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Samkit

Samkit Maniar  |180 Answers  |Ask -

Tax Expert - Answered on May 27, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more
Asked by Anonymous - May 23, 2024Hindi
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I would like to know the income tax implications on the maturity redeemed amount when received of 5 years monthly SIP in Equity Mutual Fund.

Ans: Long term capital gains taxed at 10% if such long term capital gains is over 1 lac for that financial year.

Please take your CAs advice before moving ahead.
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  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

Asked by Anonymous - May 26, 2024Hindi
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let me know that if i take sip of one mutual fund monthly 50000 for 5 years how will be the income tax for capital gains?
Ans: If you invest Rs 50,000 monthly in a mutual fund through SIPs for five years, the taxation of your gains depends on the type of mutual fund and the holding period. It’s important to understand how capital gains taxes work to plan your investments efficiently.

Types of Capital Gains

Short-Term Capital Gains (STCG): Gains from units held for less than three years are considered short-term. These are taxed at a higher rate.

Long-Term Capital Gains (LTCG): Gains from units held for more than three years are considered long-term. These attract a lower tax rate.

Taxation Based on Mutual Fund Type

Equity-Oriented Funds: If your mutual fund invests primarily in equity, any gains after holding for more than one year are long-term. These are taxed at 12.5% if the gain exceeds Rs 1.25 lakh in a financial year. Short-term gains (held for less than one year) are taxed at 20%.

Debt-Oriented Funds: Capital gains are added to your income and taxed at your income tax slab rate.

SIP Specific Taxation

Individual SIPs Treated Separately: Each SIP is considered a separate investment. So, if you invest Rs 50,000 monthly, each investment is tracked individually for tax purposes. For example, SIPs made in the first year will become long-term after one year, but those made in the fifth year will be short-term until the next year.

Rolling Nature of Investments: Since you’re investing monthly, you’ll have a mix of short-term and long-term capital gains when you start redeeming. You need to plan redemptions carefully to minimise taxes.

Disadvantages of Index Funds

Limited Flexibility: Index funds cannot adapt to market changes. They simply track the market, which might not always align with your financial goals.

Potential for Lower Returns: Actively managed funds can outperform the market, offering potentially higher returns. Index funds miss out on this opportunity.

The Role of Regular Funds Managed by CFPs

Expert Management: Regular funds managed by a Certified Financial Planner offer tailored advice. This ensures your investments align with your financial goals and risk profile.

Better Tax Planning: A CFP can help you manage your redemptions to minimise taxes. They can also recommend tax-efficient investment strategies.

Investment Strategy Considerations

Invest in Tax-Efficient Funds: Consider funds that offer tax benefits or have a tax-efficient structure. This can maximise your post-tax returns.

Monitor Tax Implications: Keep track of your capital gains and plan redemptions accordingly. Avoid unnecessary taxes by holding investments for the required period.

Consider Increasing SIPs Over Time: As your income grows, increase your SIP contributions. This will enhance your wealth creation without a significant increase in tax liability.

Final Insights

Investing Rs 50,000 monthly through SIPs is a strong strategy for wealth creation. However, understanding the tax implications is crucial. By focusing on the right type of funds and managing your redemptions wisely, you can optimise your returns and minimise your tax liability. Regularly consulting with a Certified Financial Planner will help ensure your investments remain tax-efficient and aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 07, 2024

Money
I m allready invest in SIP last 5 years Rs. 3000 per month Imy planing is running countinue 25 years my age is 42 , plz aks me my fund maturity amount after 25 years
Ans: Investing in a SIP (Systematic Investment Plan) is a wise decision for long-term wealth creation. Given your consistent investment of Rs. 3000 per month over the last 5 years and your plan to continue for 25 years, let's delve into the expected maturity amount and other essential aspects of your investment strategy.

Understanding the Power of SIP and Compounding
A SIP is an effective way to invest in mutual funds regularly. It leverages the power of compounding and rupee cost averaging, which helps in maximizing returns and minimizing risks over the long term. Your commitment to investing Rs. 3000 monthly demonstrates disciplined saving and a strategic approach to achieving your financial goals.

