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Sunil Lala  |193 Answers  |Ask -

Financial Planner - Answered on May 16, 2024

Sunil Lala founded SL Wealth, a company that offers life and non-life insurance, mutual fund and asset allocation advice, in 2005. A certified financial planner, he has three decades of domain experience. His expertise includes designing goal-specific financial plans and creating investment awareness. He has been a registered member of the Financial Planning Standards Board since 2009.... more
Asked by Anonymous - May 15, 2024Hindi
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Hi, I would need advice I am 41 ppf is about 20 lakh, epf is 98 lakh, mutal funds is about 8 lakh with annual contribution of about 1 lakh, shares investment is 2.5 lakh worth 4.5 lakh, gold about 2-3 lakh, gold bonds 10gm, income plan about 10 lakh worth about 20 lakh, insurance cover about 55 lakh , health insurance about 10 lakh basic plus critical illness is about 10 lakh more , home loan emi about 65k pm for 9 years 10 months Property investment worth about 2.6 cr Any other suggestions

Ans: You have a good balanced portfolio
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  |5019 Answers  |Ask -

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

Asked by Anonymous - Feb 29, 2024Hindi
Money
Hello, I am 43 Years old and earning in-hand 2.2+ lac per month, from this year I have started investment in MF SIP(60K/month), NPS(10% basic + 50k/yrs from past 5 yrs), PPF (12500/month from past 5 yrs), Emergency fund 3lac (FD), EPF(20+lac), No EMI(Debt free - hold 2 property), Term Plan (50 lac) + 1.5 CR (Corporates cover)-> have external plan for 1.5 CR more + minimum external medical insurance plan (Currently corporate medical plan of 15 lac available) Equity investment is 0. My monthly expense is around 50k. I have two kids 5 and 10 yrs old - need to plan for education and my retirement(at 60 age). I can invest more 80-90k/month, Risk capacity is high, please suggest. Requirement - Education 2 CR for (1 CR each Kid appx) and for retirement around 5 CR liquid cash.
Ans: It's wonderful that you have a solid financial foundation and a clear vision for your future. Let's review your current investments and suggest strategies to help you achieve your goals for your children's education and your retirement.

Current Financial Situation
Monthly Income and Expenses
In-hand Income: Rs. 2.2+ lakhs per month
Monthly Expenses: Rs. 50,000
Current Investments
Mutual Fund SIP: Rs. 60,000 per month (started this year)
NPS: 10% of basic salary + Rs. 50,000 annually (contributed for the past 5 years)
PPF: Rs. 12,500 per month (contributed for the past 5 years)
Emergency Fund: Rs. 3 lakhs (in Fixed Deposit)
EPF: Rs. 20+ lakhs
Term Plan: Rs. 50 lakhs + Rs. 1.5 crore (corporate cover) + additional Rs. 1.5 crore
Medical Insurance: Corporate plan of Rs. 15 lakhs + minimum external plan
Assets
Two Properties: Debt-free
Financial Goals
Children's Education: Rs. 2 crores (Rs. 1 crore for each child)
Retirement: Rs. 5 crores liquid cash by age 60
Investment Strategy
1. Enhance Equity Exposure
Given your high-risk capacity and long investment horizon, increasing your equity exposure is prudent. Equity investments can offer higher returns compared to other asset classes.

Increase SIP Amount: You can invest an additional Rs. 80,000-90,000 per month. This can be allocated to diversified equity mutual funds, mid-cap funds, and small-cap funds for higher growth potential.
2. Optimize Existing Investments
Mutual Fund SIPs: Continue your existing SIPs. Consider adding funds with a good track record and those that align with your risk appetite.
NPS: This is a good investment for retirement savings due to its tax benefits and long-term growth potential. Ensure your allocation is optimized between equity and debt within NPS.
PPF: Continue your contributions to PPF for tax-free returns and safety. However, PPF has a lower return compared to equities, so balance your investments accordingly.
3. Diversify Investments
Diversification helps manage risk and capture opportunities across different market segments.

Equity Funds: Increase investments in equity mutual funds. Consider large-cap, mid-cap, and small-cap funds for a balanced growth portfolio.
Debt Funds: To balance the portfolio, consider debt mutual funds for stability and predictable returns.
Gold: Small allocation to Sovereign Gold Bonds (SGBs) can act as a hedge against inflation and market volatility.
Education Planning for Children
1. Systematic Investment Plan (SIP) for Education
Start dedicated SIPs in equity mutual funds targeted for your children's education. This will help in accumulating the required corpus systematically over time.

2. Child Plans
Consider investing in child-specific mutual funds or ULIPs that offer long-term growth and benefits tied to education milestones.

