Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Sunil

Sunil Lala  |201 Answers  |Ask -

Financial Planner - Answered on Apr 18, 2024

Sunil Lala founded SL Wealth, a company that offers life and non-life insurance, mutual fund and asset allocation advice, in 2005. A certified financial planner, he has three decades of domain experience. His expertise includes designing goal-specific financial plans and creating investment awareness. He has been a registered member of the Financial Planning Standards Board since 2009.... more
Amit Question by Amit on Mar 13, 2024Hindi
Listen
Money

Sunil, as a financial expert, given the financial profile of someone like me - a 42-year-old individual earning a monthly salary of 1.6 lakh rupees, owning two self-occupied flats in Mumbai and Pune, with monthly obligations of approximately 70,000 rupees, and an EPF balance of around 30 lakh rupees - do you think it's realistic to aim to grow the EPF balance to 2.5 crore rupees over the next 10 years, possibly through contributions to EPF and VPF? What specific strategies or adjustments would you recommend to achieve this ambitious goal?

Ans: It's better to do SIP in equity mutual funds than putting money in VPF
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.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |6528 Answers  |Ask -

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

Asked by Anonymous - May 12, 2024Hindi
Listen
Money
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

..Read more

Ramalingam

Ramalingam Kalirajan  |6528 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 13, 2024

Asked by Anonymous - Jun 09, 2024Hindi
Money
Hello, I want to get advise upon financial planning, my target is to generate atleast 4+ crores by 2046. Currently I am 29 years old, have stated my SIP from year 2021 of Rs 1000 and have gradually increased to 5k since last year. My SIP goes in quant small cap fund direct plan growth the present value of my invested amount is Rs 225036 and have stock portfolio of Rs 90855 (including 4qty of SGB), over all my shares invested present value is Rs 134112. Additionally have an FD of Rs 50k, and have lately started investing in PPF Rs 1000, also have covered myself with health insurance policy of SI Rs 10 lakh. Suggest me how can I scale up my investments and schemes where I can reach to the set aim. Also, should I go for Post Office scheme KVP or keep continuing with PPF. I am earning 45k/month, and don't have any liabilities or loans.
Ans: Firstly, let me congratulate you on setting a clear financial target. Generating Rs 4+ crores by 2046 is an ambitious yet achievable goal with disciplined savings and smart investments. You're 29 years old, and you have about 22 years to achieve this target. You’ve made a good start by investing in SIPs, stocks, and PPF, and it’s excellent that you have health insurance coverage as well.

Current Financial Overview
Let's start by reviewing your current financial situation:

SIP Investment: Started in 2021 with Rs 1000, increased to Rs 5000 since last year, invested in a small cap fund direct plan growth. Present value: Rs 225036.
Stock Portfolio: Current value: Rs 134112.
Fixed Deposit: Rs 50,000.
Public Provident Fund (PPF): Recently started with Rs 1000.
Health Insurance: Sum Insured of Rs 10 lakhs.
Monthly Income: Rs 45,000.
No liabilities or loans.
Investment Strategy to Achieve Rs 4+ Crores
To achieve your goal of Rs 4+ crores by 2046, you need a well-structured investment plan. Let's break down the steps:

1. Increase Your SIP Contributions
Your SIP contributions are currently at Rs 5000 per month. Given your income and lack of liabilities, you can gradually increase this amount. Aim to increase your SIP contribution by 10-15% each year. This compounding effect over 22 years will significantly boost your corpus.

Why Increase SIP?

Power of Compounding: Higher contributions lead to higher returns over time.
Rupee Cost Averaging: Regular investments reduce the risk of market volatility.
2. Diversify Your Mutual Fund Portfolio
Currently, your SIP is in a small cap fund, which is high-risk but can offer high returns. However, diversification is crucial. Consider investing in a mix of:

Large Cap Funds: These funds are less volatile and provide stable returns.
Mid Cap Funds: Balanced risk and return.
Multi Cap Funds: Invest across market capitalizations, offering diversification within the fund.
Benefits of Diversification:

Reduced Risk: Spread investments across different sectors.
Stability: Large and mid cap funds offer more stability compared to small caps.
3. Review and Adjust Your Stock Portfolio
Your stock portfolio has a present value of Rs 134112, which includes 4 units of Sovereign Gold Bonds (SGB). Continue monitoring your stocks and ensure diversification here as well. Investing in blue-chip stocks can provide stable growth, while mid and small cap stocks can offer higher returns.

