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Ramalingam

Ramalingam Kalirajan  |7098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 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 - Apr 23, 2024Hindi
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Hi sir, im 51 yrs, i have pf balance 70L and fd 65L. Need 1L per month as expenses after my retirement (7) years to go. How much to invest in nps to get 1L as pension .

Ans: To achieve a monthly pension of 1L from NPS after retirement, you'll need to calculate the corpus required based on your expected rate of return and life expectancy. Considering you have 7 years until retirement, you'll have to make aggressive contributions to reach your goal.

It's advisable to consult with a financial advisor to calculate the exact amount. Typically, for a monthly pension of 1L, you might need a corpus between 1.5 to 2 crores, given the current NPS annuity rates and inflation. Adjust your NPS contributions accordingly to meet this target.
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  |7098 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 16, 2024

Asked by Anonymous - May 04, 2024Hindi
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My age for 25 year i need 80000 thousands par months after retirement. Hou much i have to invest in nps to get the same
Ans: It's great that you're thinking about your retirement at such a young age. Let's calculate how much you need to invest in the National Pension System (NPS) to achieve a monthly income of 80,000 after retirement.

Understanding NPS
National Pension System (NPS): NPS is a voluntary, long-term retirement savings scheme offered by the Government of India.
Investment Options: NPS offers various investment options, including equity, corporate bonds, and government securities, allowing you to choose a suitable asset allocation based on your risk tolerance and investment goals.
Retirement Income: The accumulated corpus in your NPS account can be used to purchase an annuity, providing you with a regular income stream during retirement.
Estimating Retirement Corpus
To generate a monthly income of 80,000 after retirement, we'll first calculate the required retirement corpus based on your life expectancy and expected rate of return.

Calculation Steps
Monthly Income Requirement: 80,000 (as per your requirement)
Annual Income Requirement: 80,000 * 12 = 9,60,000
Annual Income in Retirement: Assuming a conservative 6% annual return post-retirement, the corpus required would be:
Retirement Corpus = Annual Income Requirement / Expected Annual Return
Retirement Corpus = 9,60,000 / 0.06 = 1,60,00,000
Determining NPS Contribution
Given your age of 25, you have a considerable investment horizon, allowing you to benefit from compounding returns over time. Let's calculate how much you need to invest in NPS to accumulate the required retirement corpus.

NPS Calculator
Using an NPS calculator with assumed rates of return and retirement age, you can determine the monthly contribution required to achieve your retirement goal.

Conclusion
To ensure a comfortable retirement with a monthly income of 80,000, you need to start investing in NPS early and contribute regularly. Consider consulting with a Certified Financial Planner to develop a personalized retirement plan aligned with your financial goals and risk tolerance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7098 Answers  |Ask -

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

Asked by Anonymous - Jun 28, 2024Hindi
Money
Hello Sirr Myself Subhro, Now i just started my professional life i have with a 2.5 LK Of loans outstanding my monthly salary is 15000. I have some 2nd Income that flexible at 6000/-Month. With i have 50000 in Fixed Deposit, 1 LK in Kisan Vikash Patra, 25000 in Mutual Funds and 15000 in My Nps Investment in Aggressive Growth with a active Sip Of 1000/Month with a Running Sip Of 2000/Monthly. Now i planning with a retirement at 50 yrs Age With A fixed term Of Pension 1 lk/Monthly without Nps Investment Returns what calculation i need for reach the financial goal? I have a monthly family Expense Of 5000/Month. With All My Savings & investing is growthing i want 1 LK/Month Payout from My 50 yrs Age. Can Please help me
Ans: First of all, congratulations on starting your professional life and thinking ahead about your financial future! It’s great to see you have some investments already. Let’s explore a detailed plan to achieve your retirement goal of Rs 1 lakh per month starting at age 50.

Assessing Your Current Financial Situation
Income and Expenses
Your current monthly salary is Rs 15,000, and you have an additional flexible income of Rs 6,000 per month. Your total monthly income is Rs 21,000.

Your family expenses are Rs 5,000 per month. This leaves you with Rs 16,000 per month for savings, investments, and loan repayments.

Existing Investments and Loans
You have the following investments:

Fixed Deposit: Rs 50,000
Kisan Vikas Patra: Rs 1 lakh
Mutual Funds: Rs 25,000
NPS Investment: Rs 15,000
SIPs: Rs 3,000 per month (Rs 1,000 in NPS and Rs 2,000 in mutual funds)
You also have an outstanding loan of Rs 2.5 lakh.

Financial Goals
Retirement Goal
You aim to retire at 50 with a monthly pension of Rs 1 lakh. This requires significant planning and disciplined investing.

Loan Repayment
Your outstanding loan of Rs 2.5 lakh needs to be managed efficiently to reduce interest burden.

