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45 Year Old Seeking Retirement Advice: Can I Make It with My Savings and Business Plan?

Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 04, 2025

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
sridhar Question by sridhar on Jan 27, 2025Hindi
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I’m 45 and planning to retire in next 3 months. I have an overall savings of 3.3 ( FD, PF, Savings, Shares) gold - 20L plus 5L Silver. Home loan every month 61k, Car loan 39k, house rent 21k and 55k home expenses. Thinking to start my training business from home, can fetch 30k to 1L per month if done correctly. Planning to close my home loan (67L) full or partial (50L) and sell car or close partially loan (10L), outstanding is 15.5L. I have a daughter completing her 10th and took admission in 11th grade. Her annual college fees is 1.2L. We are moving in May to our own house and have 3 shops in a slightly prime location (Chennai) however we can enjoy after 6 to 7 years. It is fetching today 35k (overall). Health insurance of 10L.

Ans: You have structured your financial resources thoughtfully. A total savings corpus of Rs. 3.3 crore, along with Rs. 20 lakh in gold and Rs. 5 lakh in silver, provides a strong financial base.

Your plans to start a home-based training business could generate Rs. 30,000 to Rs. 1 lakh monthly. This is an excellent decision for post-retirement income. Additionally, your health insurance coverage of Rs. 10 lakh is a valuable safety net for healthcare needs.

Debt Management
Handling your outstanding liabilities should be a priority to ensure a smooth retirement.

Home Loan (Outstanding Rs. 67 lakh): Closing this loan partially or fully will reduce financial stress. Consider closing Rs. 50 lakh initially and investing the remaining Rs. 17 lakh wisely for liquidity.

Car Loan (Outstanding Rs. 15.5 lakh): Selling the car or partially paying off Rs. 10 lakh can reduce monthly expenses.

Monthly Expense Management: Clearing debts can reduce your combined EMIs from Rs. 1 lakh per month to manageable levels.

Income Stream Planning
You have diverse potential income streams post-retirement, including the training business and rental income.

Training Business: Focus on marketing and building a strong clientele. Consistent efforts can fetch Rs. 1 lakh monthly.

Rental Income: The current Rs. 35,000 per month can support regular expenses. The three shops could yield higher returns in the future.

Investment Recommendations
To maintain financial stability and meet long-term goals, diversification is essential.

Debt Mutual Funds: Invest a portion of the remaining savings after loan repayments. These offer stable returns and easy liquidity.

Actively Managed Equity Funds: Keep some exposure to high-performing mutual funds for growth. These help beat inflation and generate wealth over time.

Gold and Silver Holdings: Continue holding these as a hedge against market risks.

Emergency Fund: Maintain Rs. 15-20 lakh in liquid investments to handle unexpected expenses.

Children's Education Planning
Your daughter’s education expenses of Rs. 1.2 lakh per year are manageable within your cash flow.

Set aside a dedicated education fund to cover her next 3-4 years of education.

Use liquid funds or fixed deposits to keep this amount easily accessible.

Estate Planning
Clear planning for asset transfer is vital for family security.

Draft a Will: Create a legally sound will to ensure smooth inheritance.

Power of Attorney: Assign a trusted family member or advisor for financial decisions if needed.

Final Insights
Your decision to close or reduce liabilities and start a home-based business is strategic. By efficiently managing your cash flow, investments, and liabilities, you can retire comfortably while ensuring your family’s financial well-being.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
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  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 18, 2024

Asked by Anonymous - Jun 11, 2024Hindi
Money
I am 43 years old, have 13 yrs son in 9th std, 8yrs daughter in 3rd std. Both in India. Currently i am NRI monthly 5lacs salary. But soon coming back to india my salary will be 2.3lac per month. I have 1plot size 30x40 in bangalore. Around 5acres of active agricultural in native tier 3 city. I have epf balance 30lacs(not performing last 2.5yrs) . Current bank balance is 10lacs. Have sukanya samruthi for my daughter 10k per month (around 4lacs in account) Around 500gm gold jewel, wife(home maker, not nri) having 250gm gold, 1.5acre agri land in her name purchased by me with good potential for real estate. Invested in stock market 1lac recently in my wife's name. No debt now. Planning construct home 1cr(will get rent 40k per month) in 1year in bangalore, planning to buy car 15lacs less than 2years. Own home in village. Holding 1cr term insurance. My current family expense 1lac per month(including school fees, petrol etc.)Kindly advice me for kids education marriage and my retirement corpus. Currently having 2nd old santro for my personal travel in India.
Ans: Thank you for sharing the details of your financial situation. I understand your goals and concerns, and I appreciate the effort you’ve put into securing your family’s future. Let's analyze your financial position and provide a comprehensive plan for your children's education, their marriage, and your retirement.

