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53 year old Surajit is selling his Kolkata flat for 64 Lakhs. How to invest smartly?

Ramalingam

Ramalingam Kalirajan  |7209 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 27, 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 - Aug 26, 2024Hindi
Money

Sir, I am Surajit Chakraborty and I plan to sell my 10-year-old flat in Kolkata for ?64 lakh. I am currently 53 years old, in the 30% tax bracket, and intend to retire at 58. Could you please advise me on how to invest this ?64 lakh in a way that minimizes tax liability, generates a good surplus after retirement, and allows me to withdraw ?50,000 to ?60,000 per month for living expenses?

Ans: At 53, you are close to retirement. You plan to sell your flat for Rs 64 lakh and aim to secure a regular income post-retirement. Your goals are clear: minimize tax liability, generate a surplus after retirement, and have Rs 50,000 to Rs 60,000 per month for living expenses. To achieve these, a well-structured investment strategy is essential. This will involve carefully balancing between growth, income generation, and tax efficiency.

Reinvesting in Real Estate or Bonds

To save on LTCG tax, you have options like reinvesting in another property or investing in specific government bonds under Section 54EC. Reinvesting in another property can help defer or avoid LTCG tax. However, since you are nearing retirement, tying up funds in real estate may not be ideal.

Investing in Section 54EC bonds is another option. These bonds are issued by the government and have a lock-in period of 5 years. The interest earned is taxable, but your capital gains will be exempt from LTCG tax. However, these bonds may not offer the liquidity or returns you need for retirement.

Creating a Retirement Corpus

Given your goal of generating Rs 50,000 to Rs 60,000 monthly, you should focus on creating a diversified retirement corpus. The Rs 64 lakh can be split across various asset classes to balance risk, returns, and liquidity.

Investing in Debt Instruments

A significant portion of your Rs 64 lakh should be allocated to debt instruments. These provide stable and predictable returns, which are crucial for regular income post-retirement.

Senior Citizen Savings Scheme (SCSS): Once you retire, this scheme offers a safe investment with a good interest rate. The interest is taxable, but it provides regular income. The current interest rate is around 7.4% per annum, and the scheme has a 5-year lock-in period.

Monthly Income Plans (MIPs): These are mutual funds that invest predominantly in debt instruments and a small portion in equity. They offer regular income and some capital appreciation. Choose a conservative MIP for lower risk.

Bank Fixed Deposits (FDs): Though they offer lower returns, FDs are safe and provide guaranteed returns. Spread your FDs across different banks and tenures to maintain liquidity and safety.

Investing in Balanced Funds

To counter inflation and ensure your corpus grows, invest a portion in balanced or hybrid mutual funds. These funds invest in both equity and debt, offering growth potential with moderate risk.

Balanced Hybrid Funds: These funds generally invest around 40-60% in equity and the rest in debt. The equity portion helps in capital appreciation, while the debt portion provides stability. These funds can offer better returns than pure debt funds over the long term.
Systematic Withdrawal Plan (SWP)

To generate your monthly income, consider a Systematic Withdrawal Plan (SWP) from mutual funds. With SWP, you can withdraw a fixed amount regularly, which suits your need for Rs 50,000 to Rs 60,000 per month. SWP from equity-oriented funds is tax-efficient as only the capital gains portion is taxed, and that too at a lower rate.

Maintaining Liquidity

As you approach retirement, maintaining liquidity becomes crucial. Ensure a portion of your corpus is in liquid funds or short-term FDs. These will act as an emergency fund and provide easy access to cash without disturbing your long-term investments.

Evaluating Your Risk Tolerance

Since you are 5 years away from retirement, assess your risk tolerance. While equity offers higher returns, it also comes with higher risk. A balanced approach, with more weightage towards debt, is advisable. As you near retirement, consider reducing your equity exposure further.

