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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 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 - May 12, 2024Hindi
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Hi Sir, im 29 years old working in private company. How i achive 1cr at my retirement age. Please guide me.

Ans: It's great that you're thinking about your financial future at such a young age. Achieving a retirement corpus of ?1 crore is an admirable goal, and with careful planning and disciplined investing, it's definitely achievable. Here's a guide to help you get started:

Start Early
Advantage of Time
At 29, you have the advantage of time on your side. Starting early allows your investments to benefit from the power of compounding, which can significantly boost your wealth over the long term.

Regular Savings
Commit to setting aside a portion of your income each month towards your retirement goal. Even small amounts invested regularly can accumulate into a substantial corpus over time.

Investment Strategy
Diversified Portfolio
Build a diversified investment portfolio that includes a mix of equity, debt, and other asset classes. Equity investments offer higher growth potential over the long term, while debt investments provide stability and income.

Systematic Investment Plans (SIPs)
Invest in mutual funds through SIPs, which allow you to invest small amounts regularly. Choose funds based on your risk tolerance, investment horizon, and financial goals.

Retirement Planning
Calculate Required Corpus
Estimate how much you'll need for retirement by factoring in your current expenses, inflation, and expected lifestyle in retirement. Use online retirement calculators or consult with a financial planner to determine the target corpus.

Regular Review
Regularly review your investment portfolio and make adjustments as needed to stay on track towards your retirement goal. Rebalance your portfolio periodically to maintain the desired asset allocation.

Additional Tips
Emergency Fund
Build an emergency fund to cover unexpected expenses and avoid dipping into your retirement savings during emergencies.

Insurance Coverage
Ensure you have adequate insurance coverage, including health insurance and life insurance, to protect yourself and your loved ones from financial uncertainties.

Conclusion
By starting early, adopting a disciplined savings habit, and investing prudently, you can work towards achieving a retirement corpus of ?1 crore. Remember to stay focused on your goal, seek professional advice when needed, and remain patient as you progress towards financial independence.

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  |6253 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2024

Asked by Anonymous - Jun 17, 2024Hindi
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I am 29 years old.I have a personal loan of 15lac going on will finish on 2029.My monthly income is 27000 on cash after emi, ppf deduction. Im retiring on 2037.How can I acheive 1cr before my retirement.? Where can i invest to achieve financial freedom after retirement.? Waiting ur guidance.
Ans: You have a clear goal, and achieving Rs. 1 crore before retirement is possible with a disciplined approach. Let’s explore your options.

Evaluating Current Financial Situation
Monthly Income and Obligations
You earn Rs. 27,000 monthly after EMI and PPF deductions. You have a personal loan of Rs. 15 lakh, which will be paid off by 2029.

Retirement Plan
You plan to retire in 2037. This gives you around 14 years to build your corpus. Let’s explore how to achieve your goal.

Importance of Starting Early
Power of Compounding
Starting early allows your investments to grow through compounding. Compounding helps your investment grow exponentially over time.

Discipline in Investing
Consistent investing is crucial. Setting aside a fixed amount each month will help you achieve your goal.

Investment Options
Mutual Funds
Mutual funds can be an excellent option for building your retirement corpus.

Equity Mutual Funds
Equity mutual funds invest in stocks. They offer higher returns but come with higher risks. Over a long period, they can help you build a substantial corpus.

Debt Mutual Funds
Debt mutual funds invest in fixed-income securities. They offer stable returns with lower risk. They can be a good option for short-term goals.

Hybrid Mutual Funds
Hybrid mutual funds invest in a mix of equity and debt. They provide a balance of risk and return, suitable for moderate risk tolerance.

Systematic Investment Plan (SIP)
Investing through SIPs is a disciplined approach. You can invest a fixed amount regularly, which helps in averaging out the cost and reduces the risk of market volatility.

Evaluating Mutual Funds
Professional Management
Mutual funds are managed by professional fund managers. They have the expertise to make informed investment decisions, which can lead to better returns.

Diversification
Mutual funds offer diversification by investing in a mix of assets. This reduces risk and helps in achieving steady returns.

Liquidity
Mutual funds are highly liquid. You can redeem your investments easily, providing quick access to your money when needed.

Convenience
Investing in mutual funds through SIPs is convenient. It automates the investment process, ensuring disciplined investing without worrying about market timing.

Risk and Considerations
Market Risk
Mutual funds are subject to market risk. The value of your investments can fluctuate based on market conditions. It’s important to have a long-term perspective.

Expense Ratios
Mutual funds charge an expense ratio for managing the fund. Higher expense ratios can impact your returns. Choose funds with reasonable expense ratios.