Calculating the Expected Maturity Amount
To estimate the maturity amount, we need to consider the average annual return expected from your investments. Historically, equity mutual funds have delivered returns ranging between 10-15% per annum. For this calculation, we'll consider an average return of 12% per annum.

SIP Calculation Formula

FV is the future value or maturity amount.
P is the SIP amount (Rs. 3000).
r is the monthly rate of return (annual rate divided by 12).
n is the number of SIP installments (years multiplied by 12).
Calculation for 25 Years
Given:

SIP amount (P) = Rs. 3000
Annual rate of return = 12%
Monthly rate of return (r) = 12% / 12 = 1% = 0.01
Number of installments (n) = 25 years × 12 = 300
Let's plug these values into the formula:

FV = 3000 × [(1 + 0.01)³?? - 1] / 0.01 × (1 + 0.01)

Performing the calculation:

FV = 3000 × [(1 + 0.01)³?? - 1] / 0.01 × 1.01

FV = 3000 × [(1.01)³?? - 1] / 0.01 × 1.01

FV = 3000 × [33.784 - 1] / 0.01 × 1.01

FV = 3000 × 32.784 / 0.01 × 1.01

FV = 3000 × 3278.4 × 1.01

FV = 3000 × 3311.184

FV = 9933552

FV ≈ Rs. 99,33,552

So, your investment of Rs. 3000 per month for 25 years at an average annual return of 12% will yield approximately Rs. 99,33,552.

Assessing the Impact of Different Return Rates
It's essential to consider different return scenarios to understand the potential outcomes better. Here are the calculations for varying return rates:

10% Annual Return:
FV = 3000 × [(1 + 0.008333)³?? - 1] / 0.008333 × (1 + 0.008333)

FV ≈ Rs. 75,55,221

12% Annual Return:
FV ≈ Rs. 99,33,552

15% Annual Return:
FV = 3000 × [(1 + 0.0125)³?? - 1] / 0.0125 × (1 + 0.0125)

FV ≈ Rs. 1,42,36,786

The Importance of Regular Reviews
It’s crucial to review your investment portfolio regularly. Markets and personal circumstances change, and periodic reviews ensure your investments stay aligned with your financial goals. Engage with a Certified Financial Planner (CFP) who can provide personalized advice and adjustments based on market conditions and your evolving needs.

Benefits of Actively Managed Funds
Actively managed funds involve professional fund managers who make strategic investment decisions. These funds aim to outperform the market by leveraging research and market insights. For a medium-risk investor like you, actively managed funds can potentially provide higher returns compared to passively managed funds.

Disadvantages of Index Funds
Index funds passively track a market index, aiming to replicate its performance. While they offer lower fees, they may not achieve the returns needed to meet your financial goals. Actively managed funds, despite higher fees, can potentially deliver better returns through strategic investments.

Advantages of Regular Funds Through MFD
Investing through a Mutual Fund Distributor (MFD) with CFP credentials offers personalized advice and continuous portfolio management. This ensures your investments are well-managed, and any necessary adjustments are made promptly.

Avoiding Direct Funds
Direct funds bypass intermediaries, reducing expense ratios. However, they require you to manage your portfolio independently. Given your medium risk tolerance and long-term goals, professional guidance from an MFD with CFP credentials can be more advantageous.

The Role of Diversification
Diversification involves spreading your investments across various asset classes and sectors to reduce risk. A well-diversified portfolio can help you achieve your financial goals while managing risks effectively.

Diversifying Your SIP Portfolio
Considering your medium risk tolerance, a balanced portfolio can include a mix of large-cap, mid-cap, and sectoral funds. This combination offers growth potential and stability.