Retirement Planning
1. Retirement Corpus Calculation
With a target of Rs. 5 crores by age 60, let's ensure your investments align to meet this goal. A mix of equity and debt will provide growth and stability.

2. Retirement-Specific Funds
Consider investing in retirement-focused mutual funds and increasing your NPS contributions. These funds are designed to grow your savings efficiently over the long term.

3. Review and Rebalance Portfolio
Regularly review and rebalance your portfolio to align with changing market conditions and life stages. This will help in maintaining the desired asset allocation.

Risk Management
1. Adequate Insurance Cover
You already have substantial term insurance and health insurance coverage. Ensure they are sufficient to cover any unforeseen circumstances.

2. Emergency Fund
Maintain or slightly increase your emergency fund to cover 6-12 months of expenses. This provides a safety net for unexpected events.

Consultation with a Certified Financial Planner (CFP)
1. Personalized Financial Advice
A Certified Financial Planner can offer personalized advice, taking into account your specific financial situation, goals, and risk tolerance.

2. Expert Management
CFPs help in managing your investments effectively, optimizing returns while minimizing risks.

3. Comprehensive Planning
CFPs can assist with comprehensive financial planning, including tax planning, estate planning, and more, ensuring all aspects of your financial health are covered.

Example Investment Plan
Here’s a simplified example of how you might allocate your additional Rs. 80,000-90,000 monthly investment:

Equity Mutual Funds: Rs. 50,000 in diversified large-cap, mid-cap, and small-cap funds.
Debt Mutual Funds: Rs. 20,000 for stability and income generation.
Gold/SGB: Rs. 10,000 for diversification and inflation hedge.
Regular Monitoring and Adjustments
1. Annual Review
Conduct an annual review of your investments and financial goals. Adjust your SIP amounts and asset allocation as needed.

2. Stay Informed
Keep yourself informed about market trends and economic changes. Staying updated will help in making informed investment decisions.

Conclusion
Your current investments and financial strategies are commendable and align well with your goals. By increasing your equity exposure, optimizing existing investments, and consulting a Certified Financial Planner, you can confidently work towards securing your children’s education and a comfortable retirement.

Your disciplined approach and willingness to invest more monthly will significantly enhance your financial security. Continue to monitor and adjust your investments regularly to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

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Hello Gurus, I am 41 years old and currently working in IT industries. My take home salary is more or less 1.8L/Month (After (income-tax, pf, etc.) all deductions). My monthly expenses (including everything + investments) are around 1.3L/Monthly. Family of four, kids are not started their major studies, still in primary school, dependant parents and relatives. My current investments. 1) LIC – 1.6L/Annum – approx. return would be 50+ Lakhs by 2038 2) HDFC Sanchya + - annually 4L return after 2038 3) PPF – annually 1.5L/Annum and expecting 40+Lakhs by 2034 4) PF – Right now around 20+Lakhs 5) One land – 25L 6) One Flat under construction – 25L invested/paid and total payment will be 1.15 Cr by 2028 7) One MF – Current value 8L, total investment 3.5L(Lumpsum in year of 2017) 8) Cash in hand – 70L(FD) 9) Emergency fund – 20L(FD) 10) Equity 1.6L Invested and current value 2.7L No Loans as of now. Apart from this I have 50L worth of term insurance, 20L health insurance cover for my Family. I am targeting to retire by another 14 years with a corpus of 15cr or more. Please guide me how I can achieve it. If I need to invest in MF then which all MFs I can invest in. (Risk taking appetite is moderate)
Ans: You have a well-diversified portfolio and a clear goal of retiring with a corpus of Rs 15 crores in 14 years. Let's break down a strategy to achieve this goal.

Current Financial Position
Age: 41 years
Monthly take-home salary: Rs 1.8 lakhs
Monthly expenses: Rs 1.3 lakhs
Family: Four members, with kids in primary school, dependent parents and relatives
Investments and Assets
LIC: Rs 1.6 lakhs/annum, expected return of 50+ lakhs by 2038
HDFC Sanchaya+: Rs 4 lakhs/annum, expected annual return after 2038
PPF: Rs 1.5 lakhs/annum, expected return of 40+ lakhs by 2034
PF: Current value around 20+ lakhs
Land: Worth Rs 25 lakhs
Flat under construction: Rs 25 lakhs invested, total payment will be Rs 1.15 crores by 2028
Mutual Funds: Current value Rs 8 lakhs, total investment Rs 3.5 lakhs (lumpsum in 2017)
Cash in hand (FD): Rs 70 lakhs
Emergency fund (FD): Rs 20 lakhs
Equity: Rs 1.6 lakhs invested, current value Rs 2.7 lakhs
Term insurance: Rs 50 lakhs
Health insurance: Rs 20 lakhs
Retirement Goal
Target corpus: Rs 15 crores
Time horizon: 14 years
Risk appetite: Moderate
Investment Strategy
1. Increase SIPs in Mutual Funds:

Considering your moderate risk appetite, invest in a mix of large-cap, mid-cap, and hybrid mutual funds. Actively managed funds can offer better returns compared to index funds.