Performance Variability
Not all mutual funds perform consistently. It’s essential to review fund performance regularly and make necessary adjustments to your portfolio.

Steps to Achieve Rs. 1 Crore
Assess Financial Goals
Understand your financial goals and risk tolerance. This will help you choose the right investment options.

Choose the Right Funds
Select mutual funds that align with your goals and risk profile. For long-term goals, equity funds can be suitable.

Increase Investment Gradually
As your income increases, try to increase your SIP amount. This will help you achieve your goal faster.

Consult a Certified Financial Planner (CFP)
A CFP can provide personalized advice based on your financial situation. They can help you choose the right funds and create a comprehensive financial plan.

Power of Compounding
Growth Over Time
Compounding allows your investment to grow over time. Reinvesting your returns helps your money earn returns on returns, leading to exponential growth.

Starting Early
The earlier you start investing, the more time your money has to grow. Consistent investing can significantly impact your corpus by the time you need it.


It’s great that you are proactive about your retirement planning. Understanding the importance of starting early and disciplined investing shows your commitment to securing your financial future.

Final Insights
Achieving Rs. 1 crore before retirement is possible with disciplined investing and proper planning. Evaluate your financial goals, choose the right investment options, and stay consistent. Consulting a CFP can provide personalized guidance and ensure you are on the right track.

Remember, the goal is to align your investments with your financial goals and risk tolerance. Stay informed, review your investments regularly, and seek professional advice when needed.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 24, 2024

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I am a govt employee. My in hand salary is 35k after deduction of EMI. I have a loan of Rs 10 lac which I am planning to repay in next 4-5 years. My savings are : 5k in provident fund, 5k in life insurance, 3k in mutual funds. Apart from this I have invested Rs 10 lac in equity. I want to retire by 2030. My goal is to reach the mark of Rs 1 Cr. Please guide how can I achieve it?
Ans: Current Financial Situation
You have a good start with savings and investments. Here’s a summary:

In-Hand Salary: Rs 35,000 (after EMI deduction)
Loan: Rs 10 lakh (to be repaid in 4-5 years)
Savings:
Provident Fund: Rs 5,000 per month
Life Insurance: Rs 5,000 per month
Mutual Funds: Rs 3,000 per month
Equity Investment: Rs 10 lakh
Retirement Goal: Rs 1 crore by 2030
Loan Repayment Plan
Repay Loan Strategically:

Prioritise loan repayment to reduce interest burden.
Allocate a fixed amount monthly towards EMI.
Ensure it doesn’t affect essential expenses and savings.
Increase EMI if Possible:

Increase your EMI payment when you get increments.
This will help you repay the loan faster and save on interest.
Savings and Investment Plan
Provident Fund:

Continue contributing Rs 5,000 per month.
It’s a secure investment with stable returns.
Life Insurance:

Ensure your life insurance covers your family’s needs.
It’s essential for financial security.
Mutual Funds:

Increase your SIPs in mutual funds to Rs 5,000 per month.
Focus on actively managed funds for better returns.
Avoid direct funds as they lack professional guidance.
Equity Investments:

Continue your equity investments.
Diversify your portfolio to include large, mid, and small-cap funds.
Avoid index funds as they are passively managed.
Actively managed funds can potentially offer higher returns.
Additional Investment Options
Balanced Advantage Funds:

Invest in balanced advantage funds.
These funds provide a mix of equity and debt.
They offer stability and growth.
Systematic Investment Plan (SIP):

Start new SIPs in actively managed funds.
Allocate Rs 2,000 each to large, mid, and small-cap funds.
Multi-Asset Funds:

Consider investing in multi-asset funds.
These funds diversify across equity, debt, and other assets.
They help in risk management.
Regular Review and Rebalancing
Annual Review:

Review your portfolio annually.
Ensure it aligns with your financial goals.
Rebalance Portfolio:

Rebalance your portfolio based on market conditions.
Shift investments to maintain desired asset allocation.
Achieving Retirement Goal of Rs 1 Crore
Target Returns:

Aim for a mix of stable and high-return investments.
Focus on long-term growth.
Increase SIPs Gradually:

Increase your SIP contributions as your income grows.
This helps in accumulating a larger corpus.
Emergency Fund:

Maintain an emergency fund for unexpected expenses.
This ensures your investments remain untouched.
Final Insights
You have a solid financial foundation. Focus on repaying your loan efficiently and increasing your SIPs in actively managed funds. Regularly review and rebalance your portfolio to stay on track. By following this strategy, you can achieve your retirement goal of Rs 1 crore by 2030.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

Asked by Anonymous - Jul 30, 2024Hindi
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My net salary 80K , age 43 years, I want to retire at age of 55 ,I want 1 cr at the age of 55
Ans: At age 43, with a net salary of Rs. 80,000, your goal is to retire at 55 with a corpus of Rs. 1 crore. This is a prudent plan, and with focused financial planning, it’s achievable. Here’s a step-by-step guide to help you reach your goal.