Understanding Your Financial Situation
Current Income and Assets
Monthly NRI Salary: Rs 5 lakhs
Upcoming Indian Salary: Rs 2.3 lakhs per month
Plot in Bangalore: 30x40
Active Agricultural Land: 5 acres
EPF Balance: Rs 30 lakhs
Bank Balance: Rs 10 lakhs
Sukanya Samriddhi Yojana: Rs 10,000 per month (Rs 4 lakhs in account)
Gold Jewelry: 750 grams (500 gm yours, 250 gm wife’s)
Agricultural Land (Wife’s name): 1.5 acres
Recent Stock Investment: Rs 1 lakh (wife’s name)
Current Family Expenses: Rs 1 lakh per month
Term Insurance: Rs 1 crore
Plan to Construct Home: Rs 1 crore (rent: Rs 40,000 per month)
Plan to Buy Car: Rs 15 lakhs (in less than 2 years)
Own Home in Village
Current Car: Old Santro
Financial Goals
Children’s education
Children’s marriage
Retirement corpus
Construct home and generate rental income
Purchase a car
Evaluating Your Assets
EPF Balance
Your EPF balance of Rs 30 lakhs is substantial but hasn’t been performing well. It’s crucial to reassess this investment and consider moving a portion to other instruments that may offer better returns.

Agricultural Land and Plot
Agricultural land and the plot in Bangalore are valuable assets. The agricultural land in your wife’s name has real estate potential, which can be considered for future use or sale.

Gold
Gold is a secure investment and can be used as a safety net in times of need. It’s good to have a portion of your assets in gold.

Stock Market Investment
Investing in stocks can yield high returns, but it’s also risky. Ensure you’re diversifying adequately to manage risk.

Planning for Children’s Education and Marriage
Education
Estimate Future Costs: Education costs are rising. Estimate the future costs for both your children’s education. Consider inflation and choose investments accordingly.

Investment Vehicles: SIPs in mutual funds are an effective way to build an education corpus. Diversify between equity and debt funds for balanced growth and safety.

Marriage
Estimate Marriage Expenses: Determine a realistic amount for marriage expenses considering current trends and inflation.

Long-Term Investments: For long-term goals like marriage, consider investing in PPF, Sukanya Samriddhi Yojana (for your daughter), and balanced mutual funds.

Retirement Planning
Retirement Corpus
Calculate Corpus Needed: Estimate the amount you’ll need to maintain your lifestyle post-retirement. Consider inflation and life expectancy.

Diversified Portfolio: A mix of mutual funds, fixed deposits, and pension schemes can help create a robust retirement corpus.

Monthly Contributions
Systematic Investments: Allocate a portion of your salary towards SIPs in mutual funds. Diversify between equity, debt, and hybrid funds for balanced growth and safety.

EPF and PPF: Continue contributing to EPF and PPF. They offer tax benefits and relatively secure returns.

Construction of Home and Rental Income
Construction Plan
Budget Management: Ensure the construction cost of Rs 1 crore is within your budget. Consider taking a home loan if necessary but ensure it’s manageable within your salary.

Rental Income: The expected rental income of Rs 40,000 per month will help supplement your monthly income. This can be allocated towards your children’s education or marriage fund.

Tax Benefits
Home Loan Interest: Utilize tax benefits on home loan interest under Section 24(b) of the Income Tax Act.

Principal Repayment: Avail of tax deductions on the principal repayment under Section 80C.

Buying a Car
Budget Allocation
Down Payment and Loan: Decide on the down payment and the amount to be financed through a loan. Ensure the EMI is affordable within your post-return salary.

Savings Plan: Start a dedicated savings plan for the car purchase to avoid large financial strain at the time of purchase.

