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Ramalingam Kalirajan  |9823 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 23, 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
Ravichandran Question by Ravichandran on Mar 06, 2024Hindi
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Hi , I have a question on ULIP vs mutual fund...I know that mutual would create wealth but at the end we need to pay tax for the return...so would it be better to invest in ULIP so that atleast we have no tax on return??..can I distribute equally to both ..let me know thanks

Ans: Mutual funds offer several advantages over ULIPs. They typically have lower charges, greater flexibility, and a wider range of options to suit various investment goals and risk appetites. Moreover, mutual funds are known for their transparency, liquidity, and professional management, which can potentially lead to better performance over the long term. By choosing mutual funds, investors can benefit from market opportunities without the constraints and costs associated with ULIPs. It's always advisable to focus on cost-effective and well-performing investment avenues to maximize returns.
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  |9823 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

Asked by Anonymous - May 04, 2024Hindi
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Is mutual fund better than ulip
Ans: Understanding Mutual Funds vs. ULIPs
It's great that you're considering different investment options to secure your financial future. Both Mutual Funds (MFs) and Unit Linked Insurance Plans (ULIPs) are popular choices among investors in India. Let's delve into why Mutual Funds are often preferred over ULIPs.

Transparency and Cost Efficiency
One of the key advantages of Mutual Funds is their transparency and cost efficiency. Unlike ULIPs, which often come with high charges and hidden fees, Mutual Funds typically have lower expense ratios and offer greater clarity regarding fees.

Flexibility and Diversification
Mutual Funds provide investors with flexibility and diversification opportunities. With a wide range of funds available across various asset classes and sectors, investors can tailor their portfolio to suit their risk tolerance and financial goals.

Professional Management
Another significant advantage of Mutual Funds is professional fund management. Skilled fund managers actively monitor the market, analyze trends, and make informed investment decisions on behalf of investors. This expertise can potentially lead to better returns compared to self-managed ULIPs.

Liquidity
Mutual Funds offer greater liquidity compared to ULIPs. Investors can easily buy and sell Mutual Fund units based on their financial needs, without incurring hefty charges or facing surrender penalties, as is often the case with ULIPs.

Tax Efficiency
Mutual Funds also offer tax benefits, especially Equity Linked Savings Schemes (ELSS), which provide tax deductions under Section 80C of the Income Tax Act. ULIPs, on the other hand, may have complex tax implications and may not offer the same level of tax efficiency.

Conclusion: Choosing the Right Investment Avenue
While ULIPs may offer insurance coverage along with investment benefits, Mutual Funds often outshine them in terms of transparency, cost efficiency, flexibility, and potential returns. As a Certified Financial Planner, I recommend carefully assessing your investment objectives, risk appetite, and financial needs before making a decision.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9823 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 31, 2024

Asked by Anonymous - Jul 23, 2024Hindi
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I am a 34 year old IT professional with moderate risk appetite. Should I invest in ULIP like TATA AIA param rakshak for wealth generation or start investing in Mutual Funds. my goal is to generate enough wealth in 10years to support my retirement and my two kids (4 and 2years old) education. I earn around 2L per month
Ans: Assessing Your Current Situation
You are 34 years old.

You earn Rs 2 lakh per month.

You have two kids, aged 4 and 2 years.

Your goal is wealth generation for retirement and kids' education.

Understanding ULIPs
ULIPs combine insurance and investment.

They offer life cover and market-linked returns.

They have a lock-in period of 5 years.

Disadvantages of ULIPs
High charges: Premium allocation, administration, and fund management fees.

Limited flexibility: Fixed allocation between insurance and investment.

Complex structure: Difficult to understand and manage.

Benefits of Mutual Funds
Professionally managed: Fund managers handle investments.

Variety of options: Equity, debt, and hybrid funds.

Flexibility: Adjust investments based on goals and risk.

Actively Managed Funds vs. Index Funds
Actively Managed Funds:

Fund managers aim to outperform the market.

Higher potential returns but higher fees.

