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Ramalingam

Ramalingam Kalirajan  |9383 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 09, 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
ANAND Question by ANAND on Jul 09, 2024Hindi
Money

Dear Sir, I am at verge of retirement shortly. I will be getting Rs.60 L. I am thinking of investing Rs.30 L in Senior Citizen scheme of Post Office. Request your suggestion whether this option is ok. If not, kindly advise where to invest this corpus and balance Rs.30 L. I am expecting Rs.50 K plus pm from the investment of Rs.60 L corpus. Kindly advise. Thanks in advance.

Ans: Congratulations on nearing your retirement! This is an exciting and crucial time. I understand your goal is to generate Rs. 50,000 per month from your Rs. 60 lakh corpus. Let's analyze and evaluate your investment options to help you achieve this goal.

Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is a popular option. It provides a safe and secure investment with guaranteed returns. The interest rate is attractive compared to other fixed-income instruments. Additionally, SCSS offers tax benefits under Section 80C. However, there are limitations.

Advantages of SCSS:

Safety and security: Backed by the government.
Attractive interest rates: Higher than regular savings schemes.
Tax benefits: Deduction under Section 80C up to Rs. 1.5 lakh.
Disadvantages of SCSS:

Investment limit: Maximum of Rs. 15 lakh per individual.
Lock-in period: Five years, extendable by three years.
Interest rate risk: Rates may change, affecting future returns.
SCSS can be a good option for part of your corpus. Let's explore other options for the remaining Rs. 30 lakh to maximize your monthly income.

Mutual Funds
Mutual funds are a versatile investment option. They offer the potential for higher returns, diversification, and liquidity. By investing in mutual funds, you can balance risk and reward effectively.

Types of Mutual Funds:

Debt Funds: Low-risk, suitable for stable returns.
Equity Funds: High-risk, suitable for long-term growth.
Balanced Funds: Combination of equity and debt, balanced risk.
Advantages of Mutual Funds:

Diversification: Spreads risk across various assets.
Professional management: Managed by experienced fund managers.
Liquidity: Easy to buy and sell units.
Power of compounding: Reinvested earnings generate additional returns.
Disadvantages of Mutual Funds:

Market risk: Returns are subject to market fluctuations.
Management fees: Charges may reduce overall returns.
Debt Funds:

Debt funds invest in fixed-income securities like bonds, debentures, and government securities. They are less volatile and provide regular income.

Advantages of Debt Funds:

Stable returns: Lower risk compared to equity funds.
Tax efficiency: Better post-tax returns than fixed deposits.
Liquidity: Easy to redeem units when needed.
Disadvantages of Debt Funds:

Interest rate risk: Returns can be affected by changing interest rates.
Credit risk: Possibility of default by the issuer.
Equity Funds:

Equity funds invest in stocks and have the potential for high returns. They are suitable for long-term goals.

Advantages of Equity Funds:

High returns: Potential for significant capital appreciation.
Inflation protection: Returns can outpace inflation.
Tax benefits: Long-term capital gains tax advantage.
Disadvantages of Equity Funds:

Market volatility: High risk of short-term losses.
Market timing: Difficult to predict market movements.
Balanced Funds:

Balanced funds combine equity and debt investments. They aim to provide growth with stability.

Advantages of Balanced Funds:

Balanced risk: Mix of equity and debt reduces overall risk.
Diversified portfolio: Exposure to different asset classes.
Moderate returns: Potential for steady income and growth.
Disadvantages of Balanced Funds:

Moderate risk: Not as safe as pure debt funds.
Lower returns: May not match pure equity fund returns.
Systematic Withdrawal Plan (SWP)
An SWP allows you to withdraw a fixed amount from your mutual fund investment at regular intervals. It provides a steady income stream.

Advantages of SWP:

Regular income: Fixed withdrawals as per your requirement.
Tax efficiency: Gains taxed at lower rates compared to fixed deposits.
Flexibility: Modify withdrawal amount and frequency as needed.
Disadvantages of SWP:

Market risk: Withdrawals depend on fund performance.
Capital erosion: Withdrawals may reduce your capital over time.
Fixed Deposits (FDs)
Fixed deposits offer guaranteed returns and capital protection. They are a safe investment for conservative investors.

