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Ramalingam

Ramalingam Kalirajan  |9644 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 11, 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 - Jun 04, 2024Hindi
Money

Hi, my package is around12lpa. I hv invested in PPF for 3k SIP and 5k SIP in mutual funds, HRA with 20k monthly rent. Still I hv my tax deducted monthly around 5-8k. Can u help me in wat ways can I invest and wer do I need to invest that would help me in zero tax cut

Ans: Understanding Your Financial Situation
Income and Tax Structure
Your annual package is Rs 12 lakh, translating to Rs 1 lakh per month. You currently invest Rs 3,000 in PPF and Rs 5,000 in mutual funds via SIPs. You also pay Rs 20,000 per month as rent. Despite these investments and deductions, your monthly tax deduction ranges from Rs 5,000 to Rs 8,000. Let's delve deeper into optimizing your investments and tax planning.

Monthly Breakdown
Monthly Income: Rs 1,00,000
Rent: Rs 20,000
PPF SIP: Rs 3,000
Mutual Fund SIP: Rs 5,000
Tax Deduction: Rs 5,000 to Rs 8,000
Maximizing Tax Savings
Section 80C Investments
You can claim deductions up to Rs 1.5 lakh under Section 80C. Currently, you are investing Rs 3,000 per month in PPF, totaling Rs 36,000 annually. You can optimize this section further.

Public Provident Fund (PPF)
PPF offers a safe investment with attractive interest rates and tax benefits. Continue with your current PPF SIP and consider increasing it if possible.

Current Annual Investment: Rs 3,000 * 12 = Rs 36,000
Potential Increase: Aim for Rs 1.5 lakh annually to maximize the Section 80C limit.
Equity-Linked Savings Scheme (ELSS)
ELSS mutual funds are tax-saving instruments with a lock-in period of three years. They offer the dual benefit of tax savings and potential market-linked returns.

Annual Investment: Consider allocating a portion of your Rs 5,000 SIP towards ELSS funds.
Lock-in Period: 3 years
Potential Returns: Higher than traditional instruments but with market risk.
Section 80D: Health Insurance
Premiums paid for health insurance policies qualify for tax deductions under Section 80D. This can include policies for yourself, your spouse, children, and dependent parents.

Health Insurance Premiums
Self, Spouse, and Children: Deduction up to Rs 25,000.
Parents (Below 60): Additional deduction up to Rs 25,000.
Parents (Above 60): Additional deduction up to Rs 50,000.
Benefits
Tax Savings: Up to Rs 75,000 if parents are senior citizens.
Health Coverage: Ensures financial support during medical emergencies.
Section 80E: Education Loan Interest
Interest paid on education loans for higher studies can be claimed as a deduction under Section 80E. This deduction is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.

Education Loan Interest
Eligibility: Loans taken for higher education of self, spouse, or children.
No Upper Limit: The entire interest amount is deductible.
Section 80G: Donations
Donations made to specified charitable institutions and relief funds are eligible for deductions under Section 80G. The deduction can be either 50% or 100% of the donation amount, depending on the type of institution.

Charitable Donations
Eligible Donations: Donations to specified funds, NGOs, and charitable institutions.
Deduction: 50% or 100% of the donation amount.
Documentation: Ensure proper receipts and documentation for claiming the deduction.
Section 24(b): Home Loan Interest
Interest paid on a home loan for a self-occupied property is deductible up to Rs 2 lakh under Section 24(b). This deduction is over and above the Section 80C limit.

Home Loan Interest
Self-Occupied Property: Deduction up to Rs 2 lakh.
Rented Property: Entire interest amount deductible without any upper limit.
Principal Repayment: Eligible under Section 80C within the Rs 1.5 lakh limit.
Investment Planning
Diversifying Investments
Diversification helps in spreading risk and optimizing returns. Your current investments are a good start, but further diversification can enhance your portfolio.

Mutual Funds
Mutual funds offer a range of investment options across different asset classes. Diversify your mutual fund investments across equity, debt, and hybrid funds.

Equity Funds: For long-term growth and higher returns.
Debt Funds: For stability and regular income.
Hybrid Funds: For a balanced approach combining equity and debt.
Employee Provident Fund (EPF)
EPF is a retirement benefits scheme available to salaried employees. Contributions to EPF qualify for tax deductions under Section 80C.

Employee Contribution: 12% of basic salary.
Employer Contribution: 12% of basic salary.
Tax Benefits: Employee's contribution qualifies under Section 80C.
National Pension System (NPS)
NPS is a government-backed pension scheme offering tax benefits under Section 80C and an additional Rs 50,000 under Section 80CCD(1B).

Section 80C: Contribution up to Rs 1.5 lakh.
Section 80CCD(1B): Additional Rs 50,000.
Tax Savings: Up to Rs 2 lakh in total.
Additional Tax Saving Strategies
House Rent Allowance (HRA)
HRA can be claimed if you live in rented accommodation. The deduction is the least of the following:

Actual HRA received: Rs 20,000 per month.
50% of Salary (Metro): 50% of Rs 1,00,000 = Rs 50,000 per month.
Rent Paid – 10% of Salary: Rs 20,000 - Rs 10,000 = Rs 10,000 per month.
Optimizing HRA Claim
Ensure you have rent receipts and rental agreement documentation. Claim the maximum allowable deduction based on actual rent paid.

Leave Travel Allowance (LTA)
LTA can be claimed for travel expenses incurred for trips within India. It can be claimed twice in a block of four years.