Suggested Allocation:
Large Cap Funds: 50% of SIP amount (Rs. 1500 per month)
Mid Cap Funds: 30% of SIP amount (Rs. 900 per month)
Sectoral/Thematic Funds: 20% of SIP amount (Rs. 600 per month)
Monitoring and Rebalancing
Regular monitoring and rebalancing are essential to ensure your portfolio stays aligned with your goals. Periodic reviews help in making necessary adjustments based on market conditions and performance.

Steps for Monitoring:
Quarterly Reviews:

Review your portfolio every quarter to assess performance and make necessary adjustments.

Rebalancing:

If certain funds outperform or underperform, rebalance to maintain your desired asset allocation. This helps in managing risk and optimizing returns.

Importance of Emergency Fund
Before continuing with your SIP, ensure you have an emergency fund covering 6-12 months of living expenses. This provides a financial cushion in case of unexpected events, allowing your investments to grow uninterrupted.

Tax Implications and Planning
Understanding the tax implications of your investments is crucial. Equity mutual funds held for more than one year qualify for long-term capital gains tax, which is currently 10% on gains exceeding Rs. 1 lakh per year. Plan your investments and withdrawals to optimize tax efficiency.

Additional Investment Considerations
Diversifying Beyond Equity:

While equity funds are essential, consider diversifying a small portion into debt funds or hybrid funds for stability and risk management.

Monitoring Market Trends:

Stay informed about market trends and economic indicators. This helps in making informed decisions and adjusting your portfolio accordingly.

Professional Advice:

Engage with a Certified Financial Planner (CFP) regularly. Their expertise can guide you in making strategic decisions and achieving your financial goals.

Steps to Implement Your Investment Plan
Assess Your Risk Tolerance:

Re-evaluate your medium risk tolerance to ensure your investment strategy aligns with your comfort level.

Choose the Right Funds:

Select large cap, mid cap, and sectoral funds with a strong track record and consistent performance.

Invest Systematically:

Continue with your SIP and consider additional SIP investments to manage market volatility and average out costs.

Review and Adjust:

Regularly review your portfolio, assess performance, and rebalance as needed to stay on track towards your goal.

Conclusion
Achieving your goal of a substantial maturity amount through SIPs requires a strategic and diversified approach. By investing in a balanced mix of large cap, mid cap, and sectoral funds, and leveraging the expertise of a Certified Financial Planner, you can optimize your chances of success. Remember to monitor your investments regularly, adjust your portfolio as needed, and stay informed about market trends.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Money
I have invested Rs 50000 in Aditya Birla Sun life Psu equity fund direct growth in August 2024 .It gone down and am at a loss of around 7000 now ..should I continue and keep a watch or withdraw the amount .Kindly advice
Ans: You’ve invested Rs. 50,000 in a PSU-focused equity mutual fund (direct growth) in August 2024. You are currently facing a notional loss of around Rs. 7,000.

Let’s evaluate your concern with a 360-degree analysis. We’ll consider fund nature, risk, tenure, emotional behaviour, tax impact, and expert support.

We truly appreciate your initiative in seeking proper guidance. It shows a responsible investment mindset.

Let’s assess this decision from all angles.

 

Nature of Investment Chosen
You invested in a sector-specific equity fund.

 

Sector funds are very high-risk and concentrated.

 

PSU theme is based on government-owned businesses.

 

These funds follow a very narrow investment style.

 

When sector underperforms, your entire fund gets affected.

 

Even good companies may fall if the sector is weak.

 

Sector and Volatility
PSU stocks are affected by government policy decisions.

 

Market may react to budget, reforms, or geopolitical news.

 

In short term, PSU funds can show deep falls.

 

This is part of the risk-reward structure in such funds.

 

Volatility is not a mistake; it is expected.

 

If you knew this before investing, you need not worry now.

 

Investment Duration
You invested just 8 months ago.

 

Equity mutual funds need more time.

 

Especially sector funds may take 3 to 5 years minimum.

 

Judging performance in 8 months is not meaningful.

 

Markets have up and down cycles.

 

Short-term dips are not real losses unless you redeem.

