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Ramalingam Kalirajan  |4628 Answers  |Ask -

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

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Jun 15, 2024Hindi

Hi Sir, I’m a(Female)27-year-old practicing doctor planning to pursue my master’s in the coming year. I have two siblings, aged 23 and 25, who are still studying, and my mother is 55 years old. We have a deposit of 2.6 crore with an average return of 8%. No house loan, Our average monthly expenses are 1.2 lakhs. My mother and one sibling have medical insurance of 15 lakhs. Within three years, I am planning for my marriage. Please help me with saving a corpus for my marriage and increasing our net worth.

Ans: Planning your finances effectively is crucial to ensuring a secure future. As a 27-year-old practicing doctor, you are at a pivotal stage in your life where strategic financial planning can set you on the path to achieving your goals. Here is a comprehensive guide to help you save for your marriage, increase your net worth, and ensure your family's financial security.

Current Financial Situation and Analysis
First, let's assess your current financial situation. You have a deposit of Rs 2.6 crore, which generates an average return of 8% per annum. Your monthly expenses are Rs 1.2 lakhs. Your mother and one sibling have medical insurance of Rs 15 lakhs each.

Your immediate financial goals include saving for your marriage in three years, supporting your siblings' education, and ensuring your family's financial stability.

Monthly Expense Management
Managing your monthly expenses is crucial. Your current monthly expenses of Rs 1.2 lakhs seem reasonable. However, it is essential to review and categorize these expenses to identify areas where you can save.

Fixed Expenses: Rent, utilities, groceries, and transportation. These are non-negotiable and need to be budgeted accordingly.

Variable Expenses: Dining out, entertainment, and shopping. These can be managed and reduced if necessary.

Discretionary Expenses: Luxury items and vacations. These should be minimized to focus on your savings goals.

Creating a detailed monthly budget and tracking your spending can help you manage your expenses better and increase your savings.

Emergency Fund
Having an emergency fund is essential for financial security. This fund should cover at least six months of your monthly expenses, which amounts to Rs 7.2 lakhs. An emergency fund can protect you and your family from unexpected financial setbacks.

Saving for Your Marriage
Planning for your marriage in three years requires a dedicated savings strategy. Here are steps to ensure you have sufficient funds:

Estimate the Cost: Determine the estimated cost of your marriage. Consider all expenses, including venue, catering, attire, and other miscellaneous costs.

Create a Dedicated Fund: Open a separate savings account for your marriage expenses. This will help you track your progress and ensure the funds are not used for other purposes.

Regular Contributions: Set up automatic transfers to this account from your monthly income. This disciplined approach will ensure you steadily build your marriage fund.

Investment Strategies for Growth
To increase your net worth, it's crucial to invest your savings wisely. Here are some strategies to consider:

Diversified Mutual Funds: Investing in diversified mutual funds can provide good returns. Actively managed funds, guided by professional fund managers, can outperform index funds by selecting high-potential stocks.

Equity Mutual Funds: These funds invest in stocks and have the potential for high returns. They are suitable for long-term goals like wealth creation.

Debt Mutual Funds: These funds invest in fixed-income securities. They are less volatile and can provide stable returns, balancing the risk in your portfolio.

Systematic Investment Plan (SIP): Investing through SIPs allows you to invest a fixed amount regularly. This helps in averaging the cost of investment and mitigates market volatility.

Balanced Funds: These funds invest in a mix of equities and debt. They offer the potential for growth with reduced risk.

Insurance and Risk Management
Adequate insurance coverage is vital to protect your family's financial future. Here are some insurance strategies:

Health Insurance: Ensure that you and all your family members have adequate health insurance coverage. Medical expenses can be a significant financial burden without proper insurance.

Life Insurance: If you have any life insurance policies, review them to ensure they provide sufficient coverage. Term insurance is recommended as it offers high coverage at low premiums.

Disability Insurance: Consider purchasing disability insurance to protect your income in case of an unexpected disability that prevents you from working.

Financial Goals and Retirement Planning
Setting clear financial goals is essential for your long-term financial security. Here are some steps to achieve your financial goals:

Short-Term Goals: These include saving for your marriage and your siblings' education. Prioritize these goals and allocate funds accordingly.

Medium-Term Goals: Consider your plans for purchasing a house or other significant expenses. Start saving for these goals early.

Long-Term Goals: Retirement planning is crucial. Even though you are young, starting early can help you build a substantial retirement corpus.

Retirement Planning
To ensure a comfortable retirement, consider these strategies:

Employee Provident Fund (EPF): If you are employed, contribute to the EPF. This government-backed scheme provides a safe and steady return.

Public Provident Fund (PPF): This is another government-backed scheme with attractive interest rates and tax benefits. It has a lock-in period of 15 years, making it suitable for long-term savings.

