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Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 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
azad Question by azad on Nov 08, 2023Hindi
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how to go about the superanation fund of 18 lacs how to use safely for life time

Ans: Safely Utilizing a Superannuation Fund of Rs. 18 Lakhs for Lifetime Financial Security
Utilizing a superannuation fund of Rs. 18 lakhs requires careful planning to ensure lifelong financial security. Let's explore strategic approaches to manage this fund prudently.

Assessing Financial Goals and Needs
Understanding Long-Term Financial Objectives

Identify your long-term financial goals, including retirement lifestyle, healthcare expenses, and legacy planning.
Assessing Current Financial Situation

Evaluate your current financial position, including income sources, expenses, and existing investments.
Creating a Comprehensive Financial Plan
Holistic Financial Planning

Develop a comprehensive financial plan tailored to your unique circumstances, considering risk tolerance, investment horizon, and liquidity requirements.
Diversified Investment Strategy

Adopt a diversified investment strategy to mitigate risk and optimize returns. Allocate assets across various asset classes, including equities, fixed income, and alternative investments.
Utilizing the Superannuation Fund
Staggered Withdrawals

Consider staggering withdrawals from the superannuation fund to ensure a steady income stream throughout retirement.
Systematic Withdrawal Plans (SWP)

Implement a Systematic Withdrawal Plan (SWP) to periodically withdraw a predetermined amount from the superannuation fund, aligning with your cash flow needs.
Managing Investment Risk
Balanced Portfolio Allocation

Maintain a balanced portfolio allocation based on your risk tolerance and investment objectives. Adjust asset allocation periodically to rebalance the portfolio.
Avoiding Overexposure

Avoid overexposure to any single asset class or investment vehicle. Diversification is key to managing investment risk effectively.
Mitigating Longevity Risk
Longevity Planning

Plan for longevity by ensuring your retirement savings last throughout your lifetime. Consider factors such as inflation, healthcare costs, and lifestyle expenses.
Annuity Products

Explore annuity products as a potential option to provide guaranteed income streams in retirement. However, weigh the pros and cons carefully before making decisions.
Regular Portfolio Reviews
Ongoing Monitoring

Conduct regular reviews of your investment portfolio to assess performance, adjust asset allocation, and realign investment strategies as needed.
Professional Guidance

Seek guidance from a Certified Financial Planner (CFP) to navigate complex financial decisions and optimize your retirement income strategy.
Conclusion
Safely utilizing a superannuation fund of Rs. 18 lakhs for lifetime financial security requires a strategic and disciplined approach. By creating a comprehensive financial plan, managing investment risk, mitigating longevity risk, and seeking professional guidance, you can achieve financial stability and peace of mind in retirement.

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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Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 19, 2024

Asked by Anonymous - May 18, 2024Hindi
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Hello Sir, I am 35 years old. I have 6 lacs in NPS and 1 fd of 5 lac saved uptill now. I manage to save around 1-2 lacs every year to add into these instruments. I have recently inhertited a large some of money i.e. 40 lacs in the last few months. I dont have the experience nor have the knowledge on how to handle this quantum.. Please advise on how do i deploy this fund. As a goal,i wish to retire by the time i am 45 with a corpus of 3 cr. Is this possible ? Please advice.
Ans: First, congratulations on your savings and recent inheritance. Managing a significant sum can be overwhelming, but with proper planning, you can achieve your financial goals.

You have 6 lakhs in the National Pension System (NPS) and a fixed deposit of 5 lakhs. These are good starting points.

You save around 1-2 lakhs annually, showing your commitment to building your financial future.

Evaluating Your Retirement Goal
You aim to retire by age 45 with a corpus of 3 crores. This is an ambitious yet achievable goal with disciplined investing.

Given your current age of 35, you have a 10-year horizon to build this corpus. Strategic investments are key to reaching this target.