LTA Claim
Eligibility: Travel expenses for self, spouse, children, and dependent parents.
Exemptions: Actual travel expenses (travel fare only, not food or accommodation).
Documentation: Maintain proper travel tickets and receipts.
Tax-Free Allowances and Perquisites
Certain allowances and perquisites provided by employers are tax-free. These can include meal coupons, telephone reimbursements, and conveyance allowances.

Utilizing Tax-Free Allowances
Meal Coupons: Up to Rs 50 per meal is tax-free.
Telephone Reimbursements: Actual expenses incurred for official purposes.
Conveyance Allowance: Up to Rs 1,600 per month is tax-free.
Regular Review and Rebalancing
Importance of Portfolio Review
Regularly reviewing your portfolio ensures it remains aligned with your goals and market conditions. Rebalancing helps maintain the desired asset allocation.

Quarterly Review: Assess the performance and make necessary adjustments.
Annual Review: Reevaluate your financial plan based on changes in income, expenses, or goals.
Professional Guidance
Benefits of Consulting a Certified Financial Planner (CFP)
A CFP provides personalized advice, helping you achieve your financial goals efficiently.

Tailored Strategies: CFPs design investment strategies based on your specific needs and risk tolerance.
Regular Monitoring: They monitor your portfolio and suggest timely adjustments to optimize returns.
Comprehensive Planning: CFPs assist in tax planning, retirement planning, and estate planning, ensuring holistic financial health.
Actively Managed Funds vs Direct Funds
Disadvantages of Index Funds
While index funds offer low costs, they may not provide the best returns. Actively managed funds, despite higher fees, aim to outperform the market.

Expert Management: Fund managers actively select stocks to generate higher returns.
Flexibility: Actively managed funds can adapt to market changes, potentially reducing losses.
Disadvantages of Direct Funds
Direct mutual funds require investor expertise and regular monitoring. Without professional guidance, there’s a risk of poor investment decisions.

Complexity: Direct funds demand more time and knowledge to manage effectively.
Risk of Underperformance: Investors may not achieve optimal returns without proper guidance.
Final Insights
By optimizing your tax-saving investments and making strategic contributions, you can significantly reduce your taxable income. Utilize Section 80C, 80D, 80E, and other sections effectively. Diversify your investments across different asset classes and seek professional guidance for personalized advice. Regularly review and rebalance your portfolio to stay aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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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You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |9644 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 22, 2024

Asked by Anonymous - May 22, 2024Hindi
Money
Hi Sir, I am currently earning 1 lakh per month Regarding the investment purpose i am having a house loan emi per month, also doing fixed deposit after every 3-4 months and also investing in ppf and nps I cannot invest in term life insurance due my medical issues and cannot also invest in medical insurance for parent they are also facing medical issues so what can be done in this case monthly around 16k tax is getting deducted
Ans: Your current financial situation reflects a well-structured approach towards savings and investments despite the constraints posed by medical issues. You have a steady income of ?1 lakh per month, and you are diligently paying off a home loan EMI, investing in fixed deposits (FD), Public Provident Fund (PPF), and the National Pension System (NPS). This detailed guide aims to help you navigate your financial strategy effectively while considering your limitations and future goals.

Understanding Your Current Financial Position
Income and Expenses
Your monthly income is ?1 lakh, with an approximate deduction of ?16,000 for taxes. This leaves you with ?84,000 per month.

Home Loan EMI
Your home loan EMI is a significant fixed expense. Ensure this is a manageable proportion of your income to avoid financial strain.

Investments
You are making regular investments in FDs, PPF, and NPS. This is a prudent approach for tax savings and long-term financial security.

Medical Insurance Constraints
You cannot invest in term life insurance or medical insurance for your parents due to medical issues. This presents a unique challenge that requires a tailored financial strategy.

Optimizing Investments
Public Provident Fund (PPF)
PPF is a secure, long-term investment that offers tax benefits. Continue maximizing your PPF contributions up to the permissible limit.

Benefits
Tax-free interest
Long-term growth
Safe investment option
National Pension System (NPS)
NPS is excellent for retirement planning. It offers tax benefits and the potential for higher returns due to market-linked investments.

Benefits
Additional tax deduction under Section 80CCD(1B)
Flexibility in choosing the investment mix
Pension income post-retirement
Fixed Deposits (FD)
FDs offer guaranteed returns, making them a safe investment. However, their returns are generally lower compared to other investment options.

Considerations
Ensure you ladder your FDs to manage liquidity.
Compare interest rates across banks for better returns.
Exploring Additional Investment Options
Mutual Funds
Actively managed mutual funds can provide higher returns compared to FDs. They offer diversification and professional management.

Equity Mutual Funds
Suitable for long-term investments.
Higher potential returns but with market-linked risks.
Debt Mutual Funds
Lower risk compared to equity funds.
Suitable for short to medium-term investments.
Systematic Investment Plans (SIP)
Investing through SIPs in mutual funds helps in averaging out the market volatility and compounding returns over time.

Benefits
Disciplined investment approach
Flexibility in investment amount and tenure
Potential for higher returns compared to lump-sum investments
Tax-saving Investments
Consider other tax-saving instruments under Section 80C and 80D to reduce your taxable income further.

Examples
Equity Linked Savings Schemes (ELSS)
National Savings Certificate (NSC)
Senior Citizens Savings Scheme (SCSS) (if applicable for your parents)
Managing Medical Expenses
Emergency Fund
Maintain an emergency fund equivalent to 6-12 months of living expenses. This fund will provide a financial cushion for unexpected medical expenses.