National Pension System (NPS): This scheme offers a mix of equity, corporate bonds, and government securities. It provides tax benefits and a regular income post-retirement.

Mutual Funds for Retirement: Invest in retirement-specific mutual funds that offer a mix of equity and debt. These funds aim to provide growth and stability over the long term.

Supporting Your Siblings' Education
Your siblings' education is a significant financial responsibility. Here are steps to ensure they have the funds they need:

Education Loans: Explore education loans for your siblings. These loans can provide the necessary funds without straining your finances.

Scholarships and Grants: Research scholarships and grants available for their courses. This can significantly reduce the cost of education.

Savings Plans: Set up dedicated savings plans for their education expenses. Regular contributions can help you build a substantial education fund.

Tax Planning
Effective tax planning can help you save money and increase your net worth. Here are some tax-saving strategies:

Section 80C: Invest in tax-saving instruments like PPF, EPF, National Savings Certificate (NSC), and tax-saving mutual funds (ELSS) to avail deductions under Section 80C.

Section 80D: Claim deductions on health insurance premiums paid for yourself and your family under Section 80D.

Home Loan Interest: If you plan to take a home loan, claim deductions on the interest paid under Section 24(b) and the principal repayment under Section 80C.

Other Deductions: Utilize other available deductions like education loan interest (Section 80E) and donations (Section 80G).

Increasing Your Net Worth
Increasing your net worth involves a combination of saving, investing, and managing your liabilities. Here are some tips:

Regular Savings: Ensure you save a portion of your income regularly. This disciplined approach can significantly boost your savings over time.

Smart Investments: Invest your savings in high-potential instruments like mutual funds, stocks, and bonds. Diversify your portfolio to balance risk and return.

Avoid Debt: Minimize your debt and avoid unnecessary loans. High-interest debt can erode your savings and reduce your net worth.

Increase Income: Explore opportunities to increase your income. This could include taking on additional work, starting a side business, or investing in income-generating assets.

Regular Financial Review
Regularly reviewing your financial plan is crucial to ensure you stay on track to achieve your goals. Here are some tips:

Annual Review: Conduct an annual review of your financial plan. Assess your progress towards your goals and make necessary adjustments.

Life Changes: Update your financial plan in response to significant life changes like marriage, birth of a child, or a change in employment.

Market Conditions: Stay informed about market conditions and adjust your investments accordingly. Consult with a Certified Financial Planner (CFP) to get professional advice.

Final Insights
Planning your finances is a continuous process that requires regular review and adjustment. By managing your expenses, saving diligently, investing wisely, and ensuring adequate insurance coverage, you can achieve your financial goals and secure your family's future.

Your proactive approach to financial planning is commendable. Continue to educate yourself on financial matters and seek professional advice when needed. Remember, a well-planned financial strategy can provide you with peace of mind and a secure future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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 Kalirajan  |4628 Answers  |Ask -

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

Asked by Anonymous - Mar 20, 2024Hindi
Pabak Asked on - Mar 16, 2024 I am 70, my wife 56, have a working daughter 25, yet to get married. I have a corpus as follows: Please advise how to re-arrange my savings to generate 35K pm. Daughter's marriege budget is 20 lakh. Presently invested in wife' head Rs. 30lakh in post office TDs laddered for matyrity from 2025 in 4 years( 7Lin 2025, 13Lakh in 2026, 6.5 lakh in 2027 and rest 3.5 lakh in 2028. In my head: SCSS Rs 30 Lakh . In Ujjivan Bank FD 10 Lakh, In running PPF with contribution Rs. 35 Lakh. Total 1.05 Cr. Further I have 9 Lakh in MIS jointly with wife. Regards,
Ans: Hello Pabak,

Firstly, it's commendable that you have a structured approach towards managing your savings at 70. Your concern for your daughter's marriage and planning for a regular income is indeed thoughtful.

To generate 35K pm from a corpus of 1.05 Cr, a withdrawal rate of approximately 4% annually would be required. However, considering your daughter's marriage budget of 20 lakh and other financial commitments, it's essential to strike a balance between growth and liquidity.

Given the laddered maturity of post office TDs, it aligns well with your near-term requirements. However, to optimize returns, you might consider diversifying a portion from SCSS and Ujjivan Bank FD into debt funds or conservative balanced funds. This can potentially enhance returns while maintaining liquidity.

Your PPF contribution of 35 lakh can continue to grow, providing a tax-efficient and secure avenue for long-term savings. Additionally, the 9 lakh in MIS jointly with your wife can be a source of regular income.

A Certified Financial Planner can offer personalized advice, analyzing your financial landscape, and suggesting adjustments tailored to your financial goals, risk tolerance, and investment horizon. They can guide you on optimizing your portfolio to meet both short-term and long-term financial needs, ensuring a balance between growth and income.