2. Maximise Tax Savings:

Continue maximising your PPF and PF contributions for tax savings and secure returns.

3. Diversify Further:

Consider diversifying into debt funds for stability and fixed returns. This will balance your equity investments.

4. Real Estate Investments:

Be cautious with the flat under construction. Ensure timely completion and clear legal title to avoid future issues.

5. Emergency Fund:

You already have a substantial emergency fund. Maintain this for liquidity during unforeseen events.

6. Equity Investments:

Continue investing in equities. Direct stocks can offer high returns but require careful selection and monitoring.

7. Review Insurance Cover:

Ensure your term insurance cover is adequate. Consider increasing it to match your financial responsibilities and future goals.

Regular Monitoring and Review
Annual Review:

Regularly review your portfolio performance. Adjust investments based on market conditions and financial goals.

Financial Planner Consultation:

Seek advice from a Certified Financial Planner periodically. They can provide tailored advice and keep your investments on track.

Final Insights
You are on a good financial path with a diversified portfolio. Focus on increasing your SIPs in mutual funds and diversifying further into debt funds. Ensure your real estate investments are secure and maintain your emergency fund. Regularly review your portfolio and seek professional advice to stay on track for a comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 14, 2024

Asked by Anonymous - Jul 14, 2024Hindi
Money
Hi, I am 36 year old and employed in Govt sector. I have three kids of 9,2&1 years. I have monthly Gross salary of ?2.4 lakhs before tax. I don't have any liabilities in form of loans or EMI. My assets are as follows:- Provident fund - ?70 lakhs Monthly contribution to PF - ?40000/- I have 06 mutual funds with monthly subscription of ?10000 each. Present value of MF is ?23 lakhs. My funds are :- 1. Kotak Emerging Equity Fund 2. SBI Small Cap Fund 3. Parag Parikh Flexi Cap Fund 4. Mirae Asset ELSS Tax Saver Fund 5. Quant Small Cap Fund 6. Edelweiss Balanced Advantage Fund I have an insurance cover policy of Rs 2 Cr from HDFC. I have an additional insurance cover of ?1.25 Cr from my organisation. I have Sukanya Samridhi Yojna subscription for my 2 eldest kids at monthly subscription of ?12500/-. I have a "Promise for Growth Care" investment plan from "Canara Oriental HSBC" At a monthly subscription of ?12500/- with payment tern of 10 years and coverage for 20 years (insurance cover ?15 lakhs included in it). I have a Bajaj Allianz "Goal Assure II" plan for monthly subscription of ?5000/-. Payment term 5 years and coverage for 20 years (insurance cover of ?6 lakhs covered). I have ?25 lakhs cash in hand. Out of these I am planning to invest ?20 lakhs in Sovereign Gold Bonds. I wish to retire at 56 years. Please suggest me about any requirement to change/ reallocate any investments from existing ones. Will this investment strategy hold me good for requirement during higher education of kids and their other requirements like marriage etc after 20 years. Please suggest any changes if required. Thank you. Regards
Ans: You've done a commendable job in setting up a diverse investment portfolio and securing insurance coverage. Let's evaluate your current strategy and suggest improvements.

Provident Fund and Insurance
Your provident fund balance of Rs. 70 lakhs and a monthly contribution of Rs. 40,000 is a strong foundation for retirement. Your insurance coverage of Rs. 2 crore from HDFC and an additional Rs. 1.25 crore from your organisation ensures financial security for your family.

However, evaluating the insurance cover every few years is advisable to ensure it remains adequate as your financial responsibilities grow.

Mutual Funds
Your six mutual funds with a monthly subscription of Rs. 10,000 each and a present value of Rs. 23 lakhs are diversified across different categories.

This is a balanced approach, but it's essential to review the performance of each fund annually. Underperforming funds should be replaced with better-performing ones to maximize returns.

Sukanya Samridhi Yojna
Investing in Sukanya Samridhi Yojna for your two eldest children is a smart move. The Rs. 12,500 monthly contribution ensures a secure future for your daughters.

This scheme provides tax benefits and a high interest rate, making it an excellent long-term investment for your children's education and marriage.

Investment Plans
The "Promise for Growth Care" and "Goal Assure II" plans offer insurance and investment benefits. However, these plans often come with high costs and lower returns compared to mutual funds.