Strategies
Keep this fund in a high-interest savings account or a liquid mutual fund for easy access.
Regularly review and adjust the fund amount based on your expenses.
Government and Employer Schemes
Explore any government or employer-provided health schemes that might offer some coverage for medical expenses.

Benefits
Reduced medical costs
Additional financial support for treatments
Financial Planning for Your Parents
Health Savings
Since insurance isn't an option, allocate a portion of your savings specifically for your parents' medical expenses.

Strategies
Create a dedicated medical fund.
Invest in low-risk, high-liquidity options like savings accounts or liquid funds.
Estate Planning
Ensure that you have an estate plan in place. This includes having a will to manage and distribute your assets efficiently.

Benefits
Clear instructions for asset distribution
Minimizes legal complications
Budgeting and Expense Management
Monthly Budget
Create a detailed monthly budget to track your income, expenses, and savings.

Steps
List all sources of income.
Categorize and list all expenses.
Allocate funds for essential expenses first (EMI, utilities, groceries).
Set aside a portion for savings and investments.
Review and adjust the budget regularly.
Expense Tracking
Use expense tracking apps or maintain a manual record to monitor your spending habits.

Benefits
Identifies unnecessary expenses
Helps in sticking to the budget
Reducing Tax Liability
Explore ways to reduce your taxable income through various deductions and exemptions.

Strategies
Maximize contributions to tax-saving instruments.
Claim deductions for home loan interest under Section 24(b).
Long-term Financial Goals
Retirement Planning
Continue contributing to your NPS and PPF for a secure retirement. Evaluate the corpus required for your retirement and plan accordingly.

Strategies
Review and adjust your retirement corpus based on inflation and lifestyle changes.
Diversify retirement investments for better risk management.
Child’s Education and Future
Start planning for your child’s education early to ensure you have sufficient funds when needed.

Education Fund
Consider starting an education fund through SIPs in equity mutual funds.
Use PPF and other long-term instruments for this purpose.
Investment Diversification
Diversify your investments across different asset classes to balance risk and return.

Examples
Equity and debt mutual funds
PPF and NPS
FDs and other fixed-income instruments
Conclusion
Your financial journey requires a balanced approach given the constraints on insurance and the need to manage medical expenses. By optimizing your current investments, exploring additional options, and maintaining a disciplined budgeting approach, you can secure a stable financial future for yourself and your family. Consulting a Certified Financial Planner can provide personalized guidance tailored to your unique situation.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9644 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 15, 2024

Asked by Anonymous - Jul 15, 2024Hindi
Money
Hi I am 39 years old and my CTC is 20 LPA. Please suggest investment plan for '0' tax
Ans: Managing finances effectively and minimizing tax liability are key aspects of financial planning. With your annual CTC of Rs. 20 lakhs, it's important to understand that achieving a completely "zero tax" scenario is not feasible. However, strategic investments and proper planning can significantly reduce your tax burden.

Tax Planning Basics
Understanding tax laws and available deductions is the first step. Here's a breakdown of key sections that can help you save tax:

Section 80C
You can claim deductions up to Rs. 1.5 lakhs under Section 80C. This includes:

Public Provident Fund (PPF): A safe investment with tax-free interest and good returns.

Employee Provident Fund (EPF): Contributions to EPF are tax-exempt and grow steadily.

Equity-Linked Savings Scheme (ELSS): These mutual funds offer tax deductions and the potential for high returns, with a three-year lock-in period.

Life Insurance Premiums: Premiums paid for life insurance policies qualify for tax deductions under this section.

Tuition Fees: Payments towards children's tuition fees are also eligible.

Section 80D
You can claim deductions for health insurance premiums:

Self, Spouse, and Children: Up to Rs. 25,000.

Parents: An additional Rs. 25,000 for parents under 60, and Rs. 50,000 for parents above 60.

Section 80CCD(1B)
Contributions to the National Pension System (NPS) offer an extra deduction of Rs. 50,000, in addition to the Rs. 1.5 lakhs under Section 80C.

Section 24(b)
Interest paid on home loan EMIs is deductible up to Rs. 2 lakhs for a self-occupied property.

Investment Strategy for Tax Saving
A well-rounded investment strategy not only saves tax but also builds wealth over time.

Equity-Linked Savings Scheme (ELSS)
ELSS funds are a popular choice due to their dual benefits of tax saving and wealth creation. They have a lock-in period of three years and invest primarily in equities, offering the potential for high returns.

Public Provident Fund (PPF)
PPF is a long-term investment with a 15-year tenure. The interest earned is tax-free, and it offers a safe and steady return.

National Pension System (NPS)
NPS provides an additional tax benefit under Section 80CCD(1B). It also helps in building a retirement corpus. The funds in NPS are managed by professional fund managers, offering a mix of equity and debt exposure.

Insurance for Tax Saving
Term Insurance
Term insurance is a cost-effective way to secure your family’s future. Premiums paid are deductible under Section 80C.

Health Insurance
Health insurance premiums are deductible under Section 80D. It is essential to have adequate health coverage to protect against medical emergencies.

Retirement Planning
Planning for retirement is crucial. Here are some options to consider:

Employee Provident Fund (EPF)
Continue contributing to EPF for tax-free growth and retirement savings.

