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Ramalingam

Ramalingam Kalirajan  |8933 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 18, 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 - May 12, 2024Hindi
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Respected Sir, I am 42 years old. With monthly PPF of 7000, nps of 15000, MF 40000. I am also saving towards emergency fund and put 10000 every month. I also put on adhoc basis 10 to 15 thousands whenever I have some excess cash. My EMIs- 65k on housing loan and 18k on car EMI. My income - 2.3 lakh per month in hand after deduction. My present epf corpus is 40 lakh. I want to save 6 crore in next 15 years. Am I on right track?

Ans: Your commitment to systematic savings across various investment avenues demonstrates a disciplined approach towards building wealth for the future.

Analysis:
Monthly Contributions:

Your monthly contributions towards PPF, NPS, and MFs, along with regular savings for an emergency fund, reflect a diversified savings strategy.
Ad hoc contributions during surplus months further enhance your savings potential, allowing for flexibility in wealth accumulation.
Debt Obligations:

Your housing loan and car EMI constitute a significant portion of your monthly expenses, warranting careful consideration in your financial planning strategy.
EPF Corpus:

Your EPF corpus of 40 lakhs signifies a substantial retirement savings base, contributing to your long-term financial security.
Assessing Goal Feasibility
Analysis:
Target Corpus:
Your goal of saving 6 crores in 15 years is ambitious but achievable with diligent planning and consistent investment efforts.
Considering your current savings rate and investment contributions, it's essential to assess the adequacy of your investment strategy in meeting this target.
Recommendation for Enhanced Planning
Assessment:
Portfolio Optimization:

Review your investment portfolio to ensure optimal asset allocation and diversification. Consider consulting a Certified Financial Planner to align your investments with your risk tolerance and long-term goals.
Debt Management:

Explore strategies to accelerate debt repayment, especially your housing loan, to free up additional funds for investments towards your target corpus.
Regular Monitoring:

Regularly review and adjust your financial plan based on changes in income, expenses, and market conditions to stay on track towards achieving your financial goals.
Conclusion
While your current financial plan demonstrates a proactive approach towards wealth creation, optimizing your investment strategy and debt management can further enhance your path towards achieving a 6 crore corpus in 15 years. With diligent planning and periodic review, you can navigate towards financial success and long-term security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
Asked on - Nov 23, 2024 | Answered on Nov 25, 2024
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Hi, I need ypur professional guidance.to plan my investment portfolio
Ans: I appreciate your trust and willingness to connect.
Let's embark on this financial journey together.
You can reach me through my website mentioned below.
This platform has restrictions on sharing personal contact. Hope you understand.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
Insagram: https://www.instagram.com/holistic_investment_planners/
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  |8933 Answers  |Ask -

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

Asked by Anonymous - May 31, 2024Hindi
Money
I am 48 yrs old. My take home salary is 195000 p/m. I have a PPF corpus of 20 lakhs maturing in 2026(I make minimum contribution of Rs500/year). The present valuation of my mutual fund kitty is 53 lakhs(23.5 lakhs original investment). I am continuing with monthly SIP of 50k. I have one house worth 1.2cr for which 8 lakh more is reqd which I have kept aside. The house that I live in is worth 2.5cr for which I am paying an EMI of 93k. 14 yrs of loan repayment is left with outstanding of 89lakhs. I have been making min 50k investment in NPS since it's inception. My EPF contribution is 8.5k/month with 3 lakhs in kitty. I have 24 lakhs of health insurance and 1.5cr term insurance. Apart from that I have 3 LIC policies out which I will be getting around 15lakhs between 2029 n 2034. I have a son 16yrs old whose education and marriage is to be taken care yet apart from my retirement. Am I on right path of investment?
Ans: Your current financial position reflects thoughtful planning and prudent investment strategies. At 48, you have a solid income, diversified investments, and significant insurance coverage. Let's analyze your financial status in detail and assess if you are on the right path to achieving your goals, including your son's education and marriage, and your retirement.

Income and Savings Overview
Your take-home salary of Rs 1,95,000 per month provides a strong foundation for your financial planning. Your current savings and investments demonstrate a clear commitment to securing your financial future.

PPF Corpus
Your PPF corpus of Rs 20 lakhs maturing in 2026 is a great safety net. The minimum annual contribution of Rs 500 helps keep the account active and continues to earn tax-free interest. Upon maturity, you can use this amount for your son's education or other significant expenses.

Mutual Fund Investments
Your mutual fund investments have grown from an original investment of Rs 23.5 lakhs to Rs 53 lakhs. Continuing with a monthly SIP of Rs 50,000 shows disciplined investing. This strategy helps average out the cost and benefit from market fluctuations over time.