Steps to Achieve Your Financial Goals
Loan Repayment Strategy
Prioritize repaying your outstanding loan of Rs 2.5 lakh. This will reduce your interest burden and free up more funds for investments. Allocate a portion of your flexible income towards extra loan repayments.

Building Emergency Fund
Maintain an emergency fund equivalent to 6 months of expenses. This ensures you have liquidity for unforeseen events. Your Fixed Deposit of Rs 50,000 can be part of this fund. Aim to increase it gradually.

Boosting Savings and Investments
With Rs 16,000 available after expenses, here's how you can allocate it:

Loan Repayment: Rs 6,000 per month (in addition to regular EMI)
Emergency Fund: Rs 2,000 per month until you reach your target
Investments: Rs 8,000 per month
Diversifying Investments
Mutual Funds
Mutual funds offer growth potential through equity exposure. Invest in a mix of equity and balanced funds for diversification. Actively managed funds can help achieve higher returns compared to index funds.

Public Provident Fund (PPF)
PPF is a safe, tax-efficient investment with long-term benefits. Consider opening a PPF account and invest up to Rs 1.5 lakh annually to benefit from compounding and tax savings under Section 80C.

National Pension System (NPS)
Continue your NPS investments for retirement benefits. NPS offers tax advantages and a disciplined savings mechanism. Increase your monthly SIP if possible to boost retirement corpus.

Systematic Investment Plan (SIP)
Increase your SIPs in mutual funds to take advantage of rupee cost averaging and compounding. A diversified portfolio with a mix of large-cap, mid-cap, and multi-cap funds can provide balanced growth.

Calculating Retirement Corpus
To achieve a monthly pension of Rs 1 lakh from age 50, you need to build a substantial retirement corpus. Assuming a conservative withdrawal rate of 4%, you would need a corpus of Rs 3 crore.

Power of Compounding
Start early and invest consistently to benefit from compounding. Even small, regular investments can grow significantly over time.

Example Portfolio Allocation
Equity Mutual Funds
Allocate 60% of your investments to equity mutual funds. This includes large-cap, mid-cap, and multi-cap funds. Equity funds offer higher growth potential, suitable for long-term goals like retirement.

Debt Mutual Funds
Allocate 30% to debt mutual funds for stability and lower risk. Debt funds provide regular income and preserve capital.

Hybrid Funds
Allocate 10% to hybrid funds (balanced funds). These funds invest in both equity and debt, offering a balance of growth and stability.

Regular Portfolio Review
Review your investment portfolio regularly. Market conditions change, and it's important to rebalance your portfolio to stay aligned with your goals.

Tax Planning and Optimization
Tax-Efficient Investments
Invest in tax-efficient instruments like ELSS (Equity-Linked Savings Scheme) for tax savings under Section 80C. Optimize your portfolio to minimize tax liabilities.

Retirement Corpus Withdrawal Strategy
Plan your withdrawal strategy to minimize tax impact. Withdraw from tax-exempt sources like PPF and use tax-efficient SWPs.

Risk Management and Diversification
Diversified Portfolio
Maintain a diversified portfolio to spread risk. Invest across different asset classes like equity, debt, and balanced funds.

Regular Portfolio Review
Review your investment portfolio regularly. Market conditions change, and it’s crucial to rebalance your portfolio to stay aligned with your goals.

Seeking Professional Guidance
Certified Financial Planner (CFP)
Working with a CFP provides personalized advice and strategic planning. A CFP can help you navigate financial decisions and optimize your investment strategy.

Financial Workshops and Seminars
Attend financial workshops and seminars to stay updated on investment strategies and market trends. Continuous learning can enhance your financial acumen.

Creating a Legacy and Estate Planning
Will and Estate Planning
Draft a will to ensure your assets are distributed as per your wishes. Estate planning is crucial to provide financial security to your family.

Nomination and Beneficiaries
Ensure all your investments have the correct nomination details. This simplifies the process for your family in case of any eventuality.

Final Insights
Achieving your retirement goal of Rs 1 lakh per month requires disciplined savings, strategic investments, and careful planning. Focus on repaying your loans to reduce interest burden, build an emergency fund for liquidity, and diversify your investments across equity, debt, and hybrid funds.

The power of compounding is your best ally. Start early, invest regularly, and review your portfolio periodically. Working with a Certified Financial Planner can provide personalized advice and ensure you stay on track with your financial goals.

