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Ramalingam

Ramalingam Kalirajan  |7630 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 15, 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 15, 2024Hindi
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Hi sir M 34 years old and my income is just 22k help me how to plan and save for my kids and education one is 7yrs old and one is 5yrs old and m leaving in rented house till now no investment nothing pls guide me as m going down day by day and not able to concentrate on anything and help me planning financially as i want to educate my kids well and how to invest for more income and any scholarship also let me know

Ans: I understand your concerns about financial planning, especially with the responsibility of your children's education on your shoulders. Here's a simplified plan to help you get started:

Emergency Fund: Start by building an emergency fund. Aim to save at least 3-6 months' worth of expenses. This fund will provide a safety net in case of unexpected expenses or job loss.

Budgeting: Create a monthly budget to track your income and expenses. This will help you identify areas where you can cut back on expenses and save more.

Children's Education: For your children's education, consider investing in a Sukanya Samriddhi Yojana (SSY) or Public Provident Fund (PPF). These are government-backed schemes with tax benefits that can help you save for their future education.

Investments: With a monthly income of 22k, it's crucial to start small but consistent investments. Look for Systematic Investment Plans (SIPs) in mutual funds that align with your risk tolerance and investment goals. Even a small amount invested regularly can grow significantly over time.

Scholarships: Research and apply for scholarships for your children. Many organizations and educational institutions offer scholarships based on merit or financial need.

Rental House: While renting provides flexibility, consider your long-term housing needs. If possible, start saving for a down payment on a house. Owning a home can provide stability and serve as an investment for the future.

Additional Income: Explore ways to increase your income, such as taking up a part-time job or freelancing. Every extra rupee can make a difference in your savings and investments.

Remember, financial planning is a journey, not a destination. Start small, stay consistent, and review your plan regularly to make necessary adjustments. Seek advice from a financial advisor if needed to tailor a plan that suits your specific situation and goals.
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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Moneywize

Moneywize   | Answer  |Ask -

Financial Planner - Answered on Apr 30, 2024

Asked by Anonymous - Apr 18, 2024Hindi
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I have Rs 1.2 crore in my bank account. My wife earns Rs 80,000 per month and I earn Rs 2 lakh per month. We have three children – two daughters and one son – who will need approximately 10 to 15 lakh each for their higher studies 7 to 12 years from now. How shall I go about meeting my children’s education goal and also plan for my retirement. My wife and I have about 15 and 7 years for our retirement.
Ans: It's great that you're thinking ahead for your children's education and your retirement! Here's a suggested plan to meet your goals:

1. Children's Education Fund:

• Since you have 7 to 12 years for your children's higher education, you can invest in relatively aggressive investment options like mutual funds or diversified equity funds. These have the potential to offer higher returns over the long term.
• Allocate a portion of your savings every month towards this goal. Considering inflation and assuming an average annual return of 10%, you would need to invest roughly Rs 20,000 to Rs 25,000 per month to accumulate the desired amount for each child's education.

2. Retirement Planning:

• Since you and your wife have 15 and 7 years left for retirement respectively, you'll want to focus on building a retirement corpus.
• Consider investing in a mix of equity and debt instruments to balance risk and returns. You can invest in mutual funds, provident funds, and Public Provident Fund (PPF) for a balanced portfolio.
• Aim to save at least 15-20% of your combined monthly income for retirement. Considering your current earnings, you can aim to save around Rs 50,000 to Rs 60,000 per month for retirement.

3. Asset Allocation:

Since you have a relatively long investment horizon for both goals, you can afford to have a higher allocation towards equities for potentially higher returns. As you approach your retirement age, gradually shift towards more conservative investment options to preserve capital.

4. Emergency Fund:

Make sure to maintain an emergency fund equivalent to 3-6 months of your combined living expenses. This fund should be readily accessible in case of unexpected expenses or emergencies.

5. Regular Review:

Regularly review your investment portfolio and make adjustments as needed based on changes in your financial situation, market conditions, and investment goals.

6. Professional Advice:

Consider consulting with a financial advisor to tailor a plan specific to your financial goals, risk tolerance, and investment preferences.

By following this plan diligently and investing consistently over the years, you should be well-prepared to meet your children's education expenses and enjoy a comfortable retirement.

..Read more

Dev

Dev Ashish  | Answer  |Ask -

MF Expert, Financial Planner - Answered on Jun 25, 2024

Asked by Anonymous - Jun 25, 2024Hindi
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Hello, I am 43 yrs old and have a govt job . M monthly salary is 1 lakhs. I have two kids of age 13yrs and 8yrs.. How can I save a good amount for higher studies if my kids.
Ans: While your monthly salary is Rs 1 lakh, the surplus available after expenses is not known. But to give you an idea about how much would the investment requirement for both kids, we can run a simulation.