Advantages of FDs:

Guaranteed returns: Fixed interest rates.
Safety: Low risk of capital loss.
Easy to manage: Simple and straightforward investment.
Disadvantages of FDs:

Low returns: Interest rates are usually lower than inflation.
Taxable interest: Interest income is fully taxable.
Lock-in period: Premature withdrawals may incur penalties.
Monthly Income Schemes (MIS)
Post Office Monthly Income Scheme (POMIS) provides a regular monthly income with low risk. It’s a safe option backed by the government.

Advantages of MIS:

Regular income: Monthly interest payments.
Safety: Government-backed scheme.
Low risk: Suitable for conservative investors.
Disadvantages of MIS:

Low returns: Interest rates are not very high.
Investment limit: Maximum investment of Rs. 4.5 lakh per individual.
Lock-in period: Five years with limited liquidity.
Recommended Strategy
To achieve your goal of Rs. 50,000 per month, a diversified approach is advisable. Here’s a recommended strategy:

1. Invest in SCSS:

Allocate Rs. 15 lakh to SCSS. This provides safety, guaranteed returns, and tax benefits. Expect regular interest income.

2. Invest in Debt Mutual Funds:

Allocate Rs. 20 lakh to debt mutual funds. This provides stable returns, liquidity, and tax efficiency. Choose funds with a good track record.

3. Invest in Balanced Mutual Funds:

Allocate Rs. 10 lakh to balanced mutual funds. This provides growth potential with moderate risk. It helps balance your overall portfolio.

4. Systematic Withdrawal Plan (SWP):

Set up an SWP from your mutual fund investments. Withdraw Rs. 25,000 per month. This provides a regular income stream with tax efficiency.

5. Fixed Deposits (FDs):

Allocate Rs. 10 lakh to fixed deposits. This provides safety, guaranteed returns, and easy management. Use the interest income for monthly expenses.

6. Monthly Income Schemes (MIS):

Allocate Rs. 5 lakh to POMIS. This provides a regular monthly income with low risk. It's a safe option for conservative investors.


I understand that managing retirement finances can be challenging. Your goal is to ensure a comfortable and secure retirement. Diversifying your investments across different options will help you achieve this goal.

Final Insights
Investing in SCSS, mutual funds, FDs, and MIS can provide a balanced and diversified portfolio. This approach helps generate a steady income while minimizing risk. Regular reviews and adjustments will ensure your portfolio stays aligned with your goals.

Feel free to reach out for any further assistance. Your retirement is a significant milestone, and careful planning will help you enjoy it to the fullest.

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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Asked by Anonymous - Jan 26, 2023Hindi
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Sanjeevji, which is the best option to invest senior citizen saving scheme in the post office or bank?
Ans: You primarily have the following four major options for investment as a senior citizen which differ from each other in the way they work. Their important characteristics are given below. If you wish to know more, they are readily available with just a bit of googling:-

1. Senior Citizen Savings Scheme (SCSS). A 5-year scheme, extendable by 3 more years, Maximum investment allowed is Rs 15 Lakhs. Only persons with age 60 and above can invest in it, with the exception of armed forces retired personnel where this limit is 50 years. Current rate of interest is 8% payable on a quarterly basis. Available through Post Office and select banks.

2. Post office Monthly Income scheme (POMIS). A 5-year scheme. Maximum investment allowed is Rs 4.5 Lakhs. Applicable for any adult. Current rate of interest is 7.1% payable on a monthly basis. Available through Post Office only.

3. Pradhan Mantri Vaya Vandana Yojana (PMVVY). It is an insurance policy-cum-pension scheme launched by Govt of India and administered through Life Insurance Corporation (LIC). Its current rate of interest is 8%, minimum entry age 60 years, duration of 10 years, and maximum amount allowed is Rs 15 Lakhs.

4. Bank FDs. Available with all the banks with a choice of tenures. Minimum deposit amount and rate of interest vary from bank to bank. Current rates of interest in State Bank of India for senior citizens are 7.25% for a 1-2 year deposit. Other banks are also similarly placed.

If you want to know more about such options, please go to the link https://www.indiapost.gov.in/Financial/pages/content/post-office-saving-schemes.aspx where further details and more such post office schemes are given out.