Tax Planning for Regular Income

Your monthly withdrawals will be subject to tax. To minimize tax, consider the following:

Utilize Tax-Free Instruments: Senior Citizen Savings Scheme (SCSS) and interest from tax-free bonds (if any) can reduce your tax liability.

Opt for SWP from Equity Funds: As mentioned earlier, SWP from equity funds is more tax-efficient than regular withdrawals from debt funds.

Plan Withdrawals: Withdraw smaller amounts from different sources to stay within a lower tax slab.

Review and Rebalance Regularly

Your financial situation and market conditions may change. Regularly review your portfolio and rebalance it to ensure it continues to meet your income needs and risk profile. Consider consulting a Certified Financial Planner periodically to make informed adjustments.

Finally

Your plan to sell the flat and create a retirement corpus is a wise move. By carefully selecting and balancing your investments, you can minimize tax liability, ensure regular income, and maintain financial security during retirement. A combination of debt instruments, balanced funds, and systematic withdrawals will help you achieve your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
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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Mutual Funds, Financial Planning Expert - Answered on Aug 29, 2024

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Sir, I am Surajit Chakraborty and I plan to sell my 10-year-old flat in Kolkata for ?64 lakh. I am currently 53 years old, in the 30% tax bracket, and intend to retire at 58. Could you please advise me on how to invest this ?64 lakh in a way that minimizes tax liability, generates a good surplus after retirement, and allows me to withdraw ?50,000 to ?60,000 per month for living expenses?
Ans: At 53, you are close to retirement. You plan to sell your flat for Rs 64 lakh and aim to secure a regular income post-retirement. Your goals are clear: minimize tax liability, generate a surplus after retirement, and have Rs 50,000 to Rs 60,000 per month for living expenses. To achieve these, a well-structured investment strategy is essential. This will involve carefully balancing between growth, income generation, and tax efficiency.

Reinvesting in Real Estate or Bonds

To save on LTCG tax, you have options like reinvesting in another property or investing in specific government bonds under Section 54EC. Reinvesting in another property can help defer or avoid LTCG tax. However, since you are nearing retirement, tying up funds in real estate may not be ideal.

Investing in Section 54EC bonds is another option. These bonds are issued by the government and have a lock-in period of 5 years. The interest earned is taxable, but your capital gains will be exempt from LTCG tax. However, these bonds may not offer the liquidity or returns you need for retirement.

Creating a Retirement Corpus

Given your goal of generating Rs 50,000 to Rs 60,000 monthly, you should focus on creating a diversified retirement corpus. The Rs 64 lakh can be split across various asset classes to balance risk, returns, and liquidity.

Investing in Debt Instruments

A significant portion of your Rs 64 lakh should be allocated to debt instruments. These provide stable and predictable returns, which are crucial for regular income post-retirement.

Senior Citizen Savings Scheme (SCSS): Once you retire, this scheme offers a safe investment with a good interest rate. The interest is taxable, but it provides regular income. The current interest rate is around 7.4% per annum, and the scheme has a 5-year lock-in period.

Monthly Income Plans (MIPs): These are mutual funds that invest predominantly in debt instruments and a small portion in equity. They offer regular income and some capital appreciation. Choose a conservative MIP for lower risk.

Bank Fixed Deposits (FDs): Though they offer lower returns, FDs are safe and provide guaranteed returns. Spread your FDs across different banks and tenures to maintain liquidity and safety.

Investing in Balanced Funds

To counter inflation and ensure your corpus grows, invest a portion in balanced or hybrid mutual funds. These funds invest in both equity and debt, offering growth potential with moderate risk.

Balanced Hybrid Funds: These funds generally invest around 40-60% in equity and the rest in debt. The equity portion helps in capital appreciation, while the debt portion provides stability. These funds can offer better returns than pure debt funds over the long term.
Systematic Withdrawal Plan (SWP)

To generate your monthly income, consider a Systematic Withdrawal Plan (SWP) from mutual funds. With SWP, you can withdraw a fixed amount regularly, which suits your need for Rs 50,000 to Rs 60,000 per month. SWP from equity-oriented funds is tax-efficient as only the capital gains portion is taxed, and that too at a lower rate.

