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Ramalingam

Ramalingam Kalirajan  |7249 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 13, 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
Jaganmohan Question by Jaganmohan on May 13, 2024Hindi
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Money

Thank you for your prompt response Sir. May I know how to go about the financial planning please

Ans: I appreciate your trust and willingness to connect.
Let's embark on this financial journey together.
You can reach me through my website mentioned-below.
This platform has restrictions to share the personal contact. Hope you understand.

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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We had an Arranged Marriage, 6 Months ago with minimal period of Courtship before it. My Wife always wants to have her way with almost everything. Whenever there's any disagreement between us, she emotionally manipulates me & I give in. Sometimes, I get frustrated & argue with her. Whenever, I raise my voice at her, she gets upset. She doesn't talk to me, doesn't let me touch her, doesn't respond to any affectionate gestures like Hugs/Kisses & refuses to engage in any kind of Intimacy. Sometimes, she's in this Sulky Mood for days together & even weeks, if she wants to. For Patching up with her, I'd have to shell out a lot of Money. Her Heart melts only when I give her some Expensive Gifts or take her out & treat her lavishly, only then she would come around to make Love with me. I'd always give in to her demands as I want to lead a Peaceful Married Life with her.But now, she's got used to this Pampering & starts sulking quite often and this is draining me Mentally, Emotionally & Financially. I Love my Wife, Dearly & I'd do anything to see her Happy, but now I've begun to Doubt whether she too Loves me to the same extent or whether she's taking undue advantage of my Kind Nature. Please advise me, how to deal with her & sort out such issues, in the further course of our Married Life? I just want to lead a Happy Married Life along with my Wife & raise a Family in a Peaceful Home.
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Ramalingam Kalirajan  |7249 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 10, 2024

Asked by Anonymous - Dec 10, 2024Hindi
Money
Iam retired state govt employee I will draw pension of Rs.58000 and will get lumsum of 5600000 beside I will get rent of 75000. Housing loan of 4000000 and 1500000 gold loan EMI is 61500 including Insurance. Suggest whether I should clear the entire loans or invest properly
Ans: You have a clear income and debt structure. A pension of Rs. 58,000, rental income of Rs. 75,000, and a lump sum of Rs. 56 lakhs provide robust cash inflow. On the other side, you have two significant loans—a housing loan of Rs. 40 lakhs and a gold loan of Rs. 15 lakhs. Your monthly EMI of Rs. 61,500, including insurance, impacts your cash flow.

The decision to clear loans or invest requires analyzing multiple angles. Let's evaluate step by step.

Evaluating Loan Repayment
1. Interest Rates Analysis

Housing loans usually have lower interest rates, especially for retired government employees.
Gold loans generally carry higher interest rates than housing loans.
2. Tax Benefits

Housing loans provide tax deductions under Section 80C and 24(b).
Repaying the housing loan entirely removes this tax advantage.
3. Financial Comfort

Continuing EMIs ensures liquidity for other goals.
Clearing loans offers peace of mind and reduces financial obligations.
Investing the Lump Sum
1. Diversification for Safety and Growth

Divide the Rs. 56 lakhs into debt and equity investments.
Debt investments ensure safety and regular income.
Equity investments can provide long-term growth potential.
2. Focus on Debt-Free Retirement

Allocate funds to secure essential expenses post-retirement.
Retaining liquidity helps manage unforeseen expenses.
3. Tax-Effective Planning

Tax-efficient investments can optimize post-tax returns.
Consider long-term capital gains taxation for equity mutual funds.
Calculating Cash Flow Balance
1. Income vs. Expenses

Post-retirement income: Rs. 1.33 lakhs (pension + rent).
EMI obligation: Rs. 61,500.
Net disposable income: Rs. 71,500 (excluding insurance).
2. Post-Loans Scenario

Clearing loans reduces your outflows.
A debt-free position increases monthly savings.
Suggested Action Plan
Step 1: Addressing High-Interest Loan
Clear the gold loan as it has higher interest rates.
Reducing this burden improves monthly cash flow.
Step 2: Partial Housing Loan Repayment
Consider a partial prepayment of the housing loan.
This will reduce EMIs and interest outgo.
Step 3: Allocate Remaining Funds to Investments
Create a balanced portfolio with equity and debt investments.
Ensure it aligns with your risk appetite and goals.
Step 4: Emergency Fund Creation
Keep 6–12 months’ expenses as an emergency fund.
Park this amount in a liquid or ultra-short-term debt fund.
Step 5: Insurance and Legacy Planning
Review your insurance coverage for adequacy.
Plan for wealth transfer to ensure family financial security.
Benefits of Investing Through Regular Funds with a Certified Financial Planner
Regular funds provide guided expertise for financial goals.
Certified Financial Planners ensure disciplined investment strategies.
They monitor your portfolio and make necessary adjustments.
Direct funds lack personalized advice, leading to uninformed decisions.