National Pension System (NPS)
NPS is a tax-efficient way to save for retirement. It allows you to choose your investment mix and offers additional tax benefits.

Children's Education and Marriage
Investing for your children’s future is important. Here’s how you can plan:

Sukanya Samriddhi Yojana
If you have a daughter, this scheme offers high interest and tax benefits. It is designed to secure her future.

Mutual Funds
Create a portfolio with a mix of equity and debt funds. This balances growth and safety, ensuring funds for education and marriage.

Benefits of Actively Managed Funds
Professional Management
Actively managed funds are handled by professional fund managers who aim to outperform the market.

Flexibility
These funds can adjust their strategies based on market conditions, potentially offering higher returns.

Diversification
Actively managed funds invest across various sectors and assets, reducing risk through diversification.

Disadvantages of Index Funds
Lack of Flexibility
Index funds passively track a market index, which limits their ability to respond to market changes.

Potential Underperformance
In volatile markets, index funds may underperform compared to actively managed funds.

Disadvantages of Direct Funds
Lack of Guidance
Direct funds might have lower costs but lack professional advice. This can lead to suboptimal investment decisions.

Time-Consuming
Managing investments on your own requires time and expertise. Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) offers convenience and professional guidance.

Avoiding Common Pitfalls
Over-Reliance on Insurance Products
Avoid investment-cum-insurance products like ULIPs and endowment plans. They often offer lower returns and high costs. Instead, invest in mutual funds for growth and buy term insurance for protection.

Building an Emergency Fund
An emergency fund is essential. It should cover 6-12 months of living expenses. Keep this fund in a savings account or liquid mutual funds for easy access.

Final Insights
Creating a zero-tax investment plan is not realistic, but you can significantly reduce your tax liability with strategic planning. Leveraging tax-saving instruments, diversifying your portfolio, and ensuring adequate insurance are key steps.

Remember, the key to successful investing is consistency and patience. Regularly review and adjust your portfolio with the help of a Certified Financial Planner to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Nayagam P

Nayagam P P  |8451 Answers  |Ask -

Career Counsellor - Answered on Jul 10, 2025

Career
I have got 91 percentile in MHT-CET . Can I get Mechanical engineering in COEP or VJTI ? And can you suggest any good Mechanical Engineering colleges in Mumbai at my percentile??
Ans: Mann, With a 91 percentile in MHT-CET, seats for Mechanical Engineering at COEP (closing ~98.9–99.5) and VJTI (closing ~98.3–99.8) are out of reach. However, several reputable Mumbai institutions whose Mechanical cutoffs fall below 91 percentile guarantee admission, each offering accredited curricula, experienced faculty, modern workshops, industry linkages through MOUs and active placement cells averaging over 80% placements in the past three years. These include Vidyalankar Institute of Technology (Wadala), Fr. C. Rodrigues Institute of Technology (Vashi), Bharati Vidyapeeth College of Engineering (Navi Mumbai), SIES Graduate School of Technology (Nerul), St. Francis Institute of Technology (Borivali), Rizvi College of Engineering (Bandra), Don Bosco Institute of Technology (Kurla), Thadomal Shahani Engineering College (Bandra), Pillai College of Engineering & Technology (New Panvel) and VES Institute of Technology (Chembur). Each campus features dedicated Mechanical labs, hands-on project initiatives and placement records between 82% and 90%, ensuring both strong academic foundations and robust employability prospects.

Recommendation: Vidyalankar Institute of Technology (Wadala) tops for its cutting-edge CAD/CAM facilities and consistent 88–90% placements, Fr. C. Rodrigues Institute (Vashi) follows with strong automotive-sector tie-ups and 85% placements, then Bharati Vidyapeeth COE (Navi Mumbai) for its robust workshop infrastructure, active student chapters and 82–87% placement consistency. All the BEST for Admission & a Prosperous Future!

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Nayagam P

Nayagam P P  |8451 Answers  |Ask -

Career Counsellor - Answered on Jul 10, 2025

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My daughter score 95.78 percentile in mht cet in sc category. Which college Mumbai and Pune I will choose for Computer Science or IT branch .
Ans: Sandeep Sir, With a 95.78 percentile in MHT CET (SC), your daughter qualifies for CSE and IT seats at numerous reputable Mumbai and Pune institutions whose SC closing percentiles fall below her score, ensuring guaranteed admission. These colleges combine accredited curricula, experienced faculty, modern labs, strong industry tie-ups, active research, and placement cells averaging over 80 percent placements in the last three years. In Mumbai, options include KJ Somaiya Institute of Technology & Science (Vidyavihar), Rizvi College of Engineering (Bandra), SIES Graduate School of Technology (Nerul), Thadomal Shahani Engineering College (Bandra), and Xavier Institute of Engineering (Mahim). In Pune, seats are assured at Pune Institute of Computer Technology (Dhankawadi), Vishwakarma Institute of Technology (Bibwewadi), Pimpri Chinchwad College of Engineering (Akurdi), VIT Pune (Kharadi), MIT World Peace University (Kothrud), AISSMS College of Engineering (Pune Station), D.Y. Patil College of Engineering (Akurdi), Sinhgad College of Engineering (Narhe), MIT Academy of Engineering (Alandi Road), and Dr. D. Y. Patil Institute of Technology (Pimpri) .