Maintaining Emergency Fund
Emergency Fund
Allocate Funds: Maintain an emergency fund equivalent to 6-12 months of your monthly expenses. This ensures financial stability in case of unforeseen circumstances.

Liquid Investments: Keep the emergency fund in liquid investments like savings accounts or liquid mutual funds for easy access.

Risk Management
Insurance
Health Insurance: Ensure adequate health insurance coverage for your entire family. Consider enhancing your current health insurance plan given the rising medical costs.

Term Insurance: Your Rs 1 crore term insurance is good. Reassess the coverage to ensure it meets your family’s needs.

Diversification
Diversified Portfolio: Diversify your investments across various asset classes to reduce risk and improve returns.

Regular Review: Regularly review your investment portfolio and rebalance it to align with your financial goals and risk tolerance.

Creating a Financial Plan
Setting Clear Goals
Specific Goals: Define specific financial goals for your children’s education, their marriage, and your retirement.

Timeframes: Set realistic timeframes for each goal to help in planning and tracking progress.

Monthly Budget
Income Allocation: Allocate your income towards various expenses, savings, and investments. Ensure you’re saving and investing a significant portion of your income.

Expense Tracking: Track your expenses to ensure you stay within your budget and can allocate more towards savings and investments.

Professional Guidance
Certified Financial Planner (CFP): Consult a CFP to help create a detailed financial plan tailored to your needs and goals.

Regular Monitoring: Regularly monitor and review your financial plan with your CFP to make necessary adjustments based on changing circumstances.

Final Insights
You have a solid foundation with various assets and a good income. By strategically planning your investments and expenses, you can comfortably achieve your financial goals. Focus on diversifying your investments, maintaining an emergency fund, and seeking professional advice. This will ensure your children’s education and marriage are well-funded, and you can enjoy a comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 21, 2024

Asked by Anonymous - Jul 21, 2024Hindi
Money
Am 64 yrs old running. I am getting 32K monthly pension. Having 35 L FD, 20L liquid 10 L in trading investment but it's now 9 L Started 20K/ month SIP recently Having commitment of 110000 EMI for a flat for another 25 months total cost 1.2 C. staying in rental flat for 35K a month. Having own house at Native value of 1.5 C Having Plots around 1C Not having idea to sell Old house and plots I can work for 2 yrs and earn about 50 - 60 L Having commitment for 1 daughter marriage Paying 49 K/ Yr for 50 L Term policy till 75 yrs old. Having Gold for 40 L for wife and abt 1C for daughter Pls advise I need 2 L passive income Having 2 cars
Ans: At 64, you have built a solid financial base. You receive Rs 32,000 monthly as pension, which is commendable. Your assets include Rs 35 lakhs in fixed deposits, Rs 20 lakhs in liquid funds, and Rs 9 lakhs in trading investments (initially Rs 10 lakhs). Additionally, you’ve recently started a Rs 20,000 monthly SIP. You also have a significant commitment of Rs 1.1 lakh EMI for a flat, which will continue for another 25 months, with the total cost being Rs 1.2 crore. You currently reside in a rental flat, costing you Rs 35,000 per month, and own a house in your native place worth Rs 1.5 crore. Furthermore, you have plots worth Rs 1 crore and gold valued at Rs 40 lakhs for your wife and Rs 1 crore for your daughter. You also pay Rs 49,000 per year for a Rs 50 lakh term insurance policy, valid until age 75.

Financial Challenges and Goals
High EMI Commitments: Your EMI of Rs 1.1 lakh is a significant burden, especially when combined with your monthly rental of Rs 35,000. This commitment limits your liquidity and investment potential.

Limited Passive Income: You aspire to generate Rs 2 lakh in passive income, which requires a strategic approach given your current financial landscape.

Upcoming Responsibilities: Your daughter’s marriage is a major upcoming financial responsibility, for which you must plan carefully.

Future Employment: You can work for another 2 years and expect to earn Rs 50-60 lakhs, which provides an opportunity to bolster your financial security before full retirement.

Strategic Financial Plan
1. Managing Existing Commitments
EMI and Rental Costs: With only 25 months left on your flat EMI, continue prioritizing these payments to avoid financial strain. Once the EMI is completed, you’ll have more disposable income for investments or savings. You might consider relocating to your flat to save on rent.

