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Should I Sell My Property to Pay Off Home Loan?

Milind

Milind Vadjikar  |1120 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 09, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Vijay Question by Vijay on Aug 27, 2024Hindi
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Hi I m earning 80k pm where i am spending half of my income to pay emi's. I am owning one house in Vishakhapatnam city which is worth of 1cr and it has home loan outstanding of 18 lakhs , I also own property which worth of 15 lakhs . Is it the right move for clearing the home loan to sell my other property to invest my monthly salary in other portfolios of investments. Kindly suggest me to take a decision for clearing my home loan dues. Is this a good approach or is there any other better investment options for future? Please suggest

Ans: It is always prudent to prepay your loans, as early as possible, and use the surplus income to more investments which could help you to fund your retirement and other financial 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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Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 31, 2024

Asked by Anonymous - Aug 31, 2024Hindi
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I am 37 year old working in IT company. My take home salary is around 1.5 lakhs but I have home loan of 45 lacs for rent out property which has a valuation of 82 lakhs. I have 23 lakh market value of shares in share market across 40 odd share, mutual fund of about 7 lakh and fd of another 7.5 lakh. I have taken out 7 lakh from my PF account and want to do part payment of 8 lakh for homeloan next month. So balance homeloan will be around 37 lakh. My question is if i plan to pay the complete homeloan next year by selling all shares, mutual fund and fd.. will it be a right decision since i dont want to take headache of an outstanding home loan? Your valuable response is awaited
Ans: You have a solid financial foundation with diversified investments across shares, mutual funds, and fixed deposits. Your home loan stands at Rs. 45 lakh, and the property is valued at Rs. 82 lakh, indicating a strong asset base. Your decision to make a part payment of Rs. 8 lakh from your provident fund will reduce the home loan to Rs. 37 lakh, which is a good step in reducing your debt.

The question at hand is whether selling all your shares, mutual funds, and fixed deposits next year to completely pay off your home loan is a wise decision. Let’s evaluate your situation from a 360-degree perspective.

Benefits of Paying Off the Home Loan
Debt-Free Status: Paying off your home loan can provide immense peace of mind. Being debt-free can reduce financial stress, allowing you to focus on other long-term financial goals.

Saving on Interest: By paying off the loan early, you will save a significant amount on interest payments. This can be especially beneficial if the interest rate on your home loan is high. Even if you have a reasonable interest rate, the long-term savings can still be substantial.

Increased Cash Flow: Once the loan is repaid, the monthly EMI burden will be gone. This will improve your monthly cash flow, giving you more flexibility in your finances.

Concerns with Selling Investments to Pay Off the Loan
While paying off your home loan sounds appealing, it is important to consider the impact of liquidating your investments. Let’s take a deeper look:

Opportunity Cost: The market value of your shares is Rs. 23 lakh, mutual funds are Rs. 7 lakh, and fixed deposits are Rs. 7.5 lakh. By selling these investments, you may miss out on potential growth in the long term. Shares and mutual funds, especially actively managed funds, have the potential to grow significantly over time, which could lead to higher returns than the interest you save by paying off the loan.

Market Timing: The share market is volatile, and selling all your shares at once might not be the best strategy, especially if the market is down. You may end up selling at a loss or missing out on future gains.

Diversification: Liquidating all your investments to pay off your loan would reduce your investment portfolio. Having a diversified portfolio helps balance risk and rewards, and selling off everything to pay off a single liability could disrupt that balance.

FD Interest Rates: Fixed deposits are a safe but low-return investment. While they don’t offer high returns like shares or mutual funds, they do provide stability. However, if the interest rate on your home loan is higher than the FD rate, liquidating FDs could make sense as you are effectively losing money on the spread between the loan interest and the FD interest.

Evaluating the Decision to Pay Off the Home Loan
Let's consider the following points before you make your decision:

Home Loan Interest vs. Investment Returns: The first step is to compare the interest rate on your home loan with the expected returns on your investments. If the home loan interest is higher than the average returns from your shares, mutual funds, and FDs, then paying off the loan may be a good decision. However, if your investments are yielding higher returns than the interest you're paying, it might be better to keep the loan and let your investments grow.

Long-Term Growth Potential: Actively managed funds and shares have the potential to generate significant returns in the long run. The power of compounding can help grow your wealth. By liquidating these investments now, you could be giving up long-term gains. This is particularly important for your financial goals like retirement, children’s education, or other milestones.

Balance Between Debt and Investments: Rather than selling off all your investments to pay off the home loan, you might consider a balanced approach. You can make a substantial part-payment towards the loan without liquidating your entire portfolio. This will reduce your debt while still allowing you to benefit from your investments’ growth.

Alternative Strategies
If you are uncomfortable with having an outstanding home loan, there are alternative strategies you could explore rather than liquidating all your investments.

Part-Payment Strategy: Instead of paying off the entire loan, you could make regular part-payments from your savings. This will reduce the loan balance and interest burden while allowing your investments to continue growing. The extra EMI savings can be reinvested in mutual funds or other financial products that align with your goals.

Systematic Withdrawal Plan (SWP): Rather than selling all your mutual funds at once, you could opt for an SWP. This allows you to withdraw a fixed amount periodically, which could be used for part-payments on the loan. This way, you can continue to benefit from market growth while gradually reducing your loan burden.

Reinvest Your Savings: Once you have repaid a portion of your loan, you can reinvest the EMI savings in mutual funds through SIPs or other long-term growth options. This will help you build wealth while maintaining a balanced financial portfolio.