Suitable for long-term goals.

Index Funds:

Track a market index.

Lower fees but limited growth potential.

Not ideal for aggressive wealth generation.

Direct Funds vs. Regular Funds
Direct Funds:

Lower expense ratio.

Require self-management.

Suitable for experienced investors.

Regular Funds:

Managed by a Certified Financial Planner (CFP).

Slightly higher fees but professional guidance.

Ideal for less experienced investors.

Recommended Investment Approach
For Wealth Generation:

Choose equity mutual funds.

Aim for long-term growth.

For Children's Education:

Consider balanced or hybrid funds.

Mix of equity and debt for stability.

Steps to Start Investing
Assess Your Risk Appetite:

Moderate risk tolerance means a mix of equity and debt.
Set Clear Goals:

Define the amount needed for retirement and education.
Choose the Right Funds:

Select funds based on performance and alignment with goals.
Regularly Review Investments:

Monitor performance and adjust as needed.
Additional Considerations
Emergency Fund:

Maintain a fund for unexpected expenses.
Insurance:

Ensure adequate life and health cover separate from investments.
Tax Efficiency:

Invest in tax-saving funds for better returns.
Final Insights
ULIPs are not ideal for aggressive wealth generation.

Mutual funds offer better flexibility and growth potential.

Align investments with your goals and risk tolerance.

Regularly review and adjust your portfolio for optimal performance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9823 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 31, 2024

Asked by Anonymous - Dec 30, 2024Hindi
Money
Best investment option ULIP or Mutual Fund
Ans: Understanding the differences between ULIPs (Unit Linked Insurance Plans) and mutual funds is essential to make an informed choice. Below is a detailed explanation from a Certified Financial Planner's perspective.

What Are ULIPs?
ULIPs are hybrid products offering life insurance and investment. A portion of the premium goes towards life insurance, while the rest is invested in various funds, such as equity or debt.

Key Benefits of ULIPs
Dual Purpose: Provides life insurance coverage along with potential investment growth.

Tax Savings: Premiums are eligible for tax deductions under Section 80C. Maturity proceeds may also be tax-free under Section 10(10D), subject to conditions.

Compulsory Discipline: The five-year lock-in period ensures disciplined long-term investing.

Major Drawbacks of ULIPs
High Costs: Includes multiple charges such as premium allocation, fund management, and mortality costs. These charges reduce overall returns.

Complexity: Understanding ULIP charges and performance can be confusing due to a lack of transparency.

Limited Fund Choices: Investment options are restricted to funds offered by the insurer.

Lower Returns: High costs and fund limitations may result in below-average returns compared to mutual funds.

What Are Mutual Funds?
Mutual funds are pure investment products that pool money from investors and invest in equity, debt, or a mix of both, depending on the fund type.

Key Benefits of Mutual Funds
Variety of Options: Mutual funds offer options like equity, debt, hybrid, and sector-specific funds to suit different financial goals and risk profiles.

Transparency: Investors can track fund performance, portfolio holdings, and expense ratios.

Low Costs: Mutual funds generally have lower charges compared to ULIPs, making them more cost-effective.

Flexibility: You can switch funds, adjust SIP contributions, or redeem investments anytime (subject to exit load).

Higher Returns: Over the long term, mutual funds tend to deliver better returns due to active management and lower costs.

Major Drawbacks of Mutual Funds
No Insurance Coverage: Unlike ULIPs, mutual funds are purely for investment and do not provide life insurance.

Tax on Gains: Gains from mutual funds are taxed based on the holding period and type of fund.