Consider surrendering these policies and redirecting the funds to better-performing mutual funds or other investment avenues. This approach can provide higher returns and better liquidity.

Cash in Hand and Sovereign Gold Bonds
Holding Rs. 25 lakhs in cash is a good safety net. Planning to invest Rs. 20 lakhs in Sovereign Gold Bonds is a sound decision. Gold is a hedge against inflation and adds diversification to your portfolio.

However, ensure that you maintain an emergency fund equivalent to at least six months of your expenses before making this investment.

Retirement Planning
You plan to retire at 56, which gives you 20 years to build your retirement corpus. Your current investments in provident funds, mutual funds, and insurance plans are a solid start.

Regularly reviewing and adjusting your portfolio can help you stay on track to achieve your retirement goals.

Increasing Mutual Fund Contributions
Consider increasing your mutual fund contributions as your salary grows. This will help you build a more substantial corpus over time.

Systematic Investment Plans (SIPs) are an excellent way to invest in mutual funds, providing the benefits of rupee cost averaging and compounding.

Diversifying Investments
While your current investments are well-diversified, consider adding more asset classes to your portfolio. Equity-linked savings schemes (ELSS), debt funds, and balanced advantage funds can provide better risk-adjusted returns.

Tax Planning
Utilize tax-saving instruments like ELSS, Public Provident Fund (PPF), and National Pension System (NPS) to maximize your tax benefits.

These investments not only provide tax deductions under Section 80C but also offer good returns and long-term benefits.

Children's Education and Marriage
Planning for your children's higher education and marriage requires substantial funds. The Sukanya Samridhi Yojna and your mutual fund investments are excellent steps towards this goal.

Education Planning
Estimate the future costs of education considering inflation. Invest in a mix of equity and debt instruments to build a corpus that can meet these expenses.

Marriage Planning
For your children’s marriage, consider long-term investments that provide safety and growth. Fixed deposits, recurring deposits, and balanced funds can be good options.

Reviewing and Rebalancing
Regularly reviewing and rebalancing your portfolio is crucial to ensure it aligns with your goals. Market conditions, financial responsibilities, and life stages change over time.

Annual Review
Conduct an annual review of your investments. Evaluate the performance of your mutual funds, insurance policies, and other investments.

Rebalance your portfolio to maintain the desired asset allocation and risk level.

Financial Advisor Consultation
Engage with a certified financial planner for professional advice. They can provide personalized recommendations and help you navigate complex financial decisions.


I understand the responsibilities of planning for your children's future while securing your retirement. Your commitment to financial planning is admirable.

Balancing short-term needs with long-term goals can be challenging, but your disciplined approach will yield positive results.

Final Insights
You've laid a strong foundation for your financial future. By making a few strategic adjustments and regularly reviewing your portfolio, you can ensure that your investments align with your goals.

Stay committed to your financial plan, and you will achieve your objectives of securing your children's future and enjoying a comfortable retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Anu

Anu Krishna  |1043 Answers  |Ask -

Relationships Expert, Mind Coach - Answered on Jul 19, 2024

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Relationship
My girlfriend has lot of expectations on How I must react to certain situations. I try my best to do it , but there is always one day where I don't have control on reacting the same as she wishes it , and then we fight and she keeps reminding me my mistakes from the past. I say sorry , she says she doesn't consider my sorries. I forgive her for whatever serious she says in fight. But then again after few days everything becomes normal. I am confused what should be done. Is it okay that I behave according to her expectations or what. Because I don't want to lose her. I have always discussed that the way I behave is my natural nature but she keeps me correcting. She accepts her mistakes even I do too. But now since these incidents often once a month. I am asking you what I must do in such situations where it's not in my hand it seems to behave in certain way as expected by her
Ans: Dear Govinda,
Well, all of us have expectations from each other, don't we?
But some expectations are realistic and some are unrealistic. Any expectation that starts to change the other person, control them, dictate their behavior is almost toxic and not healthy in the long run.
Some expectations like requesting the other person to take care of their health, finances, advice on work and family that attempts to see them in a better space is healthy and necessary.

So, where does your girlfriend's expectation fall into?
It's possible that because it's leading to constant fights, you are certainly not happy about her control about this. Then voice it out and state clearly that you would not like to change for her but only change for yourself and for the better. This may hurt her and there might be a lot of drama around it...but, if she is willing to look at the relationship maturely with you as an equal partner, there will no more fights and expectations around things that bother you.
Sit down together; tell her how this is affecting you and the relationship. There maybe little expectations that maybe good for you and the relationship. Be thankful for those.