 

Long holding gives your investment time to recover.

 

Notional Loss vs. Actual Loss
Rs. 7,000 loss is not permanent unless you withdraw.

 

Current value is only a temporary figure.

 

If you sell now, you book this loss forever.

 

If you hold, there’s chance to recover and grow.

 

Investors often panic and redeem at wrong time.

 

That’s a behavioural mistake, not a market mistake.

 

Direct Funds and Investor Decisions
You chose a direct plan.

 

Direct plans lack expert guidance.

 

You are making decisions alone.

 

Without a Certified Financial Planner, mistakes can happen.

 

Many direct investors redeem early due to fear.

 

Regular plans offer support from CFP-certified professionals.

 

A CFP helps in review, correction, and long-term strategy.

 

That small extra cost brings big long-term value.

 

Emotional Bias in Investing
Losses create fear in most investors.

 

Fear may lead to bad decisions.

 

With equity, this emotional control is critical.

 

Long-term wealth is only possible with patience.

 

You must separate emotions from money choices.

 

Take help of a CFP who brings calmness and objectivity.

 

Tax Implication (As Per New Rules)
You invested in August 2024.

 

If you redeem before August 2025, gains (or losses) are short-term.

 

Short-term capital gains tax is 20%.

 

If there’s a loss, it can be carried forward for future tax benefit.

 

But we don’t advise redeeming now just to record this loss.

 

Let the investment complete its full cycle.

 

Investment Goal and Purpose
Was there a clear goal for this investment?

 

If yes, when is the goal coming up?

 

PSU funds are not suitable for short-term needs.

 

If you need money within 1 year, it’s not ideal.

 

If it’s a long-term goal, then hold tight.

 

Invest according to your time horizon, not just fund return.

 

Diversification Matters
PSU equity funds are too narrow.

 

You should avoid putting large sums in one sector.

 

Diversify across multiple sectors and styles.

 

Multi-cap, flexi-cap or large-cap funds give better balance.

 

Keep PSU exposure limited, not core holding.

 

A well-diversified portfolio reduces mental stress too.

 

Review and Restructure
Sit with a Certified Financial Planner.

 

Review your full portfolio, not just one fund.

 

Restructure based on goals and risk tolerance.

 

Build a mix of funds with different styles and caps.

 

Avoid repeating mistakes like overexposure to sectors.

 

Common Investor Mistakes to Avoid
Don’t react to short-term loss.

 

Don’t check NAVs every day or week.

 

Don’t follow social media fund tips.

 

Don’t chase highest return or lowest NAV.

 

Don’t switch between funds too often.

 

Stay steady and follow your plan.

 

What Should You Do Now?
Do not redeem now.

 

Let the investment complete minimum 3–5 years.

 

Meanwhile, avoid adding more in this one sector.

 

Start investing gradually in diversified equity funds.

 

Take help from a CFP to guide and monitor.

 

Do a portfolio review every year.

 

Continue investing with patience and discipline.

 

Key Takeaways from Your Situation
Loss in 8 months is not unusual.

 

Sector funds are volatile by nature.

 

Your decision should be based on goals, not returns.

 

Avoid emotional reactions like panic redemption.

 

You must work with a qualified CFP for guidance.

 

Shift from direct funds to regular plan with MFD-CFP support.

 

Always diversify and follow asset allocation.

 

Stick to your long-term strategy for real wealth creation.

 

Finally
Your concern is valid and understandable.

 

But early redemption will lock the loss permanently.

 

Sector fund performance takes time to show up.

 

Stay invested and consult a CFP for next steps.

 

Your journey to wealth is not a sprint, it’s a marathon.

 

Continue with patience, proper planning, and expert guidance.

 

Right investment decisions are not based on past returns.

 

They are based on goals, risk capacity, and time.

 

You have already taken the first right step—asking the right questions.

