Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |8260 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 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
Asked by Anonymous - May 30, 2024Hindi
Money

Sir, i want to know what monthly income should i consider having when i am 60 which will be equal to today's 1.5 lakh rupees. Currently i am 34 years old and investing INR 20k per month in SIP, 1.5 Lakh in PPF per annum and lumpsum 25 Lakh in MF when i was 31. Also what amount should i look forward to accumulate by age of 60 to ensure 1.5 lakh in today's money till age 90 through SWP considering depreciation of money with time due to inflation.

Ans: At 34 years old, you are already making significant strides towards your retirement goals. Your current investments include Rs. 20,000 per month in SIPs, Rs. 1.5 lakh annually in PPF, and a Rs. 25 lakh lump sum in mutual funds made three years ago. These investments are crucial steps towards securing your future financial independence.

Inflation and Its Impact on Future Income
Inflation erodes the purchasing power of money over time. To maintain a lifestyle equivalent to Rs. 1.5 lakh today, you need to account for inflation. Let's assume an average inflation rate of 6% per annum. This means that what costs Rs. 1.5 lakh today will cost significantly more by the time you reach 60.

Estimating Future Monthly Income Needs
To estimate your future monthly income needs, we need to consider inflation. With an assumed 6% inflation rate over the next 26 years, the future value of Rs. 1.5 lakh can be calculated. Here's a simplified approach to understand this:

At 6% inflation, prices double approximately every 12 years.
In 26 years, the prices will more than triple.
Hence, to maintain the same lifestyle, you would need a monthly income significantly higher than Rs. 1.5 lakh in today’s terms.

Importance of Investment Growth
To counteract inflation, your investments need to grow at a rate higher than the inflation rate. Equity investments, like SIPs in mutual funds, historically offer returns that can outpace inflation over the long term. This is where your SIPs and lump sum mutual fund investments play a crucial role.

Assessing Your Current Investment Strategy
You are investing Rs. 20,000 per month in SIPs, contributing Rs. 1.5 lakh annually to PPF, and have a significant lump sum in mutual funds. Let's break down the benefits and potential areas for improvement in your current strategy.

Systematic Investment Plans (SIPs):
SIPs are an excellent way to invest in mutual funds, offering the benefits of rupee cost averaging and compounding. However, it's important to regularly review the performance of the funds you are investing in. Opting for actively managed funds can provide the potential for higher returns compared to index funds, which simply track the market and may not outperform it.

Public Provident Fund (PPF):
PPF is a safe investment option with tax benefits. However, its returns, though steady, may not be sufficient to counter inflation alone. Balancing your portfolio with a mix of PPF and higher-yield investments can be more beneficial.

Lump Sum in Mutual Funds:
Your Rs. 25 lakh lump sum investment in mutual funds is a substantial amount that can grow significantly over time. Ensure these funds are in actively managed schemes to maximise growth potential.

Projecting Your Retirement Corpus
To ensure a monthly income equivalent to Rs. 1.5 lakh today, we need to estimate the corpus required by the time you retire at 60. Given the inflation-adjusted requirement and considering you might live up to 90, this corpus needs to be substantial.

Let's consider a systematic withdrawal plan (SWP) from your investments post-retirement. SWP allows you to withdraw a fixed amount regularly, providing a steady income stream.

Estimating the Corpus:

Assume an annual withdrawal rate that provides the inflation-adjusted Rs. 1.5 lakh monthly income.
Factor in the potential returns on your investments during retirement.
Balancing Risk and Return
As you approach retirement, it's prudent to adjust your investment strategy to reduce risk while ensuring sufficient growth. This means gradually shifting from high-risk equity investments to more stable options. However, maintaining some exposure to equities is crucial to counteract inflation.

Importance of Diversification
Diversification is key to managing risk and ensuring steady growth. Ensure your investments are spread across different asset classes like equity, debt, and gold. Actively managed mutual funds can provide better returns and flexibility compared to index funds, which may not perform well during market downturns.

Regular Review and Rebalancing
Regularly reviewing and rebalancing your portfolio is essential to stay on track with your financial goals. A certified financial planner can help you evaluate the performance of your investments and make necessary adjustments.