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Nayagam P

Nayagam P P  |8451 Answers  |Ask -

Career Counsellor - Answered on Jul 10, 2025

Ramalingam

Ramalingam Kalirajan  |9644 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Asked by Anonymous - Jun 25, 2025Hindi
Money
I'm 23 years old. I have a group 'B' central government job with in hand salary of 81K and Rs. 16700 in nps account. My salary will be 1.05 L from January excluding around 20K per month nps contribution. From January'26 salary will increase 8-10% annually. I'm unmarried and not planning to get married in next 5 years. How can I be financially free till 35 years age with an income of 1 lakh monthly of current value ? Consider no expense in marriage and I have a house.
Ans: You have a good starting point at a young age. Your income stability and discipline will help you achieve your goals. Below is a detailed 360-degree financial action plan.

? Income and Cash Flow Assessment

Your in-hand salary now is Rs 81,000 per month.

By January, your salary will increase to Rs 1.05 lakh.

Additionally, around Rs 20,000 will go to NPS.

Total CTC is already quite decent for your age.

From January 2026, expect an 8% to 10% hike yearly.

This shows a strong career growth potential.

You have no immediate marriage expenses.

You also own a house. This reduces a major financial burden.

? Understanding Your Financial Freedom Goal

Your target is Rs 1 lakh per month income at 35 years age.

This is a big but possible target.

You have 12 years to build wealth for this income.

Assuming today’s value, Rs 1 lakh monthly is your passive income target.

This means you need a big corpus to generate this income.

Your focus should be on disciplined saving and smart investing.

Also, increasing your income regularly and saving part of it.

? Savings Capacity Analysis

Currently, you can save 60% of your in-hand salary.

You have fewer personal responsibilities right now.

This gives you a huge saving potential.

Your NPS is already being built. But it is for retirement, not financial freedom.

You need a separate investment portfolio for financial freedom at 35.

? Emergency Fund is First

Start with creating an emergency fund of 6 months' salary.

Save Rs 5 lakh to Rs 6 lakh in liquid mutual funds over the next 12 months.

This will protect you from unexpected situations.

? Start Systematic Investments

Start SIPs in actively managed equity mutual funds.

Avoid index funds.

Index funds only track the market and cannot outperform.

Actively managed funds have professional fund managers.

They aim to beat the market returns.

Avoid direct mutual fund plans.

Direct funds lack expert guidance during market falls.

Always invest in regular plans through a Certified Financial Planner and MFD.

SIP amount should be at least Rs 40,000 to Rs 50,000 monthly initially.

Increase your SIP amount every year along with your salary hikes.

? Asset Allocation Strategy

Keep 70% in equity mutual funds.

Keep 20% in debt mutual funds and recurring deposits.

Keep 10% in gold over the long term.

Equity gives long-term growth.

Debt gives stability and liquidity.

Gold gives inflation protection.

? Avoid These Investment Options

Do not invest in real estate. It is illiquid.

Do not invest in annuities. They give poor returns.

Do not invest in direct stocks without knowledge.

Avoid insurance-linked investment products like ULIPs.

? Insurance Protection is a Must

Buy a term life insurance of Rs 1 crore.

Premium will be low because you are young.

Buy health insurance for yourself. Rs 5 lakh cover is a good start.

These protections avoid eroding your savings due to unexpected events.

? Passive Income Strategy for Financial Freedom

To earn Rs 1 lakh monthly, you need a corpus.

This corpus should be invested in diversified equity and debt mutual funds.

Over 12 years, with aggressive savings and returns, you can build this.

Once you reach age 35, shift some of your equity to debt funds.

This gives regular income from the accumulated corpus.

Withdraw monthly from debt and balanced funds for your needs.

Keep reviewing your withdrawal and portfolio annually.

? Steps to Increase Your Savings Year by Year

Step 1: Start with saving 50% to 60% of your salary now.

Step 2: Increase SIP by 10% to 15% every year as salary rises.

Step 3: Whenever you get bonuses, invest 50% of them.

Step 4: Avoid lifestyle inflation. Keep your expenses simple.

Step 5: Stay unmarried till 30+ gives you a big saving advantage.

? Role of NPS in Your Portfolio

NPS is good for your retirement at 60 years.

But NPS cannot be used for financial freedom at 35.

Withdrawals from NPS are restricted before retirement.

Hence, create a separate portfolio for your early financial freedom.

? Mutual Fund Taxation for Withdrawals

When you sell equity mutual funds, LTCG above Rs 1.25 lakh is taxed at 12.5%.

Short-term capital gains are taxed at 20%.

Debt mutual funds are taxed as per your income tax slab.

Plan your withdrawals smartly to reduce tax impact.

? Portfolio Monitoring and Rebalancing

Review your portfolio yearly with a Certified Financial Planner.

Rebalance equity and debt allocation based on market and goals.

Stay away from emotional investment decisions during market ups and downs.

? Your Monthly Savings Plan Example

Salary (from January): Rs 1.05 lakh.

Expenses: Keep them within Rs 30,000 to Rs 35,000 monthly.

Saving capacity: Rs 70,000 to Rs 75,000 monthly.

Start SIP with Rs 40,000 now.

Keep Rs 20,000 aside for emergency fund until it is complete.

Invest the balance in debt mutual funds or recurring deposits.

? Suggested Immediate Steps

Step 1: Open liquid mutual fund and start saving Rs 20,000 monthly.

Step 2: Start SIP of Rs 40,000 in actively managed equity mutual funds.

Step 3: Take a term insurance cover of Rs 1 crore.

Step 4: Take individual health insurance of Rs 5 lakh.