Term Policy Review: You’re paying Rs 49,000 annually for a Rs 50 lakh term insurance. Given your age, this coverage is prudent. However, ensure that the premium isn’t causing undue strain on your finances. If necessary, consider downgrading the coverage slightly to reduce the premium, but only if it aligns with your risk tolerance and coverage needs.

2. Building Passive Income Streams
Enhancing SIP Contributions: You’ve started a Rs 20,000 monthly SIP, which is a great step. To achieve your goal of Rs 2 lakh in passive income, consider increasing your SIP amount gradually, especially after your EMI commitments are fulfilled. Over time, your SIPs will compound and provide a substantial passive income stream.

Fixed Deposits and Liquid Funds: Your Rs 35 lakh in FDs and Rs 20 lakh in liquid funds provide safety but low returns. To boost income, consider gradually shifting a portion into debt mutual funds or balanced advantage funds. These can provide higher returns with moderate risk.

Trading Investments: Your trading portfolio has decreased from Rs 10 lakhs to Rs 9 lakhs. Trading can be volatile and risky. It might be prudent to reduce exposure to high-risk trading and instead focus on stable, income-generating investments.

Realigning Investments: Given your conservative risk profile and the need for regular income, shift from direct equity trading to mutual funds. Opt for actively managed funds that balance growth and income. Consult a Certified Financial Planner to tailor a diversified portfolio.

3. Addressing Future Financial Responsibilities
Daughter’s Marriage: With significant gold reserves (Rs 40 lakhs for your wife and Rs 1 crore for your daughter), you are well-prepared for your daughter’s marriage. If additional funds are needed, consider utilizing a portion of your liquid funds or fixed deposits. Avoid selling long-term assets like your house or plots unless absolutely necessary.

Future Earnings: The Rs 50-60 lakhs you expect to earn in the next 2 years can be strategically allocated. Consider using this income to clear any remaining EMI quickly, thus freeing up cash flow. Also, allocate a portion towards high-return investments to boost your retirement corpus.

4. Optimizing Asset Utilization
Real Estate Holdings: While you don’t intend to sell your native house or plots, consider their potential as income-generating assets. Renting out the native house or plots could provide additional passive income. However, avoid taking on additional real estate investments, as they can be illiquid and may not align with your need for a steady income.

Gold Holdings: Your gold holdings are substantial, providing security for your daughter’s marriage. Avoid liquidating these assets unless necessary, as they are a hedge against inflation and a valuable part of your portfolio.

5. Retirement and Estate Planning
Retirement Corpus Growth: Post-EMI, focus on maximizing your retirement corpus through a mix of equity and debt mutual funds. This balanced approach can provide both growth and stability, ensuring you meet your Rs 2 lakh passive income goal.

Estate Planning: Ensure you have a comprehensive estate plan in place, including a will. This will help in the smooth transfer of your assets to your heirs and minimize any potential legal complications.

Investment Approach
1. Shift from Direct Trading to Managed Funds
Direct trading has caused a loss of Rs 1 lakh in your portfolio. Transitioning to actively managed mutual funds will provide professional management and reduce the risk. Managed funds can outperform in the long run, especially with a focus on your retirement goals.

2. Benefits of Regular Funds Over Direct Funds
While direct funds have lower expense ratios, they require active management and market knowledge. By investing through a Certified Financial Planner in regular funds, you gain expert advice, portfolio management, and peace of mind. The higher returns often compensate for the slightly higher fees, making it a more suitable option for you.

3. Avoid Index Funds
Index funds, though low-cost, merely replicate market performance. They lack the flexibility to adapt to changing market conditions, which is crucial as you approach retirement. Actively managed funds, on the other hand, can adjust portfolios to protect against downside risks, ensuring more stable returns for your passive income needs.

Final Insights
You are on a strong financial footing with diversified assets and a clear vision for your future. The focus should now be on optimizing your investments and reducing unnecessary risks.

Once your EMI is cleared, you’ll have greater flexibility to invest in avenues that provide steady passive income. By gradually increasing your SIP contributions, shifting to managed mutual funds, and leveraging your real estate for rental income, you can achieve your goal of Rs 2 lakh monthly passive income.