For the elder child aged 13 years, you have about 5 years to save money. If we assume a goal cost of Rs 20 lakh (in today's value) and adjust it for 10% inflation over the next 5 years, then the corpus required in 5 years will be about Rs 32 lakh. And since details of existing savings aren't available, then at 50:50 Equity:Debt allocation, you will need to start investing Rs 37,500 per month. And this amount needs to be increased by at least 5% each year (assuming similar growth in income) for the next 10 years.

Similarly for the younger child aged 8 years, you have about 10 years to save money. If we assume a goal cost of Rs 20 lakh (in today's value) and adjust it for 10% inflation over the next 10 years, then the corpus required in 10 years will be about Rs 52 lakh. And since details of existing savings aren't available, then at 75:25 Equity:Debt allocation, you will need to start investing Rs 20,500 per month. And this amount needs to be increased by at least 5% each year (assuming similar growth in income) for the next 10 years.

We don't have information about your risk appetite. But assuming that it is at least moderately aggressive, then, you can start investing in a combination of largecap index funds, flexicap funds, midcap funds.

Thanks
Dev Ashish,
SEBI Registered Investment Advisor (Fee-Only RIA)
Founder, StableInvestor.com
Twitter (@Stableinvestor)

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.

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Ramalingam

Ramalingam Kalirajan  |7630 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 25, 2024

Asked by Anonymous - Jul 13, 2024Hindi
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I am 44 years old having a kid 10 years old.I have home loan of 70 lac and my & my spouse monthly salary is 1.6 lacs.I have a plot work 70 lakhs. I have a term insurance of 60 lacs & health insurance of 10 lac. FD of 5 lacs and PPF of 10 lacs.I have no other savings. I need to plan for my kids education. And also please help in my financial planning.
Ans: Current Financial Overview
You are 44 years old with a 10-year-old child. Your monthly household income is Rs. 1.6 lakhs. You have a home loan of Rs. 70 lakhs. You own a plot worth Rs. 70 lakhs. You have a term insurance of Rs. 60 lakhs and health insurance of Rs. 10 lakhs. You have Rs. 5 lakhs in fixed deposits and Rs. 10 lakhs in PPF. You have no other savings.

Financial Goals
Kid's Education
Your child's education is a key priority. Let's focus on creating a fund for higher education.

Debt Management
Managing your home loan effectively is important. Reducing this liability will free up funds for other investments.

Wealth Creation
With no other savings, you need to build a robust investment portfolio. This will ensure long-term financial stability.

Emergency Fund
An emergency fund is crucial. This will cover unforeseen expenses without disrupting your savings.

Action Plan
Kid's Education Fund
Start a dedicated investment for your child's education.
Consider equity mutual funds for long-term growth. These funds generally offer higher returns.
Regularly invest a fixed amount monthly. This will leverage the power of compounding.
Debt Management
Prioritize paying off your home loan. This reduces interest burden over time.
Allocate any bonus or extra income towards loan repayment.
Increase EMI payments if possible. This will shorten the loan tenure.
Building an Investment Portfolio
Diversify your investments. Include a mix of equity, debt, and hybrid funds.
Actively managed funds can outperform index funds. Professional fund managers can adjust the portfolio based on market conditions.
Invest through regular plans with a Certified Financial Planner. They provide valuable advice and ongoing support.
Emergency Fund
Maintain a separate account for emergencies. This should cover 6-12 months of expenses.
Use liquid funds or short-term debt funds for this purpose. They offer easy access to funds and better returns than a savings account.
Insurance Review
Term Insurance
Your term insurance of Rs. 60 lakhs is a good safety net. Ensure the coverage is adequate for your family's needs.
Health Insurance
A health insurance cover of Rs. 10 lakhs is essential. Check if it covers all family members and includes critical illnesses.
Fixed Deposits and PPF
Continue with your fixed deposits and PPF. They provide safety and moderate returns.
Consider using some of the FD amount for higher-yielding investments. Equity and hybrid funds can offer better returns over time.
Retirement Planning
Although not mentioned, retirement planning is crucial. Start a retirement fund to ensure a comfortable post-retirement life.
Regular investments in equity or hybrid funds can build a substantial retirement corpus.
Final Insights
Your financial journey involves balancing current needs with future goals. Focus on reducing debt, building an education fund, and creating an emergency reserve. Diversify investments for long-term growth. Seek guidance from a Certified Financial Planner to optimize your strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Milind

Milind Vadjikar  |901 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Jan 24, 2025

Ramalingam

Ramalingam Kalirajan  |7630 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 24, 2025

Asked by Anonymous - Jan 24, 2025Hindi
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24.01.2025 Respected Sir, I have a land property valued 3cr. Now on this plot I am planning to build P+5 floor residential apartments For this I need a fund around 2.5cr for construction. Now I am 68 yrs old. I have invested 40L in various equities since last 44 years & 45L in Equity based M/F’s since last 14 years. Current market value is around 1.5cr & 1.60cr respectively. I am planning to raise funds from overdraft loans against my Equity shares & M/F at the current interest rate 10.35%.approx. I do not have any other source to raise the reqd. fund and I do not have any other liabilities. As per my assumptions in the next 7 to 8 years of period total market value of above investments will be around 10cr approx. I am planning SWP of Rs. 10 lacs every year to repay interest on OD. In what other ways is this possible to repay the dues? With out selling any unit of my property. Or In critical situation if arise I may sell out one unit to clear my OD loan debt. As a financial planning expert are my thoughts are correct in your opinion? I need your professional /practical advice & valuable guidance in this regard please. Please reply to my above query as early as possible. Thanks & Regards
Ans: Your plan demonstrates a well-thought-out approach to leveraging your investments while keeping liabilities manageable. Your decision to raise funds through an overdraft loan against shares and mutual funds is practical given the significant market value of your investments. However, there are a few aspects to evaluate for better clarity and financial stability.

