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Sunil

Sunil Lala  |203 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
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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.
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Ramalingam

Ramalingam Kalirajan  |7290 Answers  |Ask -

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

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

..Read more

Ramalingam

Ramalingam Kalirajan  |7290 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  |7290 Answers  |Ask -

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

Asked by Anonymous - Jul 01, 2024Hindi
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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
Ramalingam

Ramalingam Kalirajan  |7290 Answers  |Ask -

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

Asked by Anonymous - Dec 21, 2024Hindi
Money
Hi Sir, I follow your articles regularly and your detailed assessment is really awesome.I am 47yrs Male with wife, 20&18 years kids, elder one is in B.Tech and younger one is 12th. My wife is a home maker. Coming to financials. I have 4 houses including the one residing worth 10cr(total) and getting rental income of 70k per month, invested in stocks and MFs worth 60L, have foreign stocks of worth 1.7cr, accumulated pf around 1.3cr. I have farm lands worth 5cr. Have 1.2cr loan and salary of ~4L (net). current sips in equity 70k/month, have 5Cr term plan, health insurance for family 50L. How do I plan my retirement at 52-53years assuming 80 years life expectancy. Don't want to depend on kids and need regular income ~3-4L per month.
Ans: Asset Evaluation
Real Estate:
You own four houses worth Rs 10 crore, generating Rs 70,000 monthly rental income. This is a solid base for passive income. However, real estate can have fluctuating maintenance costs, tenant issues, and varying rental yields over time.

Stocks and Mutual Funds:
Your Rs 60 lakh investment in stocks and mutual funds is a commendable step. Active mutual funds offer professional fund management and can outperform index funds over time.

Foreign Stocks:
Your Rs 1.7 crore portfolio in foreign stocks adds geographical diversification. Monitor currency exchange fluctuations and global market trends.

Provident Fund (PF):
With Rs 1.3 crore in PF, this is a reliable retirement corpus. The fund provides fixed returns and tax benefits, adding stability.

Farm Lands:
Farm lands worth Rs 5 crore are an illiquid but valuable asset. They might not generate consistent income unless leased or developed.

Loans:
A loan liability of Rs 1.2 crore needs prioritised repayment. Focus on loans with higher interest rates first.

Insurance Coverage:
A Rs 5 crore term plan is robust. Your Rs 50 lakh health insurance is sufficient for unexpected medical emergencies.

Retirement Goals
You need Rs 3–4 lakh monthly for 27–28 years post-retirement.
The portfolio must generate steady, inflation-adjusted returns.
Action Plan for Retirement
Debt Management
Prepay High-Interest Loans:
Use a portion of your surplus income to prepay loans. This reduces interest outflow and increases your cash flow.

Avoid New Loans:
Focus on reducing existing liabilities instead of taking on new ones.

Portfolio Restructuring
Real Estate:
Retain essential properties. Sell underperforming or non-essential properties to reduce concentration in real estate. Invest proceeds in mutual funds or debt instruments for diversification.

Mutual Funds (MFs):
Increase SIPs in actively managed funds. They outperform direct funds due to guidance from Certified Financial Planners and MFDs. Regular funds offer better tracking and professional assistance.

Stocks:
Monitor direct equity investments closely. Consider reallocating underperforming stocks to mutual funds for better management.

Debt Instruments:
Invest in high-quality debt funds or fixed-income securities for stability. These instruments balance equity volatility and ensure steady returns.

SIP Strategy
Increase SIPs from Rs 70,000 to Rs 1 lakh/month.
Allocate 70% to equity funds for long-term growth.
Invest 30% in debt funds for stability and liquidity.
Emergency Fund
Maintain a 12-month expense reserve in liquid funds or fixed deposits.
This covers unexpected expenses without disturbing investments.
Income During Retirement
Systematic Withdrawal Plan (SWP)
Use SWPs in mutual funds to generate regular income.
Withdraw 6–8% annually from your mutual fund portfolio for a steady income stream.
Rental Income Optimisation
Review property rents regularly.
Invest part of rental income in equity or debt mutual funds for compounding.
Dividend Stocks
Retain high-dividend-yield stocks for regular income.
Reinvest surplus dividends for long-term growth.
Tax Efficiency
Equity Funds Taxation:
Long-term gains above Rs 1.25 lakh are taxed at 12.5%. Short-term gains are taxed at 20%.

Debt Funds Taxation:
Both short- and long-term gains are taxed per your income slab.

Real Estate Capital Gains:
Use exemptions under Sections 54 or 54F to save tax on property sales.

Inflation Protection
Allocate 60–70% of your portfolio to equity investments.

Equity provides inflation-adjusted returns over time.

Debt funds and fixed instruments safeguard against equity market volatility.