Comparative Analysis of ULIPs and Mutual Funds
Objective
ULIPs aim to provide both life insurance and investment returns.
Mutual funds focus solely on investments, leading to better fund management.
Transparency
ULIPs are less transparent due to their complex fee structures and limited fund details.
Mutual funds are highly transparent, offering regular updates on performance, portfolio composition, and costs.
Costs
ULIPs have high charges, including mortality, administration, and fund management costs. These significantly reduce returns.
Mutual funds are more cost-efficient, with lower expense ratios and no hidden charges.
Returns
ULIP returns are moderate due to high costs and limited fund options.
Mutual funds offer potentially higher returns due to professional fund management and diversified investment choices.
Flexibility
ULIPs have limited flexibility, as you are restricted to funds offered by the insurer.
Mutual funds provide greater flexibility, allowing you to switch funds, adjust investments, and even redeem partially.
Lock-in Period
ULIPs have a mandatory lock-in period of five years.
Mutual funds are more flexible, with no lock-in period except for tax-saving ELSS funds, which have a three-year lock-in.
Tax Benefits
ULIP premiums qualify for tax deductions under Section 80C. The maturity proceeds are tax-free under Section 10(10D), provided conditions are met.
Mutual funds offer tax benefits only for ELSS funds under Section 80C. Gains are taxable, as per the holding period.
Why Mutual Funds Are a Better Option
Focused Investment Approach
Mutual funds concentrate solely on investments, ensuring professional management and efficient fund allocation.

Higher Returns Potential
The absence of high charges allows mutual funds to deliver better returns over the long term.

Flexibility and Control
Mutual funds allow you to choose or switch between funds based on market conditions or financial goals.

Cost-Effective
Mutual funds are more cost-efficient due to lower expense ratios compared to ULIPs.

Why ULIPs May Not Be Suitable
High Charges
ULIPs have various charges that reduce your net returns. This makes them less attractive compared to mutual funds.

Limited Fund Options
You are restricted to investing only in the funds offered by the insurance company. This limits diversification.

Complexity
The structure of ULIPs, with their multiple charges and insurance components, makes them difficult to understand and monitor.

Final Insights
Mutual funds are the better investment choice for long-term wealth creation due to their focused investment strategy, flexibility, and cost-efficiency. ULIPs, on the other hand, are best avoided unless you specifically need life insurance along with investments.

For life insurance, consider a term plan, and for investments, focus on well-managed mutual funds. This combination will help you achieve your financial goals more effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Asked by Anonymous - Jul 15, 2025Hindi
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Anu Hi. I'm in a really stressful situation and I don't know how to handle it. A few years ago, I was in a relationship with a woman who turned out to be extremely manipulative and possessive. I ended things with her long before I met my wife. I've moved on completely and I'm happily married now. But my ex hasn't. I recently discovered that she has been stalking my wife on social media, creating fake accounts, and even sending her threatening messages. Some of them are nasty and borderline disturbing. She is sharing details about our past relationship that are not relevant. My wife is scared and upset, and it's starting to create unnecessary tension between us. She's beginning to question my past and wonder why this woman still feels entitled to harass her. I really don't want to involve the police or escalate this legally. I want to avoid drama, because I'm also worried it might provoke my ex even further. I just want this to stop. I'm trying to protect my marriage and my wife's peace of mind, but I feel helpless. My wife doesn't respond to her but the details still bother her. What is the right way to handle this without making it worse? How do I reassure my wife, and is there a non-legal way to make my ex back off for good? Am I wrong for trying to avoid police action in a situation like this?
Ans: Dear Anonymous,
If you have nothing to hide from your wife, why worry what your ex will do even if take the legal route?
I think your wife deserves her peace of mind and to actually go the legal way to stop your ex is okay in my opinion especially if she's begun to harass...Don't you think?
A woman that loves you will be reassured only when she feels safe with her man; what are you doing to ensure that?
For starters,
- come clean (if there's anything left to share) with your wife; this will ensure that your ex does not use that to blackmail you
- love you wife even more; actions will matter more than words at this point in time
- do not attempt to meet, text or contact your ex without a legal backing; she may use this against you

You are not wrong in avoiding police action or legal recourse as it can be a lot to handle, but if you are left with no option and your marriage is falling apart, do what it takes to save it...