Continue working for the next two years to build your retirement corpus further, ensuring a comfortable and financially secure retirement.

Finally, stay engaged with a Certified Financial Planner to regularly review and adjust your strategy, ensuring you remain on track to meet your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 29, 2025

Asked by Anonymous - Jan 27, 2025Hindi
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Money
I’m 45 and planning to retire in next 3 months. I have an overall savings of 3.3 ( FD, PF, Savings) gold - 20L plus 5L Silver. Home loan every month 61k, Car loan 39k, house rent 21k and 55k home expenses. Thinking to start my training business from home, can fetch 30k to 1L per month if done correctly. Planning to close my home loan (67L) full or partial (50L) and sell car or close partially loan (10L), outstanding is 15.5L. I have a daughter completing her 10th and took admission in 11th grade. Her annual college fees is 1.2L. We are moving in May to our own house and have 3 shops in a prime location (Chennai) however we can enjoy after 6 to 7 years. It is fetching today 35k.
Ans: Current Financial Position

Savings: Rs. 3.3 crore (FD, PF, Savings)

Gold & Silver: Rs. 20 lakh in gold, Rs. 5 lakh in silver

Loans: Home Loan: Rs. 67 lakh (EMI: Rs. 61,000/month), Car Loan: Rs. 15.5 lakh (EMI: Rs. 39,000/month)

Expenses: House Rent: Rs. 21,000/month (moving to own house in May), Household Expenses: Rs. 55,000/month

Daughter’s Education: College fees: Rs. 1.2 lakh per year

Business Plan: Home-based training business, Expected income: Rs. 30,000 to Rs. 1 lakh per month

Real Estate Assets: Own house (moving in May), Three shops in Chennai (rental income: Rs. 35,000/month, usable after 6-7 years)

Loan Repayment Strategy

Home Loan: Consider partial repayment (Rs. 50 lakh) instead of full prepayment. This keeps liquidity while reducing EMI burden significantly.

Car Loan: Since the outstanding amount is Rs. 15.5 lakh, repaying Rs. 10 lakh will reduce EMI. Selling the car is an option if a replacement is unnecessary.

Cash Flow Management

Reducing Fixed Expenses: Moving to own house in May will eliminate Rs. 21,000 monthly rent.

Household Budgeting: Rs. 55,000 for household expenses is reasonable. Ensure it includes emergency buffers.

Education Fund: Daughter’s education will require Rs. 2.4 lakh in two years. Keep this amount liquid in an FD or a short-term debt fund.

Investment Allocation

Emergency Fund: Keep at least Rs. 30 lakh liquid in a high-interest savings account or an ultra-short-term fund.

Gold & Silver: These can serve as a last resort for financial security but should not be actively liquidated.

Mutual Fund Investment: Invest a portion of savings in equity and debt mutual funds for long-term growth and stability.

Fixed Deposits & Bonds: Preserve some capital in fixed-income instruments for stability and predictable returns.

Business Income Planning

Diversified Revenue Model: Offer both in-person and online training for better scalability.

Marketing Strategy: Use social media and referrals to grow your business cost-effectively.

Financial Buffer: Set aside Rs. 10 lakh to sustain business operations in the initial phase.

Retirement Security

Pension Planning: Build a corpus that generates passive income covering monthly expenses of Rs. 1.2 lakh.

Rental Income Growth: Shops in Chennai will generate higher rent in 6-7 years. Plan for future asset utilization.

Healthcare Fund: Allocate Rs. 25 lakh specifically for future medical needs.

Final Insights

Smart Debt Reduction: Prioritize partial home and car loan repayment while maintaining liquidity.

Balanced Investments: Keep funds diversified across debt, equity, and fixed-income instruments.

Business Growth: Focus on maximizing training income with minimal fixed costs.

Retirement Readiness: Ensure passive income sources match or exceed monthly expense needs.