Risks of Selling All Shares and Mutual Funds
It’s important to address the potential risks involved in liquidating all your shares and mutual funds:

Tax Implications: Selling shares and mutual funds could lead to capital gains tax. Long-term capital gains on shares and mutual funds above Rs. 1 lakh are taxable at 10%, while short-term gains are taxed at 15%. You may need to pay a significant amount in taxes if you sell all your investments at once.

Missing Future Growth: Shares and mutual funds, particularly equity funds, have historically provided high returns over the long term. By selling these investments now, you may miss out on future growth opportunities, especially if the market performs well in the coming years.

Lack of Liquidity: By selling all your investments, you may end up with limited liquidity. It's essential to maintain an emergency fund and have enough liquid assets to cover unforeseen expenses.

Benefits of Continuing Your Home Loan
While paying off your home loan may seem like a relief, there are advantages to continuing with the loan:

Tax Benefits: Home loans provide tax benefits under Section 80C (for principal repayment) and Section 24(b) (for interest repayment). These deductions can reduce your overall tax liability, providing you with financial savings every year.

Low-Interest Rate Environment: If your home loan interest rate is relatively low, it may not be a burden to continue with the loan. Low-interest loans are manageable and can be balanced with investments that provide higher returns.

Inflation Advantage: Over time, inflation reduces the real value of debt. This means that while your loan amount stays the same, its value in real terms decreases as inflation rises. In other words, you’ll be paying off the loan with “cheaper” money in the future.

Final Insights
Paying off your home loan early can bring peace of mind, but it’s important to carefully evaluate the decision from all angles. While eliminating the loan will reduce your financial burden, liquidating all your shares, mutual funds, and fixed deposits may not be the best strategy for long-term wealth building.

Instead, you could consider a balanced approach, making part-payments on the loan while allowing your investments to grow. This would reduce your debt burden without sacrificing future growth potential. It’s also worth considering the tax implications and opportunity costs of selling your investments.

Ultimately, the decision should align with your financial goals and risk tolerance. If the peace of mind of being debt-free is more important to you than potential long-term gains, paying off the loan may be the right decision. However, if you’re willing to manage the loan for a few more years, you could potentially build greater wealth by allowing your investments to grow.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 20, 2024

Money
Hello sir. My age is 41 . I have taken a different loan stage wise as need. My salary is 72000 and loan+credit card bill is around 68000 so it is very difficult to manage it. I have home loan of 18000 emi Personal loan emi 18800 pending emi 50 Personal loan EMI 11500 pending emi 24 Personal loan EMI - 4000 pending emi 30 Two wheeler loan EMI 3400 pending emi 12 Credit card due is 100000 I have buy 1 BHK flat on 4 th floor before 11 year as it market value remain same so I think to sell out for clear some due So it is advisable or not. Is any bank/institute/financial support is in market to provide a single loan to clear all your different loan n we need to clear only one EMI ???
Ans: Your current financial situation involves high debt obligations relative to your income. Managing these efficiently is crucial to improve cash flow and financial stability. Let us address the situation step-by-step and evaluate your options for reducing debt stress.

Current Financial Snapshot
Income: Rs 72,000 per month.

EMI Obligations: Rs 68,000 monthly across home, personal, and two-wheeler loans.

Credit Card Debt: Rs 1,00,000 outstanding balance.

Assets: A 1 BHK flat purchased 11 years ago, with little to no appreciation.

Challenges in Your Financial Scenario
High Debt-to-Income Ratio: A significant portion of your income goes towards EMIs.

Multiple Loans: Managing several EMIs increases stress and creates inefficiency.

Flat’s Value Stagnation: Limited appreciation in your flat reduces its utility as an investment.

Assessing the Sale of Your Flat
Potential Benefits
Clearing Debt: Selling the flat can reduce or eliminate some debts.

Cash Flow Relief: Reduced EMIs can provide more breathing room for monthly expenses.

Simplification: With fewer loans, managing your finances becomes easier.

Potential Risks
Loss of Asset: Selling the flat reduces your property portfolio.

Market Conditions: Stagnant market value may not yield significant proceeds.

Rent Costs: If you sell, you may need to spend on rent, impacting cash flow.

Considerations Before Selling
Assess the flat’s current market value and selling potential.

Calculate the total debt you can clear with the sale proceeds.

Evaluate the impact on future living arrangements and rental costs.

Exploring Debt Consolidation
Single Loan to Replace Multiple Loans
Many banks and NBFCs offer debt consolidation loans.

A single loan replaces all your current debts.

You pay only one EMI, making it easier to manage finances.

Benefits of Debt Consolidation
Lower EMI: Consolidation can reduce overall EMI through extended tenure.

Reduced Interest Rates: Personal loans and credit cards have high interest rates. A consolidated loan may offer lower rates.

Simplified Management: Fewer payment schedules reduce the risk of missed EMIs.

Key Considerations
Evaluate the total cost, including processing fees and interest.

Check your eligibility and credit score for better loan terms.

Avoid taking new loans after consolidation to prevent a debt spiral.

Reducing Credit Card Debt
Immediate Actions
Prioritise paying off your credit card balance due to high interest rates.

Convert the outstanding balance into an EMI option if your bank allows.

Avoid using credit cards until the balance is cleared.

Long-Term Management
Use credit cards only for essentials and pay full balances each month.

Set spending limits to ensure better control over usage.

Optimising Your Budget
Reduce Expenses
Categorise expenses and cut non-essential spending.

Use public transport or carpooling to reduce travel costs.

Review utility bills and optimise usage to lower costs.

Create a Debt Repayment Plan
List loans by interest rate and tenure.

Focus on high-interest loans like personal loans and credit cards first.