Stock Investment Tips:

Regular Review: Keep track of your investments and market trends.
Diversify: Invest in different sectors to mitigate risks.
Long-Term Holding: Focus on long-term growth rather than short-term gains.
4. Continue with PPF Investments
PPF is a secure, tax-free investment option. It’s wise to continue investing in PPF due to its safety and tax benefits. Aim to increase your PPF contribution to Rs 5000 per month. This will provide a stable, risk-free component to your portfolio.

Why Continue PPF?

Tax Benefits: Contributions are eligible for tax deductions.
Safety: Backed by the government, ensuring capital protection.
Long-Term Growth: Compounded annually, offering attractive returns.
5. Avoid Direct Funds and Index Funds
Direct funds and index funds have their disadvantages. Direct funds require active management, which can be time-consuming and challenging without professional help. Index funds, on the other hand, are passively managed and may not outperform actively managed funds, especially in the Indian market.

Disadvantages of Index Funds:

Limited Flexibility: Restricted to the performance of the index.
Average Returns: May not capture high-growth opportunities.
Market Fluctuations: Susceptible to market downturns without active management.
6. Increase Your Health Insurance Cover
A health insurance cover of Rs 10 lakhs is good, but given the rising medical costs, it’s advisable to enhance your coverage. Consider a family floater plan if you plan to include dependents in the future.

Benefits of Increased Coverage:

Financial Security: Covers higher medical expenses.
Comprehensive Care: Access to better medical facilities and treatments.
7. Explore Actively Managed Mutual Funds
Actively managed funds are overseen by professional fund managers who make investment decisions based on market research and analysis. These funds can potentially offer higher returns compared to index funds.

Advantages of Actively Managed Funds:

Professional Management: Fund managers actively seek growth opportunities.
Higher Returns: Potential to outperform the market.
Flexibility: Adapt to changing market conditions.
8. Avoid Real Estate and Annuities
Real estate and annuities are not recommended due to their illiquid nature and lower returns compared to other investment options. Focus on more liquid and higher-growth investments like mutual funds and stocks.

9. Emergency Fund
You should maintain an emergency fund equivalent to 6-12 months of your expenses. This will safeguard you against any unexpected financial crises without disrupting your investment plan.

Building an Emergency Fund:

Liquid Investments: Keep it in savings accounts or liquid mutual funds.
Regular Savings: Allocate a portion of your income each month.
10. Regularly Review Your Financial Plan
Financial planning is not a one-time activity. Regularly review and adjust your investments based on your changing financial situation and market conditions.

Importance of Regular Review:

Stay on Track: Ensure your investments align with your goals.
Adjust to Changes: Adapt to life events and market shifts.
Optimize Returns: Make necessary adjustments to maximize growth.
Final Insights
Reaching your target of Rs 4+ crores by 2046 requires disciplined savings and strategic investments. By increasing your SIP contributions, diversifying your mutual fund and stock portfolio, continuing with PPF, and regularly reviewing your financial plan, you can achieve your goal.

Remember, a Certified Financial Planner (CFP) can provide personalized advice and help you stay on track. It's great to see your proactive approach to financial planning at such a young age. Keep up the good work, and you will surely reach your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |6528 Answers  |Ask -

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

Asked by Anonymous - Jul 01, 2024Hindi
Listen
Money
Hi Sir, I am a 32 year old (Private sector employee) with annual earning of 1.1 lakhs per month living with my wife in Hyderabad. I have a corpus of Rs. 6,00,000 through mutual funds, wherein I invest Rs. 25,000/month (divided in large-cap, small-cap, mid-cap and flexi-cap), Voluntary PF savings account in which I have started saving 10,000/month from January , 2024. I also have Home loan, personal loan for which I pay EMIs of Rs. 43,000 on monthly basis. My long-term target is to accumulate Rs. 15 crore by the age of 48-50 years. Please guide on the correct pathway to reach tht goal.
Ans: Current Financial Status

At 32, you have a good income and investment habit. Your annual earning is Rs 1.1 lakhs per month. Your investments and savings include:

Mutual Funds: Rs 6,00,000 corpus with Rs 25,000/month investment.
Voluntary PF: Rs 10,000/month started from January 2024.
EMIs: Rs 43,000/month for home loan and personal loan.
You aim to accumulate Rs 15 crores by 48-50 years.