Current Financial Situation
You are 12 years away from your retirement goal, which provides you with a significant time horizon to grow your investments.

The net salary of Rs. 80,000 per month offers you room to allocate a portion towards investments, considering your existing expenses.

At this stage, it's important to maintain a disciplined investment approach to achieve your target.

Investment Strategy
Diversified Portfolio
Creating a well-diversified portfolio is crucial. It spreads risk and helps achieve consistent returns.

Consider a mix of equity and debt mutual funds. Equity funds offer higher returns over the long term, while debt funds provide stability.

Allocate a higher percentage of your savings to equity funds, given the 12-year horizon. This will help your investments grow.

Regular Investments
Systematic Investment Plans (SIPs) are a great way to invest regularly without market timing.

Start or increase your SIPs in mutual funds. Aim to invest a significant portion of your salary towards these SIPs.

As your salary grows, periodically increase your SIP amounts to match your income growth.

Risk Management
While equity funds can offer high returns, they come with higher risk. To balance this, include debt funds.

Allocate a smaller portion to debt funds to safeguard against market volatility.

Ensure you have a mix of large-cap, mid-cap, and small-cap equity funds to spread your risk across various market segments.

Retirement Corpus Goal
Investment Horizon
With 12 years to retirement, you have a long-term investment horizon, which is favorable for equity investments.

Equity funds have the potential to deliver superior returns over a decade, helping you reach your Rs. 1 crore goal.

Reassess and rebalance your portfolio every few years to ensure it aligns with your goals.

Target Corpus
Achieving Rs. 1 crore by 55 requires disciplined saving and investing.

If your current savings are minimal, you'll need to save more aggressively to reach the Rs. 1 crore target.

Calculate your future expenses, accounting for inflation. This will help you understand if Rs. 1 crore will be sufficient or if you need to adjust your goal.

Tax Efficiency
Tax Planning
As you grow your investments, be mindful of the tax implications.

Opt for tax-saving mutual funds under Section 80C to save taxes while investing for your goal.

Ensure your portfolio is tax-efficient, balancing between growth and tax obligations.

Protecting Your Investments
Insurance
To safeguard your investments and your family’s future, ensure adequate insurance cover.

If you don’t already have term insurance, consider purchasing a policy. It’s affordable and provides financial security.

Health insurance is equally important. Ensure you have a comprehensive plan that covers you and your family.

Financial Discipline
Emergency Fund
Before committing to investments, ensure you have an emergency fund.

Set aside 6-12 months of living expenses in a liquid fund. This will act as a safety net during unforeseen circumstances.
Debt Management
Manage your debts carefully. If you have any high-interest loans, prioritize paying them off.

Avoid accumulating unnecessary debt, as it can hinder your ability to save and invest.
Monitoring and Adjusting
Regular Reviews
Keep a close eye on your investment portfolio. Markets fluctuate, and your needs may change.

Review your portfolio at least once a year. Adjust your asset allocation based on market conditions and your financial situation.
Seek Professional Advice
Consult a Certified Financial Planner for personalized advice. They can help tailor an investment plan specific to your needs.

Regular consultations ensure you stay on track and make adjustments as necessary.
Final Insights
Achieving Rs. 1 crore by 55 is possible with a disciplined approach. Regular investments, proper diversification, and periodic reviews are key.

Focus on a balance between growth and security in your portfolio.

As you near retirement, gradually shift towards safer investments to protect your corpus.