Step 5: Review and adjust SIP upwards after every salary hike.

? Financial Freedom Corpus Estimation

To get Rs 1 lakh monthly, you need a corpus.

A corpus of around Rs 2.5 crore to Rs 3 crore is needed.

You have 12 years to build this.

At your saving capacity, this is possible if you stay disciplined.

Compounding will play a key role. Start early, stay invested long.

? What Not to Do

Don’t invest in index funds. They just follow the market passively.

Active funds can outperform by selecting the right sectors and stocks.

Don’t invest directly in mutual funds through direct plans.

You won’t get personalised guidance and monitoring there.

Always invest through a Certified Financial Planner and Mutual Fund Distributor.

They help you make goal-based portfolio adjustments.

Avoid trying to time the market. Stay invested always.

? Life Goal Planning

Your financial freedom goal is very realistic with your saving ability.

Keep your lifestyle simple till you achieve your goal.

Marriage can wait till you become financially independent.

? Final Insights

You have the right mindset at the right age. Stay consistent.

Increase your savings and SIPs with every salary hike.

Create separate portfolios for retirement and financial freedom.

Don’t mix these goals. NPS is only for retirement.

Build your emergency fund first. Then invest more for wealth.

Avoid distractions like stock tips or get-rich-quick schemes.

Financial freedom at 35 is possible if you stay focused.

Rebalance and review your plan yearly with a Certified Financial Planner.

You will achieve your Rs 1 lakh monthly passive income goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9644 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Asked by Anonymous - Jun 25, 2025Hindi
Money
My age is 39 and I have 2 kids of 5.5 years and 3 months I have a take home of around 2.2 lacs per month. I make 20lacs per year in Stocks. I have roughly 30lacs invested in the Fund and Stocks. I have a rental income of 33K. I have an EMI of 41K for a home loan of 50lacs for 20 years. I have an LIC of 1.07lacs a year I invest roughly 60-70K per month in SIPs How should i try to invest so that I can be financially independent in the next 10 years so that i have enough for both my daughters??
Ans: ? Income and Cash Flow – Solid Base to Start
– Your total monthly income is strong at Rs 2.53 lakhs.
– This includes salary of Rs 2.2 lakhs and rent of Rs 33,000.
– Your EMI is Rs 41,000 per month. That is well within limits.
– Net free cash after EMI is above Rs 2.1 lakhs.
– Your monthly SIP investment is Rs 60–70K. That is impressive.
– You also earn Rs 20 lakhs annually from stocks.

? Current Investments – Healthy and Growing
– You have around Rs 30 lakhs invested across stocks and mutual funds.
– SIP of Rs 70K monthly builds long-term wealth steadily.
– Rental income adds passive cash flow. That is helpful.
– Your investment habits are consistent. That is appreciable.
– Keep discipline and long-term mindset to grow wealth.

? LIC Policy – Revisit and Reallocate
– You pay Rs 1.07 lakhs yearly to LIC.
– These are traditional plans or ULIPs in most cases.
– They offer low returns with high lock-in periods.
– Surrender these policies if surrender value is decent.
– Reinvest in actively managed mutual funds via SIP.
– This gives higher growth, flexibility, and transparency.
– Keep insurance and investments completely separate.

? Home Loan – Manageable and Strategic
– You have a home loan of Rs 50 lakhs.
– EMI is Rs 41,000 monthly, for 20 years.
– It is manageable within your income level.
– Prepayment can be considered later, if other goals are on track.
– Don’t prepay too early if equity growth is higher.

? Stock Market Income – High Potential but Risky
– Earning Rs 20 lakhs yearly from stocks is rare.
– But market income is unpredictable and volatile.
– Don't depend on it for fixed goals.
– Treat it as bonus income, not main engine.
– Use profits wisely for long-term investments.
– Avoid reinvesting all into risky small or mid-cap stocks.
– Move some gains to mutual funds or hybrid options.
– This gives stability and diversification to your portfolio.

? Children’s Future – Structured Goal Planning
– You have two daughters, 5.5 years and 3 months.
– You need funds for education and possibly marriage.
– Start two separate goal-based SIPs for them.
– SIPs should be in long-term equity mutual funds.
– Choose regular plans via MFD with CFP credential.
– Avoid direct mutual funds. They give no guidance or reviews.
– Regular plans give monitoring and expert support.
– Keep increasing SIP amount every year.
– Keep child goals in separate folios to track progress.
– Don’t mix their funds with retirement or housing goals.

? Financial Freedom in 10 Years – What It Takes
– You want to be financially independent by age 49.
– That’s a 10-year target. Very specific and practical.
– It will need smart investing and tight goal alignment.
– You must grow corpus to cover future expenses.
– Set target corpus based on lifestyle post-retirement.
– You must also secure children’s major education needs.
– Avoid over-investing in real estate. It is illiquid.
– Focus on financial investments for flexibility and growth.
– Build Rs 4–5 crores in financial assets over 10 years.
– SIP of Rs 70K monthly can help with that.
– Channel stock income into additional mutual fund lumpsum yearly.
– Reinvest equity profits in diversified equity mutual funds.
– Avoid concentration in one sector or stock.

? Mutual Fund Strategy – Better Than Index
– You must move away from index funds if using any.
– Index funds copy the market. No active fund manager decisions.
– They perform poorly in sideways or falling markets.
– In India, actively managed funds outperform indexes.
– They give better downside protection and rebalancing.
– Choose flexi-cap, multi-cap, and hybrid equity funds.
– Mix large-cap, mid-cap and balanced advantage strategies.
– Use regular plans and take support from Certified MFD.
– Monitor performance every 6–12 months.