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Sanjeev

Sanjeev Govila  | Answer  |Ask -

Financial Planner - Answered on May 19, 2023

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sir I am 65 years old govt.pensioners..please advise better saving port folio to help me in old age as well as my grand daughter future ...education expenses...sir post office scheme is longterm investment which i could not use earlier....
Ans: I would like to refer to two myths here before I directly answer your question:-
1. Taking life-time to be minimum 90 years, we’re talking about at least 25 more years of living and investing. Hence, it is a myth that investing in older age should be in absolutely safe instruments since inflation doesn’t care for one’s age.
2. While bank FDs and post office instruments might give you steady returns, please remember that they will always give you returns which will be negative after catering for taxes and inflation. This means that the value of your portfolio will always keep decreasing if you fully invest in such instruments only.

Regarding a good investment portfolio for you, please invest as per your risk profile – meaning how much safety and volatility are you comfortable with – and your future requirements. You have mentioned that you are a govt pensioner, implying that you may be getting enough pension for your day-to-day living. So, make out a list of your future requirements (called financial goals). Then apply the formula that long term requirements go into volatile investments like stocks for better returns and short term into safer ones. On top of this, your risk-taking ability is imposed to give you percentage of safe and volatile investments that you should have.

Amongst the instruments to invest, bank FDs or debt mutual fund for safer investments and equity / hybrid mutual funds for longer term would be good for you. In FDs and debt MFs, try to take longer term investments since interest rates are quite high now. Avoid post office instruments like Senior Citizen Savings Scheme and PO MIS since they compulsorily give you an income which you probably do not need, and hence miss out on the compounding advantages.

For you grand daughter, only good equity funds should do, assuming that she’s very young.

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Ramalingam

Ramalingam Kalirajan  |9383 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 12, 2024

Asked by Anonymous - Apr 30, 2024Hindi
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I am retiring with a corpus of 1 crore. How should I invest the same? Is it wise to put 30,00,000/- in a deferred annuity policy inspite of me going to get 50,00,000/- monthly income? Or should I invest only in FDs, SC Postal? Please advise. I don't have much savings.
Ans: It's great that you're planning for your retirement and have a significant corpus to work with. However, putting a large portion of your corpus into a deferred annuity policy might not be the most optimal choice.

Annuities can provide a steady income stream, but they often come with restrictions and may not offer the best returns compared to other investment options. Additionally, once you invest in an annuity, the funds are generally not accessible for other needs or emergencies.

Considering your desire for a monthly income of 50 lakhs, it's crucial to explore other investment avenues that can provide both growth and income. Fixed deposits (FDs) and small savings schemes like Senior Citizen Savings Scheme (SCSS) or Post Office Monthly Income Scheme (POMIS) can provide stable returns, but they might not offer the growth potential needed to sustain your desired income over the long term.

Instead, you may want to consider a combination of equity and debt investments tailored to your risk tolerance and income needs. Mutual funds, especially those focused on generating regular income, can be a good option. You can also explore dividend-paying stocks or bonds to supplement your income.

It's essential to have a diversified portfolio that balances risk and return. While FDs and small savings schemes can provide stability, they might not keep pace with inflation over time. By allocating a portion of your corpus to growth-oriented investments, you can potentially achieve higher returns and preserve the purchasing power of your savings.

Before making any decisions, it's advisable to consult with a Certified Financial Planner who can assess your financial situation holistically and recommend a personalized investment strategy that aligns with your goals and risk tolerance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |9383 Answers  |Ask -

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

Asked by Anonymous - May 16, 2024Hindi
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Hi sir, I am going to retire at 40. I.e, this year. I will have 55 lac retirement benefits. I don't have any knowledge of mutual fund or sip. My monthly pension wud be 36000. So I planned to put 30 lac in Senior citizen savings scheme to get 20500/-. What and where should I invest rest 25 lac to get better than FD/ kvp. I don't want to take risk on lifetime achieved fund.
Ans: Crafting Your Retirement Investment Strategy
Retiring at 40 is a significant milestone, and it's essential to make prudent investment decisions to safeguard your retirement corpus and ensure financial stability. Let's explore tailored investment options that align with your risk tolerance and financial goals.

Maximizing Returns on Retirement Benefits
Congratulations on your retirement! With retirement benefits of 55 lakhs and a monthly pension of 36,000, you're off to a good start. Maximizing returns on your retirement benefits is crucial for long-term financial security.