 

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Asked by Anonymous - Apr 18, 2025Hindi
Money
Dear Sir, IAM planning to Axis bank Bajaj Allianz pure stock fund, annual investment 1lac till 5 years, what are benefit out it Plz advise this a wise decision to invest. Thanks & Regards Mysore
Ans: You are planning to invest Rs. 1 lakh annually for 5 years in a pure equity mutual fund from a reputed AMC.

Let us assess your decision with a 360-degree view.

We will evaluate the benefits, risks, and alignment with your goals.

We will also check if this is a wise and suitable decision for you.

We appreciate your discipline in thinking long-term.

Let’s now explore this in detail.

 

Investment Approach
You are choosing an actively managed mutual fund.

 

This is better than passive index investing.

 

Actively managed funds aim to beat the market returns.

 

Professional fund managers analyse and pick quality stocks.

 

This is better than index funds, which just copy the market.

 

Index funds cannot avoid poor performing stocks.

 

Active funds adjust to changing market trends faster.

 

You also get risk management strategies in active funds.

 

Investment Tenure
You plan to invest for 5 years.

 

This is a decent time frame for equity mutual funds.

 

Equity funds can be volatile in the short term.

 

But over 5 years, chances of earning better returns improve.

 

Staying invested during ups and downs is key.

 

Compounding also works better when you stay longer.

 

Please try to extend beyond 5 years if possible.

 

Longer holding brings more tax efficiency and better growth.

 

Investment Amount
You are planning Rs. 1 lakh per year.

 

That’s Rs. 5 lakhs in 5 years.

 

Investing in lump sum or SIP both are fine.

 

SIP helps reduce the average cost per unit.

 

It also builds investment habit and removes timing worries.

 

If investing lump sum, divide into 4–5 tranches over months.

 

Risk Factors
Pure equity funds are linked to stock market performance.

 

They are affected by domestic and global events.

 

Short term can have negative or low returns.

 

But long term investors usually benefit more.

 

You should be mentally prepared for short-term losses.

 

Never panic or redeem early due to volatility.

 

Equity is not for those needing fixed or assured returns.

 

Patience is the most important quality here.

 

Taxation of Mutual Funds (As per New Rules)
If you sell before 1 year, gains are called short-term capital gains.

 

These are taxed at 20% as per new rule.

 

If you sell after 1 year, and gain above Rs. 1.25 lakh, tax is 12.5%.

 

Gains below Rs. 1.25 lakh are tax-free.

 

You can use the Rs. 1.25 lakh limit each financial year.

 

This makes mutual funds more efficient than many other options.

 

Insurance-cum-Investment Policies
If you also hold ULIP or LIC investment-linked plans, do review them.

 

Such policies often give low returns and high costs.

 

They mix insurance and investment in one product.

 

This is not suitable for long-term wealth creation.

 

You may consider surrendering those and switch to pure mutual funds.

 

Invest separately for protection (term plan) and wealth (mutual fund).

 

Role of a Mutual Fund Distributor with CFP
You mentioned a fund from a reputed AMC.

 

You may choose a Regular plan through a CFP-certified MFD.

 

A Certified Financial Planner gives goal-based planning.

 

They help you choose right asset allocation for your goals.

 

They guide during market cycles and emotional investing errors.

 

Regular funds include cost for their services.

 

Direct plans lack this support and guidance.

 

Many investors in direct plans take wrong decisions alone.

 

Regular plan with CFP gives personalised advice and reviews.

 

Asset Allocation & Diversification
Do not invest 100% in a single equity fund.

 

Diversify across 2–3 equity funds with different styles.

 

You can include large cap, flexi cap, or mid cap category.

 

This reduces risk from underperformance of any one fund.

 

Also keep part of your portfolio in short-term debt funds.

 

Debt funds help in emergencies or short-term needs.

 

They also reduce overall portfolio volatility.

 

Goal Alignment
What is the purpose of this investment?

 

Is it for retirement, child education, house down payment?

 

If you define the goal, planning becomes stronger.

 

You can choose fund types based on goal duration.

 

You will also know how much to invest each year.