Benefits of Professional Guidance
Working with a certified financial planner can provide personalized advice tailored to your unique financial situation. They can help you navigate market fluctuations, optimize your investment strategy, and ensure you are on track to meet your retirement goals.

Tax Efficiency
Tax efficiency is an important aspect of retirement planning. Ensure your investments are tax-efficient to maximize your returns. Utilizing tax-saving instruments like PPF, ELSS (Equity-Linked Savings Scheme), and others can help you save on taxes while growing your wealth.

Planning for Healthcare Costs
Healthcare costs can be a significant expense during retirement. Ensure you have adequate health insurance coverage and consider creating a separate healthcare fund to cover any unforeseen medical expenses.

Legacy Planning
Consider your legacy and how you wish to distribute your wealth. Estate planning can help ensure your assets are distributed according to your wishes and can also provide tax benefits.

Final Insights
Planning for retirement is a multifaceted process that requires careful consideration of various factors. By continuing to invest systematically, diversifying your portfolio, and regularly reviewing your strategy, you can build a robust retirement corpus. Aim for a balance between risk and return, and seek professional guidance to optimize your investments. With a well-thought-out plan, you can ensure a comfortable and financially secure retirement.

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.
Money

You may like to see similar questions and answers below

Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Feb 06, 2024

Listen
Money
Hello Hardik Bhai I am at 54 years in MNC. My monthly take home ~ ₹1.4 lacs + I have 2 flats that fetch rental income of ₹ ~ 50000/-. PF accumulation is around 60 lacs. Have home emi of 61000/- monthly and I am in a government flat (my wife government employee she has another 7 years of service). Make all effort to ensure that her salary is not touched.. have a daughter at 22 years. Based on her academic appetite and success have earmarked ~50 lacs for her higher education. Have investment in equity 15 lacs worth and gold around 50 lacs. Assuming I retire in another 6-7 years, how much I should ensure monthly income to maintain a present standard of of life without dependency. Your views on mutual fund etc. will be appreciated.. Thanks
Ans: Considering your profile and aspirations, here's a strategic overview:-

1. Current Income and Assets:
Monthly take-home: ?1.4 lacs
Rental income: ?50,000/-
PF accumulation: ?60 lacs
Equity investment: ?15 lacs
Gold holdings: ?50 lacs
2. Liabilities:- Home EMI: ?61,000/-
3. Future Goals and Commitments:- Daughter's higher education fund: ?50 lacs
4. Retirement Plans:- Target retirement in 6-7 years

Considering your retirement goal, let's outline a strategic approach:-

Monthly Income Requirement:- Assess your current monthly expenses and lifestyle to determine the income needed to maintain your standard of living. Factor in inflation for accurate projections.

Investment Diversification:- Given your time horizon, consider a balanced portfolio across mutual funds, including equity and debt. Diversification helps manage risk.

PF Utilization:- Evaluate the possibility of utilizing PF wisely for retirement income. Understand withdrawal rules and tax implications.

Real Estate Planning:- Given your rental income and property assets, review their potential for contributing to your retirement income.

Daughter's Education Fund:- Ensure your earmarked amount aligns with the expected cost of her education. Consider investment options with a medium-term horizon.

Risk Management:- Review your insurance coverage, including health and life insurance, to safeguard against unforeseen circumstances.

Financial Planner Consultation:- Engage with a certified financial advisor to create a detailed retirement plan. They can tailor strategies based on your unique situation and goals.

It's essential to periodically review and adjust your plan based on evolving circumstances. Connect with your financial planner for goal-based planning and a detailed explanation tailored to your unique situation.

..Read more

Ramalingam

Ramalingam Kalirajan  |8260 Answers  |Ask -

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

Asked by Anonymous - Oct 30, 2023Hindi
Listen
Money
Hi sir, Now I am 24 and I need a fix monthly income of 3+ lakhs by the age of 50 yrs. How much did I need to invest on monthly basis?
Ans: Achieving a fixed monthly income of Rs 3 lakhs by the age of 50 is a commendable goal. Given your current age of 24, you have a 26-year investment horizon. This long-term horizon allows for strategic planning and disciplined investing to reach your target.