Maintain financial discipline, manage your expenses, and stay committed to your investment plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Nitin

Nitin Narkhede  |3 Answers  |Ask -

MF, PF Guru - Answered on Sep 09, 2024

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Can Investment in Gold and Mutual Funds Give High Returns??
Ans: Dear Sumukh,
Thank you for your question about investing in gold and mutual funds. Both of these investment options have their merits, but they work differently and suit different financial goals. Let's explore how they can potentially deliver returns.
1. Gold as an Investment
• Potential Returns: Historically, gold has been seen as a hedge against inflation and currency fluctuations. Over the long term, gold prices tend to rise, but the growth is usually moderate compared to equity-based investments. In the last decade, gold has provided returns averaging 6-8% per year. However, in times of economic uncertainty (like during the pandemic), gold prices surged due to its status as a safe-haven asset.
• Volatility: While gold is a relatively stable investment during periods of economic distress, its prices can be volatile in the short term. It's best suited for long-term portfolios or when you want to diversify and protect your investments from inflation.
• Forms of Gold Investment:
o Physical Gold (Jewelry, Coins, Bars): This involves storage and making charges.
o Gold ETFs or Sovereign Gold Bonds (SGBs): These are better options for investment, offering ease of trading, tax benefits, and interest on SGBs.
2. Mutual Funds as an Investment
• Potential Returns: Mutual funds, especially equity mutual funds, can offer much higher returns than gold over the long term. Over the last 10-15 years, equity mutual funds have provided average returns of 10-15% per annum, depending on the market conditions and the type of mutual fund.
o Equity Mutual Funds have higher growth potential but come with greater risk. These funds invest in stocks of companies, and their performance is directly linked to the stock market.
o Debt Mutual Funds are safer and provide more stable returns (typically 6-8%) but with less growth potential compared to equity funds.
• SIP (Systematic Investment Plan): One of the most popular ways to invest in mutual funds is through SIPs. This method helps mitigate risk through rupee-cost averaging and can lead to substantial returns if done consistently over the long term.
Which One Offers Higher Returns?
• Short-Term Perspective: Gold might offer stability in the short term, but mutual funds, especially equity funds, generally outperform gold when it comes to growth over the long term.
• Long-Term Perspective: Mutual funds, particularly equity mutual funds, are more likely to deliver higher returns over time. Gold can be a good hedge and part of a diversified portfolio, but it's less likely to deliver substantial returns by itself.
Ideal Strategy:
• Diversification: It’s a good idea to diversify your investments between mutual funds and gold. You could allocate a portion of your portfolio (e.g., 10-15%) to gold for safety, while the majority can be invested in mutual funds to maximize growth.
• Risk Profile: If you’re comfortable with market fluctuations, equity mutual funds could be a better choice for high returns. If you prefer safety, a combination of debt mutual funds and gold might be a better strategy.
Conclusion:
• Mutual Funds have the potential to give higher returns than gold, particularly over the long term, thanks to the growth of equity markets. In Mutual funds with High Risk you can earn up to 40% returns, where as at low risk you can get 6 to 9 % returns at debt funds. At Moderate risk you can achive up to 15 to 25% returns.
• Gold, on the other hand, is a safer, long-term investment that can protect against inflation but typically offers moderate returns. Golds can give you on and average of 10 to 15 % return over long horzons.
It’s essential to align your investments with your financial goals, risk tolerance, and investment horizon. You might consider consulting a financial advisor to help create a balanced investment plan.
Best regards,
Nitin Narkhede
Founder & MD, Prosperity Lifestyle Hub https://Nitinnarkhede.com
Free Webinar https://bit.ly/PLH-Webinar

...Read more

Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

Asked by Anonymous - Sep 09, 2024Hindi
Money
Hi sir, I have net salary of 2.7L per month and am 46 year old with 2 children aged 12 and 6. I have a EPF+PPF corpus of 65 lakhs , NPS 5 lakhs, 1CR in MF portfolio, invest 50k monthly (Which is on Hold currently) in MF SIPs. I own a house 65L(loan free) & another house 2CR have outstanding loans of 1CR. I have family floater medical insurance with 20L coverage and life cover for 1Cr. I wish to retire by age of 55 - pls advise how much corpus do I need at hand to retire. Consider my monthly expense as 1L
Ans: You are 46 years old with a net salary of Rs. 2.7 lakh per month. You have two children, aged 12 and 6, and a current corpus of Rs. 65 lakh in EPF and PPF, Rs. 5 lakh in NPS, and Rs. 1 crore in your mutual fund portfolio. Additionally, you own two properties, one valued at Rs. 65 lakh (loan-free) and another valued at Rs. 2 crore, with an outstanding loan of Rs. 1 crore. Your current monthly expenses are Rs. 1 lakh, and you have paused your monthly SIP of Rs. 50,000. You also hold a life insurance cover worth Rs. 1 crore and a family floater medical insurance with Rs. 20 lakh coverage.

You plan to retire by the age of 55, which gives you approximately nine years to build a sufficient corpus. Let's explore how much you need to comfortably retire while sustaining your current lifestyle.