But, the bigger ones are the ones that are bothersome and yes, your girlfriend must know about it. Instead of confronting, be firm and gentle and she may very well understand the whole scenario. This will also help you in situations where she expects something and it does not happen and yet she will be okay with it. So, have that clear communication for better understanding. Is this possible? Yes, provided the two of you work at this together not confronting but managing it.

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

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Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

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Hi, I am 48 year old male working in a IT firm. I earn 1.3 L per month and my monthly expense is 70k per month. I have EPF of 45L, Nps of 22L, shares of 50L, fd of 80L. I also have additional residential property of about 40L. I have no loans. I would like to retire early in a year or two and would like to spend rest of life without any financial issue. Kindly advice.
Ans: Evaluating Your Financial Position

You earn Rs 1.3 lakh per month and have monthly expenses of Rs 70,000. Your current investments include:

EPF: Rs 45 lakh
NPS: Rs 22 lakh
Shares: Rs 50 lakh
FD: Rs 80 lakh
Residential Property: Rs 40 lakh
You plan to retire early in a year or two and want a secure financial future.

Monthly Expenses and Inflation

Your current monthly expenses are Rs 70,000. Considering inflation, this amount will increase over time. Plan for increasing expenses to ensure a comfortable lifestyle.

Evaluating Retirement Corpus

Your retirement corpus should be able to cover your expenses for the rest of your life. Let's analyze how your current investments can support you.

EPF and NPS

EPF and NPS are excellent for retirement as they provide regular income and tax benefits. However, their liquidity is limited until retirement age.

EPF: Consider keeping this until you reach the official retirement age for a stable income.
NPS: Provides regular annuity post-retirement. Continue investing till you retire.
Shares and FD

Your shares and FD can provide a mix of growth and stability.

Shares: These can offer good returns but are subject to market risks. Plan a strategy to withdraw gradually to mitigate risks.
FD: Provides stable returns. Consider laddering your FDs to have a continuous income stream.
Residential Property

You can either rent out or sell your additional property. Renting can provide a steady income, while selling can add to your corpus.

Building a Retirement Corpus

Calculate the amount needed for your retirement corpus to sustain your lifestyle.

Current Monthly Expenses: Rs 70,000
Annual Expenses: Rs 8.4 lakh (70,000 x 12)
Assuming you need this for the next 30 years, considering inflation and other factors, your corpus should be substantial.

Investing Post-Retirement

Once you retire, the goal is to ensure that your corpus generates a steady income.

Systematic Withdrawal Plan (SWP): Invest in mutual funds and set up an SWP to get regular monthly income.
Balanced Funds: Invest in balanced funds for a mix of equity and debt.
Debt Funds: Provide stability and can be used for short-term goals.
Emergency Fund

Keep an emergency fund equivalent to 6-12 months of expenses. This should be easily accessible, like in a savings account or liquid funds.

Health Insurance

Ensure you have comprehensive health insurance coverage. Medical expenses can be a significant burden, so having a robust plan is crucial.

Regular Review

Regularly review and adjust your investments to match your needs and market conditions. A Certified Financial Planner can help you with this.

Final Insights

To retire comfortably, ensure a mix of growth and stability in your investments. Maintain liquidity for emergencies and healthcare. Plan for inflation and increasing expenses. Regularly review your investments to stay aligned with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

Asked by Anonymous - Jul 03, 2024Hindi
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Hi, I have 35 years old, my in salary is 19LPA in hand. I have a fixed deposit of 2 lakh, 15k sip, 2L invested in stock, 2lakh and 4 lakh emergency fund I have a 2 years old daughter, I don't have any loan. how to plan my retirement
Ans: You are 35 years old with a monthly salary of Rs 19 lakhs per annum in hand. You have a fixed deposit of Rs 2 lakh, a SIP of Rs 15,000, Rs 2 lakh invested in stocks, and a Rs 4 lakh emergency fund. You also have a 2-year-old daughter and no loans.

Evaluating Your Financial Goals
Your primary goal is to plan for retirement. This involves determining how much you need to retire comfortably and creating a plan to achieve that goal.

Setting Retirement Goals
Retirement Age: Decide when you want to retire. Let's assume at age 60.
Post-Retirement Expenses: Estimate your monthly expenses during retirement. Factor in inflation.
Emergency Fund
You already have an emergency fund of Rs 4 lakh. This is a good start. Ensure it covers at least 6-12 months of expenses.

Maintain Adequate Coverage: Regularly update your emergency fund as your expenses grow.
Fixed Deposit
Your Rs 2 lakh fixed deposit provides a safety net but offers low returns.

Consider Alternatives: Higher returns options like debt mutual funds for better growth.
SIP (Systematic Investment Plan)
Your Rs 15,000 SIP is a disciplined approach to investing.