Real Estate Investments
You own a house worth Rs 1.2 crore, for which you have kept aside Rs 8 lakh to complete the payment. Additionally, the house you live in is valued at Rs 2.5 crore, with an EMI of Rs 93,000 and an outstanding loan of Rs 89 lakhs over 14 years. These assets provide significant equity and stability.

Insurance and Retirement Savings
Health and Term Insurance
Your health insurance coverage of Rs 24 lakhs and term insurance of Rs 1.5 crore are prudent measures. These policies ensure financial protection for your family in case of unforeseen events.

NPS Contributions
Your monthly contribution of Rs 50,000 to the NPS since its inception indicates a strong focus on retirement savings. The NPS offers tax benefits and a structured retirement income.

EPF Contributions
Your EPF contributions of Rs 8,500 per month, with a current kitty of Rs 3 lakhs, add another layer of retirement security. The EPF provides a guaranteed return and is a reliable long-term savings option.

LIC Policies
You have three LIC policies, which will yield around Rs 15 lakhs between 2029 and 2034. These policies offer both insurance and savings benefits, providing additional financial support in the future.

Assessing Financial Goals
Son's Education and Marriage
Your son's education and marriage are significant financial milestones. Given his current age of 16, education expenses are imminent. The maturity of your PPF in 2026 and the continued growth of your mutual funds can help cover these costs. For marriage expenses, your disciplined savings in mutual funds and LIC policies will be beneficial.

Retirement Planning
You are on a solid path towards a comfortable retirement. Your investments in NPS, EPF, and mutual funds, along with the real estate assets, create a diversified portfolio. This diversity reduces risk and ensures steady growth.

Evaluating Investment Choices
Public Provident Fund (PPF)
The PPF is a safe and tax-efficient investment. Its long lock-in period ensures disciplined saving. The tax-free interest makes it an attractive option for long-term goals.

Mutual Funds
Your mutual fund investments have performed well, doubling from the original investment. Continuing with monthly SIPs helps in rupee cost averaging and leveraging market volatility. Actively managed funds offer potential for higher returns compared to index funds, which passively track the market. Your approach with actively managed funds, guided by a certified financial planner, is sound.

Real Estate
Your real estate investments provide significant value and stability. The owned house worth Rs 1.2 crore and the residence valued at Rs 2.5 crore are substantial assets. Real estate can offer good returns, but it also requires maintenance and can be less liquid than other investments.

National Pension System (NPS)
The NPS is an excellent retirement savings vehicle, offering market-linked returns and tax benefits. Your consistent contributions show a strong commitment to building a retirement corpus. The structured withdrawal and annuity options at retirement provide a steady income.

Employees' Provident Fund (EPF)
The EPF is a reliable source of retirement savings with guaranteed returns. Your monthly contributions ensure a growing corpus, supplemented by employer contributions. The EPF is also tax-efficient, offering tax-free interest and withdrawal benefits.

Life Insurance Corporation (LIC) Policies
Your LIC policies provide insurance coverage and savings benefits. The guaranteed returns, though modest, offer financial security. The maturity proceeds between 2029 and 2034 will help fund future expenses.

Debt Management
Your EMI of Rs 93,000 for the home loan with an outstanding amount of Rs 89 lakhs needs careful monitoring. Ensure timely payments to maintain a good credit score. Prepayment options should be considered if surplus funds are available, to reduce the loan tenure and interest burden.

Risk Management
Your health and term insurance policies offer substantial coverage. Review these policies periodically to ensure they meet your current needs. Adequate insurance coverage protects your family from financial distress in case of emergencies.

Recommendations for Improvement
Review and Rebalance Portfolio
Periodically review your investment portfolio to ensure it aligns with your financial goals. Rebalancing helps maintain the desired asset allocation and manage risk.

Increase EPF Contributions
Consider increasing your EPF contributions if possible. The EPF offers a secure and tax-efficient way to build your retirement corpus.

Education Planning
Start planning for your son's higher education expenses. Estimate the costs and align your investments accordingly. Consider education loans if necessary, as they can be a low-cost borrowing option.

Marriage Fund
Create a dedicated investment plan for your son's marriage. Mutual funds, especially actively managed ones, can offer good returns over the long term. Regularly invest a portion of your income towards this goal.

Emergency Fund
Ensure you have an adequate emergency fund. It should cover at least six months of expenses. This fund should be easily accessible and kept in a liquid form, such as a savings account or liquid mutual fund.

Long-Term Investment Strategy
Diversification
Maintain a diversified investment portfolio. Diversification reduces risk and enhances potential returns. Spread investments across different asset classes like equities, debt, and real estate.

Actively Managed Funds vs. Index Funds
Actively managed funds, guided by skilled fund managers, aim to outperform the market. They offer higher return potential compared to index funds, which merely track market indices. Actively managed funds are preferable for achieving higher returns, despite their higher expense ratios.