Estate Planning
Draft a will to allocate assets transparently among family members.
Use nomination and joint ownership to avoid legal complications.
Consider a family trust for farm lands to avoid disputes.
Periodic Review
Review your financial plan every six months.
Adjust investments based on market conditions, goals, and needs.
Consult a Certified Financial Planner regularly for updates.
Finally
A well-diversified portfolio ensures financial independence post-retirement. Focus on debt repayment, portfolio balance, and tax-efficient withdrawals. Your assets can comfortably generate Rs 3–4 lakh monthly income, adjusted for inflation.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Kanchan

Kanchan Rai  |444 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Dec 21, 2024

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I am the eldest sibling in our families and aged 51. Normally, whenever anyone in the family has a problem - financial, mental, psychological, issue with people or anything else, they come up to discuss with me and share. Well, many would say I am lucky as people look up to me when they are in any kind of a problem. But that is not the case. Sadly no one is around with whom I can discuss or even think to share my issues, my problems. I do not have any friends. Sadly, yes, that is a fact and at my age, I dont expect that here we have a culture where we can get to making friends, at least the kind of friends with whom you can confide, share your feelings, problems. I tried and failed. Maybe because I am introvert or maybe I am too cautious. To make it more complicated, I dont work in the regular kind of job. I am a lone person who works as a freelance from home. This limits my outreach when it comes to interacting with real people. I have clients, business contacts, but I cannot get personal with them. It will never be a good choice. My wife is busy with her job + we do not have any relation beyond the daily matters related to household and it has been more than 10 years now that we live this way. Tried to sort out things with her but she just does not have time and interest (after all who wants to add on to tensions, stress). My daughter is after all my daughter - I cannot share these with her, and definitely at 10 she is too young to be one to discuss such stuff. I am not sure how far this issue can be fixed but I am hopeful to find some path here.
Ans: Dear Kevin,
Starting small can be helpful. Consider connecting with people through shared interests or hobbies, either online or in person, where the pressure to immediately open up is minimal. Online communities, local meetups, or volunteer activities can create low-stakes opportunities to connect with like-minded individuals. The goal isn’t to instantly find someone to confide in but to slowly build a sense of belonging and companionship.

Your relationship with your wife appears to be another significant source of emotional distance. While her lack of interest in deep conversations may seem like a barrier, it’s worth exploring other ways to reconnect—perhaps by spending time together in shared activities or revisiting moments that once brought you closer. Sometimes, relationships stuck in routines benefit from new experiences or even professional counseling to navigate the underlying dynamics.

Regarding your daughter, while it’s clear she cannot shoulder your emotional burdens, she can still be a source of joy and connection. Investing time in activities with her can provide a sense of fulfillment and grounding that counters loneliness.

Above all, remember that reaching out for professional support, such as therapy, is not a sign of weakness but an act of self-care. A therapist can provide a safe space to express your feelings and help you develop strategies to foster deeper connections and manage emotional isolation.

You deserve to feel supported and connected, and even if the journey to finding that seems long, every step you take toward opening up or seeking out others is a move toward a more fulfilling and less lonely existence.

...Read more

Ramalingam

Ramalingam Kalirajan  |7290 Answers  |Ask -

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

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Top4 sips with 15k amount suggest me
Ans: Here’s an updated strategy for your Rs. 15,000 SIP allocation, replacing the sectoral/thematic fund with a small-cap fund for better long-term growth potential.

Suggested SIP Allocation (Rs. 15,000)
Large-Cap Fund

Allocation: Rs. 4,000/month
Objective: Stability and steady growth by investing in India’s top 100 companies.
Why Choose: Provides consistent returns and low volatility in your portfolio.
Flexi-Cap Fund

Allocation: Rs. 4,000/month
Objective: Diversified exposure across large, mid, and small-cap stocks.
Why Choose: Offers balanced risk and returns with flexibility during market cycles.
Mid-Cap Fund

Allocation: Rs. 3,500/month
Objective: Tap into the growth potential of medium-sized companies.
Why Choose: Higher returns with manageable risk compared to small caps.
Small-Cap Fund

Allocation: Rs. 3,500/month
Objective: Focus on fast-growing small-cap companies.
Why Choose: High-growth potential over the long term, though with higher volatility.
Why Include Small-Cap Funds?
Long-Term Growth: Small-cap companies have immense potential to grow significantly over time.
Diversification: Adds exposure to an underrepresented segment, complementing large and mid-caps.
High Returns: Potential for higher returns compared to other categories, albeit with higher risk.
Key Considerations
Investment Horizon: Stay invested for at least 7-10 years to mitigate short-term volatility.
Active Fund Management: Avoid direct or index funds to leverage professional expertise.
Regular Monitoring: Review fund performance periodically with a Certified Financial Planner.
Tax Implications
Equity Funds:
LTCG above Rs. 1.25 lakh/year taxed at 12.5%.
STCG (held less than 1 year) taxed at 20%.
Final Insights
This updated allocation ensures a mix of stability, moderate risk, and high growth. With consistent SIPs and periodic reviews, you can achieve robust wealth creation over the long term. A Certified Financial Planner can assist in optimising your investment strategy.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7290 Answers  |Ask -

