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How can I secure my 8-year-old son's future with a 27,000 INR monthly income?

Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 12, 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 - Nov 12, 2024Hindi
Money

Meri age 43 hai, private job h, meri month income 27000/ hain jo mere in hand 25600/- aati hain, meri koi alag se income nhi hain, Mera beta h jo abhi 8 year ka h, uska future kasie secure kru, family ke sath hi rehta hu, main aisa kya kru jisse meri monthly income bhi save ho sake. Or retirement ka koi issue na ho.

Ans: Let’s explore a comprehensive financial approach to help secure your son’s future and prepare for your retirement while saving from your monthly income. Here's a plan tailored to your unique situation.

Current Financial Overview
You are 43 years old and working in a private job with a monthly income of Rs 27,000, leaving you Rs 25,600 in hand. You have one son, aged 8, and no other income source. Ensuring a balance between saving, investing, and securing your son’s future is essential.

Steps for Financial Security and Savings
Establish an Emergency Fund
Start with building an emergency fund to cover 3-6 months of living expenses. This will ensure you’re financially protected during unexpected situations. Consider liquid funds or a recurring deposit, as they offer ease of access while keeping your funds safe.

Allocate for Child’s Education
Start saving specifically for your son's higher education. By beginning early, you can spread out contributions. Consider options that offer stable growth, such as child-specific mutual funds or balanced funds, which are professionally managed and aligned with long-term goals. Regular contributions through a Systematic Investment Plan (SIP) will help gradually accumulate a sizable corpus.

Focus on Retirement Planning
Retirement planning should be approached with a clear goal in mind. Assess how much you will need to maintain your lifestyle post-retirement. Aim for investments that provide growth along with some stability, like diversified mutual funds or balanced funds, as these allow capital appreciation over time. Investing regularly will help ease the burden and grow your retirement corpus without impacting your monthly income significantly.

Health Insurance Protection
Health-related expenses can strain finances. Ensure you have adequate health insurance coverage to safeguard yourself and your family from unexpected medical costs. This will preserve your savings and protect your family’s well-being.

Life Insurance for Financial Security
Opt for term life insurance to provide a financial cushion for your family. This policy would offer your family a lump sum to cover essential expenses in case of an unfortunate event. Avoid investment-linked insurance as it may not give optimal returns compared to pure investment options like mutual funds.

Maximising Your Investment Returns
Mutual Fund Investments
Actively managed mutual funds can offer potentially higher returns than index funds. With an experienced Certified Financial Planner, you can choose funds managed by experts aiming to outperform the market. Through a Systematic Investment Plan (SIP), you can invest small amounts regularly, making it easier to save consistently.

Avoid Direct Funds; Choose Regular Funds
Direct funds can seem cost-effective, but they lack the benefit of expert guidance. Investing through a Certified Financial Planner helps you make informed choices, balancing risk and returns. Regular funds, guided by a CFP, ensure professional management and support, especially in adapting to market changes.

Tax-Efficient Investing
The recent changes in capital gains tax are important to understand. For equity mutual funds, long-term capital gains above Rs 1.25 lakh are taxed at 12.5%, while short-term capital gains are taxed at 20%. For debt mutual funds, both short-term and long-term gains are taxed as per your income slab. Planning your investments to align with these tax rules will help you maximize post-tax returns.

Budgeting and Expense Management
Set Up a Budget to Track Savings
A budget will help you control expenses and save more. Separate essential expenses like household needs, utilities, and education from non-essentials. Aim to save at least 10-15% of your monthly income towards investments.

Automate Savings
Automate your SIPs and other recurring savings. This disciplined approach ensures that savings are set aside first before other expenses. Automation also reduces the chances of missing contributions, allowing your investments to grow steadily.

Regular Financial Reviews
Review Your Financial Plan Annually
Review your financial plan and investment portfolio yearly. Adjust your strategy if there are changes in your income, expenses, or goals. A Certified Financial Planner can provide valuable insights and updates to keep you on track.