Senior Citizen Savings Scheme (SCSS)
Investing 30 lakhs in the Senior Citizen Savings Scheme to earn a monthly income of 20,500 is a conservative yet effective choice. SCSS offers guaranteed returns and capital protection, making it suitable for risk-averse investors like yourself.

Exploring Investment Options for the Remaining 25 Lakhs
Now, let's focus on the remaining 25 lakhs and explore investment avenues that offer better returns than FDs or KVPs without compromising your risk tolerance.

Fixed Income Investments
Consider allocating a portion of the remaining corpus to fixed income investments such as corporate bonds, debentures, or high-quality debt mutual funds. These options provide stable returns with relatively lower risk compared to equities.

Systematic Withdrawal Plans (SWP)
Another option is to invest in mutual funds with a SWP facility. SWP allows you to systematically withdraw a predetermined amount from your investment at regular intervals. Opt for debt-oriented balanced funds or conservative hybrid funds to minimize risk while aiming for better returns.

Regular Funds Investing through a Certified Financial Planner
Investing in regular funds through a Certified Financial Planner (CFP) offers several benefits. A CFP provides personalized advice, portfolio management, and regular reviews to ensure your investments are aligned with your goals and risk tolerance. With a CFP's guidance, you can navigate market uncertainties and optimize your investment strategy for better returns.

Ensuring Financial Stability in Retirement
Retiring at a young age requires careful planning to ensure financial stability throughout your retirement years. By diversifying your investment portfolio, minimizing risk, and seeking expert guidance, you can build a robust financial foundation that supports your lifestyle and aspirations.

Conclusion
Sandeep, retiring at 40 is a remarkable achievement, and it's essential to make wise investment decisions to preserve and grow your retirement corpus. By investing in a combination of conservative options like the Senior Citizen Savings Scheme and exploring alternative avenues for the remaining corpus, you can achieve your financial goals while safeguarding your lifetime achievements.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |9383 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Nov 26, 2024

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I, a senior citizen, would like your suggestion for investing a retirement corpus, with a moderate risk appetite. I have already made some investments in Equity, MFs, FDs, Senior Citizen Saving Schemes & Post Office Schemes.
Ans: You have already diversified your investments wisely across equity, mutual funds, FDs, senior citizen savings schemes, and post office schemes. This indicates a well-thought-out approach. As a senior citizen, your focus should now shift to maintaining stability, generating consistent income, and growing your corpus within a moderate risk appetite.

Key Investment Objectives for Senior Citizens
Capital Preservation:
Safeguard your retirement corpus against unnecessary risks.

Regular Income:
Ensure stable and predictable income to meet monthly expenses.

Moderate Growth:
Invest a portion in moderate-risk instruments for inflation-beating returns.

Liquidity:
Keep funds accessible for emergencies or unforeseen expenses.

Strategies for Allocating Your Retirement Corpus
Emergency Fund:
Set aside at least 12 months of living expenses in liquid investments. Use options like liquid mutual funds or high-interest savings accounts.

Equity Allocation for Growth:
Retain a portion in equity funds for long-term growth. Opt for actively managed funds over index funds. Actively managed funds offer better potential returns, guided by experienced fund managers.

Debt Mutual Funds for Stability:
Debt funds provide stability and moderate growth. These are tax-efficient compared to FDs for investors in higher tax brackets.

Senior Citizen Savings Schemes:
Continue contributing to senior citizen savings schemes. They offer guaranteed returns and safety.

Monthly Income Plans (MIPs):
MIPs in mutual funds offer regular payouts and moderate growth. These are ideal for generating supplementary income.

Reviewing Your Mutual Fund Investments
Avoiding Over-Diversification:
If you hold too many mutual funds, it can dilute returns. Focus on 3-5 well-performing funds.

Invest Through Regular Plans:
Avoid direct mutual funds. Regular plans via MFDs guided by a Certified Financial Planner offer better advice and monitoring.

Evaluating FDs and Post Office Investments
Fixed Deposits (FDs):
FDs are safe but may not beat inflation. Use them only for short-term needs.

Post Office Schemes:
These offer reliable returns. Consider their lock-in periods before increasing your investments.

Ensuring Tax Efficiency
Mutual Fund Taxation:
Equity funds have LTCG above Rs 1.25 lakh taxed at 12.5%. Debt funds are taxed as per your income tax slab. Factor this into your withdrawal strategy.

