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Ramalingam

Ramalingam Kalirajan  |6625 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 04, 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 - Jan 03, 2024Hindi
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Hi Ramalingam, I am 26 earning 78k per month as salary Having investment in FD: 2.5lakh RD:2500per month (started dec 2023) SBI conta fund 2000 monthly started (dec 2023) SBI small cap:2000 per month (started nov 2023) SBI bluechip fund: 2000 per month (started nov 2023) SBI multicap fund: 2000 (started nov 2023) And started contributing in PF as well from last year, deposited 1.5lakhs Are my investments are on track or where and how much shall I invest to attain financial freedom at the age of 40-42 ? I also want to buy a car soon. Kindly suggest.

Ans: It's great to see that you've started investing at a young age and are thinking about your financial future. Here are some suggestions to help you achieve your goals:

Review Your Portfolio: Evaluate the performance of your existing investments periodically and ensure they are aligned with your financial goals and risk tolerance.

Emergency Fund: Consider building an emergency fund equivalent to 3-6 months' worth of expenses. This fund will provide a financial cushion in case of unexpected expenses or loss of income.

Diversification: While it's good to have investments in mutual funds and recurring deposits (RD), consider diversifying your portfolio further. Explore other asset classes such as equity, debt, real estate, and gold to spread risk and enhance returns.

Goal-Based Investing: Define your financial goals clearly, including milestones like buying a car and achieving financial freedom by age 40-42. Allocate your investments accordingly to meet each goal within the desired timeframe.

Investing for Retirement: Since you aim to achieve financial freedom by age 40-42, focus on building a substantial retirement corpus. Consider investing in long-term wealth creation instruments like equity mutual funds, PPF (Public Provident Fund), NPS (National Pension System), and EPF (Employee Provident Fund).

Car Purchase: If you plan to buy a car soon, start setting aside a portion of your savings towards this goal. You can either save up the entire amount or consider taking a car loan, depending on your financial situation and preferences.

Budgeting: Track your income and expenses regularly to ensure you're living within your means and allocating sufficient funds towards savings and investments.

Financial Planning: Consider consulting with a financial advisor to create a comprehensive financial plan tailored to your goals, risk profile, and investment horizon. They can help you optimize your investment strategy and make informed decisions.

Remember to stay disciplined with your savings and investments, avoid impulsive spending, and continue learning about personal finance to make informed decisions. With prudent financial planning and consistent efforts, you can work towards achieving financial freedom and realizing your goals.
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  |6625 Answers  |Ask -

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

Asked by Anonymous - May 10, 2024Hindi
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I am 31 years old and I have monthly income of 1,80,000 including wife's income after deducting all taxes and monthly expenses and EMIs. Curent Investment is going like this per month. 1. 125,000 in mutual funds in below category. And I am expecting to increase this sip by 10% annually. 65000 in small cap 35000 in mid cap 25000 in large cap 2. 8500 in PPF 3. 25000 towards buying gold coins I have a emergency funds of 11 lacs in FD which is almost 20X of monthly expenses. Also in stocks I have accumulated around 12 lacs since from last month only I increased sip amount. My goal is to get financial freedom by age of 38 with 4-5 crores. Could you please suggest if I am moving in right path.
Ans: It's commendable that you're diligently planning and investing towards your financial freedom. Let's analyze your current investment strategy and assess if it aligns with your goal of achieving financial independence by the age of 38 with a corpus of 4-5 crores.