Advantages of Your Strategy
Liquidity Without Selling Investments: Using an overdraft loan against your equity and mutual fund investments helps retain the assets.

SWP to Cover Interest Payments: A systematic withdrawal plan (SWP) ensures regular cash flow to meet interest expenses.

Property Value as Collateral: Your land property provides additional financial security.

Future Potential of Investments: Your expectation of Rs. 10 crore over 7-8 years appears reasonable given historical growth trends.

Concerns and Potential Risks
Market Volatility: Both equities and mutual funds are subject to market fluctuations.

Interest Burden: Over time, the compounding of the interest at 10.35% could strain liquidity.

Delays in Property Completion: Construction delays could impact cash flow plans.

Over-dependence on SWP: Over-reliance on SWP can erode long-term wealth if markets underperform.

Alternative Ways to Manage Overdraft Loan
Diversify Funding Sources
Split the Loan Amount: Explore partial loans from banks or NBFCs secured by the property itself.

Loan Against Fixed Deposits: Use your FD as collateral for a part of the loan.

Consider a Lower-Interest Loan: Negotiate with lenders for a lower interest rate.

Optimise SWP Strategy
Adjust Withdrawal Amount: Reduce SWP if the market experiences a downturn.

Partial Sale of Underperforming Units: Sell a small portion of underperforming investments to reduce the loan burden.

Construction Phasing
Build in Phases: Start with 2-3 floors initially to reduce the upfront loan requirement.

Rental Income from Early Units: Generate income from completed units to support loan repayment.

Emergency Backup Plan
Sell a Unit if Needed: Keep the option of selling one residential unit open to clear the loan.

Gold as Last Resort: Liquidate a small portion of gold only in extreme situations.

Tax Implications
Interest Deduction: Interest paid on loans for property construction could have tax benefits. Consult a tax expert for clarity.

Capital Gains on SWP Withdrawals: Gains from equity mutual fund SWP above Rs. 1.25 lakh per year will be taxed at 12.5%. Ensure tax liabilities are factored in.

Sale of Units: If you sell a unit to repay the loan, calculate the long-term capital gains taxes.

Key Points for Wealth Growth
Reinvest Profits Post Loan Repayment: Post-repayment, redirect surplus to equity or mutual funds for wealth growth.

Monitor Investments Regularly: Periodically review the performance of equity shares and mutual funds.

Diversify Investments: Post-retirement, ensure a diversified portfolio for steady income and wealth preservation.

Finally
Your plan is practical and aligns with your financial goals. However, diversification of funding sources, optimising SWP, and monitoring loan repayment are crucial. Prepare for market volatility and create an emergency backup plan. This approach ensures stability while maximising wealth creation.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Milind

Milind Vadjikar  |901 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Jan 24, 2025

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49 years old female school teacher. I want to invest ?5 lakh lumpsum that would fetch me good returns in 2 or 3 years. Please suggest a good investment avenue. I need this amount to fund my son's education who is in grade 9 right now. Apart from this, I also tried my hand in MF- I invest ?15k every month in SBI Bluechip fund direct, 10k in Canara Rebeco Bluechip fund direct, 5k in UTI NIFTY Index Fund direct, 5k in Axis midcap growth direct plan, 5k in Mirae asset largecap fund direct, 20k in NPS monthly. Apart from this, i had also invested ?1 lakh lump sum in SBI equity hybrid fund ?1 lakh, axis multicap direct fund ? 1 lakh, and quant small cap direct plan ?50,000. None of the last three lumpsum investments are doing well. They are showing negative returns. I have three questions for which i am looking answers for: 1) where should i invest lumpsum of ? 5 lakh now 2) the three lumpsum investments in quant smallcap, axis multicap and sbi equity hybrid - should i continue remaining invested 3) are the monthly sips and nps investments amounting to ?55 fine. I intend to work for another 5-6 years.
Ans: Hello;

1. It is advisable to invest lumpsum of 5 L in a nationalised bank FD. Considering the fact that your kid may enter higher education in 3 years it is not apt to subject it to market vagaries.

2. If you are prepared to hold your lumpsum investments for 5 year+ horizon then no need to worry about short term negative return.

3. Monthly sip's and NPS investments look good.

Happy Investing;
X: @mars_invest

...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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