Understanding Your Financial Goal
To generate a fixed monthly income of Rs 3 lakhs, you need a substantial retirement corpus. The exact amount will depend on the assumed rate of return and inflation. Generally, a well-planned investment strategy can help achieve this target.

Importance of Starting Early
Starting your investments early is beneficial. Compounding plays a crucial role in wealth accumulation. The longer your money is invested, the more it grows, making it easier to achieve your financial goals.

Estimating the Required Corpus
A fixed monthly income of Rs 3 lakhs translates to Rs 36 lakhs annually. Assuming a conservative withdrawal rate of 4%, you would need a retirement corpus of approximately Rs 9 crores. This corpus can sustain withdrawals while preserving capital.

Monthly Investment Requirement
To reach a corpus of Rs 9 crores in 26 years, regular and disciplined investments are essential. Based on historical returns of diversified equity mutual funds, you can estimate the required monthly investment. Assuming an annual return of around 12%, you need to invest a significant amount monthly.

Choosing the Right Investment Avenues
Diversification is key to managing risk and achieving stable returns. Here are some recommended investment options:

Equity Mutual Funds: These funds offer high returns over the long term. Diversify across large-cap, mid-cap, and small-cap funds to balance risk and return.

Hybrid Funds: These funds invest in both equity and debt. They provide stability and moderate returns, making them suitable for long-term goals.

Debt Funds: While offering lower returns, debt funds provide stability. They should form a smaller portion of your portfolio to reduce overall risk.

The Benefits of SIPs
Systematic Investment Plans (SIPs) are an effective way to invest regularly. SIPs help in rupee cost averaging and reduce the impact of market volatility. Investing a fixed amount monthly ensures disciplined savings and wealth accumulation.

The Role of Actively Managed Funds
Actively managed funds are preferable over index funds for long-term goals. Fund managers actively select securities to outperform the market. This active management can potentially provide higher returns, aiding in faster accumulation of the required corpus.

Disadvantages of Direct Funds
Direct funds require self-management and in-depth market knowledge. Without professional guidance, it can be challenging to make informed investment decisions. Investing through regular funds with the assistance of a Mutual Fund Distributor (MFD) and a Certified Financial Planner (CFP) offers professional advice and personalized strategies.

Regular Review and Rebalancing
Regularly review your investment portfolio to track performance. Rebalance your portfolio periodically to maintain the desired asset allocation. This involves shifting investments from overperforming to underperforming assets to stay aligned with your financial goals.

Professional Guidance
Engage with a Certified Financial Planner (CFP) for personalized advice. A CFP can help in selecting the right funds, managing risks, and ensuring that your investment strategy aligns with your long-term financial goals.

Inflation and Its Impact
Inflation erodes purchasing power over time. Your investment strategy should aim for returns that outpace inflation. Equity investments generally offer inflation-beating returns, making them essential for long-term wealth creation.

The Importance of Financial Discipline
Consistency is crucial in achieving financial goals. Stay committed to your investment plan, even during market downturns. Financial discipline ensures steady progress towards your target corpus.

Building a Contingency Fund
Maintain a contingency fund to handle unexpected expenses. This ensures that your primary investments remain intact, and you don’t have to liquidate assets prematurely.

Tax Planning
Consider the tax implications of your investments. Opt for tax-efficient investment options to maximize returns. Long-term capital gains from equity funds are tax-advantaged, making them a suitable choice for long-term goals.

Conclusion
Achieving a fixed monthly income of Rs 3 lakhs by the age of 50 is attainable with disciplined investing and strategic planning. Start early, diversify your investments, and seek professional guidance. Regular review and rebalancing of your portfolio will ensure you stay on track and maximize your returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8260 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Oct 24, 2024

Money
Hi, Im male 52 years, an NRI and want to retire in about a years time. i have a flat which is worth 75lacs in India, around 50 lacs in FD, investment in equities 16 lacs and a mutual fund of around 10 lacs with a monthly sip of 17,000. i have about 30 lacs investment with relatives with some interest. around 35 lacs would be end of service benefits. have two children who are doing their higher studies in India, a daughter and a son 18 & 20 respectively. appreciate your advise the best monthly income that i should have with my savings. i have no other liabilities or loan.
Ans: You are a 52-year-old NRI planning to retire in a year. You have built a diversified portfolio and financial assets. Your assets consist of:

A flat worth Rs 75 lakhs in India.