Maintaining Liquidity

As you approach retirement, maintaining liquidity becomes crucial. Ensure a portion of your corpus is in liquid funds or short-term FDs. These will act as an emergency fund and provide easy access to cash without disturbing your long-term investments.

Evaluating Your Risk Tolerance

Since you are 5 years away from retirement, assess your risk tolerance. While equity offers higher returns, it also comes with higher risk. A balanced approach, with more weightage towards debt, is advisable. As you near retirement, consider reducing your equity exposure further.

Tax Planning for Regular Income

Your monthly withdrawals will be subject to tax. To minimize tax, consider the following:

Utilize Tax-Free Instruments: Senior Citizen Savings Scheme (SCSS) and interest from tax-free bonds (if any) can reduce your tax liability.

Opt for SWP from Equity Funds: As mentioned earlier, SWP from equity funds is more tax-efficient than regular withdrawals from debt funds.

Plan Withdrawals: Withdraw smaller amounts from different sources to stay within a lower tax slab.

Review and Rebalance Regularly

Your financial situation and market conditions may change. Regularly review your portfolio and rebalance it to ensure it continues to meet your income needs and risk profile. Consider consulting a Certified Financial Planner periodically to make informed adjustments.

Finally

Your plan to sell the flat and create a retirement corpus is a wise move. By carefully selecting and balancing your investments, you can minimize tax liability, ensure regular income, and maintain financial security during retirement. A combination of debt instruments, balanced funds, and systematic withdrawals will help you achieve your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |7209 Answers  |Ask -

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

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Sir, I am Surajit Chakraborty and I plan to sell my 10-year-old flat in Kolkata for ?64 lakh. I am currently 53 years old, in the 30% tax bracket, and intend to retire at 58. Could you please advise me on how to invest this ?64 lakh in a way that minimizes tax liability, generates a good surplus after retirement, and allows me to withdraw ?50,000 to ?60,000 per month for living expenses?
Ans: At 53, you are close to retirement. You plan to sell your flat for Rs 64 lakh and aim to secure a regular income post-retirement. Your goals are clear: minimize tax liability, generate a surplus after retirement, and have Rs 50,000 to Rs 60,000 per month for living expenses. To achieve these, a well-structured investment strategy is essential. This will involve carefully balancing between growth, income generation, and tax efficiency.

Reinvesting in Real Estate or Bonds

To save on LTCG tax, you have options like reinvesting in another property or investing in specific government bonds under Section 54EC. Reinvesting in another property can help defer or avoid LTCG tax. However, since you are nearing retirement, tying up funds in real estate may not be ideal.

Investing in Section 54EC bonds is another option. These bonds are issued by the government and have a lock-in period of 5 years. The interest earned is taxable, but your capital gains will be exempt from LTCG tax. However, these bonds may not offer the liquidity or returns you need for retirement.

Creating a Retirement Corpus

Given your goal of generating Rs 50,000 to Rs 60,000 monthly, you should focus on creating a diversified retirement corpus. The Rs 64 lakh can be split across various asset classes to balance risk, returns, and liquidity.

Investing in Debt Instruments

A significant portion of your Rs 64 lakh should be allocated to debt instruments. These provide stable and predictable returns, which are crucial for regular income post-retirement.

Senior Citizen Savings Scheme (SCSS): Once you retire, this scheme offers a safe investment with a good interest rate. The interest is taxable, but it provides regular income. The current interest rate is around 7.4% per annum, and the scheme has a 5-year lock-in period.

Monthly Income Plans (MIPs): These are mutual funds that invest predominantly in debt instruments and a small portion in equity. They offer regular income and some capital appreciation. Choose a conservative MIP for lower risk.

Bank Fixed Deposits (FDs): Though they offer lower returns, FDs are safe and provide guaranteed returns. Spread your FDs across different banks and tenures to maintain liquidity and safety.