 

This creates clarity and motivates regular investing.

 

Benefits of Your Decision
You are investing regularly for 5 years.

 

This is better than keeping money in savings or FD.

 

Mutual funds give higher growth potential than bank products.

 

Your money gets managed by professionals.

 

It helps you beat inflation in long term.

 

You don’t need to track stock market daily.

 

Low minimum investment and high liquidity are extra benefits.

 

You can withdraw anytime if needed.

 

Few Points to Remember
Review your investment once a year with a CFP.

 

Rebalance the portfolio based on goal changes.

 

Avoid timing the market or chasing top funds.

 

Stay away from hot tips or media hype.

 

Focus on consistent investing and patience.

 

Track fund performance with right benchmarks, not just NAV growth.

 

Final Insights
Your plan shows good financial discipline.

 

You have chosen a strong long-term wealth creation path.

 

Mutual funds can offer superior growth compared to many traditional tools.

 

Choosing actively managed funds is wise for better returns.

 

Take support of a CFP to make your journey smoother.

 

Diversify well and invest with clear purpose.

 

Stay consistent and avoid emotional decisions.

 

Wealth creation is a slow and steady process.

 

With right strategy, your goal will be achieved peacefully.

 

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

...Read more

Dr Upneet

Dr Upneet Kaur  |35 Answers  |Ask -

Marriage counsellor - Answered on Apr 19, 2025

Asked by Anonymous - Mar 18, 2025Hindi
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Relationship
My relationship started Four years ago and everything was fine My parents accepted him but his mother started creating problems over small things He is Jain and I understand that it is difficult for them to accept someone from a non-vegetarian family However his mother told my father that my entire family should stop eating nonveg and said many hurtful things She also said that I should only wear suits and follow their rules I have always lived a comfortable life where I never had to do any household chores but his mother told my parents that I need to learn everything I come from a wealthy family while his family is average, and I am not sure if I can adjust to that lifestyle His mother created a lot of drama for two years and now suddenly she is ready to accept me But I am afraid she might go back to her old ways after marriage I have never had to worry about financial issues but I know things might change if I marry him He has also lied to me a few times and when my parents visited his home and business his father avoided showing anything and made excuses which made my family suspicious
Ans: Hello mam.
I understand that it feels strange when someone changes suddenly so much like you said the boy's mother's attitude changed and now she is ready to accept you. Marriage is a big decision and it does not work only with love. It needs many other practical things to work. Like many compromises from both side, finances, acceptance, trust and respect. Think as much as you want before marriage a d take a good decision but after marriage you cannot change the things so easily.
Take some more time and get information on their business, thier family reputation, their relatives and neighbours. Only then take a decision. And leave the things upto your parents. They are much more experienced and have a much more willingness to see you happy.
Take care !
Follow me :
https://www.instagram.com/dr_upneet

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Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Money
I m 40 yrs old father of 10 yrs daughter till date my investment is all in fixed assets and gold i m planning to do the job for till 55 my till date investment is around 1.5 crore i have liability of 45 lac need your advice on future investment i can invest upto 30k monthly looking forward for your advice???
Ans: You’re already doing very well. Rs. 1.5 crore saved is a great milestone. Also, planning investments till 55 is a very thoughtful step. Let us now see how you can create a future-proof financial plan.

I will look at it from all angles—your current investments, liabilities, risk, and future needs.

Let’s begin.

 

Current Financial Position: A Quick View

You have Rs. 1.5 crore in fixed assets and gold. That’s excellent.

 

You have liabilities of Rs. 45 lakh. It needs attention.

 

Your age is 40. You have 15 years to work more. Good time to plan.

 

You can invest Rs. 30,000 every month. That gives you strength.

 

You have a 10-year-old daughter. Education and marriage will need planning.

 

Where You Stand Today

Your savings are not diversified. All in fixed assets and gold.

 

Fixed assets don’t give monthly income. They are not liquid.

 

Gold does not beat inflation over long term. Return is moderate.