All the best!
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Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

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Asked by Anonymous - Jul 22, 2025Hindi
Career
IIT Hyderabad Mechanical Vs BITS Pilani CSE, which one to choose
Ans: IIT Hyderabad’s B.Tech in Mechanical Engineering operates under AICTE approval and NBA accreditation within a combined Mechanical & Aerospace department, led by 36 Ph.D.-qualified faculty engaged in industry-funded projects, and equipped with RF, VLSI, smart-grid, and design-manufacturing labs. Its curriculum integrates core mechanics, thermofluids, and design streams with research collaborations with DRDO and ISRO. Placement performance for Mechanical Engineering records a 53.70% placement rate over the past three years, with an average package of 18.71 LPA. Robust student support includes a Career Development Centre, technical clubs, and mentorship programs.

BITS Pilani’s B.Tech in CSE, a NAAC A++–accredited program, features a storied department founded in 1971, over 900 faculty across campuses, state-of-the-art AI, data science, and software engineering labs, and global Practice School internships. Its placement cell secures an 82.75% overall placement rate with first-degree students—CSE branch sees virtually all hires—and average packages of 19.70 LPA. Strong alumni networks, active coding societies, and career-readiness workshops further bolster student outcomes.

Recommendation: Considering higher placement consistency, cutting-edge computing infrastructure, and near-universal campus hires, choosing BITS Pilani’s CSE program best maximizes immediate employability and industry immersion, whereas IIT Hyderabad’s Mechanical Engineering offers specialized research exposure and emerging core-engineering opportunities. All the BEST for a Prosperous Future!

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Career Counsellor - Answered on Jul 22, 2025

Ramalingam

Ramalingam Kalirajan  |9823 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2025

Asked by Anonymous - Jul 18, 2025Hindi
Money
I have a 6 year fixed deposit which will pay at maturity in Sep-2027. My question is on when to pay tax for this deposit. Should it be paid every year based on interest accrued every year OR only once, at the time of actual interest credit into the account?
Ans: Understanding Taxation on Fixed Deposit Interest

– Interest on fixed deposits is taxable under “Income from Other Sources.”
– Tax is not based on when interest is received.
– It is based on when the interest accrues.
– This is true even if the FD pays only at maturity.

? When Does Interest Accrue?

– Interest accrues every financial year, not just on maturity.
– Banks calculate interest every quarter or half-year.
– Even for reinvestment FDs, interest is earned yearly.
– The entire interest is paid at maturity, but accrues yearly.

? Taxation is Based on Accrual Method

– As per Income Tax Act, interest must be declared yearly.
– This is known as “accrual basis of taxation.”
– Ignoring this may result in tax demand and penalty later.

? Common Misunderstanding About Tax on FDs

– Many believe tax is due only when FD matures.
– This is incorrect under the Income Tax rules.
– This assumption may cause large tax outflow in maturity year.
– Also, it may attract interest and penalty from IT department.

? Your Obligation Each Year

– Every year you must estimate interest accrued.
– Add it to your total income while filing ITR.
– Pay tax as per your income slab on that amount.
– This is applicable even if the interest is not paid out.

? Where to Find Yearly Accrued Interest

– Ask your bank for yearly interest accrual certificate.
– Usually available in April each year.
– This helps in proper tax reporting in your return.

? Tax Deduction at Source (TDS) on FDs

– Banks deduct TDS if interest exceeds Rs. 40,000 per year.
– For senior citizens, this limit is Rs. 50,000.
– TDS is 10%, provided PAN is updated.
– If PAN is missing, TDS can be at 20%.
– TDS is not the final tax liability.
– You still need to calculate your slab tax.
– If you fall in higher tax slab, pay balance tax.
– If your slab is lower, claim refund of excess TDS.

? If You Ignore Annual Reporting

– Tax department can track FD accrual via Form 26AS.
– Interest is also shown in AIS (Annual Information Statement).
– If you don’t report interest, it raises red flags.
– In future scrutiny, you may face tax demand and penalty.

? Tax Planning Suggestions

– Ask bank for Form 16A or interest certificate every year.
– Add accrued interest to your income in your return.
– Pay self-assessment tax if needed before 31st July.
– This avoids last-minute surprise tax burden at maturity.
– Also avoids interest under section 234B and 234C.

