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Samraat

Samraat Jadhav  |2008 Answers  |Ask -

Stock Market Expert - Answered on Jul 26, 2024

Samraat Jadhav is the founder of Prosperity Wealth Adviser.
He is a SEBI-registered investment and research analyst and has over 18 years of experience in managing high-end portfolios.
A management graduate from XLRI-Jamshedpur, Jadhav specialises in portfolio management, investment banking, financial planning, derivatives, equities and capital markets.... more
Visu Question by Visu on Jul 25, 2024Hindi
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I do not own a house; living in heart of metro city for over 50 years; I am retired, and with no family or financial (loan/EMI) commitment. I do not prefer retirement or living assist pay home available for senior citizen where I may lose my independance and choice of my life. I have given declaration for donation of organs after my death; also I have declared donation of my body to medical college to save creamation expenses and procedure, by not disturbing the others Being a self dependant, I allocate my income, 20% for rent; 15% for food expenses 10% for medical emergency (I have no health issues, not even a diabetic and blood pressure) though my annual medical expenses is ZERO. 25% for travel/Trek (I fond of travelling and exposing to trekking spot like travelling to Himalayas - Rishikesh every year for the laslt 27 years) 15% for local conveyance (like petrol etc)5% for emergency; 5% for insurance premium commitments; 5% for others including donation and pooja etc. anything unutlised is for saving where I donot require to accumulate saving or investment , as it does not require for me to leave a legacy. Please advise, do I need to re-allocate the ratio; all the time we are asking for income and investment, and I am placing this question on expenditure. Though I can understand the expenditure pattern changes according to the taste of the people; and life style; we do not have thumb rule and I request you to kindly suggest if anything is missed out or re-allocate the percentage.

Ans: Thats a great and noble thing you are doing and happy to see that you take care of your health and give importance to fitness, kudos to you on this.
From the allocation side I would suggest you to keep changing your food allocation ratio as this is linked with Inflation you can change this from 15% to 20%. The leftover should go in savings.
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  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 2024