Increase SIP: As your income grows, increase your SIP amount. Aim for at least 20-30% of your salary in investments.
Stock Investments
You have Rs 2 lakh invested in stocks.

Diversify Portfolio: Ensure your stock investments are diversified to reduce risk.
Regular Review: Monitor and review your portfolio regularly.
Retirement Corpus Calculation
Estimate the corpus needed for retirement based on your current lifestyle and inflation.

Online Calculators: Use retirement calculators for precise estimates.
Investment Options
Mutual Funds
Mutual funds can provide good returns over the long term. Consider a mix of equity and debt funds.

Equity Funds: For long-term growth.
Debt Funds: For stability and income.
Public Provident Fund (PPF)
PPF is a safe investment with tax benefits. It offers good returns over the long term.

Invest Regularly: Maximize your PPF contributions annually.
National Pension System (NPS)
NPS is a retirement-focused investment option with tax benefits.

Regular Contributions: Invest regularly for long-term growth and retirement corpus.
Child's Education Fund
Start planning for your daughter's education early.

Education SIP: Set up a separate SIP for your daughter's education fund.
Child Plans: Consider child education plans for specific goals.
Insurance
Ensure you have adequate life and health insurance coverage.

Life Insurance: Term insurance to cover financial liabilities.
Health Insurance: Adequate health coverage for the family.
Tax Planning
Optimize your tax savings through various investment options.

Tax-saving Instruments: Utilize PPF, ELSS, and NPS for tax benefits.
Creating a Diversified Portfolio
A well-diversified portfolio reduces risk and enhances returns.

Asset Allocation: Allocate assets across equity, debt, and alternative investments based on risk tolerance.
Suggested Allocation
Equity Funds: 60% for long-term growth.
Debt Funds: 20% for stability.
PPF/NPS: 20% for retirement and tax benefits.
Regular Monitoring and Review
Regularly review and adjust your investment portfolio to ensure it aligns with your goals.

Annual Reviews: Review your portfolio and make adjustments annually.
Consult CFP: Work with a Certified Financial Planner for personalized advice.
Final Insights
Planning for retirement requires a disciplined and diversified approach. Increase your SIP, diversify investments, and utilize tax-saving instruments. Regularly review and adjust your portfolio to stay on track. Leverage the expertise of a Certified Financial Planner for optimal results.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...Read more

Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

Asked by Anonymous - Jul 02, 2024Hindi
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Money
My current monthly income is 1.2l i have a ppf of 15k and RD of 15k per month. I have 2 SIPs worth 3k each a month. Kindly suggest how much should I invest and where to invest so that I get around 4 5 Cr by the age of 45. FYI my current age is 29 and i hold no liabities as of now and unmarried.
Ans: You aim to accumulate Rs. 4-5 crores by the age of 45. With a current monthly income of Rs. 1.2 lakhs, you have a strong base to achieve this goal.

Current Investments
Your current investments include:

PPF: Rs. 15,000 per month

RD: Rs. 15,000 per month

SIPs: Rs. 6,000 per month (2 SIPs of Rs. 3,000 each)

Assessing Your Current Investments
PPF:

Advantages:

Safe and secure investment.

Tax benefits under Section 80C.

Decent long-term returns.

Disadvantages:

Lock-in period of 15 years.

Limited growth compared to equities.

Recurring Deposit (RD):

Advantages:

Guaranteed returns.

Suitable for short-term goals.

Disadvantages:

Taxable interest income.

Lower returns compared to mutual funds and stocks.

Systematic Investment Plans (SIPs):

Advantages:

Disciplined investment approach.

Potential for high returns over long term.

Rupee cost averaging benefits.

Disadvantages:

Market-linked risks.
Recommended Investment Strategy
Increase Equity Exposure
To achieve Rs. 4-5 crores by 45, you need higher equity exposure. Equity investments have historically provided higher returns compared to debt instruments.

Increase SIPs:

Increase SIP investments to Rs. 40,000 per month.

Diversify across large-cap, mid-cap, and multi-cap funds.

Balanced Approach
Maintain a balanced approach by continuing some investments in safe instruments.

Continue PPF:

Keep contributing Rs. 15,000 per month.

Provides stability and tax benefits.

Review RD:

Evaluate RD returns.

Consider diverting some RD funds to equity or hybrid funds for better growth.

Consider Hybrid Funds
Hybrid funds provide a mix of equity and debt, offering balanced risk and returns.

Monthly Investment:

Invest Rs. 10,000 per month in hybrid funds.

Suitable for moderate risk tolerance.

Emergency Fund
Ensure you have an emergency fund covering 6-12 months of expenses.

Safety Net:

Maintain liquidity for unforeseen expenses.

