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Ramalingam

Ramalingam Kalirajan  |7758 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 04, 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
srinivas Question by srinivas on Jul 04, 2024Hindi
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Thank you sir for the neat clarification. Appreciate it. However i am half way through the payment of ICICIPru life, HDFC Pension fund and HDFC Life. Surrendering them will be loss. Please advise. Thanks,

Ans: It's often better to book a loss and reinvest in mutual funds rather than continuing with low-return insurance and pension plans. Mutual funds usually offer higher returns and better flexibility. Consulting a Certified Financial Planner (CFP) can provide tailored advice, ensuring your investments align with your financial goals and risk tolerance. A CFP can help evaluate your current policies and guide you on the best course of action for maximizing your returns.

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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Ramalingam

Ramalingam Kalirajan  |7758 Answers  |Ask -

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

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Dear Sir, My name is Raj, I am 48, I have HDFC Youngstar super premium policy which is invested in Opportunity funds, now the fund value is 10Lacs (1 Lac/M and I paid 6 yrs so far) should I surrender the policy and invest in MF?And if yes, please suggest the best MF to invest Lumpsum amount for next 5 years. Thank you.
Ans: Dear Raj,

I appreciate you reaching out with your query. As a Certified Financial Planner, let me help you evaluate your current HDFC YoungStar Super Premium policy and assess whether switching to mutual funds is a better option for your financial goals.

Evaluating Your HDFC YoungStar Super Premium Policy
You've already paid premiums for 6 years and have accumulated a fund value of Rs 10 lakhs. This policy is a Unit Linked Insurance Plan (ULIP), where part of your premium goes towards life cover, and the rest is invested in the market.

ULIPs typically have high charges for mortality, administration, and fund management, which can reduce returns compared to other investment options like mutual funds.

Opportunity funds are high-risk investments and are subject to market volatility. It is important to compare the growth of your fund over the past 6 years against other market investments, like actively managed mutual funds, to see if it is performing well.

Why Consider Surrendering the Policy?
High Costs: ULIPs often have higher charges than mutual funds, which impacts the overall returns over time.

Low Flexibility: ULIPs offer limited flexibility compared to mutual funds in terms of changing or switching funds.

Better Growth Potential in Mutual Funds: If your ULIP is underperforming or you want to reduce costs, investing in actively managed mutual funds can be a more efficient way to grow your wealth over time.

Tax Implications: Partial or full withdrawal from ULIPs after 5 years is generally tax-free, making this an opportune time to consider surrendering. However, future premiums may still incur higher costs compared to mutual funds.

Benefits of Mutual Funds Over ULIPs
Lower Costs: Actively managed mutual funds typically have lower fund management and administrative charges compared to ULIPs.

Greater Flexibility: Mutual funds allow you to choose from a wide range of investment strategies, risk profiles, and asset classes without the limitations that ULIPs often impose.

Active Management: Unlike index funds or ULIPs, actively managed funds are handled by professional fund managers who continuously analyze the market for opportunities, potentially delivering better returns.

Lumpsum Investments: If you’re looking for a 5-year investment horizon, actively managed equity mutual funds can provide growth potential, especially when you reinvest in funds with a good track record.

What Should You Do Now?
Evaluate Your Policy: Compare the growth of your ULIP’s Opportunity Fund with the performance of actively managed mutual funds. If your ULIP has not performed satisfactorily, it may be worth surrendering.

Consult with a CFP: Before surrendering your policy, ensure you are clear about any surrender charges or other fees involved. Speak to a Certified Financial Planner (CFP) to get a clear picture of the financial impact.

Invest Lumpsum in Mutual Funds: Once you surrender your ULIP, you can invest the Rs 10 lakh lump sum in mutual funds for better growth potential over the next 5 years.

Suggesting the Right Mutual Fund Strategy (Without Scheme Names)
For a 5-year investment horizon, I would recommend the following types of funds based on your risk appetite:

Aggressive Approach: Invest a significant portion of the amount in large-cap or multi-cap equity funds for capital appreciation. These funds tend to have lower volatility compared to small-cap funds but still offer strong growth prospects.

Moderate Approach: A combination of balanced advantage funds (BAFs) or flexi-cap funds could provide growth with moderate risk. These funds dynamically adjust between equity and debt based on market conditions, offering a balance between risk and return.

Conservative Approach: If you prefer to limit risk, you can look into debt-oriented hybrid funds. These funds invest in a mix of debt and equity, providing stable returns while still participating in market growth.

Tax Implications for Mutual Fund Investments
When you switch to mutual funds, it’s important to be aware of the capital gains tax rules:

Equity Mutual Funds: For investments held for more than 1 year, long-term capital gains (LTCG) above Rs 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) for investments held for less than a year are taxed at 20%.

Debt Mutual Funds: Both long-term and short-term capital gains from debt funds are taxed as per your income tax slab.

Final Insights
To sum up, if your HDFC YoungStar Super Premium policy has underperformed or the costs are too high, surrendering the policy and switching to mutual funds can be a wise decision. Mutual funds offer lower costs, greater flexibility, and potentially better returns, especially when investing for 5 years.

Ensure you consult a Certified Financial Planner (CFP) to understand all the charges involved in surrendering the policy and get tailored advice on mutual fund selection based on your risk profile and financial goals. By doing so, you can optimize the returns on your lump-sum investment and secure your financial future.

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

..Read more

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Dr Nagarajan Jsk

Dr Nagarajan Jsk   |224 Answers  |Ask -

NEET, Medical, Pharmacy Careers - Answered on Feb 01, 2025

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I have completed my msc in biochemistry n now doing internship but I am confusing about my future because I see this field don't pay me inuff for life even for future... N don't have more jobs in Maharashtra. I don't like production jobs but in Pharma only production pay much so what can I do .. Can u suggest me which job is high payable after Msc biochemistry
Ans: Hi Nandu,

Greetings!

Could you please let me know which year you completed your course and whether you are currently doing an internship or apprenticeship? An internship is part of the curriculum, where students gain practical training, sometimes with a stipend and sometimes without. After completing your course, you can opt for an apprenticeship, which typically lasts one to one and a half years and includes a stipend, usually split 50%-50% between the industry and government.

If you are in the internship phase, please inform me about the specific field you are working in. Initially, you may not expect a high salary, but after gaining expertise in your field, your compensation will improve. Typically, this takes about three years, so it’s important to focus on skill acquisition for a better future.

If your internship aligns with your field of study, I encourage you to continue and consider starting a medical lab or exploring opportunities in medical devices related to biochemistry. However, pursuing a career in pharmaceutical production may not be suitable for you, as it is a different field, and you may find it challenging to grasp the processes involved since you are currently inexperienced in that area.

Please share the specific field of your internship, and I would be happy to provide more tailored advice.
with regards

Poocho. Life Change Karo!

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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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