Final Insights
A structured, disciplined approach is key to building a secure financial future. By focusing on your son’s education, retirement, and emergency savings, you’re laying a foundation for financial independence and security. Remember, small but consistent efforts will help you achieve your financial goals with time.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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  |7201 Answers  |Ask -

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

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MERA NAAM SURINDER HAI MERI SALARY 30th PER MONTH HAI AND HEALTH INSURANCE B LE RAKHA AND MAIN 2.5 LK SAVE KR RAKHE HAI KON SE MUTUAL FUND MAI INVEST KRU KI 5 SAAL MAI PAISE DOUBLE HO JAYE
Ans: 1. Understanding Your Financial Situation

Monthly Salary:

Rs 30,000 per month.
Savings:

Rs 2.5 lakhs available for investment.
Health Insurance:

Already in place, which is good for financial security.
2. Investment Goals

Objective:
Double your investment in 5 years.
3. Selecting Suitable Mutual Funds

Equity Mutual Funds:

High Growth Potential:

Equity funds have the potential to deliver high returns.
They invest in stocks of various companies.
Types of Equity Funds:

Large-Cap Funds:
Invest in large, established companies.
Lower risk compared to mid and small-cap funds.
Mid-Cap Funds:
Invest in medium-sized companies with growth potential.
Higher returns with moderate risk.
Small-Cap Funds:
Invest in small companies with high growth potential.
High risk but also high returns.
Flexi-Cap Funds:

Flexible Investment:
These funds invest across large-cap, mid-cap, and small-cap stocks.
Fund managers have the flexibility to shift investments.
Thematic or Sectoral Funds:

Sector-Specific Growth:
Invest in specific sectors like technology, healthcare, etc.
High risk but can offer high returns if the sector performs well.
4. Disadvantages of Index Funds

Limited Flexibility:

Index funds replicate market indices.
They cannot adapt to market changes quickly.
Average Returns:

Index funds usually provide average market returns.
Actively managed funds have the potential for higher returns.
5. Benefits of Actively Managed Funds

Professional Management:

Expertise:

Managed by experienced professionals.
They make informed decisions based on market research.
Adaptive Strategy:

Can adjust portfolios based on market conditions.
Potential for higher returns than passive index funds.
6. Disadvantages of Direct Funds

Time-Consuming:

Requires constant monitoring and management.
Not suitable for those with limited time and expertise.
Complexity:

Needs a deep understanding of the market.
Professional management is often more beneficial.
7. Investing Through a Certified Financial Planner (CFP)

Expert Guidance:

Tailored Advice:

CFPs provide advice based on your financial goals.
They help in selecting the right mutual funds.
Continuous Support:

Ongoing support and portfolio review.
Helps in making informed investment decisions.
Final Insights

Diversify Your Investment:

Spread your Rs 2.5 lakhs across different types of equity funds.
This helps in balancing risk and maximizing returns.
Regular Monitoring:

Keep an eye on your investments.
Adjust your portfolio as needed to stay aligned with your goals.
Seek Professional Advice:

Consulting a Certified Financial Planner can provide valuable insights.
They offer personalized advice to help you achieve your investment goals.
Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7201 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 2024

Asked by Anonymous - Jul 20, 2024Hindi
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Main 35 saal ka hu or 50 saal main retirement Lena chata hu meri jewellery shop hai .. or meri monthly 1 lakh ki sip or 20lakh k share hai ... retirement par 4 lakh ki montly income chata hu ...mujhe kya karna chiye ??
Ans: Current Financial Situation
Age: 35 years old

Profession: Jewellery shop owner

Income: Monthly SIP of Rs. 1 lakh

Investments: Rs. 20 lakhs in shares

Retirement Goal: Retire at age 50

Retirement Income Goal: Rs. 4 lakhs per month

Investment Goals
Generate a monthly retirement income of Rs. 4 lakhs.
Maximise returns on existing investments.
Diversify investments to manage risk.
Assessment of Current Strategy
SIP Investment
You have a strong monthly SIP investment of Rs. 1 lakh. This is a good start for building your retirement corpus.