? Asset Allocation – Smart and Balanced
– Equity should be 65–70% of your total assets.
– Keep 10% in debt for short-term goals.
– Add 5–10% in gold for portfolio stability.
– Avoid more real estate investment. It lacks liquidity.
– Use debt mutual funds or short-term FDs for emergency fund.
– Keep minimum 6 months’ expenses as emergency fund.
– Don’t touch this fund for lifestyle purchases.

? Term and Health Insurance – Review Coverage
– You have LIC, but no mention of term cover.
– Take term insurance of at least Rs 2 crore.
– Your current income and dependents need that cover.
– Take a separate, pure term insurance plan.
– Premiums are low if taken early.
– Health insurance for the whole family is a must.
– Don't depend only on employer health cover.
– Buy separate family floater plan of Rs 10–15 lakhs.

? Risk Control and Diversification – Stay Protected
– Don’t overexpose portfolio to stocks.
– Diversify across mutual funds and fixed income.
– Use debt funds for short-term goals.
– Don’t use stocks or equity mutual funds for child’s school fees.
– Keep long-term equity for long-term goals only.
– Avoid investment-linked insurance policies going forward.
– Don’t go for annuities. They lack flexibility and low returns.
– Stay focused on liquid and growth-oriented financial assets.

? How to Increase SIPs – Plan Step Up
– You are already investing Rs 70,000 monthly.
– Increase it by 10–15% every year.
– As income increases, raise SIPs accordingly.
– You may reach Rs 1 lakh monthly SIP in 3 years.
– This will grow corpus sharply.
– Use stock income to invest additional Rs 5–10 lakhs yearly.
– Combine SIPs and lumpsums for maximum impact.

? Tax Planning – Optimize Using Right Mix
– Use ELSS for tax-saving under Section 80C.
– Avoid LIC for tax benefit.
– Keep mutual funds for long-term gains.
– Follow latest tax rules on capital gains:
• LTCG above Rs 1.25 lakh taxed at 12.5%
• STCG taxed at 20%
– Rebalance portfolio based on gain and tax impact.
– Don’t withdraw from equity frequently.

? Year-Wise Plan – Actionable Roadmap
– 2024–2026:

Build Rs 1 crore corpus in equity mutual funds.

Increase SIP to Rs 1 lakh.

Shift LIC and stocks into goal-based funds.
– 2027–2029:

Focus more on daughters’ education funding.

Monitor child goal corpus yearly.

Continue growing retirement fund separately.
– 2030–2034:

Review corpus and evaluate financial independence.

Decide if you can stop active income.

Keep equity funds for drawdown with plan.

? What to Avoid – Stay Alert and Focused
– Don’t mix investments with insurance again.
– Don’t increase real estate assets.
– Don’t invest in index funds or ETFs.
– Don’t opt for direct funds.
– Direct funds lack review and strategy updates.
– Regular funds via MFD with CFP are reliable.
– Don’t depend on stock market for fixed cash flow.
– Treat it as bonus only.

? Finally
– You have income, assets, and discipline. That’s your strength.
– You must now align assets to your goals.
– Reallocate LIC money to mutual funds.
– Take term and health insurance urgently.
– Build two child goal SIPs and one retirement SIP.
– Shift stock profits slowly to long-term mutual funds.
– Increase SIPs every year without fail.
– Review asset allocation yearly with professional help.
– Stay focused. Be consistent. Avoid distractions.
– Financial freedom in 10 years is achievable.
– It needs clarity, structure, and ongoing action.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9644 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Asked by Anonymous - Jun 25, 2025Hindi
Money
Sir, i am 35 years old and my intake is Rs 90 thousand/ month. I have in vested Rs 26 lacs in FDR, 15 lacs in PPF, 5 lacs in EPF, having invested Rs 13 lacs in SIP and investing Rs 31 thousand/ month in it. I have term policy covering Rs 1cr., health policy covering Rs.6 lac, HDFC Life policy of Rs. 4.5 Lac. In how much time i will reach my target of Rs. 1.5 cr ?
Ans: You are doing very well for your age. At 35, you’ve already built a good foundation. Your disciplined investments, protection through term and health policies show clear planning. Let’s now assess your journey towards Rs. 1.5 crore goal from a 360-degree view.

? Review of Current Financial Assets

– You have Rs. 26 lakh in FDR.
– Rs. 15 lakh is invested in PPF.
– EPF is Rs. 5 lakh at present.
– SIP investments total Rs. 13 lakh.
– Monthly SIP of Rs. 31,000 is ongoing.
– Total existing corpus is around Rs. 59 lakh.
– Your income is Rs. 90,000 per month.
– You also have Rs. 1 crore term insurance cover.
– Health cover of Rs. 6 lakh is active.
– A traditional HDFC Life policy of Rs. 4.5 lakh also exists.

? First Step: Define the Goal Properly

– You mentioned a target of Rs. 1.5 crore.
– But we need to know the purpose clearly.
– Is it for retirement, child’s education or home buying?
– Time horizon changes with goal type.
– And that changes investment approach too.
– Without this, planning becomes a rough guess.

