file an income tax return.
The refund request should include details of TDS deducted.
Form 26AS helps track the deducted tax.
If both spouses have separate incomes, each must file returns individually.
A structured approach ensures smooth refund processing.

Repatriation and Account Conversion After Retirement
NRI accounts must be converted to resident accounts upon return.
Failing to convert can lead to tax complications.
Inform banks about residential status change to avoid excess TDS.
Timely conversion helps in better tax compliance.

Finally
When returning to India, ensure proper tax planning for TDS refunds. Only the primary account holder can claim the refund. Converting accounts to resident status is necessary to avoid tax issues.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Asked by Anonymous - Feb 06, 2025Hindi
Listen
Money
Hi sir my take home salary is 78000 can I buy home for 60 lakhs and I'm having a personal loan due for 14k for 1 year Kindly suggest
Ans: You have a take-home salary of Rs. 78,000 per month. You are considering buying a home worth Rs. 60 lakh. You also have a personal loan of Rs. 14,000 per month due for one more year.

Let’s evaluate whether purchasing this home is financially feasible and optimal.

Assessing Affordability Based on Income
Typically, housing affordability is calculated based on your monthly salary and liabilities.

Lenders usually approve home loans with an EMI-to-income ratio of up to 40%-50%.

In your case, the monthly EMI for the home loan will likely be substantial.

This will affect your cash flow, leaving limited room for other expenses.

It's essential to have a comfortable margin for daily expenses, savings, and emergencies.

If you can manage all your expenses comfortably, home ownership is possible.

Home Loan EMI Calculation Considerations
A Rs. 60 lakh home loan at an interest rate of 8%-9% will have a significant EMI.

For a loan tenure of 20 years, the EMI could be between Rs. 48,000 to Rs. 55,000.

You also have a personal loan of Rs. 14,000.

Combining both EMIs, your total monthly liabilities could be around Rs. 62,000 to Rs. 70,000.

With a take-home salary of Rs. 78,000, this leaves only Rs. 8,000 to Rs. 16,000 for other expenses.

This is a tight budget, especially considering unforeseen costs like healthcare or repairs.

Impact of Personal Loan on Financial Health
A personal loan of Rs. 14,000 can strain your finances, particularly with a new home loan.

Having two EMIs (personal loan + home loan) may limit your ability to save and invest.

If your personal loan interest rate is high, it can be more burdensome than the home loan.

Clearing the personal loan before taking on a home loan would be advisable.

Evaluating the Home Purchase from a Debt Perspective
Borrowing money for a home is often considered a good investment.

However, with your current financial situation, a high loan burden can lead to stress.

The personal loan and the home loan would require careful budgeting.

If you are planning to take on the home loan while still servicing the personal loan, it may strain your finances.

It’s best to focus on paying off the personal loan before committing to a new home loan.

Importance of Saving for a Down Payment
Typically, it’s recommended to make a down payment of at least 20% of the property value.

In your case, this would be Rs. 12 lakh for the Rs. 60 lakh home.

Saving up for the down payment reduces the amount of the loan, lowering EMIs.

The higher the down payment, the lesser the loan burden and overall interest paid.

You can also explore options like using part of your savings or other investments for the down payment.

Exploring Alternative Housing Options
If purchasing a Rs. 60 lakh home is not feasible, you may consider smaller properties.

This will reduce the loan burden and make the monthly payments more manageable.

Additionally, look at properties that are closer to your budget or in different locations.

You may also consider renting for a while, saving for a larger down payment, and paying off the personal loan.

Reconsidering Financial Stability
Buying a house should align with long-term financial goals and not cause undue stress.

Having too many loans can limit your ability to invest for the future.

Your immediate financial stability is essential before taking on additional commitments.

It may be better to pay off the personal loan first and save for a larger down payment.

Final Insights
Purchasing a home with a Rs. 78,000 salary and multiple loans may not be advisable.

Prioritize clearing the personal loan before taking on a large housing loan.

A balanced approach is crucial to avoid financial stress and ensure long-term stability.

You may consider a smaller home or rent for a few years until your finances improve.

Always ensure you have a sufficient emergency fund and room for other expenses.

As your financial situation stabilizes, you can then comfortably purchase your dream home.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Listen
Money
My brother wants to transfer 15 crores to my account in India from his NRI dubai account, if I receive the amount, should I be liable to pay tax for this amount?
Ans: In India, any money received from abroad is subject to scrutiny under the Income Tax Act.

However, gifts from relatives are tax-free in India.

A brother is considered a relative under the Income Tax Act, so gifts between siblings are exempt from tax.

What You Should Be Aware Of
1) Source of Funds
The money must come from a legal source.

Ensure that your brother can provide proof of the source of funds if required by the authorities.

2) Reporting the Transaction
Large transactions (above Rs. 10 lakh) need to be reported to Income Tax authorities.

If you receive Rs. 15 crores, it may be flagged for monitoring, and you may need to provide explanation and source details.

3) Repatriation Process
Ensure the money is sent through proper banking channels.

RTGS/NEFT/IMPS from an NRI account to your Indian account will ensure the money is tracked properly.

No Immediate Tax Liability for Gift from Brother
If your brother is gifting the amount to you, no tax is applicable as it is treated as a gift from a relative.

However, if the money is for business transactions or repayment of loans, it may attract tax or require documentation.

Final Insights
Receiving a gift of Rs. 15 crores from your brother is not taxable, as siblings are considered relatives.

Ensure the transaction is done via legal channels and keep all relevant documents.

Reporting large amounts to the Income Tax Department is a good practice.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7872 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 06, 2025

Asked by Anonymous - Feb 05, 2025Hindi
Listen
Money
Hello I joined private ltd. firm in October, 2024. The company has not provided me appointment letter and salary slip but credited my salary in my account. When I asked for appointment letter and salary slips the company just forwarded me mail on 20th January 2025 to handover the charge to other person without any notice to me which I did. Now they are not paying my December salary and January, 2025 full and final settlement. I was property manager in the company. Please suggest me what can be done in this case.
Ans: Your employer’s actions are unprofessional and unfair. You have legal options to claim your salary and final settlement.

Gather All Supporting Documents
Bank Statements: Show proof of salary credited for previous months.
Emails & Messages: Keep all communication with HR and management.
Work Records: Maintain any reports, client interactions, or tasks completed.
Company Policies: If you have access to any written policies, keep them.
These documents will strengthen your case.

Send a Formal Email Request
Draft a polite but firm email to HR and management.
Mention your pending salary and final settlement details.
Request a timeline for the payment.
Attach proof of salary credits and work done.
Give them a deadline of 7-10 days to respond.
Written communication creates a legal record of your request.

Send a Legal Notice Through a Lawyer
If the company does not respond, consult a labour lawyer.
A legal notice can push the company to clear dues.
Mention your job role, tenure, and pending salary.
Demand payment within a reasonable time.
A legal notice increases pressure on the employer.

File a Complaint with Labour Authorities
Private firms must follow labour laws regarding salary payments.
Visit the local Labour Commissioner’s office.
Submit a complaint with all supporting documents.
The department will issue notices and mediate with the company.
Labour authorities can legally intervene in salary disputes.

Consider Legal Action in Court
If all else fails, you can file a case in labour court.
Courts handle cases of unpaid salaries and wrongful termination.
A lawyer can guide you on the legal process and expected timeline.
Legal action is a strong step but ensures justice.

Finally
You have every right to claim your salary and final settlement. Follow a structured approach—start with written communication, then escalate legally if needed. Employers cannot deny rightful dues without consequences.

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.

Close  

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

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

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

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

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

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x