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Ramalingam Kalirajan |10873 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 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

Asked by Anonymous - Jun 24, 2025Hindi

Hi, Myself and wife are working in IT sector earning 2.4L/month together. I am 46 years of age currently. I need your advice to become debt free in next 5 years and retire with 1L monthly income post retirement at 55. I have two kids aged 13 and 5 years. I am expecting 1.3 cr for their education till graduation. Currently we have a home loan of 65L with 80K EMI and 10 years tenure. Our monthly expenses fall around 1.1L. We have 60L in PF, 50L in PPF, 20L in NPS, 60L in MF & Stocks. We have a property worth 3cr in a gated community. Currently investing 40K in SIPs, 25K in PPF and 10K in NPS together. Other expenses are 50K p.a for term insurances of 3cr for self and wife and 35K p.a for 15L health insurance, 1L p.a for endowment policies. Though it is difficult to allocate budget for savings, trying hard to continue. I have no other assets apart from these. Please suggest how to close home loan at the earliest and plan for post retirement.

Ans: Income, Expenses and Current Cash Flow Evaluation
– You both earn Rs. 2.4L per month together.
– Your household expenses are Rs. 1.1L every month.
– EMI for home loan is Rs. 80K monthly.
– Total fixed outflow is already Rs. 1.9L per month.
– You invest Rs. 75K monthly in SIPs, PPF, and NPS.
– You are stretching well to balance savings and EMIs.

– Annual insurance cost is Rs. 50K for term, Rs. 35K for health, Rs. 1L for endowment.
– It is becoming difficult to continue all this together.
– You are trying hard to save despite tight cash flow.
– This effort is very disciplined and must be appreciated.

– But to become debt free and retire early, we need restructuring.
– A cash flow-focused strategy is required immediately.

Home Loan Prepayment Strategy – Getting Debt-Free in 5 Years
– Home loan of Rs. 65L with 10-year tenure and Rs. 80K EMI is heavy.
– The interest outgo over 10 years will be very high.
– You aim to close this loan in 5 years, which is good.
– You will need to make yearly prepayments in addition to EMIs.

– Consider targeting Rs. 6–8L yearly as lump sum towards principal.
– You can plan this from yearly bonus or partial MF redemptions.
– Also, check if interest rates are flexible and allow partial prepayment without charge.
– Avoid reducing EMI, reduce tenure with every prepayment.
– This will save huge interest and help close loan faster.

– Keep Rs. 60K–70K monthly for regular expenses and essential insurance.
– Redirect any surplus over this towards loan prepayment.
– You may also pause PPF or reduce SIP for 1 year if loan closure is priority.
– Avoid stopping NPS. It gives long-term retirement benefit with tax saving.

Endowment Policies – Time to Reassess
– You are paying Rs. 1L yearly towards endowment plans.
– These plans offer very low return, mostly under 5% post-tax.
– Please check if these policies have completed 5 years.

– If so, check surrender value and maturity status.
– Surrender these policies if loss is minimal and reinvest.
– Reinvest that amount into mutual fund SIP or debt fund.
– This shift will help you grow money better and faster.

– Insurance must be pure protection, not for returns.
– You already have good term insurance of Rs. 3cr.
– That should be continued till retirement age.

Education Corpus for Two Kids – Rs. 1.3 Cr Target
– You expect Rs. 1.3 Cr for both kids’ graduation.
– First child is 13, second child is 5.
– For the elder one, the goal is just 4–5 years away.
– For the younger, you have more time to accumulate.

– Currently you have Rs. 60L in mutual funds and stocks.
– You also invest Rs. 40K monthly in SIPs.
– Separate these investments clearly into goal-specific buckets.
– At least Rs. 20L should be earmarked for elder child’s graduation.
– Increase debt component in this portion gradually now.
– Shift into hybrid and then debt fund fully over next 2–3 years.
– This will protect from market fall closer to college need.

– For second child, you can stay with equity SIP longer.
– SIP of Rs. 20K–25K dedicated for her education can help meet future cost.
– Keep increasing SIPs by 5–10% yearly to beat inflation.
– Do not delay switching asset class once you near the target year.

Retirement Goal – Monthly Income of Rs. 1L After Age 55
– You want to retire by 55 with Rs. 1L per month income.
– This means generating around Rs. 12L income yearly post-retirement.
– This income should ideally last 25–30 years, till age 85.

– You already have Rs. 60L in PF, Rs. 50L in PPF, and Rs. 20L in NPS.
– That is Rs. 1.3 Cr corpus in fixed and semi-fixed retirement tools.
– You also have Rs. 60L in MF and stocks.
– That makes your total current investment corpus Rs. 1.9 Cr.

– Continue NPS and PPF contributions till retirement.
– PPF gives tax-free withdrawal at maturity.
– NPS will give lump sum plus pension income mix.
– But NPS return is capped. Use mutual funds for extra growth.

– From MF, keep minimum Rs. 25L reserved for retirement growth.
– Add SIPs separately for retirement fund only.
– A SIP of Rs. 20K/month for 9 years can help add to the retirement bucket.

– Avoid index funds for retirement. They lack strategy and underperform in volatile Indian markets.
– Actively managed funds give flexibility, tactical rebalancing and better downside protection.
– Choose regular funds through CFP-certified MFD for expert guidance.
– Avoid direct funds as they don’t provide ongoing advice or behavioural discipline.

– After age 52, slowly move equity funds into hybrid and debt.
– Keep at least 2 years’ expenses in liquid funds when you retire.
– This helps avoid withdrawing during market dips.

Property Worth Rs. 3 Cr – Use It Only If Needed
– You own a property worth Rs. 3 Cr in a gated community.
– Treat this as a backup for future.
– You can downsize or rent it post-retirement if needed.
– But do not depend on it as investment.
– Use it only for relocation or emergency planning.
– Avoid selling unless absolutely needed.

Realistic Allocation and Savings Strategy
– Use bonuses, variable pay, or extra income only for prepayment.
– Reduce lifestyle spending by 10–15% for next 3 years.
– Stop endowment premiums and shift that money to mutual fund SIPs.
– If expenses stay at Rs. 1.1L/month, post-retirement lifestyle must adjust.
– Or ensure retirement corpus is large enough to sustain same lifestyle.

– Keep SIPs minimum Rs. 60K/month till retirement age.
– Prefer goal-wise folios: education, retirement, emergency.
– Keep emergency fund of Rs. 3–4L in liquid fund or FD always.

– Do not reduce term insurance till age 55.
– Health cover must be renewed till you get a senior citizen policy.
– Avoid investing in new ULIPs, real estate, or traditional insurance.

MF Taxation to Remember
– Equity fund LTCG above Rs. 1.25L taxed at 12.5%.
– STCG taxed at 20% on equity fund redemptions.
– Debt fund gains taxed as per your income slab.
– Track tax implications before doing lump sum redemptions.
– Plan redemptions in phased manner to reduce tax outgo.

Finally
– You have built a strong foundation with long-term investments.
– Now you need alignment between investments and goals.
– Debt prepayment, retirement and education must be handled simultaneously.
– Pause or reduce non-critical spending for next 3 years.
– Review and rebalance your investments every year.
– Always consult with a Certified Financial Planner to align strategy.

– You can be debt-free in 5 years and retire with dignity at 55.
– With a focused plan, your kids’ education and your peace of mind can be secured.

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

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