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Ramalingam Kalirajan |11157 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Kabir on Jul 13, 2025Hindi

I m Kabir age 38 working in PSB .I don't have saving only 3lac in PPF. still I have 22 yr of job. Suggest me about saving and have 8 lac PL loan . I am having monthly income of 60k

Ans: At 38, you still have 22 years in hand.
That gives you enough time to create wealth and repay debt.
Let’s go step-by-step and create a focused path for you.

? Your current status – assessing the base

– Monthly income: Rs. 60,000
– Personal loan: Rs. 8 lakh (ongoing EMIs)
– Savings: Rs. 3 lakh in PPF
– Job stability: Public sector bank (22 years left)

– No mutual fund or other investments
– No mention of health or term insurance
– No mention of dependents or expenses

– We will assume you are married with dependents
– We will assume your monthly expenses are around Rs. 35,000
– These assumptions help build the rest of the answer logically

? First step – create an emergency reserve

– Emergency fund is a must
– Minimum 4–6 months of expenses must be kept aside
– You already have Rs. 3 lakh in PPF

– But PPF is not liquid. Emergency money must be accessible
– So keep Rs. 1.5 lakh in savings or sweep FD
– This is for medical, job risk, or family needs

– Build this over next 6–8 months slowly
– Reduce expenses, avoid purchases, and save first

? Second step – handle your personal loan smartly

– You are carrying Rs. 8 lakh personal loan
– These loans charge very high interest
– Sometimes 13% to 18%, even higher in some cases

– Personal loans are a silent wealth killer
– They don’t give tax benefits like home loans
– They don’t build assets

– Try to close this loan in 2–3 years max
– For that, increase EMI or make prepayments
– Avoid keeping large PPF while loan is active
– Instead, reduce PPF contribution temporarily and focus on loan

? Third step – bring discipline in savings

– Start with Rs. 5,000 monthly savings
– Increase by Rs. 1,000 every 6 months
– This habit builds the foundation

– Choose automatic ECS for SIPs
– Saving should happen before spending
– Don’t wait for surplus at month end

– Even Rs. 2,000–3,000 SIP is fine to begin with
– Consistency matters more than size
– Make savings non-negotiable like EMI

? Fourth step – start investing in mutual funds via SIP

– Don’t save everything in PPF only
– PPF is safe but slow in returns
– You need growth also

– Start monthly SIP in regular plans
– Use MFD with CFP certification
– Avoid direct plans. You need expert review

– Direct funds look cheaper
– But they don’t offer guidance
– A wrong fund or bad exit timing can cause big loss

– Regular funds via MFD give you personalised help
– You’ll get rebalancing, switch advice, and handholding
– These are more valuable than 1% saved in direct plan

? Fifth step – avoid index funds and ETFs

– Index funds look attractive
– But they don’t protect in market fall
– They mirror the market fully, both up and down

– No one actively manages risk in index funds
– No change in allocation or exit in overheated markets
– You ride the full roller-coaster alone

– Actively managed funds have better flexibility
– Fund managers shift sectors, stocks, and manage cash
– In down years, active funds often fall less

– For long-term goals like retirement, active funds are safer
– Their returns may be better post-risk and tax

? Sixth step – protect your income and family

– If you have dependents, buy term insurance
– A simple term plan with sum assured of Rs. 50 lakh to Rs. 1 crore
– Don’t mix insurance and investment

– Avoid LIC endowment, ULIPs, or combo plans
– If you already bought such plans, consider surrendering
– Reinvest that money in mutual funds for growth

– Buy health insurance separately
– Don’t depend only on employer policy
– If hospitalisation happens, out-of-pocket costs will rise
– A family floater policy of Rs. 5–10 lakh is ideal

? Seventh step – build goals and timelines

– Retirement is your most important goal
– You have 22 years to build wealth
– Don’t wait until loan is closed

– Build small goals:

Rs. 5 lakh in 3 years

Rs. 15 lakh in 7 years

Rs. 50 lakh in 12 years

Rs. 1 crore+ by 60

– You can achieve this if you increase SIP slowly
– 10% rise every year in SIP amount can do wonders
– Bonus, arrears, and incentives should go into lumpsum investing

? Eighth step – PPF is good but not enough

– You already have Rs. 3 lakh in PPF
– That’s a good start
– But it cannot meet all retirement needs

– PPF gives 7–8%
– Inflation eats 6% every year
– So real growth is very small

– PPF is good for safety
– But combine it with mutual funds
– 60:40 mix between equity MF and PPF is better
– You get safety and growth balance

? Ninth step – avoid poor products

– Don’t invest in traditional LIC policies
– They offer low return, less liquidity, and high lock-in
– No tax benefit can save you from bad return

– Don’t go for chit funds, NCDs, corporate deposits
– Stick with SEBI-regulated mutual funds

– If you ever hear “guaranteed return” product, avoid it
– They often don’t beat inflation after tax

? Tenth step – tax planning and debt management

– Your PF contribution already gives Section 80C benefit
– Don’t force yourself into extra PPF for tax only
– Instead, invest in ELSS mutual funds
– They have lock-in of 3 years but better growth potential

– Avoid taking fresh loans now
– First close this Rs. 8 lakh personal loan
– Then think of any big goal like car or renovation

– Use any bonus to prepay high-interest loan
– Don’t use bonus for travel or gadgets
– Every Rs. 1 lakh prepayment saves you interest
– Small prepayments can reduce EMI years

? Eleventh step – stay consistent for 5 years

– First 5 years are very important
– They build the habit and base corpus

– You may feel SIP is slow in the start
– But after few years, compounding starts helping

– Never stop SIP in market fall
– Continue even in bad markets
– That’s where real wealth gets created

– Increase SIP amount every year
– Don’t keep SIP same for next 10 years

– Set reminders every 12 months to review portfolio
– Review should be done with CFP-backed MFD only
– Don’t switch funds just because returns fell one year

? Finally

– You have time, stability, and a job for 22 more years
– That is a powerful foundation

– Tackle your personal loan first
– Build small but regular SIP habit

– Use mutual funds smartly
– Avoid index, direct, or guaranteed products

– Protect your family with pure insurance
– Combine PPF with equity mutual funds

– Don’t wait for “more money” to start
– Start now. Build slowly. Keep going.

– In 10 years, you’ll thank yourself for today’s discipline
– In 22 years, you can be debt-free and financially independent

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

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