Remember, a well-structured financial plan not only meets your financial goals but also offers peace of mind, allowing you to cherish moments with your loved ones.

..Read more


Ramalingam Kalirajan  |4628 Answers  |Ask -

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

Asked by Anonymous - Jun 17, 2024Hindi
Hi sir, I am 29 years old and having 3 months old kid, working in IT earning 90k monthly and I have NPS of 5k. I have a personal loan of 14L and I pay 30k loan for it and monthly expenses is about 40k. I invest in mutual fund 15k. I am planning to have Corpus of 10cr in my 50s..can you help me to plan sir.
Ans: You're doing a great job balancing work and finances at 29, especially with a 3-month-old child. You're earning Rs. 90,000 per month, contributing Rs. 5,000 to NPS, and investing Rs. 15,000 in mutual funds. You also have a personal loan of Rs. 14 lakh with an EMI of Rs. 30,000 and monthly expenses of Rs. 40,000.

Understanding Your Financial Goals
You aim to build a corpus of Rs. 10 crore by your 50s. This goal is ambitious but achievable with disciplined saving and smart investing. Let's break down your current situation and outline a plan to help you reach this goal.

Creating a Strong Financial Foundation
Emergency Fund
Before diving deeper into investments, establish an emergency fund. Save 6-12 months' worth of expenses in a liquid, easily accessible account. This fund acts as a safety net for unforeseen events and provides financial stability.

Paying Off Debt
Your personal loan of Rs. 14 lakh with a monthly EMI of Rs. 30,000 is significant. Paying off this debt should be a priority. Focus on repaying high-interest loans first to reduce the financial burden and free up more money for investments.

Investing in Mutual Funds
Diversifying Your Portfolio
Investing Rs. 15,000 per month in mutual funds is a good start. Consider diversifying your portfolio across different types of mutual funds to spread risk and increase potential returns. Here’s a suggested allocation:

Large-Cap Funds: 30% of your investment
Mid-Cap Funds: 30% of your investment
Small-Cap Funds: 20% of your investment
Flexi-Cap Funds: 20% of your investment
Benefits of Actively Managed Funds
Actively managed funds have the potential to outperform the market indices. Fund managers actively select stocks that can offer better returns. This approach can be more beneficial than investing in index funds, which simply track market indices.

National Pension System (NPS)
Enhancing Your NPS Contribution
Currently, you're contributing Rs. 5,000 per month to NPS. Consider increasing this contribution over time. NPS offers tax benefits and is a good long-term investment for retirement planning. The additional tax benefits under Section 80CCD(1B) can also help reduce your taxable income.

Exploring Other Investment Options
Equity-Linked Savings Scheme (ELSS)
ELSS funds offer tax benefits under Section 80C and have a lock-in period of three years. They invest primarily in equities and can provide good returns. Allocating a portion of your savings to ELSS can help you save on taxes and grow your wealth.

Public Provident Fund (PPF)
PPF is a safe investment option with tax-free returns. It has a 15-year lock-in period, making it suitable for long-term goals. Consider investing in PPF to balance the risk in your portfolio and ensure steady returns.

Systematic Investment Plans (SIPs)
Consistent Investing
Continue your SIPs in mutual funds. SIPs allow you to invest a fixed amount regularly, which helps in averaging the purchase cost and reducing the impact of market volatility. Increasing your SIP amount as your income grows can significantly boost your corpus over time.

Avoiding High-Risk Investments
Caution with Direct Stock Trading
While direct stock trading can offer high returns, it comes with significant risks. Unless you have in-depth market knowledge and time to monitor stocks, it's better to stick with mutual funds. Professional fund managers have the expertise to make informed decisions and manage risks effectively.

Financial Discipline and Budgeting
Maintaining a Budget
Keep a detailed record of your income and expenses. A budget helps you identify unnecessary expenses and allows you to allocate more towards savings and investments. Financial discipline is crucial in achieving your long-term goals.

Regular Savings
Apart from investments, ensure you save a portion of your income regularly. Set aside at least 20-30% of your income for savings and investments. Automating your savings can help maintain consistency and discipline.

Tax Planning
Maximizing Tax Benefits
Utilize tax-saving instruments like NPS, ELSS, and PPF to reduce your taxable income. Efficient tax planning can help increase your investable surplus, enabling you to invest more towards your financial goals.

Reviewing and Rebalancing Your Portfolio
Regular Monitoring
Review your investment portfolio at least once a year. This helps you assess the performance of your investments and make necessary adjustments. Rebalancing your portfolio ensures it remains aligned with your risk tolerance and financial goals.

Planning for Child’s Future
Education and Other Expenses
Start a dedicated investment plan for your child’s education and future needs. Consider child-specific mutual funds or PPF for these goals. Investing early ensures you have a substantial corpus when required.