Evaluating Investments

Your current investments are a good mix. Here’s an evaluation:

Mutual Funds: Investing in large-cap, small-cap, mid-cap, and flexi-cap funds is wise. This provides diversification and growth potential.
Voluntary PF: This is a good addition for long-term stability and tax benefits.
Loan Repayment Strategy

Your EMIs are Rs 43,000/month. Paying off loans early can free up more funds for investment.

Prioritize High-Interest Loans: Pay off personal loans first if they have higher interest rates.
Consider Prepayments: Use bonuses or windfall gains to make prepayments on your home loan.
Increasing Investments

To reach your goal of Rs 15 crores, you need to increase your investments. Consider the following:

Increase SIP Amount: Gradually increase your SIP in mutual funds. Aim to invest a higher percentage of your income.
Additional Investments: Consider other growth-oriented options like equity mutual funds. Avoid direct funds; regular funds through an MFD with CFP credentials offer better management.
Tax Efficiency

Utilize Tax Benefits: Maximize tax-saving investments under Section 80C, 80D, and 80CCD.
Review Tax Plans: Regularly review your tax-saving instruments to ensure efficiency.
Emergency Fund

An emergency fund is crucial. Aim to save at least 6-12 months of expenses in a liquid fund. This provides a safety net for unexpected events.

Insurance Coverage

Health Insurance: Ensure you have adequate health coverage for you and your family.
Life Insurance: Opt for a term insurance plan. This secures your family's future in case of any unforeseen event.
Retirement Planning

Set Clear Goals: Define your retirement lifestyle and expenses.
Regular Contributions: Continue regular contributions to your retirement funds like PF and mutual funds.
Regular Review and Adjustment

Monitor Investments: Regularly review your portfolio’s performance. Adjust based on market conditions and life changes.
Certified Financial Planner: Consult a Certified Financial Planner for personalized advice. They can help you stay on track with your goals.
Disadvantages of Direct and Index Funds

Direct funds might seem cost-effective but can be time-consuming and require expertise. Index funds lack flexibility and may underperform actively managed funds. Regular funds through an MFD with CFP credentials provide better professional management.

Final Insights

You have a strong foundation with your current investments and savings. To reach Rs 15 crores by 48-50 years, increase your investments, manage loans efficiently, and ensure tax efficiency. Regularly review your financial plan and consult a Certified Financial Planner for tailored advice. This will help you achieve your financial goals and secure your future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Milind

Milind Vadjikar  |351 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 07, 2024

Asked by Anonymous - Oct 07, 2024Hindi
Listen
Money
Hi Sir, Im 29 male,earning 75k post deductions, Im having 1.6Y baby,Ive term insurance and corporate health insurance. Ive set my goals as below Daughter education anount-(50-60 Lakhs) Considering the current fee structure assuming it would be this much Note:Amount mentioned for her whole education carrer. House purchase: It a long term goal I wanted to purchase own house. Not sure how much cost it would be in Bangalore after 10y.Kindly suggest how much one should save for the same. Retirement goal: For Retirement I would like to have a corpus of 2CR. Considering the above goals How can I achieve,Im doing investments as below 14K SIP Started from this year At present invested around 73K Direct stock value:65K SSY: 2K per month Emergency fund: Holding 6 month expenditure Liquid Amount 1L And I have a personal loan which will be completed by APR 2025. This is my current financial condition. Please suggest how can I achieve my Goals as per the current financial plan.
Ans: Hello;

I hope your term life cover is adequate (1.35-1.8Cr).
Apart from corporate health insurance it is always better to have personal health care cover as a precaution.