Use any bonuses or windfalls to prepay loans.

Generating Additional Income
Renting the 1 BHK Flat
If selling the flat is not feasible, consider renting it for extra income.

Use the rent to reduce EMI pressure or build a repayment fund.

Freelancing or Part-Time Work
Explore freelance opportunities that match your skills.

Use additional income to pay off debts faster.

Alternatives to Consider
Restructuring Loans
Approach your lenders to restructure loans with extended tenure or reduced EMI.

Ensure that restructuring terms are affordable and sustainable.

Balance Transfer
Transfer high-interest personal loans to lenders offering lower interest rates.

Use this to reduce overall interest burden and EMI.

Benefits of Working with a Certified Financial Planner
A Certified Financial Planner can provide a customised debt repayment plan.

They help manage finances effectively while maintaining focus on long-term goals.

Guidance ensures disciplined execution without additional debt accumulation.

Final Insights
Selling your flat can clear significant debt, but consider rental costs and market conditions. Debt consolidation can simplify EMIs and reduce interest costs, but evaluate its feasibility. Focus on paying high-interest loans first, optimise expenses, and explore additional income streams. Avoid accumulating further debt to regain financial stability. A structured approach will help you achieve long-term financial freedom.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 29, 2025

Asked by Anonymous - Jan 24, 2025Hindi
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I am 36 years old with two kids 3.75 years old and 1.25 year old. I have outstanding home loan of 24 lakh. I have mutual fund holding of 9 lakh and 3 lakh in equity. I don't have other savings. My monthly salary is 1.8 lakh and home loan emi is 55k/month and other expenses are 50k/month. I intent to pay off my home loan entirely by April 2025. And then save and focus on purchasing other real estate property. Request you to advise if I should pay off current home loan and then invest in second ( given opportunity cost of rising real estates ) or should I keep current emi and take additional loan to purchase second property as 24 lakh rupees would not be enough for second property.
Ans: Assessing Your Current Financial Situation
You are 36 years old with two young kids.

Your monthly salary is Rs. 1.8 lakh.

Home loan EMI is Rs. 55,000 per month.

Other monthly expenses are Rs. 50,000.

Your current assets include Rs. 9 lakh in mutual funds and Rs. 3 lakh in equity.

No other savings apart from these investments.

You plan to fully repay your Rs. 24 lakh home loan by April 2025.

You are considering investing in another real estate property.

You are evaluating whether to pay off your current home loan first or take an additional loan.

Evaluating Home Loan Repayment
Paying off your home loan will free up Rs. 55,000 per month.

This can increase your savings and investment capacity.

However, prepaying the loan reduces liquidity, which is important for financial security.

Home loan interest rates are lower than potential investment returns from mutual funds.

Instead of full prepayment, partial repayment with continued investment may be better.

Assessing your loan’s interest rate versus expected returns is essential.

Managing Your Cash Flow and Investments
After EMI and expenses, you have Rs. 75,000 surplus per month.

With no emergency savings, all surplus going into loan repayment is risky.

Maintaining liquidity through an emergency fund is crucial.

Investing part of the surplus in mutual funds can create better long-term returns.

A balanced approach between loan prepayment and investment can be more beneficial.

Risks of Purchasing a Second Property
Real estate is illiquid and requires significant investment.

Rental yields are generally low, offering about 2-3% annually.

Capital appreciation is uncertain and depends on market conditions.

Maintenance, taxes, and potential vacancies add to costs.

If property prices fall, you may face financial stress with a higher loan burden.

Opportunity Cost of Investing in Real Estate
Investing in equity mutual funds offers better long-term returns.

You can achieve financial freedom faster through diversified investments.

Real estate locks in a large amount of money with slow growth.

Liquidity is lower compared to mutual funds or fixed-income instruments.

Recommended Financial Strategy
1. Build an Emergency Fund
Keep at least 6-12 months of expenses in liquid funds.

This ensures financial security and avoids forced withdrawals from investments.

2. Balance Loan Repayment and Investments
Instead of full prepayment, allocate some surplus towards investments.

Partial prepayment can reduce interest burden without affecting liquidity.

Continue investing in mutual funds for long-term wealth creation.

3. Avoid Purchasing Another Property
With limited savings and liquidity, another property will increase financial risk.

A second home loan will add EMI burden and reduce investment potential.

Diversifying into equity and fixed-income investments is a better approach.

Real estate investment limits flexibility in case of financial emergencies.

4. Strengthen Your Investment Portfolio
Increase SIP contributions in mutual funds to build long-term wealth.

Focus on a mix of large-cap, mid-cap, and flexi-cap funds for diversification.

Invest in debt funds or fixed-income instruments for stability.

Ensure a proper asset allocation based on risk tolerance and goals.

5. Secure Your Family’s Future
Ensure you have adequate term life insurance to protect your family.

Health insurance for yourself, spouse, and kids is necessary.

Create a financial plan for your children’s education and future needs.

Finally
Paying off your home loan is beneficial but should not drain liquidity.

Investing in mutual funds offers better flexibility and growth.

A second property will increase financial stress and limit investment potential.

Maintaining a balanced approach ensures financial stability and long-term wealth creation.

Prioritize an emergency fund, investments, and financial security before taking new liabilities.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

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Hello, I am 57 years working out of India and earning 35 lacs annually with PR of that country and having NRI FD of 3.5 crore and mutual fund of 20 lac and sip of 3lac per annum. I have own bungalow and flat in b town of Gujarat. My daughter went to U.S.A for master last year. I want to retire and want to enjoy rest of life exploring the world with wife. Please advise.
Ans: Your goal is clear—retirement and world travel with your wife. You have built a strong financial foundation. Now, structuring your investments for lifelong cash flow is important.