Estimating Your Retirement Corpus
To determine your retirement corpus, we need to consider several factors:

Current monthly expenses: Rs. 1 lakh
Retirement age: 55
Post-retirement years: Assuming life expectancy of 85 years, you need to plan for 30 years post-retirement.
Inflation rate: An assumed inflation rate of 6% per year is a reasonable estimate for the future.
Growth rate of investments: Typically, diversified equity mutual funds have delivered around 10-12% returns over the long term.
Based on these factors, your current monthly expenses will increase due to inflation, and you need a corpus that generates enough to cover these rising costs. Since your expenses are Rs. 1 lakh today, they could double or triple over time. Your corpus should be able to sustain this without depleting prematurely.

Breakup of Current Assets
EPF & PPF (Rs. 65 lakh): These are stable, low-risk assets that will help you post-retirement but won't generate high returns.

NPS (Rs. 5 lakh): Provides tax benefits and is specifically designed for retirement savings. It will grow over time but is not highly flexible for withdrawals until retirement age.

Mutual Funds (Rs. 1 crore): This is an excellent foundation for your retirement plan. Equity mutual funds, in particular, have the potential to grow at a faster rate and combat inflation.

Real Estate (Rs. 65 lakh + Rs. 2 crore): While real estate holds value, its liquidity is limited. The house you live in does not contribute to your retirement corpus unless you plan to downsize. The second house has a loan of Rs. 1 crore, and the EMIs for this property must be factored into your pre-retirement cash flows.

Life Insurance (Rs. 1 crore): While it’s important for your family’s protection, this doesn’t contribute to your retirement corpus.

Estimating Your Future Monthly Expenses
Your current monthly expense is Rs. 1 lakh, but due to inflation, this figure will increase. Let’s assume the inflation rate remains at 6%. By the time you retire at 55, your monthly expenses will likely double or triple, reaching anywhere between Rs. 1.7 lakh to Rs. 2 lakh per month. Your retirement corpus should be large enough to generate this amount without running out of funds.

In addition, you’ll have to account for:

Healthcare costs: As you age, medical expenses tend to rise. Even though you have Rs. 20 lakh family floater insurance, post-retirement medical costs not covered by insurance should be factored in.

Educational expenses: Your children’s education could be a significant expense over the next 10 to 15 years.

Corpus Required for Comfortable Retirement
To maintain your current lifestyle, you would need a corpus that generates at least Rs. 2 lakh per month during retirement. Based on a withdrawal rate of 4%, which is commonly used to ensure the corpus lasts for the entirety of your retirement, you’ll need a retirement corpus of approximately Rs. 6 to 7 crore.

This corpus will ensure that you can comfortably cover your rising living expenses, healthcare, and other unforeseen costs without depleting your savings.

Recommendations to Achieve the Corpus
Here’s a detailed plan to help you achieve your target of Rs. 6 to 7 crore before retirement:

1. Resume Your SIP Investments
Restart your monthly SIP of Rs. 50,000 immediately. This is crucial, as equity mutual funds can provide the high returns needed to meet your retirement goal.

Consider increasing your SIP contribution each year in line with salary increments. This will accelerate your corpus growth and help you fight inflation more effectively.

2. Focus on Equity Mutual Funds
Given your long-term horizon (9 years until retirement), equity mutual funds remain the best investment option to grow your wealth. These funds have historically provided higher returns (10-12% CAGR), which will be essential for building your retirement corpus.

Ensure your portfolio is diversified across large-cap, mid-cap, and multi-cap mutual funds for balanced growth and risk.

3. Debt Repayment Strategy
You currently have an outstanding home loan of Rs. 1 crore. It’s advisable to clear this debt as early as possible. Carrying such a large debt into retirement can strain your finances.

Use a portion of your liquid assets, such as your mutual fund corpus or any bonuses, to reduce the loan burden gradually. This will free up cash flow and allow you to focus more on building your retirement fund.

4. Maximize Your EPF & PPF Contributions
Continue contributing to your EPF and PPF accounts. While the returns from these are modest, they are low-risk and provide tax-free returns, making them ideal for post-retirement stability.

As PPF matures, consider reinvesting the proceeds into equity mutual funds to capitalize on higher returns.

5. Increase Contributions to NPS
Your NPS balance is currently Rs. 5 lakh. Increase your contributions to this as it provides excellent tax benefits and is tailored for retirement.

NPS is also one of the few products where withdrawals are partially tax-free. Increasing contributions now will give you a more substantial corpus in the future.

6. Prioritize Children’s Education
Plan separately for your children’s education expenses. You might want to use specific child education funds or a combination of mutual funds for this.

Avoid dipping into your retirement savings for education purposes. Set clear boundaries between these two financial goals.