Keep it in a liquid fund or high-interest savings account.

Regular Reviews and Rebalancing
Monitor and rebalance your portfolio periodically to stay aligned with your goals.

Portfolio Review:

Quarterly or semi-annual reviews.

Adjust based on market conditions and personal goals.

Final Insights
To achieve Rs. 4-5 crores by 45, increase your equity exposure. Consider enhancing your SIP contributions significantly. Maintain a balanced approach with continued PPF contributions and emergency funds. Regularly review and rebalance your portfolio. This strategy aligns with your financial goals and risk profile, ensuring a secure and prosperous future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

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My Father has purchase a property for rs 115000 in year 1994.at Bhayandar west district Thane at Maharashtra state.and my Father did this registration in amnesty scheme in year 2008.and after that my Father died in year 2014.and after I made a release deed transfer this property in my name (son). I sold this residential property in June 2024for rs 30lakh.in this case I want to know the status of capital gain is there or not I also want to know if I sell this residential property .I can purchase ashop or not. If I want to save capital gain what is the solution to save my tax. Thanking u.
Ans: You sold a property in June 2024 for Rs 30 lakh. It was bought for Rs 1,15,000 in 1994. Let's evaluate if there's a capital gain.

Indexed Cost of Acquisition

The property purchase cost will be adjusted for inflation. This is called the Indexed Cost of Acquisition (ICA). The ICA is calculated using the Cost Inflation Index (CII) provided by the Income Tax Department.

Calculating Indexed Cost

Calculate the ICA to understand your capital gain. Since we won't use specific formulas here, you can consult a Certified Financial Planner to get the precise ICA value. This helps in determining the exact capital gain.

Long-Term Capital Gains (LTCG)

Since you held the property for more than 24 months, it is classified as a long-term asset. The profit from the sale, after adjusting for the ICA, is your Long-Term Capital Gain (LTCG).

Tax on LTCG

LTCG is taxed at 20% with indexation benefits. However, there are ways to save on this tax.

Investing in Another Property

You can save on capital gains tax by investing in another residential property. This is covered under Section 54 of the Income Tax Act. If you buy a residential house within two years or construct one within three years, you can claim exemption.

Investing in Capital Gains Bonds

Another option is to invest in Capital Gains Bonds under Section 54EC. These bonds have a lock-in period of five years and provide tax exemption on the gains. The maximum investment limit in these bonds is Rs 50 lakh.

Purchasing a Shop

Buying a shop will not provide capital gains tax exemption under Section 54. The exemption is only for residential properties. If you sell a residential property, you must reinvest in a residential property to save on capital gains tax.

Other Options to Save Tax

Residential Property: Invest in another residential property within two years.

Construction: Construct a new house within three years.

Capital Gains Bonds: Invest in these bonds within six months of the sale.

Final Insights

To save on capital gains tax, reinvest in a residential property or Capital Gains Bonds. Purchasing a shop will not help in saving tax on capital gains. Consulting a Certified Financial Planner can help you navigate these options efficiently.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

Asked by Anonymous - Jul 02, 2024Hindi
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I am 58 years old and draw a monthly pension of 45K. I made a lot of money post taking a VRS 15 years back but spent most of it on my only child travelling and a home worth 5 cr plus. I am covered for medical/heath by CGHS and also a 30 lac private health insurance. I have about 30 lac worth jewellery and a similar amount in my SB account. Please advise what should be my investment plan to ensure a regular monthly income of atleast 30K per month in addition to the pension I get.
Ans: You are 58 years old and receive a monthly pension of Rs 45,000. You have spent a significant amount on your child's education and travel, and own a home worth over Rs 5 crore. You have medical coverage from CGHS and a private health insurance worth Rs 30 lakh. Additionally, you possess jewellery worth Rs 30 lakh and have Rs 30 lakh in your savings bank account. Your goal is to ensure an additional monthly income of at least Rs 30,000.

Evaluating Your Investment Needs
Your primary need is to generate a regular income of Rs 30,000 per month. This should be achieved with minimal risk and high liquidity.

Liquid Funds
Liquid funds are suitable for very short-term investments. They invest in high-quality, short-term securities. These funds offer safety and liquidity, making them ideal for maintaining emergency funds.

Safety: Invests in high-quality securities.
Liquidity: Easy access to funds.
Ultra-Short Duration Funds
Ultra-short duration funds are suitable for a horizon of 6 months to 1 year. They offer slightly higher returns compared to liquid funds while maintaining a low level of risk.

Higher Returns: Better than liquid funds.
Low Risk: Invests in low-risk instruments.
Short Duration Funds
Short duration funds are suitable for an investment horizon of 1 to 3 years. These funds invest in debt instruments with short maturities and offer a balance between risk and return.