Assessing Your Current Financial Position
Income: Rs. 35 lakh annual income from work abroad.

Assets: Rs. 3.5 crore in NRI fixed deposits, Rs. 20 lakh in mutual funds.

Investments: SIP of Rs. 3 lakh per year.

Real Estate: Own bungalow and flat in Gujarat.

Family Responsibility: Daughter pursuing a master's degree in the U.S.A.

Retirement Goal: Financial independence and world travel.

Key Challenges in Retirement Planning
Cash Flow Management: Ensuring a steady income for expenses.

Inflation Risk: Expenses will rise over time, reducing purchasing power.

Investment Growth: Maintaining and growing wealth to last a lifetime.

Liquidity Needs: Quick access to funds for travel and emergencies.

Tax Efficiency: Minimizing tax burden on withdrawals.

Retirement Corpus Planning
1. Estimating Annual Expenses
Consider monthly lifestyle costs, medical expenses, and travel budgets.

Account for inflation, as costs will rise over time.

Keep an emergency fund to handle unexpected expenses.

2. Generating Regular Cash Flow
Fixed Deposits (FDs): Provide safety but lower returns after tax.

Systematic Withdrawal Plan (SWP): Ideal for steady monthly income.

Dividend-paying Mutual Funds: Useful for passive cash flow.

Corporate Bonds: Can provide stable interest income.

Optimizing Your Investment Portfolio
1. Reducing FD Dependence
Rs. 3.5 crore in FDs is too high. Interest rates may not beat inflation.

Shift a portion into mutual funds with a mix of equity and debt.

Debt mutual funds can provide stability with better tax efficiency.

2. Equity Exposure for Growth
Equity is necessary for long-term wealth growth.

Consider large-cap and multi-cap mutual funds for stability.

Keep a portion in international funds for global exposure.

3. Debt Investments for Stability
Short-term debt funds are good for liquidity.

Corporate bond funds can offer better returns than FDs.

Select tax-efficient debt instruments for fixed income.

Funding Your Travel Goals
Create a dedicated "Travel Fund" for expenses.

Use SWP from mutual funds to generate travel cash flow.

Avoid dipping into principal amount to maintain financial security.

Tax Planning for Retirement
1. Taxation on Withdrawals
SWP from equity mutual funds attracts LTCG tax after Rs. 1.25 lakh gains.

Debt fund withdrawals are taxed as per income slab.

Optimize withdrawals to reduce tax burden.

2. NRI Tax Considerations
Check tax liabilities in India and your resident country.

Double taxation treaties can help reduce excess taxation.

Plan withdrawals carefully to avoid tax inefficiencies.

Estate Planning and Succession
Create a will for asset distribution.

Nominate beneficiaries in mutual funds and FDs.

Consider gifting assets to your daughter for tax benefits.

Final Insights
Reduce FD dependency and shift towards mutual funds.

Maintain a balance between equity and debt investments.

Structure cash flow using SWP and tax-efficient investments.

Plan withdrawals wisely to minimize tax impact.

Set aside a dedicated travel fund for world exploration.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

Asked by Anonymous - Mar 04, 2025Hindi
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is right time to invest in mutual funds short term
Ans: Your question on short-term mutual fund investment is important. Let’s assess if this is the right time and how to approach it.

Understanding Short-Term Investments in Mutual Funds
1. Market Conditions and Short-Term Investments
The Indian stock market is currently experiencing volatility.

Global economic uncertainties and interest rate policies are influencing market movements.

Short-term investments depend on market cycles and liquidity needs.

If invested for a short period, market timing plays a crucial role.

2. Risk vs. Reward in Short-Term Investing
Short-term mutual fund investments carry risks due to market fluctuations.

Equity funds may not be ideal for short-term goals due to volatility.

Debt funds can provide stability but may have lower returns than equities.

Risk assessment is necessary before investing for the short term.

3. Ideal Fund Categories for Short-Term Investment
Ultra-short duration funds: Suitable for 3–6 months with lower risk.

Short-duration funds: Ideal for 1–3 years with moderate risk.

Liquid funds: Best for parking surplus funds for a few months.

Corporate bond funds: Offer slightly higher returns but come with credit risk.

Key Factors to Consider Before Investing
1. Investment Horizon
Define the exact period you wish to stay invested.

If less than one year, avoid equity mutual funds.

If 1–3 years, prefer high-quality debt funds.

2. Liquidity Needs
Short-term investments should be easily accessible when needed.

Debt mutual funds offer better liquidity than FDs for short-term goals.

Exit loads and redemption timeframes should be checked before investing.

3. Taxation Impact on Returns
Debt mutual fund gains are taxed as per your income slab.

Short-term capital gains (STCG) on equity funds are taxed at 20%.

Consider post-tax returns while comparing investment options.

Evaluating Alternatives for Short-Term Investments
1. Fixed Deposits vs. Debt Mutual Funds
Bank FDs provide fixed returns but may have lower post-tax returns.

Debt mutual funds offer flexibility and tax-efficient returns.

FDs may be suitable if interest rates remain high.

2. Arbitrage Funds for Short-Term Investment
Arbitrage funds invest in equity but work like debt funds in terms of risk.

Tax-efficient for holding periods beyond one year.

Suitable for those seeking stability with slightly better returns than FDs.

Final Insights
Short-term mutual fund investments require careful selection based on the time horizon.

Debt funds are better suited for stability, while arbitrage funds offer tax efficiency.

Consider liquidity, taxation, and risk factors before investing.