Fixed Deposits (FDs) worth Rs 50 lakhs.

Investment in equities valued at Rs 16 lakhs.

Mutual fund investments worth Rs 10 lakhs, with a SIP of Rs 17,000 per month.

Investment of Rs 30 lakhs with relatives, earning some interest.

You expect Rs 35 lakhs as end-of-service benefits.

You also have two children pursuing higher studies in India, a daughter (18 years) and a son (20 years). You have no other loans or liabilities, which is a great position to be in before retirement.

Assessing Your Retirement Income Needs
Since you are looking to retire soon, it's essential to plan for a stable and sustainable monthly income. You’ll need to ensure that your savings can support your post-retirement lifestyle, children's education, and other future expenses.

Given that you have Rs 136 lakhs (including FDs, mutual funds, equity, end-of-service benefits, and the investment with relatives), your retirement income should be carefully structured to last for the rest of your life.

Let’s break this down.

Suggested Allocation of Funds for Optimal Monthly Income
You should aim to achieve a balance between safety and growth, with a significant focus on capital preservation. Here’s how you can structure your savings:

1. Fixed Deposits (FDs) and Debt Instruments: Rs 60-70 Lakhs
Purpose: Safety and liquidity.

Allocation: FDs already make up Rs 50 lakhs of your portfolio. You may want to add Rs 10-20 lakhs from the end-of-service benefits to create a stable and low-risk base.

Returns: These will give you a predictable monthly income through interest payments.

Though FDs provide safety, the returns are not very high and are taxable as per your income slab. Therefore, having a mix of other low-risk instruments like short-term debt mutual funds or senior citizen saving schemes (SCSS) can further diversify your income sources.

Debt mutual funds, while taxable, offer more flexibility and better returns than FDs over time. This portion of your portfolio can be used for short-term needs and emergencies.

2. Equity Investments: Rs 16 Lakhs
Purpose: Growth and inflation protection.

Allocation: You already have Rs 16 lakhs in equity. Since equity markets are volatile, this portion of your portfolio should be left untouched for at least the next 8-10 years. It will help your overall corpus grow and provide inflation-adjusted returns.

Returns: Though volatile, equities tend to outperform other asset classes over the long term.

Keeping your equity investments intact is crucial to ensure your portfolio does not lose its value due to inflation over the long run.

3. Mutual Funds (MFs): Rs 10 Lakhs + Rs 17,000 Monthly SIP
Purpose: Balanced risk and return for the medium-term.
Your mutual fund investment of Rs 10 lakhs and monthly SIP of Rs 17,000 can be allocated to Balanced Advantage Funds (BAFs) or Hybrid Mutual Funds. These funds balance between equity and debt, offering moderate returns with reduced risk compared to pure equity funds. This will allow you to benefit from equity growth without taking excessive risk.

Since equity mutual funds with long-term capital gains (LTCG) over Rs 1.25 lakh are taxed at 12.5%, and short-term capital gains (STCG) at 20%, it is better to hold these funds long-term to avoid higher taxes. You can periodically withdraw from these funds to meet your monthly needs while keeping the bulk of your capital invested.

4. Investment with Relatives: Rs 30 Lakhs
Purpose: Additional income.

Returns: This investment earns some interest, which can serve as an extra source of income. However, relying on informal arrangements may not be as secure. You might consider reallocating this Rs 30 lakhs to a safer option, like a debt mutual fund or senior citizen savings scheme (SCSS), to ensure more stability.

This would diversify your income sources and offer better security than an informal investment.

5. End of Service Benefits: Rs 35 Lakhs
Purpose: Additional stability.

Allocation: Consider allocating Rs 20-25 lakhs of this amount into low-risk, income-generating instruments such as SCSS, which offer regular payouts and are government-backed. This can serve as a steady and guaranteed income stream for your retirement.

The rest of this money (Rs 10-15 lakhs) could be added to your mutual fund portfolio to allow for some growth potential while still maintaining a low-to-moderate risk profile.