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

..Read more

Milind

Milind Vadjikar  |1031 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Jan 27, 2025

Asked by Anonymous - Jan 27, 2025Hindi
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I’m 45 and planning to retire in next 3 months. I have an overall savings of 3.3 ( FD, PF, Savings, Shares) gold - 20L plus 5L Silver. Home loan every month 61k, Car loan 39k, house rent 21k and 55k home expenses. Thinking to start my training business from home, can fetch 30k to 1L per month if done correctly. Planning to close my home loan (67L) full or partial (50L) and sell car or close partially loan (10L), outstanding is 15.5L. I have a daughter completing her 10th and took admission in 11th grade. Her annual college fees is 1.2L. We are moving in May to our own flat and have 3 shops in a slightly prime location (Chennai) however we can enjoy after 6 to 7 years. It is fetching today 35k (overall). Health insurance of 10L. After moving to new flat expected expenses per month - house expenses- 30k, Maintenance- 7k, my expenses - 25k, other exp- 10k to 15k.
Ans: Hello;

You must close you home loan(67 L) and car loan(15.5 L) in full from 3.3 Cr of overall savings.

That will leave you with a net savings of 2.475 Cr.

Keep 7.5 L as emergency fund in your saving account.

Keep 20 L in a liquid fund meant for your daughter's higher education. Gold(20 L) and Silver(5 L) holding may be used here if required.

Now your net savings is around 2.2 Cr. Buy an immediate annuity for this sum from an insurance company. Assuming 6% annuity rate you may expect a monthly income of 1 L post tax.

This will cover all your expenses at new residence and still leave something more in hand, which may reinvested in hybrid mutual funds to boost annuity income after 10 years.

All the best for your new venture.

Happy Investing;
X: @mars_invest

..Read more

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If you do not have an open marriage, then what you are doing is certainly wrong. When has cheating ever been right? Especially when you did not mention anything wrong with your husband. I am not judging you; but I would suggest that if you want to keep this up, you either come clean to your husband or let him go. This isn't fair. You living your life to the fullest should not harm or hurt others.
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Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 18, 2025

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I am selling my 3bhk flat around 6000000 is it compulsory to invest that money in other property? if i want to invest it what is the best options available to avoid tax?
Ans: Selling a property attracts capital gains tax. Since your flat is a long-term capital asset (held for more than 2 years), the Long-Term Capital Gains (LTCG) tax rate is 20% with indexation.

LTCG Calculation = Sale Price - Indexed Cost of Acquisition
Tax Payable = 20% on the LTCG amount
However, you can avoid paying tax by reinvesting the capital gains under certain sections of the Income Tax Act.

Ways to Save Capital Gains Tax
1. Reinvest in Another Residential Property (Section 54)
If you buy another residential property within 2 years or construct within 3 years, you get an exemption on the LTCG amount.
The new property must be in India and should be held for at least 3 years.
If you sell it before 3 years, the exemption is reversed.
? Best for: Those who want to own another property.

2. Invest in Capital Gains Bonds (Section 54EC)
You can invest up to Rs 50 lakhs in NHAI or REC capital gains bonds within 6 months of sale.
The lock-in period is 5 years.
Interest is taxable but the capital gains are exempt.
? Best for: Those who want a risk-free investment with tax savings.

3. Deposit in Capital Gains Account Scheme (CGAS)
If you haven’t decided where to invest, deposit the LTCG in a Capital Gains Account Scheme (CGAS) before the IT return filing deadline.
This gives you time to buy property or construct a house.
The funds must be used within 3 years, or they become taxable.
? Best for: Those who need time before investing in real estate.

Other Investment Options (But No Tax Exemption)
If you don’t reinvest in property or bonds, the LTCG amount will be taxed at 20%. You can still invest the remaining amount in:

Mutual Funds – Equity funds for long-term growth
Fixed Deposits – Safe returns but fully taxable
Stock Market – High risk, high return potential
These options do not offer tax exemption but help grow wealth.

Final Insights
If you want tax-free gains, reinvest in property or capital gains bonds.
If you don’t want to lock funds, pay LTCG tax and invest in other assets.
Use the Capital Gains Account Scheme if you need time to decide.
Plan based on your financial goals and liquidity needs.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 18, 2025

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Dear Sir, i'm 27 years old and wish to retire by 50. I live in my own home and investing 50k monthly sip to below funds from past 1 year. 20k tata small cap/ 10k parag parekh flexi cap/ 20k motilal oswal mid cap. Could you please guide me in long term if this would be sustainable or require some adjustments in funds or distribution? I'm hoping for higher returns to have enough big corpse at the time of retirement so not included large cap funds.
Ans: You are investing early, which is a great decision. Your goal of retiring at 50 is ambitious. A strong investment strategy will help achieve it.