Your disciplined approach to savings and investments, combined with strategic planning, will help you achieve financial stability post-retirement. Stay focused on your goals, and with the right strategies, you can secure a comfortable and fulfilling retirement for yourself and your family.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7098 Answers  |Ask -

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

Money
dear sir, i m 54 years old male and having investment in MF of 58 lacks of current value of 1 Cr above.also having PF Fund 24 lacs,super enuation 16 lacs and 7 to 8 lacs in NPS. my monthly salary on hand 1.8 lacks. every month invest 75k in MF and 12k in NPS. after retirement i should have monthly 1 lac for my expense. kindly suggest how much should i invest every month. i have two daughters and got marries and no liability on my head.
Ans: You have done an excellent job in building your financial portfolio. With Rs 1 crore in mutual funds, Rs 24 lakhs in Provident Fund (PF), Rs 16 lakhs in superannuation, and Rs 7-8 lakhs in NPS, you have a strong financial base. Your monthly salary of Rs 1.8 lakhs and current investments of Rs 75,000 in mutual funds and Rs 12,000 in NPS show a disciplined approach to saving for retirement.

You mentioned that you will require Rs 1 lakh per month after retirement. This is an important goal and will guide our investment strategy.

Assessing Your Retirement Income Needs
To ensure that you have Rs 1 lakh per month during retirement, we need to consider various factors. Your existing corpus will need to generate sufficient income to meet your monthly expenses without depleting the principal too quickly.

Assuming you retire at 60, you have six more years to build your retirement corpus. The challenge is to ensure that your investments grow sufficiently to provide you with a steady income of Rs 1 lakh per month. Given your current investment discipline, you are on the right path, but a few adjustments could optimize your strategy.

Investment Strategy for Mutual Funds
Reviewing Your Mutual Fund Portfolio:

Your current mutual fund portfolio of Rs 1 crore indicates good growth over time.

However, it’s essential to review the performance of these funds regularly.

Focus on funds with a proven track record and actively managed funds. These funds offer potential for higher returns than index funds.

Ensure that your portfolio is diversified across various asset classes like large-cap, mid-cap, and multi-cap funds.

SIP vs Lump Sum:

Continue with your monthly SIP of Rs 75,000 in mutual funds. This systematic approach will help you average out market volatility.

If you receive any lump sum amounts, such as bonuses or incentives, consider investing them in a staggered manner.

Debt Fund Allocation:

As you approach retirement, consider increasing your allocation to debt funds. Debt funds offer stability and can help preserve your capital.

A gradual shift towards a balanced portfolio with a higher debt component will reduce your exposure to market risks.

Optimizing Your NPS Contributions
Your monthly contribution of Rs 12,000 to NPS is a wise choice. NPS offers a mix of equity and debt, making it a balanced investment for retirement.

Consider reviewing your NPS allocation to ensure it aligns with your risk appetite.

You can opt for a more conservative approach as you near retirement, reducing equity exposure and increasing debt allocation.

Superannuation and Provident Fund Planning
Your superannuation of Rs 16 lakhs and PF of Rs 24 lakhs are excellent sources of retirement income.

Upon retirement, you can consider withdrawing a portion of these funds for immediate needs.

The remaining amount can be invested in a mix of debt instruments and hybrid mutual funds to generate regular income.

Consider options that offer both growth and income, ensuring that your principal remains intact.

Calculating Your Monthly Investments
To achieve Rs 1 lakh per month after retirement, we need to estimate the required corpus. Although exact calculations depend on various assumptions, your current investment pattern suggests that you may need to increase your monthly contributions slightly.

Estimating Future Corpus:

Considering inflation and future expenses, you might need a retirement corpus of around Rs 2-3 crores.

To reach this target, continue with your current SIPs and consider increasing your monthly investment by Rs 10,000-15,000.

You can distribute this additional investment across debt funds, equity funds, and NPS, ensuring a balanced portfolio.

Creating a Retirement Income Strategy
Systematic Withdrawal Plan (SWP):

Upon retirement, consider setting up a Systematic Withdrawal Plan (SWP) from your mutual funds. SWP allows you to withdraw a fixed amount regularly, providing a steady income.

SWPs are tax-efficient and help manage your cash flow.

Hybrid Funds:

Invest in hybrid mutual funds that combine equity and debt. These funds offer growth potential while reducing risk.

Hybrid funds can be part of your retirement income strategy, providing a balanced approach.

Debt Instruments:

Allocate a portion of your retirement corpus to debt instruments like fixed deposits, government bonds, or Senior Citizen Savings Schemes (SCSS).

These options provide fixed returns and ensure capital preservation.

Managing Risk and Ensuring Growth
Regular Portfolio Review:

Review your portfolio at least once a year with the help of a Certified Financial Planner. This will ensure that your investments remain aligned with your retirement goals.

Rebalance your portfolio as needed, especially if there are significant changes in market conditions or your financial situation.

Contingency Planning:

Keep a contingency fund in place, equivalent to at least 6-12 months of expenses. This fund should be easily accessible and can be in liquid funds or savings accounts.

The contingency fund ensures that you don’t need to withdraw from your investments in case of emergencies.

Final Insights
Your disciplined approach to saving and investing has put you in a strong position as you approach retirement. By making some strategic adjustments, you can ensure that you achieve your goal of Rs 1 lakh per month in retirement.