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Hi I am 57yrs and will retire in June 24. That is when i turn 58 yrs from pvt sector no pension .Family of three my self wife and unmarried daughter 27 yrs but working in good MNC with decent salary of 1lac + but as of now not contrbuting financially and she is very independent and high in personal exp like travelling etc and 2 dogs as we are pet lovers. My question how should i allocate my corpus to live a decent life with 1.25lacs exp per month or max 18lacs per year. Which includes 2 family vacations a year not exceeding 4-5lac fo next 8-10 yrs Break up of my current corpus Bank FD -20lacs (@7.25%) Equity Direct (Through PMS) 1cr MF equity -2.10cr(Various Funds) MF Debt -69lacs ULIP -54lacs (lock in period over premium fully paid) NPS accmulation -12lacs (but only can withdraw after attening age of 60 so only) One House (apartments in Metro City) car loan 8lacs ( as i had change the previous car which was 12 yrs old last yr) No other Debt. One Major Future Exp - Daughter Marriage in next 3 yrs. Health Insurance coverd since 10 yrs Self-15 lacs, wife 10lacs , Daughter 5lacs.
Ans: Congratulations on your impending retirement! Planning for your financial future is crucial, especially with your family's needs and aspirations in mind. Let's strategize on how to allocate your corpus to sustain your desired lifestyle post-retirement.
Given your monthly expenses of 1.25 lakhs and considering future commitments such as your daughter's marriage, it's essential to optimize your existing assets to generate sustainable income streams.
Starting with your current corpus:
• Bank FD: While fixed deposits provide stability, the returns may not suffice to meet your long-term financial goals. Consider reallocating a portion towards investments with higher growth potential.
• Equity Investments: Your equity holdings, both direct and through mutual funds, offer the potential for capital appreciation. However, ensure a diversified portfolio and periodically review your investments to manage risk effectively.
• MF Debt and ULIP: These provide stability and security to your portfolio. Review the performance and liquidity of your debt investments to align with your retirement timeline and income needs.
• NPS Accumulation: Although you can't withdraw until age 60, NPS offers tax benefits and long-term growth potential. Continue contributing if feasible, considering it as a part of your retirement corpus.
• Real Estate: Your house can serve as a valuable asset, providing rental income or potential capital gains upon sale. Evaluate its contribution to your retirement income and consider diversifying if necessary.
Considering your daughter's financial independence and your retirement goals, aim for a balanced allocation across asset classes, focusing on generating regular income to meet your expenses.
• Equity: Maintain a portion in equities for long-term growth potential, but ensure it's aligned with your risk tolerance and retirement timeline.
• Debt: Allocate a significant portion to debt instruments for stability and income generation. Consider debt mutual funds or other fixed-income instruments to optimize returns.
• Emergency Fund: Set aside a portion of your corpus as an emergency fund to cover unexpected expenses and maintain liquidity.
• Retirement Corpus: Calculate the amount required to generate 1.25 lakhs per month, considering inflation and future expenses like your daughter's marriage. Adjust your asset allocation accordingly to ensure sustainability.
• Insurance: Review your health insurance coverage to ensure it's adequate for your family's needs, especially during retirement.
• Daughter's Marriage: Start planning and setting aside funds for your daughter's marriage, considering your financial resources and future income needs.
Advantages of MFs over ULIPs:
• Lower Cost: MFs typically have lower expense ratios compared to ULIPs. ULIPs involve insurance charges which eat into your returns. MFs focus solely on investment, potentially leading to higher returns in the long run.
• Transparency: MFs provide clear investment objectives, portfolio holdings, and expense structures. You know exactly what you're invested in and the fees involved. ULIPs can be more complex with hidden charges and a mix of insurance and investment components.
• Flexibility: MFs offer a wide variety of schemes catering to different risk appetites and investment goals. You can easily switch between funds or redeem your investment partially or fully (except for lock-in periods in ELSS). ULIPs often have lock-in periods and limited investment options.
Advantages of MFs over PMS:
• Affordability: MFs have a lower investment minimum compared to PMS. This makes them accessible to a broader range of investors. PMS typically require a much larger initial investment.
• Diversification: MFs inherently pool your money with other investors, providing built-in diversification across various assets. This helps spread risk and potentially improve returns. PMS require a larger investment to achieve similar diversification, which might not be feasible for everyone.
• Professional Management: MFs are managed by experienced fund managers who research and make investment decisions on your behalf. While PMS also offer professional management, they come with a higher cost.
Here are some additional points to consider:
• ULIPs: They can be a good option if you seek life insurance coverage along with investment potential. However, carefully assess the insurance charges and weigh them against the potential returns.
• PMS: If you're a high-net-worth investor seeking a customized investment portfolio and are comfortable with a higher fee structure, PMS could be an option. However, thoroughly understand the risks and suitability before investing.
Ultimately, the best choice depends on your individual financial goals, risk tolerance, and investment horizon. Carefully consider your needs before making a decision.
Regularly review and rebalance your portfolio to adapt to changing market conditions and life events. Seeking advice from a Certified Financial Planner can provide personalized guidance tailored to your retirement goals and financial situation.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Asked by Anonymous - Jul 13, 2024Hindi
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I am 34 years old, living in Chennai. My take home salary was 90K before 2years but I did upskilling and now my salary is 1.9Lakhs from 2022. I am paying 25K emi for my 36 lakhs home loan tenure 25Yrs. My current holding as below: Gold coin:250gram Mutual Fund:7 Lakhs Gold bees: 2lakhs PPF: 3lakhs PF:6Lakhs Emergency fund in FD: 6Lakhs Savings : 3Lakhs Car: 15lakhs (bought without loan paid full cash, saved for two years to get this). My savings allocation as below: MF: 54500/-(started from last October) PPF,SSA - 5000/- Chit - 12000 Home loan part payment -12000 I split my MF contribution to separate goals like retirement,child education I will always ensure minimum I save my 50% of income going into savings and investment. I will note my everyday spending and monitor my spent. And track %of my income sent below is my monthly average spent split. Savings -60% Living -20% EMI-10% On hand -10% Can you help me whether I am going on the right track or do I need to change anything here ?
Ans: Evaluating Your Financial Plan
Assessing your current financial strategy and future outlook:

Income and Expense Analysis
Your salary increased significantly post upskilling.
EMI for your home loan is 10% of your income, which is manageable.
Your savings rate of 60% reflects a strong commitment to financial security.
Asset Allocation
Gold holdings and mutual funds provide diversification.
Emergency fund and savings in FDs are adequate for short-term needs.
Car purchase without a loan shows disciplined savings.
Investment Strategy
MF investments split for various goals: retirement, child education.
Regular contributions to PPF and SSA for long-term savings.
Chit fund investment adds to your investment portfolio diversification.
Financial Health Check
Monitor daily expenses to track spending habits.
Regularly review income allocation and budget adjustments.
Ensure emergency fund covers 6 months of expenses.
Future Recommendations
Consider enhancing equity exposure for higher long-term growth.
Evaluate tax-saving options like ELSS funds for efficient tax planning.
Review insurance coverage periodically to align with current needs.
Final Insights
You're on a positive trajectory with a disciplined savings approach and diversified investments. Regular monitoring and adjustments will help achieve your financial goals effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6240 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Sep 02, 2024