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

Asked by Anonymous - Dec 20, 2024Hindi
Money
Hi Sir I come from a middle class family and my parents have dedicated everything they have into my education and upbringing. Now they plan to retire and i am finally at 30 in a stanle career where i make approximately 1,20,000 per month. I have a savings of approximately 2,00,000 that i want to invest into my parents retirement. We are NRI's and my parents will be returning back to India soon. I have 0 kmowledge about investments. As per what my friends advised, I have come to the following solutions: 1. Open an FD for both my parents seperately of 50000 Rs each for 5 years with their respective banks 2. Choose the Bajaj Allianz Smart Wealth Goal V SIP and invest approximately 24000 annually for 5 years, withdrawing it at 7 years. 3. Choose the TATA AIA Smart SIP wealth secure and invest 60000 Rs annually for 10 years, withdrawing it at the end of the same duration. Along with the above, I also plan to invest 40000 Rs annually into their Medical health insurance. Now as an NRI, and not having any knowledge about investing or TAX, could you help me with the above investments and how i would have to go about with TAX policies in India. Thank you
Ans: Your dedication to supporting your parents’ retirement is truly admirable. As an NRI with limited investment knowledge, making informed decisions will ensure financial stability for your parents. Let's assess and optimise your proposed plan while incorporating better strategies.

Evaluating the Current Plan
Fixed Deposit for Both Parents
Strengths: Fixed deposits (FDs) are safe and offer guaranteed returns.
Limitations: FD returns in India often fail to outpace inflation. Senior citizens get slightly higher interest rates.

Bajaj Allianz Smart Wealth Goal SIP
Overview: Likely a ULIP (insurance cum investment product). Combines life insurance with investments.
Limitations: ULIPs have high charges (administration and premium allocation fees). Returns are often lower compared to mutual funds.
Taxation: ULIPs are tax-efficient but lack transparency and flexibility.
TATA AIA Smart SIP Wealth Secure
Overview: Another ULIP-based product with insurance and investment components.
Limitations: Similar to the Bajaj Allianz plan, it has high costs and lower returns.
Taxation: Tax benefits under Section 80C but limited withdrawal flexibility.
Medical Health Insurance for Parents
Strengths: Investing in health insurance for your parents is a wise decision.
Suggestions: Opt for a plan with sufficient coverage, including critical illness and cashless claims.
Suggested Optimised Financial Plan
Step 1: Replace ULIPs with Equity Mutual Funds
Reason: Equity mutual funds provide higher returns compared to ULIPs.
Benefits: Actively managed funds offer better growth, diversification, and lower charges.
SIP Strategy: Start a SIP for Rs. 5,000 monthly (Rs. 60,000 annually) for 10 years.
Taxation: Equity LTCG above Rs. 1.25 lakh taxed at 12.5%; STCG taxed at 20%.
Step 2: Invest in Debt Mutual Funds
Reason: Debt funds offer better returns than FDs and are tax-efficient.
Allocation: Invest Rs. 1 lakh in short-duration or dynamic bond funds.
Taxation: LTCG and STCG on debt funds are taxed as per the income tax slab.
Step 3: Build an Emergency Fund
Importance: Allocate Rs. 50,000 to a liquid fund or short-term FD.
Purpose: This fund will cover unexpected medical or living expenses.
Step 4: Continue Health Insurance for Parents
Annual Premium: Rs. 40,000 annually is reasonable for comprehensive coverage.
Suggestions: Include riders like critical illness and hospital cash benefits.
Step 5: Diversify Using Sovereign Gold Bonds (SGBs)
Reason: SGBs are low-risk, inflation-proof, and provide 2.5% annual interest.
Allocation: Invest Rs. 50,000 into SGBs.
Taxation: Interest is taxable, but capital gains on redemption are tax-free.
SGBs are not available for NRIs.

Tax Implications for NRIs
Better Returns: Shift to equity and debt mutual funds for inflation-beating growth.
Tax Efficiency: Use tax-saving instruments and avoid high-tax liabilities on ULIPs.
Flexibility: Mutual funds and SGBs provide better liquidity and transparency.
Secure Future: Health insurance ensures medical expenses are not a financial burden.
Final Insights
Your proposed plan can be significantly improved with better investment choices. Focus on mutual funds, health insurance, and SGBs for long-term financial stability. Avoid ULIPs as they come with high costs and limited returns. With these steps, you can ensure a secure and comfortable retirement for your parents.

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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