Assessment of Current Investments
Mutual Funds Allocation
Small-Cap Funds: You allocate a substantial portion towards small-cap funds, which have the potential for high growth but come with higher volatility.
Mid-Cap and Large-Cap Funds: Diversifying across mid-cap and large-cap funds provides balance and stability to your portfolio.
PPF and Gold Investments
PPF: Investing in PPF is a prudent choice as it offers tax benefits and provides a safe avenue for long-term wealth accumulation.
Gold Coins: Allocating a portion towards gold adds diversification to your portfolio and acts as a hedge against inflation and market volatility.
Emergency Funds and Stocks
Emergency Funds: Your emergency fund of 11 lakhs in FD is sufficient, providing a safety net equivalent to 20 times your monthly expenses.
Stocks: Accumulating stocks alongside mutual funds adds another dimension to your portfolio, but ensure proper diversification and risk management.
Suggestions for Achieving Financial Freedom
Review Asset Allocation
Risk Management: While small-cap funds offer growth potential, ensure that your portfolio is balanced across different asset classes to mitigate risk.
Rebalance Regularly: Periodically review and rebalance your portfolio to maintain the desired asset allocation and adjust to changing market conditions.
Increase SIP Contributions
10% Annual Increase: Increasing your SIP contributions annually by 10% is a prudent strategy to boost your investments and keep pace with inflation.
Regular Monitoring: Monitor your investment performance and adjust your SIP amounts periodically to stay on track towards your financial goals.
Consider Tax-Efficient Investments
Tax Planning: Explore tax-efficient investment options such as ELSS funds or National Pension Scheme (NPS) to optimize tax savings and enhance wealth accumulation.
Tax Harvesting: Utilize tax-loss harvesting strategies in stocks to offset gains and minimize tax liabilities.
Continual Learning and Adaptation
Stay Informed: Keep yourself updated with market trends, investment strategies, and regulatory changes to make informed decisions.
Seek Professional Advice: Consider consulting with a Certified Financial Planner to tailor a comprehensive financial plan aligned with your goals and risk tolerance.
Conclusion
Your proactive approach towards financial planning and disciplined investing are key steps towards achieving financial freedom by the age of 38 with a target corpus of 4-5 crores. By maintaining a well-balanced portfolio, increasing SIP contributions, and exploring tax-efficient investment avenues, you are on the right path towards realizing your aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6625 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 19, 2024

Asked by Anonymous - May 11, 2024Hindi
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? rediff.com Rediff Gurus Logo Hi Jay Chandora | Sign Out HealthHealth MoneyMoney RelationshipRelationship CareesCareer Ask your questions about health, money, relationship or careers here Ask Anonymously Jay Jay 1 Questions 0 Answers 1 Gurus 0 Bookmarks These questions will be answered soon. Not Answered yet Jay Asked on - May 10, 2024 I am 31 years old and I have monthly income of 1,80,000 including wife's income after deducting all taxes and monthly expenses and EMIs. Curent Investment is going like this per month. 1. 125,000 in mutual funds in below category. And I am expecting to increase this sip by 10% annually. 65000 in small cap 35000 in mid cap 25000 in large cap 2. 8500 in PPF 3. 25000 towards buying gold coins I have a emergency funds of 11 lacs in FD which is almost 20X of monthly expenses. Also in stocks I have accumulated around 12 lacs since from last month only I increased sip amount. My goal is to get financial freedom by age of 38 with 4-5 crores. Could you please suggest if I am moving in right path.
Ans: Congratulations on your disciplined financial planning and significant progress towards your goals. You have a well-structured approach to investments, and it’s great to see your commitment to financial freedom.

Current Financial Situation
Your current monthly income is ?1,80,000. After deducting taxes, expenses, and EMIs, your investments are allocated as follows:

Mutual Funds: ?1,25,000 (increasing SIP by 10% annually)
Small Cap: ?65,000
Mid Cap: ?35,000
Large Cap: ?25,000
Public Provident Fund (PPF): ?8,500
Gold Coins: ?25,000
You have an emergency fund of ?11 lakhs in a fixed deposit, which covers 20 months of expenses. Additionally, you have ?12 lakhs in stocks.

Analyzing Your Investment Strategy
Mutual Funds
Your allocation in mutual funds is quite aggressive, with a significant focus on small and mid cap funds. While these can provide high returns, they also come with higher volatility.

Small Cap Funds: These can deliver substantial growth but are risky. Ensure you have a long-term horizon for this investment.

Mid Cap Funds: These balance growth and risk but still carry more risk compared to large cap funds.

Large Cap Funds: These provide stability and moderate returns, balancing your portfolio.

Public Provident Fund (PPF)
Your monthly contribution to PPF is ?8,500. PPF is a safe investment with tax benefits, and it should be part of a long-term strategy.

Gold Coins
Investing in gold coins can be a hedge against inflation and currency fluctuations. However, the allocation seems high. Consider diversifying within other stable asset classes.

Emergency Fund
An emergency fund of ?11 lakhs is prudent and well-maintained. It ensures liquidity and financial security in unforeseen circumstances.

Steps to Achieve Financial Freedom
Increase SIPs Gradually
You plan to increase your SIPs by 10% annually. This is a sound strategy. As your income grows, increasing your investment contributions will significantly impact your corpus growth.

Portfolio Diversification
Ensure your portfolio is diversified. Currently, there’s a heavy tilt towards small and mid cap funds. Consider increasing allocation to large cap and balanced funds to reduce risk.

Regular Monitoring and Rebalancing
Regularly review your investment portfolio. Rebalance it to align with your risk tolerance and financial goals. A diversified portfolio helps manage risk effectively.