Money
I am 30 years old 90 kids. I have no habit of tobacco or alcohol and teedoler. I am minimalist, having no financial commitment or family commitment. I live in rental accomodation in metro city. I don't have plans for own house or marriage. I allocate my expenses ???? as follows 20% for accommodation 20% medical expenses of my aged parents 20% for food and living expenses 10% for other expenses 10% for mutual fund investments. Please give insight, should I reallocate the proportion
Ans: Your current financial allocation reflects a minimalist lifestyle with a focus on essential needs and responsibilities. You’ve outlined your expenses as follows:

Accommodation: 20%
Medical Expenses for Aged Parents: 20%
Food and Living Expenses: 20%
Other Expenses: 10%
Mutual Fund Investments: 10%
Your priorities clearly include taking care of your parents, managing daily living costs, and investing for the future. Let’s evaluate this allocation and explore potential adjustments that could optimize your financial situation.

Assessing Each Allocation
1. Accommodation (20%)
Spending 20% of your income on rent in a metro city is quite reasonable. This allocation ensures you have a comfortable living arrangement without overextending yourself. Since you have no plans for purchasing a home, maintaining this proportion seems appropriate.

2. Medical Expenses for Aged Parents (20%)
Allocating 20% of your income towards your parents’ medical expenses shows your commitment to their well-being. This is a necessary and thoughtful allocation, especially as healthcare costs can be unpredictable. However, it might be worth considering if this expense is consistently high or if there’s room for optimization. For instance, ensuring they have comprehensive health insurance could reduce this burden and provide financial relief.

3. Food and Living Expenses (20%)
Spending 20% on food and living expenses is quite standard. As a minimalist, you likely have a good handle on managing these costs. If you find yourself consistently under budget in this category, you could consider reallocating some of this percentage towards savings or investments.

4. Other Expenses (10%)
This category typically covers miscellaneous expenses such as entertainment, travel, and other discretionary spending. Keeping this at 10% aligns with your minimalist approach. However, if you rarely spend on such extras, this allocation might be higher than necessary. You could reduce this category and redirect funds towards other financial goals.

5. Mutual Fund Investments (10%)
Investing 10% of your income in mutual funds is a good start, especially given your age. Starting early allows you to take advantage of compounding over time. However, considering your lack of major financial commitments and minimalist lifestyle, you may have the capacity to increase this percentage to build wealth more aggressively.

Potential Reallocations
Based on your situation, here are a few suggestions for reallocation:

Increase Investment Allocation: Given that you have no immediate financial commitments, consider increasing your investment allocation from 10% to 20% or even higher. This will allow you to build a substantial corpus over time, providing you with financial security and freedom in the future.

Emergency Fund: It’s important to ensure you have an emergency fund that covers at least 6-12 months of your expenses. If you don’t already have this, you could allocate a portion of your savings to build this fund. Once established, any surplus can go into your investment portfolio.

Review Medical Expenses: If your parents’ medical expenses are consistently high, it might be worth exploring health insurance options that cover more of their needs. This could potentially reduce the percentage allocated to this category, freeing up funds for other areas.

Reduce Miscellaneous Expenses: If you find that you don’t need the full 10% for miscellaneous expenses, consider reducing this allocation. The saved funds could be redirected towards investments or building your emergency fund.

Consider Retirement Planning: Although you are young, it's never too early to start planning for retirement. If you haven't started a retirement fund or NPS, this could be a good time to allocate a portion of your income towards securing your future.

A Revised Financial Plan
Here’s a potential reallocation based on the insights provided:

Accommodation: 20% (unchanged)
Medical Expenses for Parents: 15% (if optimized through insurance)
Food and Living Expenses: 20% (unchanged)
Other Expenses: 5% (reduced from 10%)
Mutual Fund Investments: 25% (increased from 10%)
Emergency Fund: 5% (until adequately funded)
Retirement Savings: 10% (new allocation)
This reallocation increases your focus on wealth building and long-term security while ensuring your essential needs and responsibilities are covered.

Final Insights
Your current allocation reflects a responsible approach to your finances, especially with your commitment to supporting your parents and living a minimalist lifestyle. However, with a few adjustments, you can potentially accelerate your wealth-building journey and prepare better for the future.

Increasing your investment allocation and focusing on building an emergency fund and retirement savings can provide you with greater financial security. By reallocating funds from less critical areas, you can ensure that your money is working harder for you, setting you up for a more comfortable and secure future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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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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