Final Insights
At 46, you are well-positioned financially, but pausing your SIP investments and holding onto a large loan could hinder your retirement plans. Restart your investments and focus on paying off your loan as soon as possible. By maintaining discipline and increasing your contributions to SIPs, NPS, and PPF, you should comfortably achieve your retirement corpus of Rs. 6 to 7 crore. Prioritize growth-oriented investments like equity mutual funds, and continue evaluating your portfolio annually to ensure it aligns with your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

Asked by Anonymous - Sep 03, 2024Hindi
Money
Hello Mr. Ramalingam Good morning. I'm 47 years old, my wife is at 40 and one daughter studying in 8th std. I have an investement in MF worth of 1.8 cr, ULIP of 20 lakhs, Direct equity of 5 lakhs, 1 cr term insurance, 5 lakhs LIC, 30 lakhs FD. Monthly SIP of 65 k in different MF's, accumulated EPF of 40 lakhs, 10 lakhs super annuatation fund. Invested in plot worth of 1 cr and farm land worth of 1.5 cr. No house and no loan. Would like retire by 55 years with monthly income of 2 lakhs / month from investment. Kindly suggest how I can make my finanical plan. Thanks
Ans: Based on your current financial situation and your goal of retiring at 55 with a monthly income of Rs. 2 lakhs, we need to assess your existing investments, future requirements, and how to bridge any gaps in your retirement plan.

Assets You Already Have
You have built a solid foundation of investments, which is impressive. Let’s break down your current assets:

Mutual Fund portfolio: Rs. 1.8 crore
ULIP: Rs. 20 lakhs
Direct equity: Rs. 5 lakhs
Term Insurance: Rs. 1 crore (sufficient for family protection)
LIC: Rs. 5 lakhs (Could be better allocated elsewhere)
Fixed Deposit: Rs. 30 lakhs
EPF: Rs. 40 lakhs
Superannuation Fund: Rs. 10 lakhs
Real Estate Investments: Plot (Rs. 1 crore) and farmland (Rs. 1.5 crore)
Your current SIP of Rs. 65,000 monthly in mutual funds is a good strategy for wealth accumulation.

Assessing Your Retirement Goal
You wish to have Rs. 2 lakhs per month as retirement income starting at 55. Considering inflation, your future expenses will likely be higher than Rs. 2 lakhs, which we must account for in your financial plan. Assuming you retire at 55 and live till 85, your investments need to generate returns for 30 years.

Evaluating Existing Investments
1. Mutual Funds:
Your current MF portfolio of Rs. 1.8 crore is a major asset. Continue with your SIPs to grow this corpus.
You might consider reviewing your fund allocations to ensure diversification across large-cap, mid-cap, and debt funds for stability and growth. Ensure these are actively managed funds, as they typically perform better than index funds over time.
2. ULIP:
ULIPs often have high charges and offer lower returns compared to mutual funds. It would be wise to surrender this policy and reinvest the Rs. 20 lakhs into mutual funds. This will offer better long-term growth for retirement.
3. Direct Equity:
Direct equity investments, while rewarding, are risky, especially as you approach retirement. It’s advisable to either reduce exposure to individual stocks or move to safer large-cap funds or balanced funds to ensure stability.
4. Fixed Deposit:
Rs. 30 lakhs in FD is a safe bet, but it yields lower returns. Consider using a portion of this for debt mutual funds, which offer slightly better returns and are tax-efficient.
5. LIC:
The Rs. 5 lakhs in LIC should be reconsidered, as insurance-based investment products are typically low-yielding. It’s better to surrender and reinvest this in mutual funds or safer investment options that offer higher returns.
6. Real Estate:
Your plot and farmland, though valuable, are illiquid assets. Real estate cannot generate a regular retirement income unless sold or rented out. Ideally, you should not rely on these for monthly income during retirement. Focus on liquid investments that can generate steady cash flow.
Plan for Retirement Income
Here’s how you can plan to generate Rs. 2 lakhs per month during retirement:

1. Continue Your SIPs:
Your monthly SIP of Rs. 65,000 is a good practice. If you can increase this slightly over the next few years, it will help you build a larger corpus for retirement. Aim to have at least Rs. 5-6 crore in liquid assets by the time you retire.
2. Shift to More Conservative Funds Closer to Retirement:
As you approach retirement, gradually move some of your equity-heavy investments into safer debt funds or balanced funds to preserve capital and reduce market risk.
3. Utilize the EPF and Superannuation Fund:
Your Rs. 40 lakhs in EPF and Rs. 10 lakhs in superannuation fund will continue to grow. Do not withdraw this early; allow it to accumulate till your retirement for a sizeable corpus that can act as a fixed-income generator.
4. Create an Income Stream with SWP:
Systematic Withdrawal Plan (SWP) from mutual funds will help you generate a monthly income after retirement. This is tax-efficient and can provide you with the Rs. 2 lakhs you desire. You can gradually withdraw from your mutual fund corpus post-retirement, ensuring your capital lasts for 30 years.
5. Review and Increase Insurance:
Your current term insurance of Rs. 1 crore is adequate for now. Ensure you have it in place till your retirement to protect your family in case of any unforeseen events. No need for further investment in insurance-based products like ULIPs or LIC.
Things to Keep in Mind
Inflation Protection: Rs. 2 lakhs per month today will not hold the same value in the future due to inflation. Plan to increase your SIP amounts and grow your corpus to account for this.

Healthcare Costs: As you age, healthcare expenses might rise. Ensure that your health insurance coverage is sufficient, or consider top-up plans to enhance your coverage.

Reassess Regularly: Financial planning is not a one-time activity. Review your portfolio annually to ensure you are on track and make adjustments based on changing market conditions or personal goals.

Final Insights
You are in a strong financial position and well on your way to a comfortable retirement. However, small changes like surrendering low-return policies and enhancing your mutual fund portfolio can make a significant difference. Focus on building a larger liquid corpus by continuing your SIPs and shifting towards income-generating assets as you near retirement.

Stay disciplined with your investments, and you will likely achieve your retirement goal of Rs. 2 lakhs monthly without financial stress.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |6253 Answers  |Ask -

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

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Money
Sir, I have both Mirae asset Large and Mid cap fund with sip + Mirae asset Large cap fund (sip stopped) Can I make STP or complete SWITCH from Mirae asset large cap fund to Mirae asset large and Mid cap fund. ? is it advisable
Ans: Switching or making a Systematic Transfer Plan (STP) from Mirae Asset Large Cap Fund to Mirae Asset Large and Mid Cap Fund can be considered based on your financial goals, risk tolerance, and investment strategy.

Factors to Consider:
1. Portfolio Diversification:
Large Cap Fund: Primarily invests in the top 100 companies, which are considered stable and less volatile. It is ideal for those seeking steady returns with relatively lower risk.
Large and Mid Cap Fund: Combines both large-cap (safer, stable) and mid-cap (higher growth potential but riskier) stocks. This offers a balanced approach, with more room for growth but with a bit more risk.
If your goal is to increase exposure to mid-cap stocks for potentially higher growth, an STP or switch to the Large and Mid Cap Fund makes sense. This fund offers a more diversified approach while still having a safety net of large-cap investments.

2. Investment Time Horizon:
Large and mid-cap funds tend to perform better in the long term (5+ years), as mid-caps may take time to realize their full growth potential. If your investment horizon is shorter, sticking with a large-cap fund may be preferable.
3. Risk Appetite:
Mid-cap stocks have higher growth potential but come with increased volatility. If you are comfortable with short-term fluctuations for long-term gains, an STP into the large and mid-cap fund could align with your goals.
4. Performance Track Record:
Both funds from Mirae Asset have strong reputations, but large-cap funds offer more consistent returns with lower downside risks during market corrections. You may want to assess the historical performance and volatility of both funds to see which fits your strategy better.
Why Use STP Instead of a Lump Sum Switch?
Tax Efficiency: An STP allows you to move funds gradually, spreading out tax implications and avoiding a large one-time exit load or capital gains tax.
Risk Mitigation: Instead of moving all your funds at once, an STP reduces the risk of entering at a high point in the market.
Consistent Investment: You continue investing in a disciplined manner, benefiting from rupee cost averaging.
Final Insight:
If your risk profile supports it, and your goal is long-term wealth creation, a STP from Mirae Asset Large Cap Fund to Mirae Asset Large and Mid Cap Fund can be a good option. This allows you to diversify your portfolio while retaining some stability through large-cap exposure.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Nitin