Target Corpus Calculation
To achieve a corpus of ?4-5 crores by age 38, considering you have 7 years, your current investments and future increments should be strategically planned.

Mutual Funds Growth: With an expected annual return of 12-15%, your increasing SIPs can substantially grow your corpus.

Stock Market Investments: Your current ?12 lakhs in stocks can grow significantly with regular investments and market returns.

PPF and Gold: Continue with your PPF contributions for safety and tax benefits. Gold investments should be moderate to avoid over-concentration in one asset.

Professional Guidance
Consulting a Certified Financial Planner (CFP) can provide tailored advice. A CFP can help optimise your investment strategy, monitor performance, and adjust as needed.

Conclusion
You are on the right path with a disciplined approach to savings and investments. Increasing SIPs, diversifying your portfolio, and regular monitoring will help you achieve your goal of financial freedom by 38. Keep up the good work and stay committed to your plan.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6625 Answers  |Ask -

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

Asked by Anonymous - Jul 11, 2024Hindi
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Hi I am 25. I started working at a MNC. Currently started Investing in PPF 10k, NPS 5k, RD 10K, mutual Fund 15k.Thougt of increasing them by 10% every year based on my increment.I have a LIC (premium 14k half yearly), Term Insurance (premium 16k yearly) and health insurance (premium 30k yearly). I am living in rent (10k per month). After 2 years I want to buy a flat (Budget approx 40 Lakh). Also I have emergency fund of 2 Lakh(FD). Suggest if any changes required in the mentioned things and to be financially free by age of 50.
Ans: Current Financial Snapshot
Age: 25
Occupation: Working at an MNC
Investments: PPF Rs. 10k, NPS Rs. 5k, RD Rs. 10k, Mutual Fund Rs. 15k (increasing by 10% yearly)
Insurance: LIC (Rs. 14k half-yearly), Term Insurance (Rs. 16k yearly), Health Insurance (Rs. 30k yearly)
Living Expenses: Rent Rs. 10k per month
Emergency Fund: Rs. 2 lakh (FD)
Future Goal: Buy a flat (Rs. 40 lakh) in 2 years
Long-term Goal: Financial freedom by age 50
Investment Strategy
Systematic Investment Plan (SIP)
Current SIP: Rs. 15k
Recommendation: Continue with 10% annual increment.
Actively Managed Funds: Prefer over index funds. They can offer better returns.
Diversification: Invest in a mix of large-cap, mid-cap, and small-cap funds.
Public Provident Fund (PPF)
Current Investment: Rs. 10k
Recommendation: Continue PPF for tax-free, secure long-term returns.
National Pension System (NPS)
Current Investment: Rs. 5k
Recommendation: Continue for retirement benefits. Allocate more towards equity for higher returns.
Recurring Deposit (RD)
Current Investment: Rs. 10k
Recommendation: Consider reducing RD. Redirect funds to SIPs for better growth.
Insurance Coverage
Life Insurance (LIC)
Current Premium: Rs. 14k half-yearly
Recommendation: LIC policies often offer low returns. Consider surrendering and reinvest in mutual funds.
Term Insurance
Current Premium: Rs. 16k yearly
Recommendation: Continue term insurance for adequate life cover.
Health Insurance
Current Premium: Rs. 30k yearly
Recommendation: Continue to ensure coverage for medical emergencies.
Emergency Fund
Current Fund: Rs. 2 lakh (FD)
Recommendation: Maintain at least 6 months of expenses in a liquid fund.
Real Estate Purchase
Buying a Flat
Budget: Rs. 40 lakh
Recommendation: Save for a larger down payment to reduce loan burden. Ensure EMIs are within 30% of your monthly income.
Future Planning
Increasing Investments
Annual Increment: Increase investments by 10% each year based on salary increment.
Diversification: Balance between equity and debt investments.
Financial Freedom by Age 50
Long-term Growth: Focus on equity mutual funds for higher returns.
Retirement Planning: Maximize NPS contributions and PPF.
Consult a Certified Financial Planner
Customized Advice: For personalized guidance, consult a certified financial planner.
Regular Reviews: Periodically review and adjust your investment strategy.
Final Insights
Your current investments are on the right track.
Adjustments in RD and LIC can optimize returns.
Focus on equity for long-term growth.
Maintain and gradually increase your investments.
Ensure a balance between security and growth for financial freedom.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ans: Dear Ruta,
You want to get into a relationship with a married man? Will that not complicate your already complicated life?
You certainly deserve to be loved and taken care of BUT do not jump towards a married man...you do understand that his priorities will lie with his first family and this will hurt you again and you will feel neglected AGAIN...

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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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