Glad to note that you reckoned these as important aspects of financial planning and mentioned about it upfront.

Now I recommend you the following:
Kid's higher education: 1 Cr (50-60L is less)
Retirement Corpus: 2 Cr
House: 1.75 Cr (Approx cost of 2 bhk flat in decent locality of Bengaluru 10 years hence)

Investments to fund these goals:
1. Kid's education:
Two investments will work in parallel to reach the goal.
12.5 K per month in SSY
10 K SIP in a aggressive hybrid mutual fund. Both these investments will yield corpus of around 46 L and 54 L in 15 years from now.(8% and 13% returns assumed respectively). So 1 Cr target achievable.

House: 14 K monthly sip will grow into a corpus of 35 L(=20% down payment for house worth 1.75 Cr; Balance through home loan)

Retirement corpus:
Start a monthly sip of 5 K flexicap mutual fund which will give corpus of 2.21 Cr, after 30 years.

Retirement corpus estimated on relatively lower side so request you to top it up as and when possible. Ofcourse you may have EPF which may complement it.

Do not dabble into direct stocks unless you have the knowledge and temperament to trade.

If you still want to do it earmark a fixed amount as your risk capital which you wouldn't mind even if it becomes zero and use it to deal in stocks, but strictly based on self knowledge and/or guidance from an investment advisor. Not based on TV and social media tips!!

6 month emergency fund provision in liquid funds is a good strategy.

Happy Investing!!

You may follow us on X at @mars_invest for updates.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

...Read more

Milind

Milind Vadjikar  |351 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 07, 2024

Asked by Anonymous - Oct 05, 2024Hindi
Listen
Money
I am 41 years old........ I am earning approximately 1.7 lakh per month...... My family liability is approximately 50000 per month.......i have a liability of 10 lakh home loan for which i am paying 12500 monthly EMI.......my investment include 40000 per month in PPF, 4200 in NPS and 3 lakh invested in mutual funds......I own a house worth 70 lakh and a plot of land worth 30 lakh.......please guide me for my forther planning as i will retire at age of 54 on 2037.
Ans: Hello;

If you are sure about not using the land plot in future then I suggest you sell it and invest the proceeds into mutual funds.

So land sell proceeds(30 L) + existing corpus of 3 L if stays invested in pure equity mutual funds for next 13 years, it will yield you a corpus of 1.62 Cr.

Also I recommend you to start a monthly sip of 50 K into pure equity fund for 13 years. At the end of 13 years it may yield you a corpus of around 2.04 Cr. (A modest return of 13% is assumed for all mutual fund investments)

NPS investment will not mature till you reach 60 so I am keeping it out of our working.

Your contribution of 40 K per month to EPF+PPF(PPF contribution cannot be more then 1.5 L per person per year) will grow into a corpus of 1.1 Cr after 13 years.(A modest return of 8% is assumed)

So your comprehensive corpus in 2037 will be 1.62+2.04+1.1= 4.76 Cr.

If you buy an immediate annuity from an insurance company for your corpus of 4.76 Cr, you may expect a monthly payout of 1.66 L(post tax) considering annuity rate of 6%.

If you don't want to sell the land parcel then I recommend you to start an sip of 60 K per month for 13 years. This may yield you a corpus of 2.45 Cr after 13 years.

3 L current MF corpus will grow to 0.1469 Cr after 13 years

So your comprehensive corpus now is 2.45+1.1+0.1469=~3.70 Cr

If you buy an immediate annuity from an insurance company for your corpus of 3.7 Cr then you may expect to receive a monthly payout of 1.3 L(post tax).

Further NPS will yield you a corpus of 25.5 L at the attainment of 60 years of age.(9% return considered; hoping you will continue to contribute after your retirement at 54 age)

I am sure you have adequate term life insurance and healthcare insurance for yourself and family.

You are ready to retire at 54 as planned.

Happy Investing!!