Nitin Narkhede  |3 Answers  |Ask -

MF, PF Guru - Answered on Sep 09, 2024

Asked by Anonymous - Sep 07, 2024Hindi
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Money
I. Have 1 crore where can i invest for 2 yrs to get bigger returns, that amt is for ur daughter marriage
Ans: Dear Friend,
Thank you for your query. It's great that you're planning ahead for your daughter's marriage. With ?1 crore available for investment over a two-year period, you’ll want to balance growth with a moderate level of risk, since the time horizon is relatively short.
Key Considerations:
Since the investment horizon is only two years, it's important to prioritize capital preservation while seeking returns higher than traditional savings accounts or fixed deposits. Investments in high-risk options like equities are not advisable for such a short duration, as markets can be volatile. Instead, a mix of low to medium risk instruments will be more suitable.
Suggested Investment Options for Two Years:
1. Debt Mutual Funds - Short-Term Debt Funds or Corporate Bond Funds can offer returns in the range of 6-8% per annum. These funds invest in government securities, corporate bonds, and other fixed-income instruments. They are safer than equity investments and are suited for a 2-year investment period.
- Dynamic Bond Funds can also be considered, as they adjust their portfolios according to interest rate fluctuations, potentially offering better returns than fixed deposits.
2. Fixed Deposits (FDs) - Though FDs offer lower returns (typically 6-7% per annum), you can opt for Corporate FDs from highly rated companies which offer slightly higher interest rates. FDs provide safety and guaranteed returns, but they may not grow your wealth significantly.
3. Arbitrage Mutual Funds - Arbitrage funds take advantage of the price difference between the cash and futures markets. They are relatively low-risk and provide returns similar to short-term debt funds but with better tax efficiency if held for more than one year. These can be a good option for a two-year horizon, offering returns of around 5-6%.
4. High-Quality Non-Convertible Debentures (NCDs) - NCDs from reputed companies offer fixed interest rates, usually ranging from 7-9%. They can be a good option for someone seeking stable returns. However, be cautious about the credit ratings of the issuing company.
5. Ultra Short-Term Mutual Funds - These funds invest in short-term debt instruments and are suitable for a two-year horizon. They generally offer returns slightly higher than savings accounts, around 6-7%.
6. Post Office Monthly Income Scheme (MIS) - If you prefer absolute safety, this government-backed scheme offers around 6.6% interest per annum, with monthly interest payouts. You can park part of your investment here for assured returns.
7. Liquid Funds or Short-Term Gilt Funds - Liquid funds invest in money market instruments and offer stable returns with high liquidity. For a two-year period, liquid funds can yield around 5-6%. Gilt funds are another option, which invest in government securities and are suitable for low-risk investors. These funds may provide returns in the range of 6-7%.
For Example, you can plan a Portfolio Allocation for ?1 Crore as follows
1. Debt Mutual Funds (40% - ?40 Lacs) : Short-term debt or corporate bond funds for capital appreciation and safety.
2. Fixed Deposits or Post Office MIS (30% - ?30 Lacs) : Secure investments with guaranteed returns.
3. Arbitrage Funds or Dynamic Bond Funds (20% - ?20 Lacs) : To benefit from moderate growth with tax efficiency.
4. Liquid Funds (10% - ?10 Lacs) : For high liquidity and short-term needs.
It’s highly recommended to consult with a certified financial advisor to fine-tune this plan according to your exact goals and risk tolerance.
Best regards,
Nitin Narkhede
Founder & MD, Prosperity Lifestyle Hub
https://Nitinnarkhede.com
Free Webinar https://bit.ly/PLH-Webinar
https://bit.ly/m/PLH-Links

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Radheshyam

Radheshyam Zanwar  |823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Sep 09, 2024

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Career
My son completed his BSC aviation how can I find job
Ans: Hi BAB
Congratulations to you and your son for completing B.Sc. Aviation. I hope during graduation, your son will have participated in extracurricular activities and might have completed some additional courses related to the aviation field. Yet, to get a job or to apply for a job, here are a few points:
(1) Try to get additional certifications (pilot training, aviation safety) for specialized roles.
(2) Look for roles in airlines, airports, and aviation companies in operations, safety, or logistics.
(3) Connect with industry professionals through aviation events and social media
(4) Use platforms like Naukri, Indeed, and LinkedIn to search for aviation roles/jobs
(5) Expertise skills in aviation management, safety, and flight operations.

Keep an eye on the following government/private job portals for notifications and eligibility criteria.
(1) Air Traffic Control (ATC): Jobs in the Airports Authority of India (AAI).
(2) Indian Air Force: Roles as Ground Duty Officers or Pilot through AFCAT.
(3) Airport Management: Positions in AAI for airport operations.
(4) Civil Aviation Department: Jobs related to aviation safety and regulations.
(5) Public Sector Airlines: Positions in Air India or similar public airlines.

You can check job listings and updates on the official AAI website aai.aero

If you are dissatisfied with the reply, pl ask again without hesitation. If satisfied, pl like and follow me.
Thanks a lot.
(Radheshyam)

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

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