Current Investment Overview
SIP Contribution – Rs 50,000 per month
Fund Allocation
Small Cap – Rs 20,000
Mid Cap – Rs 20,000
Flexi Cap – Rs 10,000
Investment Duration – 1 year completed
Key Observations
1. High Risk Allocation – Need for Balance
Your portfolio is heavily tilted toward small and mid caps.
These funds offer high returns but come with volatility.
A more balanced allocation will reduce risk.
2. Absence of Large Cap Exposure
Large caps provide stability in market downturns.
A portion of the portfolio should be in large-cap funds.
This will reduce portfolio fluctuations over time.
3. Flexi Cap Fund – Good Choice for Diversification
This fund type adjusts between market caps.
It provides flexibility based on market conditions.
Retain this fund for better risk management.
Recommended Adjustments
1. Optimizing Fund Distribution
Reduce small-cap allocation from Rs 20,000 to Rs 15,000.
Reduce mid-cap allocation from Rs 20,000 to Rs 15,000.
Add a large-cap fund with Rs 10,000 allocation.
Increase flexi-cap allocation from Rs 10,000 to Rs 15,000.
2. Adding Debt for Stability
As you get closer to retirement, reduce equity exposure.
Start a small allocation in debt funds after 40.
This will ensure capital protection.
3. Tax Planning Considerations
Capital gains tax will apply when you redeem funds.
LTCG above Rs 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
Plan withdrawals in a tax-efficient manner.
Final Insights
Continue SIPs with a more balanced allocation.
Add large-cap funds for stability.
Include debt funds closer to retirement.
Plan tax-efficient withdrawals in the future.
This strategy will ensure a strong retirement corpus.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 18, 2025

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Hi ... I have been very bad a financial planning and have been living the good life without really bothering about the future. I am 48 and work with a MNC and make around 4.5L per month after taxes. I am married with a 17 yr old son who's in 11th. I currently have savings in my bank and equity to the tune of 35L. I have been investing around 80K per month in SIP's for the last 3 years. I have an apartment which is worth around 4cr now and I have a home loan of around 1cr remaining on it. In addition, I have a personal loan of around 40L taken for home interiors (4 more years pending on it). I feel I am not really set up well for my retirement. What would you suggest? My monthly expenses after all this do not have any room for savings.
Ans: You have a strong income and investments. But high loans are affecting savings. You need a structured plan to reduce debt and secure retirement.

Current Financial Overview
Income

Rs 4.5 lakh per month after taxes
Investments & Savings

Rs 35 lakh in bank and equity
Rs 80,000 SIP per month (3 years)
Assets

Apartment worth Rs 4 crore
Loans

Home loan: Rs 1 crore remaining
Personal loan: Rs 40 lakh (4 years left)
Expenses

No room for additional savings after all expenses
Key Financial Concerns
1. Home Loan & Personal Loan – Priority on Repayment
Loan EMIs are affecting savings.
Reduce home loan tenure by increasing EMI, if possible.
Try to prepay the personal loan first. It has a higher interest rate.
Avoid taking more loans until these are cleared.
2. Retirement Planning – Building a Strong Corpus
Your current savings are low for retirement. You need a better plan.

Increase SIPs when personal loan is cleared.
Allocate funds across equity and debt for long-term growth.
Consider PPF, EPF, and debt funds for stability.
Gradually move funds to safer investments as retirement nears.
3. Son’s Higher Education – Plan Early
Your son will enter college in two years. You need a dedicated fund.

