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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 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

Question by Amit on Jul 03, 2025Hindi

How to diversify rs. 25000 in different money instruments

Ans: ? Understand the Purpose First
– Start by knowing your financial goal.
– Are you saving for short-term or long-term?
– Different goals need different instruments.
– Your age, risk level and income also matter.
– Rs. 25000 may look small, but proper plan can grow it well.

? Asset Allocation Is the Core
– Don’t put entire money in one product.
– A balanced spread reduces risks.
– It also gives stable growth over time.
– Use 3 to 4 instruments to split the Rs. 25000.
– Each portion should serve a clear purpose.

? Emergency Fund Comes First
– Keep some part for sudden needs.
– Around Rs. 5000 is ideal here.
– Keep it in a liquid mutual fund.
– Easy to withdraw, safer than savings account.
– Helps in medical or other sudden needs.

? Actively Managed Mutual Funds for Growth
– Invest around Rs. 10000 in a good mutual fund.
– Go for regular plan through Certified Financial Planner.
– Avoid direct funds. You don’t get full support there.
– Also, MF distributors give service and track your progress.
– Regular plans cost a bit more but offer ongoing help.

? Why Not Direct Funds?
– Direct funds skip professional guidance.
– Mistakes in fund choice can affect results.
– No one reminds you to review or rebalance.
– Regular plans come with full support and guidance.
– Certified Financial Planners track markets and guide you better.

? Don’t Go with Index Funds or ETFs
– Index funds just copy the market.
– No one manages actively during market falls.
– They perform average in volatile times.
– Actively managed funds try to beat the market.
– Skilled fund managers adjust strategy as needed.
– This gives better growth over time.

? SIPs Can Be Useful
– Use SIP if your income is monthly.
– It brings discipline and regular investment habit.
– Even Rs. 1000 SIP can build wealth over years.
– You can start small and grow step by step.
– Ideal for long-term wealth creation.

? Short-Term Needs Require Safety
– Around Rs. 4000 can be kept for short-term goals.
– Choose ultra-short duration or low duration funds.
– These give better returns than FDs in short period.
– Safer option for 1 to 3 years needs.
– Helps you avoid loan for small needs.

? Don’t Mix Insurance with Investment
– Avoid ULIPs or LIC investment policies.
– They offer low return and poor flexibility.
– If you already hold these, consider surrendering them.
– Reinvest in better performing mutual funds.
– Keep insurance and investment fully separate.

? Health Insurance Should Not Be Ignored
– Medical cost is rising every year.
– Without insurance, one illness can break your savings.
– Spend a small part for health insurance premium.
– It’s not an investment but a shield for wealth.
– Essential even if you are young and healthy.

? Gold for Long-Term Hedge
– You can keep Rs. 2000 in digital gold.
– Use mutual fund route for gold investments.
– Avoid physical gold due to safety and cost issues.
– Helps in hedging during inflation or global crisis.

? Avoid Fancy or Trendy Products
– Don’t fall for NFOs, crypto, or peer lending.
– They carry high risks for small investors.
– You need safety and reasonable returns.
– Stick to time-tested, regulated instruments only.

? Review Every 6 Months
– Markets keep changing all the time.
– Your goal may also change with life stage.
– A Certified Financial Planner will do reviews for you.
– Rebalancing is needed for better performance.
– Don’t forget to monitor progress.

? Tax Planning Is Needed Too
– Some mutual funds give tax benefits under Section 80C.
– But don’t choose them only for saving tax.
– Make sure the product suits your need also.
– Debt funds are taxed as per your tax slab.
– Equity funds have new tax rules now.

? Know the New Mutual Fund Tax Rule
– Equity fund LTCG above Rs. 1.25 lakh taxed at 12.5%.
– STCG in equity is taxed at 20%.
– Debt funds taxed as per your income slab.
– Choose holding period wisely for better post-tax returns.
– Plan redemptions with a Certified Financial Planner’s help.

? Small Start, Big Results
– Rs. 25000 may look small today.
– But with right mix, it can grow fast.
– Stay consistent and don’t withdraw often.
– Compounding rewards patience.
– Aim for long-term wealth creation, not just quick profit.

? Track Your Financial Behaviour
– Avoid impulsive withdrawals or switching funds often.
– Stick to your plan during market downs.
– Trust your Certified Financial Planner’s advice.
– Emotional investing leads to poor results.
– Discipline is more important than product.

? Financial Literacy Is Ongoing
– Learn basic money principles slowly.
– You don’t need complex ideas to succeed.
– Keep your strategy simple and focused.
– Ask questions to your Certified Financial Planner often.
– Clarity leads to confidence in decisions.

? What a Certified Financial Planner Adds
– They guide you from goal setting to execution.
– They track progress and suggest course correction.
– You get one point contact for all finance matters.
– Mutual Fund Distributors with CFP give clear value.
– Fees are low compared to costly mistakes.

? If You Hold LIC or ULIP Plans
– These give very poor returns.
– High charges and low flexibility hurt growth.
– Surrender if they are investment-linked.
– Reinvest in mutual funds through regular plans.
– Insurance should protect, not invest.

? Protect Your Loved Ones Too
– If you have dependents, buy term insurance.
– It gives high cover at low cost.
– Don’t mix investment with insurance.
– One death can shake family finances.
– A Rs. 500 premium gives Rs. 50 lakh cover.

? Risk Should Match Your Stage
– Younger people can take more equity exposure.
– For middle age, reduce risk slowly.
– Seniors should focus on safety and regular income.
– Your risk level must change with age.
– A Certified Financial Planner can plan this shift well.

? Don’t Chase High Return Products
– High returns usually come with high risks.
– Focus on consistent, long-term performers.
– Avoid tips from friends or social media.
– A tested plan works better than flashy ideas.
– Financial planning needs patience and clear thinking.

? Discipline Is Better Than Timing
– Timing market is very hard.
– Even experts don’t get it always right.
– Instead, invest regularly with discipline.
– SIP helps avoid wrong timing risks.
– Stay invested for longer periods.

? Risk Diversification Brings Stability
– Mix of debt, equity, gold and liquid is key.
– One bad year in equity won’t spoil all.
– Diversification protects downside risk.
– Helps in smoother wealth journey.

? Mental Peace Is Also a Goal
– Financial stress affects health and relations.
– Planned investment brings mental peace.
– Small steps towards financial goal matter.
– Your money should serve your life goals.
– Not the other way around.

? Finally
– Rs. 25000 can be a good start if used well.
– Plan based on your needs and time frame.
– Split money for emergency, growth, and short-term.
– Use mutual funds through regular plans.
– Avoid index funds, direct plans, ULIPs or real estate.
– Review regularly with a Certified Financial Planner.
– Don’t focus only on return, but full financial safety.
– Stick to plan, invest regularly, and be patient.

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

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