Market fluctuations can impact short-term returns in equity funds.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

Asked by Anonymous - Mar 24, 2025Hindi
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Dear Sir, I am 55-year-old corporate executive working in Delhi NCR. I own 3 house properties amounting to approx. INR 4 crores. Apart from these, I have PF of 45 lacs, PPF of 32 lacs, NPS of 40 lacs. I also have around INR 32 lacs in MFs & Equity, 30 lacs in FDs. My first child is studying engineering for which the expenses are around INR 2.5 lacs per annum while my second child would be going to college from next year. My monthly expenses are around 2 lacs. Am I in a position to retire ? Regards, SB
Ans: You have built a strong financial foundation with investments across multiple assets. Your key concern is whether your corpus can sustain your post-retirement lifestyle. Below is a detailed evaluation of your financial position.

Current Financial Position
Liquid Assets (Available for Retirement)
Provident Fund (PF) – Rs. 45L

PPF – Rs. 32L

NPS – Rs. 40L

Mutual Funds & Equity – Rs. 32L

Fixed Deposits – Rs. 30L

Total Liquid Assets = Rs. 1.79 Cr

Illiquid Assets (Not Considered for Regular Retirement Income)
Three House Properties – Rs. 4 Cr (Not included in the retirement corpus)

Liabilities and Key Expenses
Child 1 Education – Rs. 2.5L per annum (Few years remaining)

Child 2 College Fees – Future cost needs to be set aside

Monthly Household Expenses – Rs. 2L (Post-retirement, this will continue)

Key Factors for Retirement Decision
1. Corpus Required for Retirement
Your monthly expense is Rs. 2L, meaning Rs. 24L per year.

Inflation will increase this every year.

Your investments should generate income without depleting the principal too soon.

2. Children's Higher Education
Your elder child is already in college.

Your younger child will start college next year.

Education costs will impact your retirement savings.

3. Passive Income from Investments
Your NPS will provide a pension, but a portion must be annuitized.

PPF and PF can be used for systematic withdrawals.

FDs provide low returns and are taxable.

Mutual funds and equity investments can generate better returns with a structured withdrawal plan.

4. Withdrawal Strategy for Sustainability
Your corpus should last for at least 25-30 years after retirement.

Withdrawals should be planned to reduce tax impact.

A Systematic Withdrawal Plan (SWP) from mutual funds can provide regular cash flow.

Are You Ready to Retire?
Scenario 1: If You Retire Now (55 Years Old)
Your liquid assets may not sustain a Rs. 2L monthly expense for 30+ years.

Education expenses will add financial pressure.

You will need higher growth investments to support long-term needs.

Scenario 2: If You Work for 3-5 More Years
Your corpus can increase by Rs. 1.5 Cr - Rs. 2 Cr, strengthening financial security.

You can fully fund children's education before retirement.

Your investments will have a longer growth period before withdrawals begin.

You will have a better buffer against inflation and unexpected expenses.

Retirement Plan Recommendations
1. Postpone Retirement for 3-5 Years
This will ensure a more secure retirement.

Your corpus will have more time to grow.

2. Adjust Investment Portfolio for Stability
Increase exposure to balanced and hybrid funds.

Reduce dependency on FDs, as they provide low post-tax returns.

Retain some equity investments for long-term growth.

3. Secure a Tax-Efficient Withdrawal Plan
Plan gradual withdrawals from PF, PPF, and mutual funds.

Use Systematic Withdrawal Plans (SWP) to maintain tax efficiency.

Consider phased NPS withdrawals to manage tax liability.

4. Reassess Expenses and Future Goals
Reduce discretionary expenses if required.

Ensure you set aside emergency funds for health and other needs.

Maintain adequate health insurance to prevent medical expenses from impacting retirement savings.

Final Insights
Retiring now may put pressure on your finances due to education costs.

Working for 3-5 more years can improve financial stability.

A structured withdrawal plan will ensure your corpus lasts for 30+ years.

Investment allocation should be adjusted for a mix of growth and stability.

A well-planned retirement ensures financial freedom without compromising lifestyle.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

Asked by Anonymous - Mar 18, 2025Hindi
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Sir, When is Indian market is expected to reach level of 80k? And presently what should I do with my MF investment? Pls. Advise.
Ans: Your question about the Indian stock market reaching 80,000 and your mutual fund investments is timely. Let’s analyze these aspects in detail.

Indian Stock Market Outlook
Current Market Scenario
The Indian stock market has seen fluctuations in recent months.

Major indices have experienced corrections due to global and domestic economic factors.

Factors such as inflation, interest rate changes, and geopolitical uncertainties have impacted investor sentiment.

Market corrections are a normal part of the growth cycle. These phases often present opportunities for long-term investors.

Foreign Investment Trends
Foreign investors have been pulling funds from Indian equities, shifting towards other emerging markets.

This withdrawal impacts liquidity, leading to short-term market volatility.

However, India remains a strong long-term investment destination due to economic growth and policy reforms.

As global economic conditions stabilize, foreign investments are expected to return to India.

Factors That Can Drive Sensex to 80,000
Corporate Earnings Growth: The stock market moves in sync with earnings growth. If Indian companies show strong earnings, the Sensex will rise.

GDP Growth & Economic Policies: A growing economy and pro-business policies will attract investments.

Domestic Institutional Investors (DII) Activity: Strong DII participation can balance out foreign investor exits.

Interest Rate Movements: Lower interest rates make equities more attractive.

Sectoral Growth: Growth in banking, technology, manufacturing, and consumption sectors will push the market higher.