Investing in Balanced Funds

To counter inflation and ensure your corpus grows, invest a portion in balanced or hybrid mutual funds. These funds invest in both equity and debt, offering growth potential with moderate risk.

Balanced Hybrid Funds: These funds generally invest around 40-60% in equity and the rest in debt. The equity portion helps in capital appreciation, while the debt portion provides stability. These funds can offer better returns than pure debt funds over the long term.
Systematic Withdrawal Plan (SWP)

To generate your monthly income, consider a Systematic Withdrawal Plan (SWP) from mutual funds. With SWP, you can withdraw a fixed amount regularly, which suits your need for Rs 50,000 to Rs 60,000 per month. SWP from equity-oriented funds is tax-efficient as only the capital gains portion is taxed, and that too at a lower rate.

Maintaining Liquidity

As you approach retirement, maintaining liquidity becomes crucial. Ensure a portion of your corpus is in liquid funds or short-term FDs. These will act as an emergency fund and provide easy access to cash without disturbing your long-term investments.

Evaluating Your Risk Tolerance

Since you are 5 years away from retirement, assess your risk tolerance. While equity offers higher returns, it also comes with higher risk. A balanced approach, with more weightage towards debt, is advisable. As you near retirement, consider reducing your equity exposure further.

Tax Planning for Regular Income

Your monthly withdrawals will be subject to tax. To minimize tax, consider the following:

Utilize Tax-Free Instruments: Senior Citizen Savings Scheme (SCSS) and interest from tax-free bonds (if any) can reduce your tax liability.

Opt for SWP from Equity Funds: As mentioned earlier, SWP from equity funds is more tax-efficient than regular withdrawals from debt funds.

Plan Withdrawals: Withdraw smaller amounts from different sources to stay within a lower tax slab.

Review and Rebalance Regularly

Your financial situation and market conditions may change. Regularly review your portfolio and rebalance it to ensure it continues to meet your income needs and risk profile. Consider consulting a Certified Financial Planner periodically to make informed adjustments.

Finally

Your plan to sell the flat and create a retirement corpus is a wise move. By carefully selecting and balancing your investments, you can minimize tax liability, ensure regular income, and maintain financial security during retirement. A combination of debt instruments, balanced funds, and systematic withdrawals will help you achieve your retirement goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Ans: This is a beautiful question.
Before I dwell on your question, there are a few points which are very important for the patient to know.
1. You should roughly know what result you wish to have.
2. Never think of a perfect result. There is no such result.
3. You must think in terms of improvement and if you are sble to achieve more than 90% approx, it can be considred good.
4. Dont compare your results with any celebrity's result. There body structure is different, they have probably taken better care till now and importantly, the result you see on a public platform is after make up and not the real result. Some times it may be a photoshopped image
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8. Don't fall for less budget! its obvious a meticulous job needs more surgical time. This means that the doctor may charge more. Seniority also adds to the cost.
What I mean, there is a price to be paid for a good job.(whether medical or anywhere).
Now coming to the Plastic surgeon's choice.
1. Research well, but dont fall prey to only advertisement. Small and big centers, both advertise,
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4. Check the resilts? Look for genuinity.
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Ramalingam

Ramalingam Kalirajan  |7209 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 05, 2024