Creating a Monthly Income Plan
Based on your assets, you could structure a monthly income plan from multiple sources:

FDs and Debt Mutual Funds: This would be your primary source of income. You could set up a Systematic Withdrawal Plan (SWP) from debt mutual funds, which allows you to withdraw a fixed amount monthly, providing regular income while keeping your principal relatively safe.

Mutual Fund SWP: You could also set up an SWP from your balanced advantage or hybrid funds. Since these funds balance both equity and debt, they offer stable returns with a moderate risk level.

Investment with Relatives: If you continue this arrangement, it can serve as an additional income stream. However, ensure that it’s secure and reliable.

Projecting Monthly Income from These Sources
To estimate the monthly income you can generate, here is a rough breakdown:

FDs and Debt Funds: These can generate interest or withdrawal income in the range of Rs 25,000-30,000 per month.

Mutual Fund SWP: From Rs 10 lakhs, you could withdraw Rs 10,000-15,000 per month without depleting your corpus significantly.

Investment with Relatives: Depending on the interest rate, this could give you an additional Rs 5,000-10,000 monthly.

End-of-Service Benefits: Once allocated, this could provide another Rs 10,000-15,000 per month, depending on the instruments chosen.

In total, your monthly income could range from Rs 50,000 to Rs 70,000, which can be adjusted for inflation over time. You can also choose to withdraw larger sums for one-off expenses if needed.

Managing Future Expenses for Your Children
Your children are in their higher studies, so it’s essential to have funds set aside for their education or other needs. You could create a separate education fund using part of your end-of-service benefits or other savings. This could be invested in a debt mutual fund or balanced fund to grow safely until they need it.
Final Insights
You are well-positioned for retirement with a balanced portfolio across various asset classes. However, some reallocation and restructuring can help you secure a steady income stream while keeping your capital safe.

Focus on creating a stable monthly income from FDs, debt mutual funds, and SWPs.

Retain equity and mutual fund investments for long-term growth and inflation protection.

Consider reallocating informal investments for more security.

Plan ahead for your children’s education needs and other future expenses.

Stay mindful of the tax implications of your income and investments as an NRI.

With these strategies, you can comfortably enjoy your retirement without financial stress.

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

..Read more

Latest Questions
Pushpa

Pushpa R  |60 Answers  |Ask -

Yoga, Mindfulness Expert - Answered on Apr 18, 2025

Dr Nagarajan Jsk

Dr Nagarajan Jsk   |323 Answers  |Ask -

NEET, Medical, Pharmacy Careers - Answered on Apr 18, 2025

Asked by Anonymous - Mar 21, 2025Hindi
Listen
Career
Hello Sir, At present I am appearing Class 12 boards. I want to do research work in human psychology as my career. In which discipline I should do my Bachelors for the same? Is doing MBBS is the only way to reach out in research field? Thanks
Ans: Hi,
Kindly formulate your query in a detailed manner so that the experts on Rediff can provide you with better solutions. If you don’t provide enough information, it will be difficult for them to assist you, as the gurus need to make informed predictions to answer your question. This platform is more transparent than others because you can see the profiles of the experts available here. Therefore, be open and provide precise details. Please note that the platform does not require personal information, and you can post your questions anonymously if you prefer.

Undergraduate (UG) degrees provide foundational knowledge, including how to conduct research. In postgraduate (PG) studies, you generally build on those basics. After completing your PG studies, you can engage in research, either full-time or by pursuing a PhD.

An MBBS degree is also just a basic qualification and is not the only gateway into the research field. You can conduct research in a variety of fields, including arts.

If you are particularly interested in human psychology, gather basic information on the topic and proceed accordingly. There are various aspects of human psychology, so consider which area you would like to specialize in and plan your path from there.

ALL THE BEST

POOCHO. LIFE CHANGE KARO.

...Read more

Dr Nagarajan Jsk

Dr Nagarajan Jsk   |323 Answers  |Ask -

NEET, Medical, Pharmacy Careers - Answered on Apr 18, 2025

Asked by Anonymous - Apr 16, 2025Hindi
Listen
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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x