Projected Timeline for Sensex at 80,000
Some analysts predict the Sensex could reach 80,000 within the next 12–18 months, provided corporate earnings continue to grow.

However, markets do not move in a straight line. There will be corrections and consolidation phases before hitting new highs.

Investors should focus on long-term wealth creation rather than short-term market levels.

What Should You Do With Your Mutual Fund Investments?
1. Maintain a Long-Term Perspective
Market fluctuations are normal. Staying invested for the long term ensures you benefit from compounding.

Short-term volatility should not impact long-term wealth-building strategies.

2. Continue SIPs Consistently
Systematic Investment Plans (SIPs) help in averaging costs and reducing risk.

Market corrections provide an opportunity to buy more units at lower prices.

Stopping SIPs due to market declines can reduce long-term wealth potential.

3. Diversify Across Categories
Avoid overexposure to any single category of mutual funds.

Ensure a balance between large-cap, mid-cap, and small-cap funds.

Consider sectoral and thematic funds only if they align with your financial goals.

4. Rebalance Your Portfolio Periodically
Review your portfolio every 6–12 months to ensure alignment with financial objectives.

Rebalancing helps maintain the right asset allocation between equity, debt, and other instruments.

Exit underperforming funds and shift to better-performing ones.

5. Taxation Considerations
Long-term capital gains (LTCG) from equity mutual funds above Rs. 1.25 lakh are taxed at 12.5%.

Short-term capital gains (STCG) are taxed at 20%.

Debt fund gains are taxed as per your income slab.

If planning to withdraw, consider tax implications to optimize post-tax returns.

6. Avoid Emotional Decision-Making
Market sentiment changes rapidly. Avoid panic-selling during corrections.

Stick to a disciplined approach based on financial goals rather than reacting to short-term market movements.

If needed, consult a Certified Financial Planner for strategy adjustments.

Final Insights
The Sensex reaching 80,000 is a possibility, but the exact timeline is uncertain.

Focus on long-term wealth creation rather than short-term index movements.

Continue SIPs, diversify your portfolio, and review investments regularly.

Avoid emotional reactions to market volatility.

A structured investment approach will yield better results over time.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

Asked by Anonymous - Mar 18, 2025Hindi
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Money
I am 46 male working as a senior manager in IT with a corpus of 3.2Cr in MF, 80lacs in EPF, 2 individual house in Chennai with a value of 3 to 3.5Cr and a farm house of 50lacs near Chennai. I feel i should only consider my liquid assets for mt retirement not taking immovables ones. I have 2 Sons elder getting in to College this year (Planned around 30lacs) and younger one is in 07th Grade. I wanted to work for another 4 to 5 yrs to add another 3Cr to my corpus. Please let me know when is the right time to hang my boots.
Ans: You have a strong financial base with liquid assets and real estate. Your mutual funds and EPF together total Rs. 4 Cr. Your properties have an estimated value of Rs. 4 Cr. You plan to add Rs. 3 Cr in the next 4-5 years. You also have planned Rs. 30L for your elder son’s education.

Your key focus is on achieving financial independence and deciding when to retire.

Key Factors to Consider for Retirement
1. Corpus Required for Retirement
Your monthly expenses after retirement will define the required corpus.

Inflation will increase expenses every year.

Post-retirement, your investments should generate stable income.

2. Children’s Education and Other Goals
You have planned Rs. 30L for your elder son’s college.

Your younger son will need funds for higher education in 5-7 years.

Future expenses should be set aside before retirement.

3. Passive Income Post-Retirement
Your investments should generate a steady cash flow.

Withdrawals should be planned to last throughout retirement.

Avoid excessive withdrawals in early retirement years.

4. Investment Strategy for the Next 4-5 Years
Your goal is to add Rs. 3 Cr to your corpus.

Investments should balance growth and stability.

Asset allocation should be adjusted gradually.

Detailed Retirement Strategy
1. Segregate Retirement Corpus and Goal-Based Funds
Keep separate investments for children’s education and retirement.

This avoids disruptions in retirement planning.

Ensure liquidity for major expenses before retirement.

2. Adjust Investment Strategy for Stability
Move some funds to balanced and flexi-cap categories.

Reduce exposure to high-risk sectoral funds.

Increase allocation to investments providing consistent returns.

3. Systematic Withdrawal Plan (SWP) for Retirement Income
Plan an SWP strategy for monthly withdrawals.

Ensure withdrawals do not deplete the corpus early.

Diversify withdrawals from equity, debt, and hybrid funds.

4. Tax-Efficient Retirement Withdrawals
Minimise capital gains tax while withdrawing funds.

Use long-term equity taxation rules for mutual funds.

Plan withdrawals to stay in a lower tax bracket.

5. When Should You Retire?
You can retire when your retirement corpus can sustain expenses.

If your passive income covers 100% of expenses, you are ready.

Working for 4-5 more years will increase financial security.

6. Consider Health and Emergency Funds
Ensure adequate health insurance coverage.

Keep an emergency fund to cover unexpected medical costs.

Avoid withdrawing retirement funds for emergencies.

Final Insights
Your financial position is strong for retirement planning.

Continue investing for 4-5 years to reach Rs. 7 Cr corpus.

Set aside funds for education and emergencies before retirement.

Plan for tax-efficient withdrawals after retirement.