Insurance and Protection
Health and Life Insurance
Ensure you have adequate health insurance for your family to cover medical emergencies. Additionally, a term life insurance policy is crucial to protect your family’s financial future in case of any unforeseen events. Insurance acts as a safety net and prevents your investments from being used for emergencies.

Long-Term Wealth Creation
Compounding and Time
The power of compounding works best over a long period. By starting early and investing consistently, your money grows exponentially. The longer you stay invested, the more your wealth grows.

Staying Invested
Market fluctuations are normal. Avoid the temptation to withdraw your investments during market downturns. Staying invested through ups and downs helps in realizing the full potential of your investments.

Final Insights
Achieving a corpus of Rs. 10 crore by your 50s is ambitious but attainable with disciplined saving and strategic investing. Prioritize paying off your personal loan, build an emergency fund, and ensure adequate insurance coverage. Continue with your mutual fund SIPs and diversify your portfolio. Increase your NPS contributions and consider tax-saving instruments like ELSS and PPF. Regularly review and rebalance your portfolio, maintain financial discipline, and stay invested for the long term. This holistic approach will help you reach your financial goals and secure a prosperous future for your family.

Best regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner


..Read more

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Nayagam P

Nayagam P P  |1881 Answers  |Ask -

Career Counsellor - Answered on Jul 13, 2024

Dear Sir, I have an offer from Manipal Udupi (main campus) in joining Mechanical (from 3rd round of counseling). I am not interested on Mechanical, and I do not have any other offers in hand. I am thinking of dropping this year and preparing of JEE next year. Please note, my JEE result was below 80% percentile and PCM at 80% this year. Is it advisable to drop a year or going with Mech in Manipal-U (I am hearing that there would be few more intra-campus counselling rounds which might change my position from mech to other streams like electrical or electronics.
Ans: Bibek, what are you are referring is sliding / upgrading to other streams. Please note this depends upon the demands by other students belonging to Mechanical for ECE/CSE/EEE etc. and also your academic performance in 1st year. I normally do not recommend 'drop'. Besides, keeping in view your score in Board/JEE, it is not advisable. Better to join Manipal-Main Campus for Mechanical & try for sliding.

Some suggestions before / after joining Manipal. (1) Have a thorough research about Manipal Main Campus about its culture, hostel facilities, internship opportunities, placement records, infrastructure, faculties, quality of teaching etc. to yourself get mentally prepared (2) Keep upgrading your skills (3) Create a Professional LinkedIn Profile and keep updating it every 3-months, using keywords related to your domain / skills (4) Put Job Alerts in LinkeIn to get notifications to know about Job Market Trends to keep yourself updated (5) Connect with Professionals of your domain (not to ask for jobs) to gain knowledge from them and their views. All the Best for Your Bright Future.

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I had requested a company to provide internship plus project for my regular M.Tech course, instead i was offered internship plus job and contribution to pf was also there. In 3rd Sem we need to do internship which ended at Jan 2021, pf contribution started for month of October 2020. In 4th sem, no subject only project and i continued my job and project parallely This was during covid time, will this be a problem to work in IT gaint like TCS, If Yes, what best can i do ?
Ans: Having both an internship and a job during your M.Tech is commendable. It shows your commitment and multitasking abilities. The contribution to your provident fund (PF) is an added benefit. Remember, many successful professionals have navigated similar situations. Your dedication and adaptability will be valuable assets.

The pandemic accelerated the move toward hybrid workplaces, combining remote and in-person work. IT companies are increasingly open to flexible arrangements. Highlight your adaptability and remote work experience during interviews.

Update your resume and LinkedIn profile to reflect your internship, job, and project experience. Emphasize the skills you gained during your job and project. Showcase any relevant technologies or tools. Connect with professionals in your field. Attend virtual events and webinars. Prepare for technical interviews. Practice coding, algorithms, and system design. Understand TCS’s work culture, values, and projects. During interviews, explain your situation honestly. Highlight your achievements and how you managed both work and studies.

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Ans: Job searches can be challenging, but persistence pays off. Remind your son to stay positive, keep refining his approach, and learn from any setbacks. Remember that every student’s journey is unique, and there’s no one-size-fits-all solution. Encourage your son to explore both on-campus and off-campus options, and support him throughout the process. Your son’s strong CGPA can certainly attract recruiters during these placement drives.

If on-campus placements don’t yield immediate results, off-campus placements are an alternative. Off-campus placements involve applying directly to companies outside the college. Your son can explore job portals, company websites, and networking platforms to find relevant job openings. Tailor his resume, write personalized cover letters, and apply proactively.

While waiting for placements, your son can enhance his skills. Consider certifications, online courses, or projects related to mechanical engineering. Practical experience and domain-specific knowledge can make him more attractive to employers. Networking plays a crucial role in off-campus placements. Encourage your son to connect with alumni, industry professionals, and attend job fairs or industry events.

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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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