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Ramalingam Kalirajan |10870 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 2025

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 - Jul 09, 2025Hindi

We are a working couple(35 & 34 yrs) having two children's aged 7 and 2.5 yrs. Our combined monthly income is 2.25L. We are managing a home loan (resale property bought 5 years back) and also support my spouse family. Below is the summary of our monthly financial commitments & Investments. -- Home loan EMI (Outstanding loan 14L) - 19,400 --Additional Principal prepayment - 22,000 -- LIC Premium - 24,000 (includes Jeevan labh for both, Jeevan Anand for self, Jeevan Tarun for kids) -- Term insurance Self - 1,700 -- Mutual Fund investment - 25,000 (across Mid, large & Flexi cap) -- Gold savings - 17,000 -- PPF & SSA - 28,000 -- House rent - 7,000 -- Support to Spouse family - 16,000 -- Maid Salary - 11,000 -- Elder child schooling - 8,000 -- General Living expense - 40,000 (Includes groceries, utilities, petrol, recharge, food etc.) Also have emergency fund for 6 months. Corporate health insurance and not self. We need your suggestion that are we going in correct path? Is there any others to invest? We seek financial advice in tax saving & grow money. We have RD, NSC etc., but all the interest earned from this source are added in our income slab. Need suggestion on this. Also we have plan to buy a car and villa/flay in chennai? Is it advisable to buy now? Please advice. Thanks in advance.

Ans: – You both are managing your money well.
– Strong income of Rs.2.25 lakh per month is a great start.
– Clear budgeting, investments, and family support reflect strong financial discipline.
– Having an emergency fund already in place is excellent.
– Supporting spouse’s family is thoughtful and responsible.

»Review of Key Financial Commitments
– Home loan EMI is manageable at Rs.19,400 per month.
– Prepaying Rs.22,000 monthly towards loan is appreciable.
– Loan outstanding is only Rs.14 lakh, which is almost done.
– LIC premium of Rs.24,000 is high compared to benefits.
– Mutual fund SIP of Rs.25,000 is a good habit.
– Rs.28,000 into PPF and SSA ensures fixed safe savings.
– Gold savings of Rs.17,000 is on the higher side.
– Living expenses and child’s education are well within limits.
– Family support of Rs.16,000 is a fixed responsibility.

»Review of Life Insurance
– Jeevan Labh, Jeevan Anand and Jeevan Tarun are traditional policies.
– These mix insurance and investment in one product.
– Return from these is very low, mostly 4–5% yearly.
– They are not suitable for wealth creation.
– Term plan is a better option for pure protection.
– Please review surrender value of LIC policies.
– If losses are minimal, consider surrender and reinvest in mutual funds.
– Reinvest proceeds in regular mutual funds through a Certified Financial Planner.
– Avoid any further investment in endowment or combo plans.

»Home Loan Strategy
– Rs.14 lakh outstanding is small.
– You are paying Rs.22,000 extra principal monthly.
– This will close your loan very soon.
– That is a good goal to complete within 12–15 months.
– After closing, redirect EMI and prepayment amount into investments.
– Do not prepay at the cost of future planning.
– Consider full repayment only after children’s funds are set.

»Mutual Fund Investment
– Rs.25,000 monthly SIP is a solid step.
– Continue investing in mid, large and flexi-cap actively managed funds.
– Avoid index funds as they lack flexibility in market corrections.
– Index funds just copy indices and do not actively manage risk.
– Actively managed funds perform better in Indian markets.
– Direct plans should also be avoided.
– Regular plans via MFD ensure CFP-backed support.
– You get annual review, goal tracking and personalised advice.
– Increase SIP by Rs.3,000 every year.
– Use these funds for retirement and kids' education.

»Gold Investment Strategy
– Rs.17,000 monthly into gold is on the higher side.
– Gold gives no income and low long-term returns.
– It also lacks compounding like mutual funds.
– Keep gold allocation under 10% of your portfolio.
– Reduce gold savings to Rs.5,000 monthly.
– Redirect Rs.12,000 monthly into equity funds.

»PPF and SSA Contributions
– Rs.28,000 monthly into PPF and SSA is safe and tax-efficient.
– But returns are fixed and slow for wealth growth.
– SSA is good for girl child’s education and marriage.
– PPF is suitable as a debt portion of retirement.
– But avoid exceeding Rs.1.5 lakh yearly combined to claim 80C.
– Any more investment above 80C cap gives no tax benefit.
– Balance your allocations for returns, liquidity and tax efficiency.

»Review of RD, NSC, and Other Instruments
– RD and NSC are low-interest, taxable instruments.
– Interest is fully added to income and taxed.
– They offer no indexation or compounding advantage.
– Do not increase investment in NSC or RD.
– Shift focus to mutual funds for tax-efficiency and higher returns.
– Mutual fund LTCG up to Rs.1.25 lakh is tax-free.
– Above that, it is taxed at 12.5%.
– Short-term gains are taxed at 20%.
– Debt fund gains are taxed as per income slab.
– Plan redemptions to minimise tax impact.

»Tax Planning Suggestions
– Use full Rs.1.5 lakh under 80C with PPF, SSA, ELSS.
– ELSS mutual funds have 3-year lock-in.
– They offer tax savings and equity growth.
– Use regular ELSS plans through a Certified Financial Planner.
– Avoid NPS if liquidity and flexibility matter to you.
– Take tax benefit on health insurance under Section 80D.
– Consider Section 24 (interest) if still paying home loan interest.
– Use Section 80G for donations to save tax.

»Children’s Education Planning
– Elder child is already in school.
– Begin dedicated SIPs tagged for each child’s education.
– Use 8–12 year horizon for elder child goal.
– Choose hybrid funds for education within 10 years.
– For younger child, equity fund SIPs are ideal.
– Keep education planning separate from retirement investments.
– Review portfolio every year to ensure growth matches target.

»Emergency Fund and Protection
– Emergency fund already in place is perfect.
– Keep it equal to 6–9 months of expenses.
– Use liquid mutual funds for storing this.
– Corporate health insurance is not enough.
– Take personal family floater health insurance of Rs.10 lakh.
– Add super top-up if needed in future.
– Buy accident cover for both partners.

»Real Estate Purchase Decision
– Buying a villa or flat now is not ideal.
– It will block a large part of your savings.
– Real estate gives low returns and no liquidity.
– Rent is only Rs.7,000 now.
– Keep renting till children’s education and retirement are on track.
– After retirement corpus and goals are funded, plan for home.
– Do not buy real estate for investment purpose.

»Car Purchase Decision
– Do not buy a car on loan.
– If necessary, buy a car under Rs.8 lakh with down payment.
– Do not let EMI exceed Rs.10,000 monthly.
– Consider a pre-owned car to reduce cost.
– Delay car purchase by one year if possible.
– Use that year to boost investments.

»Behavioural Strategy and Lifestyle Control
– Maintain monthly budget tracking.
– Keep increasing SIPs annually.
– Don’t chase highest returns or hot funds.
– Keep emotional decisions away from money.
– Involve both spouses in investment discussions.
– Teach basic financial skills to children slowly.
– Celebrate savings progress regularly.

»Finally
– You both are managing your finances responsibly.
– Priorities are clear and plans are steady.
– Restructure gold, LIC, and RD investments.
– Increase equity exposure through mutual funds.
– Avoid buying real estate now.
– Ensure tax planning is aligned with long-term goals.
– With Certified Financial Planner support, Rs.10 crore corpus is realistic.
– Your journey is strong, focused, and hopeful.

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

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