Ensure your portfolio has growth and stability for long-term security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

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I am 58 now still working, I investing through SIP in Mutual funds @ 3000/-pm 1. Tata Small cap direct fund 2. ICICI Pru technology 3. HDFC Balanced advantage fund 4 Canara Roboco Multi cap 5. Axis smal cap, and Lump sum in 1 Nippon Large cap (50k) 2 Quant small cap (1.40l) 3. Quant Infra (1 lak), 4. ICICI commodities (50k) 5. Canara Roboco small cap (50k), 6. Aditya Birla Sunlife PSU equity (30k) But now the value it is declining gradually. Kindly advise
Ans: Your portfolio consists of SIPs and lump sum investments in mutual funds across multiple categories. You have exposure to small-cap, multi-cap, balanced advantage, technology, large-cap, infrastructure, commodities, and PSU equity funds.

Observations on Your Portfolio
High Exposure to Small-Cap Funds

You have three small-cap funds in SIP and three in lump sum.

Small-cap funds are highly volatile and take time to deliver returns.

Overexposure can lead to sharp fluctuations.

Sectoral and Thematic Funds

You hold technology, infrastructure, commodities, and PSU equity funds.

These funds depend on sector-specific performance.

Sectors go through cycles of growth and slowdown.

High allocation to sectoral funds increases risk.

Balanced Advantage Fund

This fund aims to balance equity and debt.

It reduces volatility but may not generate high growth.

Large-Cap and Multi-Cap Exposure

Your portfolio has only one large-cap fund and one multi-cap fund.

Large-cap funds provide stability, but exposure is low.

Multi-cap funds help diversification, but allocation is limited.

Why Your Portfolio Value is Declining
Market Volatility

Small-cap and sectoral funds react sharply to market movements.

A temporary decline does not mean a permanent loss.

Sector-Specific Performance

Technology, commodities, and infrastructure sectors may be underperforming.

These funds perform well only in favorable market conditions.

Economic and Global Factors

Interest rates, inflation, and global market trends impact sectoral funds.

A broad-based correction affects small-cap and thematic funds first.

Steps to Improve Your Portfolio
1. Reduce Small-Cap Exposure
Limit small-cap funds to one or two funds only.

Redeploy part of the funds into flexi-cap or large-cap funds.

Keep SIP in only one small-cap fund instead of two.

2. Reduce Sectoral Fund Dependence
Exit or reduce allocation in sectoral funds if they exceed 20% of your total portfolio.

Consider moving funds to diversified equity funds.

Retain sectoral funds only if you can handle volatility.

3. Increase Large-Cap and Multi-Cap Allocation
Large-cap funds offer stability and consistent returns.

Multi-cap funds adjust allocation dynamically across market caps.

Add or increase SIP in large-cap or flexi-cap funds.

4. Maintain Balanced Asset Allocation
Include a mix of equity, debt, and hybrid funds for stability.

Balanced advantage funds provide some protection in volatile markets.

Consider increasing exposure to hybrid funds for risk management.

5. Stick to Long-Term Investing
Markets move in cycles, and temporary declines are normal.

Continue your SIPs without panic.

Monitor performance but avoid frequent changes.

6. Review and Rebalance Every Year
Check fund performance annually.

Exit funds that consistently underperform their category.

Shift funds based on market trends and your risk tolerance.

Final Insights
Your portfolio is high-risk due to small-cap and sectoral fund exposure.

Reducing allocation in small-cap and thematic funds will lower volatility.

Increasing large-cap and multi-cap allocation will bring balance.

Staying invested for the long term will help you recover losses.

Avoid frequent fund switches, and review your portfolio annually.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

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I am 51 yrs of age and have a 40L portfolio in mutual funds, 15L in Equity, 15L FD, 30L PPF Now I want to plan my retirement with a good Pension plan which can give me fixed guaranteed returns on my retirement. Please advice how I'll get 60k per month to service 2 + 2 family
Ans: You are in a strong financial position to plan your retirement. You have Rs. 40 lakh in mutual funds, Rs. 15 lakh in equity, Rs. 15 lakh in fixed deposits, and Rs. 30 lakh in PPF.

Your goal is to generate Rs. 60,000 per month for a family of four. You are looking for a pension plan with guaranteed fixed returns.

Understanding Retirement Needs
You need Rs. 60,000 per month, which is Rs. 7.2 lakh per year.

Inflation will increase your expenses over time.

Your corpus must grow while also generating regular income.

Why Fixed Guaranteed Returns May Not Work
Fixed returns may not keep up with inflation.

They usually offer lower post-tax returns than market-linked investments.

Locking funds into fixed plans can reduce flexibility.

Investment Strategy for Retirement Income
Use systematic withdrawal plans (SWP) from mutual funds.

Keep a portion in growth-oriented funds for wealth appreciation.

Use fixed deposits and PPF for stability and emergency needs.

Avoid annuities, as they have low returns and tax inefficiencies.

Portfolio Restructuring
Reduce fixed deposits gradually and shift to better options.

Increase equity exposure for long-term growth.

Use dividend-yielding funds for periodic income.

Ensure liquidity for unexpected expenses.

Tax Planning
Withdraw from different sources in a tax-efficient manner.

Use mutual funds with lower tax impact compared to FDs.

Plan PPF withdrawals smartly to reduce tax burden.

Finally
Your retirement plan should ensure stable income and capital growth. Balance safety, liquidity, and returns for a secure future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

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I am a government employee and retiring from service by FEB 2025. I will get monthly pension of RS 53,000/-. In addition to that i will get retirement benefits of around 70 lakhs. I don't have any debt and responsibilities and residing in my own house. I am having knowledge in MF & Stock market also. My pension is sufficient for monthly expenses and my spouse salary will be utilized for SIPS & Savings. My question is how to park this 70 lakhs to get maximum interest with minimum risk ? I am having knowledge in MF & Stock market.
Ans: Your case involves an inherited property with multiple stakeholders. Each party’s rights must be legally and fairly determined before redevelopment.