Insights on Index Funds
Index funds mimic market indices but lack active management.
They cannot outperform markets during corrections.
Actively managed funds adapt to market trends for better returns.
Final Insights
Combining debt repayment with smart investments creates financial stability. Clearing the gold loan reduces high-interest liabilities. Partly repaying the housing loan offers balance between liquidity and debt reduction. Investing the remaining lump sum ensures future growth and income stability.

Collaborating with a Certified Financial Planner ensures tailored financial strategies. Their expertise aligns your financial decisions with long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |7249 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 10, 2024

Asked by Anonymous - Dec 10, 2024Hindi
Money
NRI, age 40 years with current corpus of INR 2.2 Cr of which 1.4 cr invested in equity and 80 lakhs in NRE FD. No liability, annual expenses of 7 lakhs including term and health insurance premiums. Intending to retire in 1 year. Can I go ahead?
Ans: Your current financial status is solid. A corpus of Rs. 2.2 crore with no liabilities is commendable. However, early retirement needs careful assessment. Here’s a 360-degree evaluation:

1. Corpus Allocation Analysis
Equity Investments (Rs. 1.4 crore):
Your allocation to equity provides growth potential. However, the volatility of equities can impact your corpus post-retirement. Reduce equity exposure to 50-60% as you approach retirement. This ensures stability.

NRE Fixed Deposit (Rs. 80 lakh):
FDs are safe but provide low post-tax returns. Consider diversifying some FD funds into debt mutual funds. Debt funds offer tax efficiency and better liquidity.

2. Expense Coverage Post-Retirement
Annual Expense Estimate (Rs. 7 lakh):
Your annual requirement is reasonable for your corpus. However, inflation will increase this over time.

Assuming inflation at 6%, your expenses could double in 12 years. Plan for this increase.

Maintain 2-3 years’ expenses (Rs. 14-21 lakh) in a liquid fund or savings account for emergencies.

3. Retirement Portfolio Restructuring
Equity Component:
Retain high-growth equity funds for long-term wealth creation. Actively managed funds perform better during volatile markets compared to index funds.

Regular plans through a Certified Financial Planner (CFP) ensure better guidance and disciplined investment. Avoid direct funds as they lack expert advice and personalised support.

Debt Component:
Allocate 30-40% to debt funds. They provide stability and regular withdrawals with better post-tax returns compared to FDs.

Hybrid Funds:
Consider balanced advantage funds. These adjust equity and debt allocations dynamically, offering stability and growth.

4. Emergency and Contingency Planning
Maintain a contingency reserve of Rs. 15-20 lakh. This can cover unexpected medical or personal expenses.

Liquid funds or short-term debt funds are ideal for this reserve. They offer higher returns than savings accounts.

5. Insurance Review
Health Insurance:
Ensure you have comprehensive health insurance. Medical inflation can erode your savings quickly.

Term Insurance:
If your family is financially independent, term insurance may not be essential post-retirement.

6. Tax Planning for Investments
Equity Mutual Funds:
Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%. Plan redemptions wisely to reduce tax outgo.

Debt Mutual Funds:
Both LTCG and STCG are taxed as per your income slab. Use systematic withdrawal plans (SWPs) to spread withdrawals and optimise taxes.

7. Post-Retirement Withdrawal Strategy
Create a withdrawal plan to match your annual expense needs. Withdraw from debt funds first to let equity investments grow.

Use SWPs in mutual funds to ensure tax efficiency and regular income.

Avoid withdrawing from equity during market corrections. This protects your capital from losses.

8. Inflation and Longevity Risks
Inflation will erode purchasing power over time. Balance equity and debt to protect against inflation.

Plan for a retirement horizon of at least 40 years. Your investments should grow faster than inflation.

9. Children’s Financial Needs
If you have children, ensure their education and other major expenses are funded separately.

Avoid dipping into your retirement corpus for their needs.

10. Professional Support
Work with a Certified Financial Planner to create a customised retirement plan. A CFP ensures your portfolio aligns with your long-term goals.
11. Lifestyle Adjustments
Keep lifestyle expenses in check post-retirement. This ensures your corpus lasts longer.

Consider part-time or consulting work for the first few years of retirement. It provides additional income and keeps you engaged.

Final Insights
You are in a strong financial position. However, early retirement requires meticulous planning.

Reallocate your investments to reduce risks and enhance stability. Plan for inflation and longevity to safeguard your financial independence.

Maintain a disciplined withdrawal strategy to ensure your corpus sustains your lifestyle.

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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