Continue with your SIPs and NPS contributions, but consider increasing your monthly investment slightly.

Diversify your portfolio, with a gradual shift towards more conservative investments as you near retirement.

Set up a Systematic Withdrawal Plan (SWP) to manage your retirement income efficiently.

Regularly review and rebalance your portfolio to stay on track.

By following these steps, you can enjoy a comfortable retirement with the financial security you desire.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |7098 Answers  |Ask -

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

Money
Sir, I' am 44 Yr. old and doing small savings in LIC and around 6.5 lakhs invested in shares. how can further improve my financial status to grow money.
Ans: Assess Your Current Financial Position
Your dedication to saving and investing shows financial discipline.

LIC savings provide insurance and assured returns but may underperform inflation-adjusted growth.

Rs 6.5 lakhs in shares is a good start for wealth accumulation but is highly dependent on market fluctuations.

You have taken initial steps toward financial independence; now focus on optimising and growing your wealth.

Define and Prioritise Your Financial Goals
Start by clearly defining your short-term, medium-term, and long-term financial goals.

Short-term: Emergency funds, annual vacations, or gadget purchases.

Medium-term: Children’s higher education or down payment for a house.

Long-term: Comfortable retirement, wealth creation, or supporting dependents.

Assign time frames and target amounts to each goal.

Prioritise based on urgency and importance to streamline your investment strategy.

Evaluate and Enhance Insurance Coverage
Life Insurance: Review your current LIC policies. Check if the coverage is adequate to secure your family’s future. A term plan may provide better protection at a lower cost.

Health Insurance: Ensure you have comprehensive health coverage for the family. Choose a policy with adequate sum assured, including critical illness cover.

Avoid combining investment and insurance. Pure insurance plans like term plans are more cost-effective.

Optimise LIC Policies for Better Returns
LIC policies typically offer low to moderate returns compared to inflation and market-linked options.

Evaluate the surrender value, lock-in period, and maturity benefits of existing LIC policies.

If the returns are unsatisfactory, you may consider surrendering or withdrawing them partially.

Reinvest the proceeds into diversified mutual funds for better long-term growth.

Diversify Your Investment Portfolio
Avoid over-concentration in direct shares, as they are highly volatile and require in-depth research.

Mutual Funds: Include equity mutual funds for professional management, diversification, and inflation-beating returns. Choose funds aligned with your risk appetite and goals.

Debt Funds: Invest in debt mutual funds for stability and steady returns, especially for short-term goals.

Gold: Consider allocating 5-10% of your portfolio to gold or gold funds to hedge against inflation.

Mutual Funds: A Better Investment Option
Actively managed funds provide opportunities for higher returns than passive investments like index funds.

Regular funds offer benefits like professional advice and regular portfolio reviews by Certified Financial Planners.

CFPs ensure your investments are aligned with your long-term financial objectives.

These funds are ideal for investors seeking growth while minimising direct market exposure.

Build an Emergency Fund
Create a liquid emergency fund covering 6-12 months of your household expenses.

Use liquid mutual funds or high-interest savings accounts for this purpose.

This ensures financial stability during unforeseen circumstances like job loss or medical emergencies.

Focus on Retirement Planning
At 44, retirement planning becomes critical to securing your post-retirement lifestyle.

Start by estimating monthly expenses during retirement, considering inflation.

Invest in a balanced mix of equity and debt instruments to build a sustainable retirement corpus.

A systematic investment plan (SIP) in equity funds can help accumulate wealth over time.

Strategic Tax Planning
Review your tax-saving investments under Section 80C to maximise deductions.

ELSS (Equity Linked Savings Scheme) mutual funds offer tax benefits and higher growth potential.

National Pension System (NPS) provides an additional Rs 50,000 tax deduction under Section 80CCD(1B).

Ensure your tax-saving investments align with your financial goals and time horizons.

Monitor and Rebalance Your Investments
Periodically review your investments to assess performance and alignment with goals.

Rebalance your portfolio to maintain the desired equity-to-debt ratio as market conditions change.

Avoid impulsive decisions during market volatility; focus on the long-term potential of your investments.

Avoid Common Investment Mistakes
Do not mix insurance and investment in one product, as it often leads to suboptimal returns.

Avoid relying solely on direct equity investments unless you have expertise in stock analysis.

Stay patient with equity investments, as they require a long-term horizon of 5-7 years for optimal growth.

Final Insights
Improving your financial status requires a well-thought-out and diversified investment plan.

Reassess your LIC policies and direct equity investments to optimise returns.

Diversify into mutual funds, build an emergency fund, and focus on tax-efficient investments.

Work with a Certified Financial Planner to develop a tailored strategy for your financial goals.

Take consistent and disciplined actions to grow your wealth and secure your financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

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

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