? Estimate the Timeline for Rs. 1.5 Crore

– Your current investments already total around Rs. 59 lakh.
– Regular SIP of Rs. 31,000/month adds good growth potential.
– Assuming continued SIP and reasonable return, goal is reachable.
– Depending on market, you can expect to reach Rs. 1.5 crore in 7–10 years.
– This assumes no withdrawals, and SIPs continue without stopping.
– Equity investments will grow faster than FDR or PPF.

? Check Asset Allocation Balance

– You have high exposure to fixed-income options.
– Rs. 26 lakh in FDR is not growth-focused.
– PPF and EPF are also low-yield, long-lock options.
– Around Rs. 46 lakh sits in safe but slow instruments.
– Only Rs. 13 lakh is in mutual fund SIPs.
– This reduces your long-term wealth creation speed.

– Over next 10–15 years, equity may give higher growth.
– But fixed deposits may not even beat inflation fully.
– Too much safety means missed opportunities.

? Mutual Funds Will Drive the Growth

– Your Rs. 31,000 SIP is the main driver for future corpus.
– Mutual funds are great for building wealth over time.
– With equity-based funds, Rs. 1.5 crore is easily achievable.
– Time and consistency are most important here.
– Don't stop SIPs even during market dips.

– Please invest only in actively managed mutual funds.
– Index funds just copy the market with no active monitoring.
– No strategy in index funds during market falls.
– Active funds try to reduce losses and improve returns.
– Smart fund managers add value in volatile times.

? Don’t Consider Direct Funds

– If you're using direct plans, please reconsider.
– Direct funds offer no professional help or periodic review.
– Many investors take wrong decisions without expert guidance.
– That can damage long-term results badly.
– Instead, choose regular plans via Certified Financial Planner.
– You will get portfolio review, risk tracking and rebalancing.
– These improve long-term returns and goal achievement.

? Importance of Term and Health Insurance

– Rs. 1 crore term cover is a good start.
– Recheck if it’s enough based on your liabilities.
– If you have dependents or loans, you may need more.
– Rs. 6 lakh health cover is fair for now.
– But hospital costs are rising quickly.
– Consider increasing health cover to Rs. 10 lakh.
– Or add a super top-up policy.

? Traditional Insurance Policy Should Be Reviewed

– HDFC Life policy with Rs. 4.5 lakh cover is low.
– Traditional plans mix insurance and investment.
– Returns are poor compared to mutual funds.
– Life cover is also very low in such policies.

– Please check surrender value.
– If it has completed 3–5 years, surrender it.
– Reinvest that amount in mutual funds.
– That gives better growth and clear goal tracking.
– Insurance and investment should never be mixed.

? Emergency Fund Must Also Be Planned

– You haven’t mentioned savings in bank or liquid funds.
– Every person must have emergency fund ready.
– Keep at least 6 months’ expenses in liquid form.
– Use liquid funds or bank savings.
– This avoids breaking long-term investments during urgent needs.

? Avoid FDR for Long-Term Goals

– Rs. 26 lakh in fixed deposits is too high.
– FDR gives low returns after tax.
– Inflation eats into the value slowly.
– You may get only 4–5% returns effectively.

– Instead, reduce FDR and increase mutual fund investments.
– That will improve your chances of reaching Rs. 1.5 crore faster.
– Rebalancing must be done with Certified Financial Planner help.

? Increase SIP When Income Rises

– As income grows, increase SIP amount regularly.
– Even Rs. 2,000–5,000 hike each year makes big difference.
– Top-up SIP or manual increase can be done.
– Don’t let inflation reduce the value of SIP.

– Example: From Rs. 31,000/month, increase to Rs. 35,000 next year.
– Then Rs. 40,000 next year and so on.
– This will bring Rs. 1.5 crore goal even faster.

? Stick to the Right Investment Philosophy

– Stay away from short-term thinking.
– Don’t stop SIP due to market volatility.
– Don’t jump into trending funds or F&O.
– Stick to your plan and review once a year.
– Review must be done with Certified Financial Planner.
– That will keep your risk in control and track goals better.

? Avoid Real Estate Investment

– Many people feel real estate is better.
– But it has high entry cost and poor liquidity.
– It can’t be sold quickly in emergency.
– Maintenance, legal issues and taxes reduce net return.
– Mutual funds and equities are more flexible and transparent.

? Tax Planning Also Matters

– EPF, PPF and SIP in ELSS help in tax saving.
– Review tax-efficient instruments every year.
– Avoid locking too much in long-term tax plans.
– SIPs can be aligned with Section 80C goals.
– Certified Financial Planner can help you optimise this.

? Your Current Progress is Impressive

– At 35, you are ahead of many people.
– You are earning, saving, and investing smartly.
– Protection is also in place through term and health insurance.
– You are not spending blindly, which is great.

– With minor changes, you can reach Rs. 1.5 crore faster.
– You need better asset balance, not more effort.
– Regular SIP and fewer fixed income holdings is key.
– Stay invested and review plan every year.

? Finally

– You are already halfway to your target.
– SIP of Rs. 31,000/month with existing corpus looks enough.
– Rs. 1.5 crore can be reached in 7–10 years.
– Shift from FDR to mutual funds for better results.
– Avoid index funds and direct plans to stay safe.
– Don't let emotional decisions disturb your investment strategy.
– Track progress yearly with Certified Financial Planner support.
– Increase SIPs when income rises for faster growth.
– Surrender traditional insurance and shift to growth funds.
– Keep emergency funds ready and health cover updated.
– You are on the right track. Stay focused and disciplined.

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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