You may follow us on X at @mars_invest for updates.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

...Read more

Radheshyam

Radheshyam Zanwar  |968 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Oct 07, 2024

Listen
Career
My son is doing his XII Standard in CBSE Curriculum with Maths,Physics, Chemistry and Biology as his group. He is yet to decide on what next after XII with his mind wavering between Astro Physics or Micro Biology with NEET in mind. Any guidance is welcome.
Ans: Hello Srinivasan.
I am glad to hear that your son is exploring diversified fields at this early stage. Astrophysics and Microbiology both are fascinating and rewarding paths, but they differ significantly in terms of the career options and the type of studies involved.
My suggestion for your son would be to focus only on the NEET examination at this stage. There is no need to divert the mind without any reason at this stage. After the NEET examination is over, you have ample time to discover more career options along with Astrophysics and Microbiology. The inclination toward career options of a student changes multiple times during the 11th and 12th. If he is brilliant, a hard worker, and dedicated to his studies, then set a goal of Min 650 marks in the NEET examination.
For Astrophysics: Focus on excelling in Physics and Maths in XII. He can apply to top institutions like IISc, IITs, or IISERs for B.Sc. programs.
For Microbiology: Prepare for NEET if he wants to take the medical path. Otherwise, he can explore a B.Sc. in Microbiology at a reputable university.

Best of luck for his future career and upcoming NEET examination.

If you are dissatisfied with the reply, please ask again without hesitation.
If satisfied, please like and follow me.
Thanks.

Radheshyam

...Read more

Milind

Milind Vadjikar  |351 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 07, 2024

Asked by Anonymous - Oct 07, 2024Hindi
Listen
Money
Now I'm 43 years old, but next 5 year's I need 3cr with best mutual funds to invest and son education, marriage and my retirement, currently I have housing loan commitment. 70lakhs, how should I close my loan ASAP and I should have 3cr in my hand. Kindly help me, I'm in scary situation, I'm working in private sector 95k my take home and current home loan emi is 63k, 4500 recently started investment through groww app in parakh Parikh small fund, 12500 in PPF etc, kindly help. I'm completely in debt trap.
Ans: Hello;

General Comments:
People always delay retirement planning for later stage but this is not ok.

Because when you are young the investible surplus amount maybe less but you have the biggest resource, time on your side.

A mere 25K monthly sip can achieve 3 Cr in 20+ years

Query Specific Comments:
If you need this corpus in 5 years then you need to make a monthly sip of 3.55 Lacs Minimum to reach 3 Cr corpus in 5 yrs.(modest return of 13% considered).

Focus on improving your earning because then you can earmark larger amounts for investing towards your goals.

Also try to prepay the home loan as early as possible through EPF corpus or some asset sale.

Do not panic if you diligently pre-close the home loan you have ample time to invest and create a comfortable corpus for your goals.

Continue investing in MFs with increasing allocation, PPF to reach your goals.

Happy Investing!!

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

...Read more

Milind

Milind Vadjikar  |351 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 07, 2024

Asked by Anonymous - Oct 07, 2024Hindi
Listen
Money
I am 24 years old and earn a monthly salary of Rs.65,000. I am interested in investing some of my funds for future financial security and am also planning to marry in two years. As I have no prior knowledge of investment, I would greatly appreciate guidance on this matter.
Ans: Hello;

First and foremost buy a good term life cover including riders for critical care and accident benefit.

Ensure that you can top-up the sum assured later when you grow your responsibilities after marriage.

For retirement planning you should consider investing in NPS. If your office provides it well and good but otherwise also you can open NPS account and contribute regularly for financing your retirement. It's an E-E-E type of scheme. Charges are quite low and you can decide to select allocation to the asset classes like equity, corporate debt or sovereign bonds as per your risk tolerance. It allows limited withdrawal before 60.

If you decide to contribute to NPS per month an amount of 20 K, it will grow into a corpus of 6.51 Cr by the time you are 60 years of age.(A modest return of 9% is considered)

For all other goals such as marriage, house, kid's education, car, vacation you can use mutual funds as your mode of investments.

If you do a monthly sip of say 15 K into a pure equity mutual fund then at the end of 5 years you may expect to receive a corpus of 12.72 L considering moderate return of 13%.

Happy Investing!!

You may follow us on X at @mars_invest for updates.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.

...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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x