Direct Funds vs. Regular Funds
Investing in direct funds requires significant market knowledge and time. Regular funds, managed through a certified financial planner, offer professional expertise and personalized advice. This approach can help in making informed decisions and achieving better returns.

Conclusion
You are on a commendable path with your current investments and financial planning. Your disciplined approach to savings, investments, and insurance coverage shows a clear commitment to financial security and growth. Regularly review your financial plan, adapt to changes, and consult with a certified financial planner to ensure you stay on track. Your diversified portfolio, combined with prudent financial management, will help you achieve your goals and secure a comfortable future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8933 Answers  |Ask -

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

Money
Im 47 year old im doing 25k per month SIP in various funds and presently my fund value is 35 lacs and my aim to build a corpus of 1.5cr in next 8 year it means at the age 55 , i have a insurance policy of rs 6 lacs which are going to matured next year other than it also 1800 per month EPF deduction held by my employer and current saving in EPF is aprox 8-9 lacs . Is this all are sufficient to achieve my aim or ineed to increase more savings. Pls suggest
Ans: First off, you're doing a great job with your savings and investments. Building a secure financial future takes dedication, and you're on the right track. Let's dive deeper into your current financial situation and see how you can achieve your goal of Rs. 1.5 crore by the age of 55.

Understanding Your Current Financial Scenario
You’re currently investing Rs. 25,000 per month in various SIPs. Your existing fund value is Rs. 35 lakhs, which is impressive. You also have an insurance policy maturing next year worth Rs. 6 lakhs. Your EPF savings are around Rs. 8-9 lakhs with a monthly deduction of Rs. 1,800.

Let's break down how these investments are contributing to your goal and assess if any adjustments are needed.

Evaluating Your SIP Investments
SIP investments are a great way to build wealth over time. Consistent monthly investments benefit from rupee cost averaging and compounding. Your Rs. 25,000 SIPs will significantly contribute to your corpus. However, it’s essential to ensure these funds are diversified across different categories like large-cap, mid-cap, and small-cap funds. Diversification reduces risk and can enhance returns.

SIP investments take advantage of the market's volatility. By investing a fixed amount regularly, you buy more units when prices are low and fewer units when prices are high. Over time, this strategy averages out the cost of your investments and reduces the impact of market fluctuations.

Power of Mutual Funds
Mutual funds are powerful financial tools that pool money from many investors to invest in securities like stocks, bonds, and other assets. They are managed by professional fund managers who aim to achieve the fund's investment objectives.

Diversification: One of the most significant advantages of mutual funds is diversification. By investing in a mutual fund, you gain exposure to a wide range of securities, which reduces the risk associated with investing in a single security. Diversification helps in balancing the portfolio and minimizes the impact of poor performance by any single security.

Professional Management: Mutual funds are managed by experienced professionals who analyze market trends, conduct research, and make informed investment decisions on behalf of investors. This expertise can lead to better returns and efficient portfolio management.

Accessibility: Mutual funds offer a variety of schemes to suit different investment goals, risk appetites, and time horizons. Whether you are looking for growth, income, or stability, there is a mutual fund that matches your needs.

Liquidity: Mutual funds provide liquidity, allowing you to redeem your units at the current net asset value (NAV) whenever you need funds. This flexibility makes mutual funds a convenient investment option.

Tax Benefits: Certain mutual funds, like Equity-Linked Savings Schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act. This dual benefit of investment and tax savings makes mutual funds attractive for tax planning.

Insurance Policy Maturing Next Year
You have an insurance policy maturing next year worth Rs. 6 lakhs. Upon maturity, consider reinvesting this amount wisely. Since your aim is to build a corpus for the future, parking this amount in equity mutual funds can be beneficial. Equities typically provide higher returns over the long term compared to other instruments.

It’s important to separate insurance and investment needs. Insurance policies that combine investment with protection often have higher costs and lower returns compared to pure investment products like mutual funds. Instead of opting for investment-cum-insurance policies, it’s better to invest in pure term insurance for adequate coverage and invest the rest in mutual funds for growth.

Investment-cum-insurance policies often come with high fees and complex structures that can eat into your returns. Moreover, the investment component of these policies usually underperforms compared to standalone investment products. Therefore, it’s advisable to avoid these hybrid products and keep your insurance and investment needs separate.

EPF Contributions and Savings
Your EPF contributions of Rs. 1,800 per month, coupled with existing savings of Rs. 8-9 lakhs, add another layer of security. EPF is a safe investment with decent returns, especially useful for retirement. However, relying solely on EPF may not be enough. It’s crucial to complement it with other investments to reach your desired corpus.