Deployment of Inherited Funds
With 40 lakhs recently inherited, strategic allocation is essential. Here’s how you can deploy this fund:

Emergency Fund
Firstly, set aside a portion for emergencies. Having 6-12 months' worth of expenses in a liquid instrument is prudent.

Debt Instruments
A part of your funds should go into safe, debt instruments. This provides stability and ensures some safety net.

Actively Managed Equity Funds
Equity funds, especially actively managed ones, can potentially offer higher returns. They can outperform the market through strategic stock selection.

Hybrid Funds
Hybrid funds, which mix equity and debt, provide a balanced approach. They reduce risk while offering growth potential.

Diversified Portfolio
Ensure your portfolio is diversified across different sectors and asset classes. This reduces risk and improves potential returns.

Regular Investments and SIPs
Continue with your annual savings of 1-2 lakhs. Investing this regularly through Systematic Investment Plans (SIPs) can benefit from rupee cost averaging.

SIPs in diversified equity and hybrid funds can provide consistent growth and reduce market volatility impact.

Importance of Active Fund Management
Actively managed funds have professional managers aiming to outperform the market. Unlike index funds, they can adapt to market changes and select high-potential stocks.

This active management can lead to better returns over time, aligning with your goal of a 3-crore corpus.

Professional Guidance
Consulting a Certified Financial Planner (CFP) can provide tailored advice. A CFP can help you select suitable funds, monitor your portfolio, and make adjustments as needed.

Investing through a CFP ensures you benefit from expert guidance, crucial for achieving long-term goals.

Disadvantages of Index Funds
Index funds, while low-cost, simply replicate an index. They lack the flexibility to react to market conditions and can't outperform the index.

Actively managed funds, however, strive for better returns through strategic decisions and active asset allocation.

Reviewing and Rebalancing
Regularly review your portfolio to ensure it aligns with your goals. Market conditions change, and periodic rebalancing is essential.

A diversified portfolio with active management and regular reviews can help you stay on track to achieve your retirement goal.

Conclusion
With disciplined investing and strategic allocation of your inherited funds, retiring with a corpus of 3 crores by age 45 is possible.

Focus on a balanced and actively managed portfolio, and seek professional guidance for the best outcomes.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

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

Money
One of my policy is getting matured i will get 10 lacs how can i use it for reinvestment options please
Ans: You have Rs 10 lakh maturing from one of your policies, and you're looking for reinvestment options. Let's explore the best ways to reinvest this amount to ensure optimal growth and financial security.

Understanding Your Financial Goals
Firstly, let's revisit your financial goals. You've mentioned wanting to accumulate a corpus of Rs 3 crore and securing enough funds for your two daughters' education and marriage. This means we need to focus on investments that offer good returns while also providing some stability.

Diversifying Your Investments
Diversification is crucial for balancing risk and reward. By spreading your investments across different asset classes, you can potentially earn higher returns while minimizing risk. Here are some key areas to consider:

Mutual Funds
Mutual funds are a great way to diversify your portfolio. They offer professional management and the ability to invest in a wide range of securities. Opt for actively managed funds rather than index funds. Actively managed funds have the potential to outperform the market because of the fund manager’s expertise.

You can start with a mix of equity and debt funds. Equity funds can provide higher returns over the long term, while debt funds can offer stability. A certified financial planner can help you choose the right mix based on your risk tolerance and investment horizon.

Systematic Investment Plans (SIPs)
Investing in mutual funds through SIPs allows you to invest a fixed amount regularly. This helps in averaging out the cost of investment and reduces the impact of market volatility. SIPs are a disciplined way to invest and can be aligned with your long-term financial goals.

Public Provident Fund (PPF)
PPF is a safe investment option with tax benefits. It offers a guaranteed return and the interest earned is tax-free. The PPF has a lock-in period of 15 years, but you can make partial withdrawals after 7 years. This can be a good addition to your retirement planning.