Shares
You have Rs. 20 lakhs in shares. Direct stock investments can be volatile. Regularly review and adjust your portfolio.

Recommendations for Improvement
Increase Diversification
Mutual Funds: Invest in a mix of equity mutual funds. Actively managed funds can provide better returns than index funds.

PPF: Start contributing to PPF for stable, tax-free returns.

Bonds: Consider investing in RBI bonds and other high-yield bonds for stable income.

Systematic Investment Plan (SIP)
Increase SIP: Gradually increase your SIP amount as your income grows. This will help build a larger corpus for retirement.

Diversified Funds: Invest in large-cap, mid-cap, and small-cap mutual funds. This diversification reduces risk and maximizes returns.

Health and Life Insurance
Health Insurance: Get comprehensive health insurance for yourself and your family. This covers medical expenses and ensures financial stability.

Life Insurance: Buy a term plan for adequate coverage. This provides financial security for your family.

Retirement Corpus
Target Corpus: To achieve Rs. 4 lakhs monthly income, you need a significant corpus. Aim for a mix of growth and income-generating investments.
Regular Review and Adjustment
Annual Review: Regularly review your investment portfolio. Adjust based on performance and changes in financial goals.

Professional Guidance: Consult a Certified Financial Planner (CFP) to tailor your investment strategy to your specific needs.

Avoiding Common Pitfalls
Avoid Direct Funds: Direct funds require active management. Consider regular funds through a CFP for better guidance and management.

Avoid Index Funds: Actively managed funds often outperform index funds. Choose funds with a good track record.

Long-Term Investment Strategy
Equity Focus: Maintain a significant portion of your investments in equity for higher returns.

Debt Instruments: Include debt instruments like bonds for stability and fixed returns.

Gold and Other Assets: Diversify into gold and other stable assets to hedge against inflation and market volatility.

Building Corpus for Retirement
Projected Needs: Estimate your future needs considering inflation. Plan your investments to meet these needs.

Retirement Fund Allocation: Allocate funds to different instruments based on risk tolerance and return expectations.

Final Insights
Your current SIP investment is commendable. Diversify your investments into mutual funds, PPF, and bonds. Increase your SIP gradually to build a substantial corpus for retirement.

Ensure you have adequate health and life insurance coverage. Regularly review and adjust your portfolio. Consult a CFP for tailored advice.

This strategic approach will help you achieve your retirement goal of Rs. 4 lakhs monthly income.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Milind

Milind Vadjikar  |741 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Dec 03, 2024

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What happens when a Mutual Fund company shuts down / gets sold off?
Ans: Hello;

If a mutual fund company gets sold or fails, the process is prescribed by SEBI:

In case MF company is Sold,
The new fund house may:
1. Continue the scheme with a new name and management.

2. Merge the scheme with similar funds and offer investors the option to exit without any exit load.

In case MF company shuts down,
The fund house will:
1. Pay out investors based on the fund's last recorded Net Asset Value (NAV) and the number of units the investor holds, after deducting expenses.

2. If the company is not in a position to do so then SEBI may liquidate the funds assets and distribute the proceeds to unit holders.

It is also pertinent to note that mutual fund regulation in India is one of the most stringent and hence best, from investor's point of view, globally.

This is not just in theory. We have seen how the Franklin Templeton abrupt closure of debt funds was handled with surgical precision, by SEBI, with no loss to unitholders.


Skin in the game regulation mandates that 20% salary of key mutual fund personnel and fund managers is paid in terms of units of their funds with a 3 year lock-in.

The stocks and bonds purchased by the AMC for the fund are held by a custodian, appointed by the trust that administers the fund.

The trust engages into a investment management agreement with the AMC for managing the fund as per their mandate and within regulatory guidelines.

Registrar and Transfer Agents handle the investor registration,kyc, maintaining records, providing account and tax statements etc.

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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