Maximise Section 80C Deductions:
Continue using investments like senior citizen schemes to avail of 80C tax benefits.

Additional Considerations for Risk Management
Insurance Coverage:
Ensure you have adequate health insurance. Medical emergencies can strain your finances.

Avoid Investment-Linked Insurance Policies:
If you hold LIC or ULIP policies, evaluate their returns. Surrender underperforming ones and reinvest in mutual funds for better growth.

Avoid High-Risk Investments:
Steer clear of speculative instruments like high-risk equities or unregulated products.

Regular Monitoring and Reviews
Review your portfolio every 6-12 months. This ensures your investments align with your financial goals.

Rebalance the portfolio as required. For instance, shift equity gains into safer instruments during market highs.

Work with a Certified Financial Planner to receive expert advice tailored to your needs.

Final Insights
Your retirement corpus is a key resource for financial independence. A balanced strategy with moderate risk will secure regular income and inflation-beating growth. Diversify, review, and optimise your investments regularly for financial well-being.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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Adarsh Rai  |12 Answers  |Ask -

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Hi. I am currently 29. Married with no kids. Wife not earning. Planning for a kid this year. Monthly earning 60k post tax. Have savings of 2 lakhs. Have personal loan of 9 lakhs. Monthly expenses 40k including emi's. I have lost interest in job and I don't want to work anymore. I want to do business which can give monthly 50 to 60k income. Max I can invest 2lakhs. Is there any business which I can start with 2 lakhs and generate monthly income of 60k ? I am frustrated with working under an employer. I want to start my own venture. Please suggest.
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Your maths
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A newborn will nudge monthly costs up by 8-10 k. Cash cushion shrinks fast.

So the plan must earn while you learn, not leap blind.

Keep the paycheck six more months.
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Choose a “cash-this-month” niche, not a moon-shot.
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Amazon / Flipkart reselling (phone cases, cables) ?40 k stock, ?15 k ads 25 % net margin on ?2 L monthly sales = ?50 k

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Local social-media management for clinics & salons ?0 gear, ?3 k Canva Pro ?8 k-?12 k per client; 6 clients hit target

None need heavy staff or rent. All can run beside your day job.

Set one simple goal: ?15 k profit by Day-30.
Hit it twice, raise target to ?35 k. Only when side income beats salary three months straight do you quit.

This is critical - Plug leaks early. Refinance personal loan to longer tenor; shave EMI to ~?10 k.

Park 1 L of savings in an emergency account—no touch.Skill up tiny, daily.
Watch a YouTube on ad copy, take a WhatsApp course on GST filings. Low cost, immediate payback.

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Hello Sir ,spandan here can you please tell me which fields will be good path for me, i want to join indian army after getting a bachelors degree but i also want to get a good course in engineering. And to improve my skills i wanted to choose a niche to select like Data science,cyber security,block chain and UX/UI. Can you tell me which is a better option
Ans: Spandhan - the Indian Army of 2030: satellites humming, networks under attack, swarms of sensors feeding dashboards in a forward command post. Officers who understand code, data flows, and signal security steer that fight.

Two decisions shape your path
The bachelor’s branch you choose (for campus learning and placements).

The Army entry gate you target after graduation.

Pick a branch that helps both goals: B.Tech CSE with a Cyber-Security or AI/Data-Science minor

Specialised B.Tech Cyber Security | Blockchain / UX-UI tracks| B.Tech ECE (electronics) with electives in embedded & comms

Go CSE (or ECE) and stack cyber-security / data-science electives. That mix lines up with Army tech entries and the private market.

Know your post-degree entry doors

TGC / SSC-Tech 20-27 Age B.E./B.Tech in listed branches inc. CSE, IT, ECE Signals, EME, Engineers

CDS – IMA/OTA 19-25 Any bachelor’s, tougher written + SSB All arms; tech grads often posted Signals

Agniveer (Technical) 17.5-21 10+2/ITI, but engineering diploma grads gain edgeKeep your CGPA ≥ 7, build fitness early, aim for NCC ‘C’ (bonus marks at SSB).Pick cyber-security as primary, add AI/data electives. You’ll be useful whether you wear olive greens or a hoodie.

Keep the plan simple: CSE + Cyber/AI → TGC/SSC-Tech → Corps of Signals.
Even if you later choose the corporate highway, those same skills pay handsomely.

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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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