Sukanya Samriddhi Yojana (SSY)
Given that you have two daughters, investing in SSY can be a great option. This scheme offers a high interest rate and tax benefits under Section 80C. The maturity amount and interest earned are tax-free. It can be used for your daughters’ education and marriage expenses.

National Pension System (NPS)
NPS is another good option for retirement planning. It offers market-linked returns and tax benefits. The funds in NPS are invested in a mix of equity, corporate bonds, and government securities, which can help in accumulating a significant corpus over time. Since you already invest in NPS, consider increasing your contributions for better retirement benefits.

Avoiding Common Pitfalls
While reinvesting, it's important to avoid certain common pitfalls that can affect your returns.

Avoid ULIPs and Insurance-Linked Investments
ULIPs and insurance-linked investments often come with high charges and lower returns compared to mutual funds. If you hold any such policies, consider surrendering them and reinvesting the proceeds in mutual funds. Insurance should be kept separate from investments.

Avoid Direct Funds
Investing in direct funds might seem like a way to save on commissions, but it can be risky without professional guidance. Regular funds, invested through a certified financial planner, provide valuable advice and can help you navigate market complexities. The fees you pay are often worth the additional support and insights.

Regular Review and Monitoring
Regularly reviewing and monitoring your investments is essential. Financial markets are dynamic, and periodic reviews ensure that your investments remain aligned with your goals. A certified financial planner can help you with this, providing timely advice and adjustments.

Building an Emergency Fund
Before making any new investments, ensure you have an adequate emergency fund. This should cover 6-12 months of your expenses. An emergency fund provides a financial cushion in case of unforeseen circumstances like job loss, medical emergencies, or urgent repairs.

Tax Planning
Effective tax planning is crucial for maximizing your returns. Invest in instruments that offer tax benefits, such as PPF, NPS, and ELSS (Equity Linked Savings Scheme). This not only reduces your tax liability but also helps in growing your wealth.

Understanding Market Risks
While equity investments can provide high returns, they also come with higher risks. It’s important to understand your risk tolerance and invest accordingly. Diversifying across asset classes, as mentioned earlier, helps in managing these risks better.

Setting Up a Trust or Will
Since you’re planning for your daughters’ future, consider setting up a trust or drafting a will. This ensures that your assets are distributed according to your wishes and can provide financial security for your family.


Your proactive approach to managing your finances is commendable. It’s clear that you care deeply about securing a bright future for your daughters. Taking these steps will undoubtedly help you achieve your financial goals. Remember, every small step taken today builds a stronger financial foundation for tomorrow.

Final Insights
Reinvesting your Rs 10 lakh wisely can significantly boost your financial health. Focus on diversifying across mutual funds, PPF, SSY, and NPS. Avoid common pitfalls like ULIPs and direct funds, and ensure regular reviews of your portfolio. Build an emergency fund and plan for taxes effectively. Your dedication to securing a better future for your family is admirable. Stay the course, and you will achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |5173 Answers  |Ask -

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

Asked by Anonymous - Jul 18, 2024Hindi
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HI, I am 41 years old and want to start a SIP to give a return of 20 lakh in next 15 yrs for children education. which fund I should choose?
Ans: Goal Assessment

You aim to accumulate Rs. 20 lakh over the next 15 years for your children's education.

Starting a SIP is a smart way to achieve this goal.

Let's explore the best approach to meet your objective.

Investment Horizon and Risk Appetite

You have a long-term horizon of 15 years.

This allows you to take on more risk for potentially higher returns.

Equity mutual funds are suitable for long-term goals.

Types of Equity Mutual Funds

Large-Cap Funds: Invest in big, stable companies. Less risky but moderate returns.

Mid-Cap Funds: Invest in medium-sized companies. Moderate risk and returns.

Small-Cap Funds: Invest in smaller companies. High risk but high returns.

Flexi-Cap Funds: Invest across various company sizes. Balanced risk and returns.

Why Not Index Funds?

Index funds follow the market. They lack active management.