EPF offers the advantage of compound interest and tax benefits, making it a vital component of your retirement planning. However, the returns from EPF are relatively lower compared to equity investments. Therefore, balancing your portfolio with equity mutual funds can help achieve higher growth.

Assessing the Gap
Let’s assess if your current investments are sufficient to achieve your goal of Rs. 1.5 crore in the next 8 years.

Assuming an average return of 12% per annum from your SIPs, we can estimate the future value. However, returns are subject to market fluctuations and cannot be guaranteed.

Similarly, EPF typically offers an 8-9% return. Considering these returns, let’s see if your current strategy will help you reach your goal or if adjustments are needed.

Adjustments and Recommendations
To ensure you achieve your goal of Rs. 1.5 crore by age 55, consider the following recommendations:

Increase Your SIP Amount: If possible, try to increase your monthly SIPs. Even a small increase can significantly impact your corpus due to the power of compounding. Aim to gradually increase your SIP amount every year.

Reinvest Maturing Insurance Policy: Reinvest the Rs. 6 lakhs from your maturing insurance policy into diversified equity mutual funds. This will give a substantial boost to your corpus.

Diversify Your Investments: Ensure your SIPs are spread across various mutual funds categories. Diversification minimizes risks and can potentially increase returns.

Monitor and Review: Regularly monitor your investments and review their performance. Make adjustments if necessary to stay on track with your goals.

Importance of Actively Managed Funds
Since you’re focusing on mutual funds, it's crucial to highlight the benefits of actively managed funds over index funds.

Actively managed funds have a professional fund manager making decisions to outperform the market. They can adapt to market conditions and potentially offer higher returns compared to index funds which simply track the market.

Investing through a Certified Financial Planner (CFP) can provide personalized advice and help you choose the best funds suited to your financial goals.

Disadvantages of Direct Funds
Direct mutual funds have lower expense ratios compared to regular funds, but they might not always be the best choice for everyone. Direct funds require a more hands-on approach and a good understanding of the market. If you lack the time or expertise, this can be challenging.

Regular funds, on the other hand, come with the guidance of a Certified Financial Planner (CFP). They provide expert advice, helping you navigate through market complexities and ensuring your investments are aligned with your goals.

Building a Strong Financial Foundation
While focusing on your investment goals, don’t forget other aspects of financial planning. Here are a few additional tips:

Emergency Fund: Ensure you have an emergency fund equivalent to 6-12 months of expenses. This provides a safety net for unexpected situations.

Health Insurance: Adequate health insurance is crucial. Medical emergencies can derail your financial plans if not adequately covered.

Review Life Insurance: Assess your life insurance needs and ensure you have sufficient coverage to protect your family’s financial future.

Retirement Planning: Beyond your goal of Rs. 1.5 crore, continue planning for retirement. Consider other retirement-specific investment options and strategies.

Regular Financial Check-ups
Regularly reviewing your financial plan is essential. Market conditions, personal circumstances, and financial goals can change over time. Schedule periodic check-ups with a Certified Financial Planner (CFP) to ensure your investments are on track and make necessary adjustments.

Final Insights
Achieving a corpus of Rs. 1.5 crore by the age of 55 is a commendable goal. Your current investments and savings provide a strong foundation. By increasing your SIP amounts, reinvesting wisely, and diversifying your investments, you can enhance your chances of reaching this goal.

Remember, consistency, discipline, and regular reviews are key to successful financial planning. You’re already doing great, and with a few strategic adjustments, you’ll be well on your way to achieving your financial aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8933 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

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Ans: Arihant, With a CRL rank of 82,777 and OBC-NCL rank of 25,899, your chances for CSE in top NITs are limited, as most premier NITs like Trichy (OBC cutoff 369), Warangal (629), and Surathkal (519) close well below your rank . However, newer NITs offer viable options: NIT Sikkim admits CSE candidates up to OBC rank 9,886, NIT Manipur up to 11,064, NIT Mizoram up to 11,236, and NIT Arunachal Pradesh up to 10,941 . Among IIITs, several institutions accept ranks in your range through JoSAA counselling, with newer IIITs typically having higher cutoffs . Government Funded Technical Institutes (GFTIs) present excellent alternatives, requiring 90-95 percentile (approximately 40,000-60,000 rank) for top institutions like School of Planning & Architecture New Delhi, Assam University, and Punjab Engineering College Chandigarh . These GFTIs maintain 80-90% placement rates with strong industry connections . State quota admissions in your home state could provide additional opportunities in government engineering colleges with separate OBC reservations . Recommendation: Apply for newer NITs (Sikkim, Manipur, Mizoram) through OBC quota, prioritize GFTIs like Assam University and Punjab Engineering College for assured CSE admission, and explore state quota options in your domicile state for comprehensive coverage. All the BEST for the Admission & a Prosperous Future!

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