 

You do not seem to have any investment in equity mutual funds.

 

Your liability of Rs. 45 lakh is big. We need to handle it smartly.

 

Why Future Investments Must Be Balanced

Equity gives good long-term returns. It helps beat inflation.

 

Debt investments give stability. They are lower on risk.

 

Gold and fixed assets are slow to grow. Not great for wealth creation.

 

Mixing equity and debt works better. It balances growth and safety.

 

Mutual funds are ideal for this mix. Easy to manage. Fully regulated.

 

Your Monthly Investment Strategy – Rs. 30,000 SIP

Allocate Rs. 18,000 in diversified equity mutual funds.

 

Allocate Rs. 6,000 in hybrid mutual funds (mix of equity + debt).

 

Allocate Rs. 6,000 in short-term debt mutual funds.

 

This will give you growth, safety, and liquidity in the right balance.

 

Avoid direct stock picking. It needs time and skills.

 

Always invest through a Certified Financial Planner.

 

Why Actively Managed Funds Are Better Than Index Funds

Index funds blindly copy the market. No professional decision-making.

 

They don’t protect during market falls. No human judgment.

 

Active funds are managed by experts. They take smart calls.

 

Active funds have outperformed index funds over longer periods.

 

A Certified Financial Planner chooses right active funds based on your goals.

 

Why Regular Plans Are Better Than Direct Plans

Direct plans don’t give expert help. You are on your own.

 

One wrong choice can cost you years of returns.

 

Regular plans come with a qualified MFD backed by a Certified Financial Planner.

 

You get portfolio review, rebalancing, and tax planning support.

 

The guidance is worth much more than the small difference in cost.

 

Handling Your Liabilities – Rs. 45 Lakh

Check if this is home loan, personal loan or other type.

 

Home loans have tax benefit. No rush to close if interest rate is low.

 

Personal or business loans are expensive. Try to pre-pay slowly.

 

Use any lump sum inflow (bonus or maturity) to reduce such loans.

 

Do not stop SIPs to pre-pay loan. Balance both wisely.

 

Plan for Your Daughter’s Education and Marriage

She is 10 now. College after 7–8 years.

 

Education will need Rs. 20–30 lakh minimum. Start a goal-based SIP.

 

Invest Rs. 10,000 out of your monthly SIP for this goal.

 

Use equity mutual funds with long-term vision for this.

 

Marriage is a longer goal. Can be planned after education goal is on track.

 

Retirement at 55 – Let’s Plan Today

You will stop earning at 55. Your savings must last till 85–90.

 

You have 15 years to build retirement corpus.

 

Set aside Rs. 15,000 from your SIP for retirement.

 

Use equity and hybrid mutual funds for this.

 

From age 50 onwards, slowly reduce equity and move to safer assets.

 

Emergency Fund and Insurance Cover

Emergency fund must cover 6 months of expenses.

 

Keep this in liquid mutual funds. Avoid using FDs for this.

 

You must have a term life cover of 10–15 times your annual income.

 

Health insurance should be minimum Rs. 20–30 lakh for the full family.

 

Don’t depend only on company insurance.

 

Review Your Fixed Assets and Gold Holdings

Fixed assets have poor liquidity. Hard to sell in emergencies.

 

Try to reduce overexposure to gold and land.

 

Use part of these assets to repay loans or invest in mutual funds.

 

This way you unlock dead money for better returns.

 

Taxation Angle – Be Smart and Prepared

Long-term equity mutual fund gains above Rs. 1.25 lakh are taxed at 12.5%.

 

Short-term equity gains are taxed at 20%.

 

Debt mutual funds are taxed as per your income tax slab.

 

Don’t worry. With a Certified Financial Planner, taxes can be optimised.

 

Always plan redemptions. Don’t redeem blindly.

 

Rebalancing Your Portfolio Annually

Asset allocation will change with time. Rebalancing keeps it on track.

 

Review once a year. Not more.

 

Avoid switching funds too often. Let them grow.