Actively managed funds aim to beat the market.

This offers potentially higher returns.

For your goal, actively managed funds are better.

Benefits of Regular Funds

Professional Management: Managed by experts.

Personal Guidance: Certified Financial Planner can guide you.

Better Performance: Regular monitoring and adjustments.

Choosing the Right Funds

Diversify across different types of funds.

This balances risk and reward.

A mix of large-cap, mid-cap, and small-cap funds is ideal.

Example Allocation Strategy

Large-Cap Fund: 40% for stability and steady growth.

Mid-Cap Fund: 30% for moderate growth.

Small-Cap Fund: 20% for high growth potential.

Flexi-Cap Fund: 10% for balanced growth.

Regular Monitoring and Review

Review your investments annually.

Adjust based on performance and changing market conditions.

Seek advice from a Certified Financial Planner regularly.

Benefits of SIP

Discipline: Ensures regular investment.

Rupee Cost Averaging: Buys more units when prices are low.

Compounding: Helps in wealth creation over time.

Why Avoid Direct Funds?

Direct funds lack personal guidance.

You miss out on expert advice.

Certified Financial Planners provide valuable insights.

Final Insights

Starting a SIP for your child's education is a wise decision.

Choose a mix of large-cap, mid-cap, small-cap, and flexi-cap funds.

Regularly review and adjust your portfolio.

Seek professional guidance to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5173 Answers  |Ask -

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

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I am a PSU employee. Now started getting EPFO pension after the age of 58 years. Where shall I show this amount received in ITR? In Salary Section or Income from other sources? If it is to be shown in the salary section, is the employer is the same as that of my current employee? Presently my age is 59 years and still working in the same PSU.
Ans: Receiving your EPFO pension after the age of 58 is a significant milestone. Given your current age of 59 and your ongoing employment with the same PSU, it's crucial to understand how to report this pension income correctly in your Income Tax Return (ITR).

Where to Report EPFO Pension in ITR
Salary Section vs. Income from Other Sources:
Income from Other Sources: EPFO pension is considered as "Income from Other Sources". This means it should be reported under this section in your ITR.
Reporting Details
Employer Details:
When reporting EPFO pension under "Income from Other Sources", you do not need to list your current employer as the source. The pension is disbursed by the Employees' Provident Fund Organization (EPFO), which acts as the payer.
Continued Employment
Working Beyond 58 Years:
Since you are still working in the same PSU, your current salary will continue to be reported under the "Salary" section of your ITR.
There is no overlap or confusion between the two sources of income.
Tax Implications
Taxable Income:
The EPFO pension is fully taxable as per your applicable tax slab.
Make sure to include the entire amount received in the relevant section to avoid any discrepancies.
Benefits of Correct Reporting
Compliance:
Correctly reporting your pension income ensures compliance with tax regulations.
This helps in avoiding any potential scrutiny or penalties from tax authorities.
Ensuring Accuracy
Double-check Figures:
Verify the pension amount received with the statements provided by EPFO.
Cross-check with your bank statements to ensure accuracy.
Professional Advice
Certified Financial Planner (CFP):
Consulting a Certified Financial Planner can provide additional insights into managing your retirement income effectively.
They can help you optimize your tax liabilities and ensure you are maximizing your financial benefits.
Insight into Pension and Salary Reporting
Separate Sources:
Keep your salary income and pension income distinctly separate in your financial records.
This clarity helps in maintaining accurate and transparent financial management.
Final Insights
Clear Distinctions:

Understand the distinction between salary income and pension income.
Report EPFO pension under "Income from Other Sources".
Professional Guidance:

Utilize the expertise of a Certified Financial Planner for comprehensive financial planning.
Ensure compliance with tax regulations to avoid any future issues.
Summary
Report EPFO pension under "Income from Other Sources".
Do not list current employer details for the pension.
Pension income is fully taxable.
Consult a Certified Financial Planner for optimal financial management.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...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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