Moderate Risk: Suitable for short-term goals.
Reasonable Returns: Better than ultra-short funds.
Monthly Income Plans (MIPs)
Monthly Income Plans can provide a regular income. These funds invest in a mix of debt and equity, offering a steady income with potential capital appreciation.

Regular Income: Suitable for monthly income needs.
Balanced Risk: Mix of debt and equity.
Benefits of Actively Managed Funds
Actively managed funds can provide better returns compared to index funds. These funds are managed by professional fund managers who make strategic decisions to outperform the market.

Professional Management: Expert fund managers handle your investments.
Flexibility: Adapt to market changes.
Disadvantages of Index Funds
Index funds track a specific market index, but they may not perform well in all market conditions. They lack active management and can result in average returns.

Average Returns: May not outperform the market.
Lack of Flexibility: Cannot adapt to changes quickly.
Investing Through a Certified Financial Planner
Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential offers several benefits. These professionals provide tailored investment strategies and regular portfolio reviews.

Personalized Advice: Tailored to your needs.
Regular Reviews: Ensures your investments stay on track.
Creating a Diversified Portfolio
A diversified portfolio can help reduce risk and enhance returns. Spread your investments across different funds to achieve better stability and growth.

Suggested Allocation
Liquid Funds: Rs 5 lakh for emergency needs.
Ultra-Short Duration Funds: Rs 5 lakh for short-term goals.
Short Duration Funds: Rs 10 lakh for moderate-term goals.
Monthly Income Plans: Rs 10 lakh for regular monthly income.
Tax Efficiency
Ensure that your investments are tax-efficient. Short-term mutual funds are taxed based on your income slab, while long-term capital gains (if held over 3 years) are taxed at 20% with indexation benefits.

Monitoring Your Investments
Regularly review your portfolio to ensure it aligns with your goals. Make adjustments as needed with the help of your CFP.

Final Insights
Your goal of generating an additional monthly income of Rs 30,000 is achievable through a diversified and balanced investment approach. Focus on liquidity, safety, and moderate returns. Leverage the expertise of a Certified Financial Planner for optimal results.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam

Ramalingam Kalirajan  |5019 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 19, 2024

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Hi, I have 13 funds in my portfolio worth of 28 Lakhs. I have been investigating from last 6 years. Wonder if I need to change my funds for better returns. Thank you.
Ans: Portfolio Overview
Managing 13 funds over 6 years is commendable. A Rs. 28 lakh portfolio shows your commitment. Let’s analyze and evaluate for better returns.

Diversification and Overlap
Diversification reduces risk. However, too many funds can lead to overlap.

Diversification:

Ensures your investments are spread across sectors and asset classes.

Reduces risk associated with a single fund or sector.

Overlap:

Too many funds can lead to similar investments.

This dilutes the benefit of diversification.

Evaluate if your funds are truly diversified or if there is overlap.

Performance Evaluation
Assess the performance of your funds.

Historical Performance:

Check the performance over different market cycles.

Compare with benchmark indices.

Consistency:

Look for funds with consistent performance.

Avoid funds with high volatility.

Fund Manager and Expense Ratio
The fund manager's expertise and the expense ratio impact returns.

Fund Manager:

Evaluate the fund manager’s track record.

Consistency and experience matter.

Expense Ratio:

Lower expense ratios can improve net returns.

High expense ratios can eat into your gains.

Portfolio Rebalancing
Regular rebalancing aligns your portfolio with your goals.

Rebalancing:

Adjust your portfolio periodically.

Maintain the desired asset allocation.

Goals and Time Horizon:

Align your investments with your financial goals.

Consider your time horizon and risk tolerance.

Actively Managed vs. Passive Funds
Actively managed funds aim to outperform benchmarks.

Actively Managed Funds:

Fund managers actively select stocks.

Potential for higher returns.

Disadvantages of Index Funds:

Follow a passive investment strategy.

Limited potential for outperforming the market.

Actively managed funds offer better opportunities.

Professional Guidance
Consult a Certified Financial Planner for tailored advice.

Certified Financial Planner:

Provides personalized investment strategies.

Aligns investments with your goals and risk profile.

Review and Adjust:

Regular reviews are essential.

Adjust the portfolio as per market conditions and personal goals.

Final Insights
Having 13 funds may be excessive. Focus on diversification without overlap. Evaluate the performance, expense ratios, and fund manager’s track record. Regularly rebalance your portfolio. Consider the benefits of actively managed funds over index funds. Seek guidance from a Certified Financial Planner for personalized advice. This comprehensive approach ensures your portfolio aligns with your financial goals and market conditions.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

...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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