Asked by Anonymous - Dec 05, 2024Hindi
Money
My question about how to approach life and money, I am 53 male, Worked in early thirties after that nothing to do for earning.Actually I have sufficient property and monthly expenses without any problem.I have 3cr 2 houses each ,12 acre of land from where I am getting sufficient income.I am the only owner of properties no siblings.A have about 50 lakhs in shares and mutual funds now , earlier I bought one house from stocks and mutual fund redemption around 20 lakhs now it's value is now 3 cr.My wife is working in Govt earning 90 thousands per month.I am very fond of investing and mutual funds, I want to help people in their investment journey through mutual funds.Can you tell me how to start this because I wants to connect people for their investment requirement.How to tell people about myself because everyone is running for money in this world but I am not but still wants people to invests.Sometimes I feel depressed sometimes not.I have 2 children daughter 23 doing BDS and son is in class 12 PCM.For me their education is important.I already have proper funds for their educational needs and normal marriage.I don't want my land property become burden for my children, it may be possible I may liquidate some of it.I have no health issue like BP sugar heart, regularly invested in body also by exercising.I don't know whether you understand my query ,seems I am a confused lucky person.
Ans: Your query reflects a unique position: you are financially secure, have no immediate monetary pressure, and have a genuine desire to help others. Here’s a structured approach to navigate your thoughts, align your purpose, and utilize your resources effectively:

1. Self-Reflection and Emotional Well-Being
Acknowledge Your Position: Feeling "confused but lucky" is natural for someone in your shoes. You’ve done exceptionally well, but now it’s about finding meaning beyond wealth.
Define Your Purpose: Reflect on why you want to help others with investments. Is it to share your knowledge, build relationships, or leave a legacy? A clear purpose will guide your efforts.
Engage with Mentors or Communities: Join communities of like-minded individuals passionate about personal finance. This will give you clarity and help channel your energy positively.

Helping People with Investments
Become a Trainer for Investors
Share your wealth of knowledge and personal experience by training others. Conduct workshops, webinars, or small group sessions to educate individuals about investments, mutual funds, and wealth-building strategies.
Partner with local organizations, schools, or community centers to organize financial literacy programs, empowering others with practical knowledge.
Build Credibility as a Social Media Influencer
Start a blog, YouTube channel, or social media page to share practical investment guidance. Leverage your personal success stories, such as how your investments enabled you to achieve significant milestones like buying a house or building wealth.
Use engaging and relatable content, including videos, infographics, and step-by-step guides on financial discipline, mutual funds, and long-term investing.
Share lessons learned from your journey, highlighting the importance of patience and strategic planning in investment success.
Engage with the Community
Offer free introductory sessions on investment basics to build trust and reach a wider audience.
Position yourself as an advocate for financial literacy, helping people understand the importance of long-term financial planning.
By focusing on training and becoming a trusted voice in financial education, you can inspire and guide others to achieve their financial goals without the need to sell or distribute financial products.

3. Planning for Your Children
Liquidating Land Thoughtfully:
If you believe the land may become a burden, consider liquidating part of it gradually. Invest proceeds in diversified, low-maintenance assets (like index funds, balanced funds, or income-generating instruments) for your children’s future.
Education and Independence:
With their education well-funded, encourage them to explore careers and passions aligned with their interests rather than burdening them with managing family assets.
4. Personal Development
Stay Physically and Mentally Active:
Your fitness focus is commendable. Complement it with mindfulness practices like yoga or meditation to address occasional feelings of depression.
Pursue Interests:
Engage in hobbies, volunteering, or activities outside finance. This will provide balance and joy.
5. Long-Term Vision for Wealth
Simplify Your Estate:
Work with an estate planner to create a will or trust that outlines how your wealth should be distributed. If you wish to donate or help others, identify organizations or causes now.
Educate Your Children:
Teach them about financial independence and stewardship of wealth to ensure your legacy doesn’t become a source of stress.
6. Combatting Depression:
Stay Connected: Spend quality time with your family and engage socially. Helping others genuinely can alleviate feelings of emptiness.
Seek Professional Support: If occasional depression persists, consult a counselor or therapist to navigate your emotions effectively.
Your desire to help others while living a secure and fulfilling life is inspiring. You’re in an enviable position to create a meaningful legacy for yourself and others.

Next Steps:

Start researching about training topics.
Begin sharing your investment journey informally through social media or blogs.
Seek professional help to plan the estate and ensure your children’s financial and emotional well-being.
You have the resources, experience, and goodwill to make a difference. Channel these into meaningful action.

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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