Current Ownership Structure
The land ownership is shared between you and your brother, inherited through a registered will.

The ground floor belongs to your brother.

The first floor belongs to you.

The second floor was sold by your father, but without terrace/roof rights.

The terrace/roof rights are shared equally between you and your brother (50% each).

Land Ownership Rights and Proportionate Share
Land ownership rights are critical in any redevelopment. Since the second-floor owner has no terrace rights, their land share must be assessed carefully.

Breakdown of Rights in the Existing Building
You and Your Brother (Owners of Ground and First Floor)

You both inherited the property, so land rights belong to you two.

Since the second-floor owner purchased their floor without terrace rights, they may not have equal land rights.

Your share in the land underneath includes the ground, first floor, and the terrace, making it a larger proportion than the second-floor owner.

Second Floor Owner (Without Terrace Rights)

The person has ownership of the second floor.

However, terrace rights were not given, meaning no claim over additional floor construction.

Their land rights may be limited to the proportionate area of their floor only.

Redevelopment Considerations
The redevelopment plan involves basement, stilt parking, ground floor, first floor, second floor, third floor, and roof rights. Distribution must be carefully structured.

1. Basement and Stilt Parking
If the property is redeveloped with a basement and parking, these areas are usually considered common spaces.

The builder may retain these rights, or they may be distributed among the existing owners.

If sold, the proceeds should be divided based on land ownership proportion.

2. Ground to Third Floor Ownership
Each stakeholder must receive fair consideration for their existing rights.

Since you and your brother own the land, you both may receive a higher proportion in the redevelopment.

The second-floor owner may receive a new floor or compensation, based on negotiations.

A redevelopment agreement should clearly define each party’s share.

3. Roof and Future Rights
If a third floor is constructed, the terrace rights must be reconsidered.

You and your brother currently own terrace rights, so this must be factored into the new agreement.

The builder may demand full rights, in which case, compensation must be determined.

Determining Proportionate Share in Redeveloped Property
A redevelopment agreement must define:

Land ownership percentage – Since you and your brother inherited the land, you both hold larger stakes.

Current floor ownership – The second-floor owner gets a limited share, as they don’t have terrace rights.

Additional floors distribution – The builder may offer additional floors to existing owners in exchange for redevelopment rights.

Compensation vs. new flats – If owners do not receive additional flats, they should be compensated.

Legal Aspects to Consider
Consult a property lawyer before signing any agreement.

Ensure land ownership is clearly documented in redevelopment terms.

Define who gets future rights over additional construction.

Decide whether redevelopment is self-funded or builder-led.

Final Insights
You and your brother have stronger land rights.

The second-floor owner may have limited claims in redevelopment.

Future terrace ownership must be clearly defined in the agreement.

Redevelopment terms should compensate owners fairly based on land share.

Legal consultation is a must before proceeding.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8145 Answers  |Ask -

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

Asked by Anonymous - Mar 16, 2025Hindi
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Money
We brother and sister have inherited a property on 400 sq yard by registered will of our father in 2014. The property was purchased by our father in 1970 and redeveloped in 1990 into three story building. NOW Ground floor is with my brother and first floor with me. Second floor was sold by our father (WITHOUT Roof/Terrace Rights) at the time of redevelopment along with the proportionate, impartible, undivided and indivisible share of land ownership rights . Me and my brother have terrace rights as per registered will of our father ( each has 50% roof/ terrace rights). There are many builders who are interested to redevelop the property into four floor with basement and stilt parking. My question is regarding the proportionate rights of the land underneath in the present building for me (First floor owner with 50% Terrace rights), my brother (Ground floor owner with 50% Terrace rights), present second floor owner(WITHOUT Roof/Terrace Rights). Secondly if we redeveloped the property into basement, stilt parking, Ground floor, first floor , second floor, third floor, roof rights; what should be my and others right in the redeveloped property with proportionate rights of the land underneath.
Ans: You have built a strong financial foundation. You own a bungalow and a flat in Gujarat. You have Rs. 3.5 crore in NRI fixed deposits and Rs. 20 lakh in mutual funds. You also invest Rs. 3 lakh annually through SIP. Your daughter is studying in the U.S.A.

You want to retire and travel the world with your wife. Your focus should be on financial security and sustainable cash flow.

Retirement Readiness
Your annual income is Rs. 35 lakh.

Your assets generate passive income, but some are not inflation-protected.

You must ensure stable cash flow to fund travel expenses.

Your investments should balance liquidity and growth.

Expense Planning
Estimate yearly travel expenses, including flights, stays, and experiences.

Maintain an emergency fund for unexpected medical or travel needs.

Adjust lifestyle costs based on your preferred travel style.

Account for healthcare costs in India and abroad.

Income from Existing Assets
Fixed deposits offer stability but generate taxable interest.

Mutual funds can provide inflation-adjusted returns.

Rental income from your properties can add to cash flow.

SIPs should continue for long-term financial health.

Investment Restructuring
Reduce exposure to fixed deposits gradually.

Increase allocation to balanced and growth-oriented mutual funds.

Keep a portion in liquid funds for easy withdrawals.

Use systematic withdrawal plans (SWP) for monthly cash flow.

Tax Considerations
Review tax liabilities in both India and your country of residence.

Optimise withdrawals to minimise tax impact.

Check mutual fund taxation as per new rules.

Consider the best way to repatriate funds if needed.

Final Insights
You are financially well-positioned to retire and travel. Ensure a mix of liquidity, growth, and passive income. Regularly review investments and expenses for long-term sustainability.

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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