 

Stay invested with discipline. That’s the only way wealth grows.

 

Behavioural Discipline is the Key

Don’t panic in market falls. Stay invested.

 

Avoid checking returns too often. It creates stress.

 

Let your Certified Financial Planner handle strategy.

 

You focus on earning and living well.

 

Final Insights

Your savings so far are impressive. But too tilted towards fixed assets.

 

Equity mutual funds will give your portfolio much-needed growth.

 

A Rs. 30,000 monthly SIP will change your financial future.

 

Don't wait. Start this SIP immediately.

 

Invest through a Certified Financial Planner. Review yearly.

 

Focus on goals: daughter’s education, marriage, and your retirement.

 

Don’t chase returns. Follow a process.

 

Protect your family with insurance. Keep emergency fund intact.

 

Wealth creation is not about luck. It is about discipline and planning.

 

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8265 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 19, 2025

Asked by Anonymous - Apr 18, 2025Hindi
Listen
Money
Dear sir, I have taken floating rate a plot loan from LIC HFL. Recently the ROI was increased from 8.75% to 8.85% immediately because of increase in bank rate. However the ROI is not reduced despite multiple repo rate changes recently. When asked the reply is - "We are yet to receive the updates from our CO with regard to changes in ROI. As soon as the ROI is changed automated message will be sent all customers."
Ans: You're absolutely right in expecting fairness when the repo rate goes down. Let me guide you step-by-step on what’s happening and what you can do next.

 

Understanding the Floating Rate Loan from LIC HFL

Your loan is linked to LIC HFL’s internal benchmark, not directly to RBI’s repo rate.

 

When RBI increases the repo rate, lenders are quick to increase your rate.

 

But when RBI reduces it, lenders often delay passing on the benefit.

 

This delay happens because LIC HFL’s Cost of Funds Based Lending Rate (COFBR) is not automatically updated.

 

COFBR is not as transparent or responsive as the external benchmark linked rates used by banks (like RLLR/EBLR).

 

Why LIC HFL May Not Reduce Your Rate Immediately

LIC HFL is an HFC (Housing Finance Company), not a bank.

 

They don’t follow the repo-linked lending rate (RLLR) system.

 

Their interest rates are based on internal policies and board decisions.

 

They may wait for quarterly reviews before passing on repo rate cuts.

 

Why the Communication Seems Delayed or Vague

You are told “waiting for CO update” – this is standard response.

 

In truth, they are buying time and not acting promptly.

 

Customers feel helpless because HFCs are not as strictly regulated as banks in this area.

 

What You Can Do Now: Action Steps

Write a formal email to the customer care, branch, and grievance officer. Request a clear explanation.

 

Ask them to share the latest COFBR and how your ROI is being calculated.

 

Use this format: “As a floating rate loan borrower, I am entitled to revised rate benefit. Kindly update my ROI in line with latest changes and share the effective date.”

 

If no proper response in 15 days, escalate it to NHB (National Housing Bank).

 

NHB is the regulator for HFCs like LIC HFL. You can file a complaint online.

 

Link: https://grids.nhbonline.org.in

 

Consider Switching the Loan to a Bank

If LIC HFL does not reduce rate, think of a loan balance transfer.

 

Switch to a repo-linked loan from a public or private sector bank.

 

These are directly linked to RBI’s repo rate. Very transparent.

 

You may have to pay small processing charges. But savings can be big.

 

Let a Certified Financial Planner help you calculate real benefit.

 

Check These Before Transferring

What’s the remaining tenure of your loan?

 

Is there any prepayment penalty? Usually none for floating loans.

 

Will new bank offer lower rate? Ask for a sanction letter before deciding.

 

Finally

LIC HFL may delay, but they cannot avoid revising your rate forever.

 

You are a responsible borrower. You deserve fair rate benefits too.

 

Keep your communication professional and written.

 

If they still delay, go ahead and move to a better lender.

 

Always have a Certified Financial Planner guide your debt and investments.

 

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

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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