? Impact on Overall Financial Planning

– FDs give assured returns but interest is fully taxable.
– This makes post-tax return low for many investors.
– Consider this tax aspect while comparing with other investments.
– For high income earners, debt mutual funds may be better.
– They offer indexation benefit and lower tax impact over time.

? Should You Break FD to Avoid Annual Tax?

– No need to break FD.
– Just declare interest every year properly.
– Even if maturity is far, show yearly interest accrual.
– Maturity proceeds will be tax-free if already declared yearly.

? Tax Filing and Documentation Tips

– Maintain record of FD opening date, amount and maturity date.
– Keep bank’s yearly interest certificate safely.
– While filing ITR, enter interest under “Income from Other Sources.”
– Match with AIS data to avoid mismatch.
– If mismatch found, explain with proof during ITR processing.

? What Happens on Maturity Year?

– In maturity year, you receive full interest and principal.
– But only declare the last year’s interest in ITR.
– Don’t report entire 6 years’ interest again.
– That would mean double taxation.
– Maturity amount already includes taxed portion.

? If You Missed Reporting in Earlier Years

– You can revise past returns for last 2 assessment years.
– File revised returns and pay tax with interest.
– Better to rectify voluntarily than face penalty later.

? Key Tax Rule to Remember

– Interest earned is taxable on accrual basis.
– Even if payment is made on maturity only.
– Pay tax each year, not just in maturity year.

? Ideal Tracking Practice

– Maintain Excel sheet for FD investments.
– Note FD amount, start and end date, and yearly interest.
– Add this value every year while filing your ITR.

? Benefit of Declaring Yearly Interest

– You avoid tax shock in final year.
– You avoid penalty, interest, and notice from IT department.
– You show income transparently.
– This helps in home loan, visa, and other financial proofs.

? Role of a Certified Financial Planner

– A CFP can help optimise tax-efficiency of your investments.
– Can help plan maturity of FD with other cashflows.
– Can suggest better options if tax is reducing returns.
– Regular reviews with a CFP help avoid such confusions.

? Disadvantages of Fixed Deposits

– Returns are low compared to inflation.
– Taxable every year.
– No indexation benefit.
– TDS cuts liquidity.
– Not suitable for long-term wealth creation.

? Alternative Options for Tax Efficiency

– Actively managed debt mutual funds offer better post-tax return.
– They allow better planning for income and withdrawals.
– Short-term and long-term capital gains can be staggered.
– Professional fund manager brings risk control.
– Certified Financial Planner and trusted MFD can help align these.

? Don’t Fall for Index Fund Hype

– Index funds offer low-cost but no flexibility.
– No scope of outperformance during market shifts.
– Poor downside protection in falling markets.
– Better to use actively managed funds guided by experts.
– This helps optimise portfolio across market cycles.

? Disadvantages of Direct Mutual Funds

– Direct plans need your own research and monitoring.
– No access to guidance from a certified mutual fund distributor.
– Most investors lack time or knowledge for this.
– Errors in fund selection or exit timing hurt returns.
– Regular plans via MFD give advice, handholding and long-term value.
– A CFP-aligned MFD ensures aligned goals, reviews and discipline.

? Don’t Rely on Endowment or Investment Policies

– If you hold LIC or Postal policies for investment, evaluate ROI.
– Most of them yield low post-tax returns.
– Consider surrender and reinvest into better options via SIPs.
– A Certified Financial Planner can help this switch efficiently.

? Final Insights

– Tax on FD interest must be paid every year, not just at maturity.
– Interest accrues yearly and is taxable even if not received.
– TDS doesn’t mean your full tax is paid.
– Declare interest each year in ITR.
– Collect interest certificate yearly for accurate tax filing.
– For better returns, explore tax-efficient debt mutual funds.
– Avoid direct funds and index funds without advice.
– Get professional support from CFP and trusted MFD.

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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