Start a separate SIP to cover education costs.
Use debt funds for short-term needs.
Avoid withdrawing from retirement savings for education.
4. Insurance – Protect Your Finances
Ensure you have term insurance of at least Rs 1.5 crore.
Maintain health insurance for family with a high cover.
Avoid traditional insurance plans with low returns.
Final Insights
Focus on repaying personal loan first.
Prepay the home loan gradually for financial freedom.
Increase SIPs once debt reduces.
Start a dedicated education fund for your son.
Build a diversified retirement corpus with equity and debt.
A disciplined approach will secure your future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8001 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 18, 2025

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Hello Sir, I am 49 Yrs of Age and working in Private Firm in Mid Management. Today my monthly expenditure is around 40000 and wants to retire at the age of 59-60. But my daughter is of 4 yrs only . As on date I invest on SIP - Monthly 40K and Equity - 1.5 Lks.. Portfolio of around 19 Lks. I have purchased two Flats -01 is free debt and on another Housing Loan of 21lks is upto 2032. FD is of around 35Lkhs. PF balance is of now- 22lkhs and PPF of Rs 6 lkh . Mediclaim for family of 50lkhs per year. Under 80 C - monthly premium of around 25 K along with terms plan of 50Lkhs. I want to purchase open plot in Nagpur for investment and future planning, Funds i will use from FD of around 25 Lks..is this wise decision? Also I have 35 lks parental Property but it will transfer to me after 10 Yrs .....Pls advise how to secure my daughter future and his education and also post retirement my expenditure.
Ans: You have a well-structured portfolio with SIPs, equity investments, FDs, and real estate. Your focus on retirement at 59-60 and securing your daughter’s future is crucial. Let’s assess your financial standing and guide you towards a more structured approach.

Current Financial Overview
Investments

SIP: Rs 40,000 per month
Equity: Rs 1.5 lakh lump sum investment
Total Portfolio: Rs 19 lakh
Real Estate

One flat is debt-free
Second flat has a Rs 21 lakh home loan till 2032
Fixed Deposits

Rs 35 lakh in FD
Provident Fund & PPF

PF Balance: Rs 22 lakh
PPF: Rs 6 lakh
Insurance & Tax Savings

Mediclaim: Rs 50 lakh per year
Life Insurance: Rs 50 lakh term plan
Monthly insurance premium under 80C: Rs 25,000
Future Real Estate Plan

Planning to invest Rs 25 lakh in an open plot in Nagpur
Parental Property

Rs 35 lakh property expected to be transferred in 10 years
Key Financial Considerations
1. Should You Invest Rs 25 Lakh in an Open Plot?
Real estate is not liquid, making it difficult to use in emergencies.
Selling at the right price may take years.
Property maintenance and legal issues can add costs.
Instead, consider investing in equity or mutual funds for higher flexibility.
It’s better to keep Rs 25 lakh diversified in liquid investments rather than real estate.

2. Retirement Planning – Securing Post-Retirement Expenses
Your current monthly expense is Rs 40,000. This will rise due to inflation. You need a solid retirement corpus.

Continue SIPs and Increase Contribution Yearly

Rs 40,000 SIPs are good, but increase them by 10% yearly.
This ensures long-term wealth creation.
Allocate FD Funds Wisely

FD returns are low and taxable.
Shift a portion to equity and hybrid funds for better growth.
Utilise PF and PPF Efficiently

PF will grow by retirement but won’t be enough alone.
Continue PPF for stable, tax-free returns.
Debt Fund Investments for Stability

Gradually move funds to debt funds five years before retirement.
This protects against market volatility.
Health Insurance is Well-Planned

Rs 50 lakh mediclaim is a strong financial shield.
Ensure coverage continues post-retirement.
3. Planning for Your Daughter’s Future
Your daughter is just four years old. You need a structured education and marriage fund.

Start a Separate SIP for Her Education

Allocate at least Rs 15,000 per month in equity funds.
Increase by 10% annually to cover rising education costs.
Use Debt Funds for Short-Term Needs

For school fees or immediate expenses, use debt funds.
These are safer than FDs and provide better returns.
Avoid Child ULIPs or Traditional Insurance Plans

These give low returns with high charges.
Instead, use mutual funds for higher growth.
Consider a Sukanya Samriddhi Account

This provides tax-free returns and stability for long-term goals.
Invest a small portion to diversify savings.
Final Insights
Avoid investing Rs 25 lakh in an open plot.
Increase SIPs yearly and allocate part of FD funds to mutual funds.
Start a dedicated education fund for your daughter.
Focus on equity growth while gradually securing assets in debt before retirement.
With structured planning, you can achieve financial security for yourself and your daughter.

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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