Thanks Madam, for ur prompt advice. I would like to further ask a question on my subject. I understood that the female with whom I am having an affair has been hiding some of her banking transactions with me I asked her about the same but she said that there is nothing as such. . So i took her bank statement of last six months and came to know that she was playing some online games and had almost lost around 10k, So I asked her on this issue. She has got wild on me as to how could I take the bank statement without her knowledge and has stopped talking to me and has blocked my number. I dont think it was a mistake on my part of checking her account as I had a doubt and that proved true. Even then I pleaded to her and accepted that it was my mistake for tracking her account without informing her and also assured that it wont be repeated. But still she is very adamant and not ready to talk to me. So madam how do i convince her and get her back.

Ans: It depends on amount of income from freelancing. If you are eligible for presumptive taxation, ITR 4 can be filed. Else you need to file ITR 3.

Ans: Yes for all property held as on 22nd July 2024, benefit of indexation is available only for calculation of tax and not for the purpose of Sec 54. Also if indexation provision is beneficial, tax rate of 20% will apply

Ans: If source of gift is genuine and if it can be explained with supporting documents, gift is not taxable.

Ans: Dear Anonymous,
It is easy to feel a sense of connection with someone who shows you a little attention especially since you don't get any attention at home. But is this worth your time and energy? NO!
The other guy at the park is most likely just being a casual friendly stranger and you are taking a meaning out of it which will fill your vacuum at this moment. Trust me, you don't want to enter this unfamiliar territory which you will start getting used to and slowly outside attention is what you will begin to crave for at any cost.
No point messing up things further. See, if it's possible to rebuild your relationship with your husband. Initially, it may seem too much BUT hey, it takes two people to make a marriage...start first and see what happens even if your in-laws keep interfering, it's about being persistent...Make that attempt...

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

Ans: LIC Jeevan Anand offers both insurance and savings. However, such plans usually provide modest returns. You mentioned your plan will give Rs. 22 lakh on maturity after 21 years. While it offers life cover, the returns from these traditional plans are generally lower than market-linked investments like mutual funds.

Insurance-cum-investment plans bundle insurance with savings, but each may underperform compared to separate insurance and investment solutions. You may want to assess if holding the policy further aligns with your financial growth goals.

Impact of Redirecting to SIPs
SIP investments in mutual funds have the potential for higher returns over the long term. With regular contributions, equity funds can benefit from market growth and compounding.

By stopping your LIC premiums and redirecting to SIPs, you could explore higher returns, particularly over 15 to 20 years. The flexibility of SIPs allows adjustments based on changing financial conditions, unlike fixed traditional plans.

Taxation Benefits and Drawbacks
LIC maturity proceeds are usually tax-exempt under Section 10(10D) of the Income Tax Act. On the other hand, equity mutual funds have new capital gains taxation rules.

For SIPs, long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%. Short-term gains are taxed at 20%. This taxation needs to be considered, but even with taxes, the growth potential could exceed traditional insurance plans.

Insurance and Investments: A Better Approach
Instead of combining insurance and investment in one product, a Certified Financial Planner would suggest separating them. You can retain life cover with a term insurance policy, which offers higher coverage at a lower cost. This ensures your family’s financial security.

Meanwhile, investments through mutual fund SIPs offer targeted financial growth, like child education or retirement planning. Regularly tracking and rebalancing these investments also ensures they stay aligned with your long-term goals.

Should You Surrender LIC? A Careful Evaluation
Surrendering an insurance policy midway can result in a reduced payout. You need to check the surrender value and compare it with your financial situation. If the surrender value is significantly lower, you may decide to continue.

However, future premiums can be redirected toward SIPs to optimise returns. It is a gradual shift rather than an immediate stop. Also, since you have already completed seven years, evaluate if staying invested till maturity aligns with your expectations.

Why Mutual Funds Are a Strong Option
Higher Returns: Equity mutual funds have historically outperformed traditional insurance plans over the long term.

Liquidity: Mutual funds offer liquidity, allowing withdrawals in case of emergencies without penalties.

Professional Management: Mutual fund managers actively manage your investments, aiming for higher growth. This gives you an advantage compared to passive, fixed insurance returns.

Goal-Based Planning: With SIPs, you can create a corpus for retirement, children’s education, or wealth creation.

Avoiding the Pitfalls of Direct Funds
Many individuals are attracted to direct funds because of lower expenses. However, managing your portfolio alone may become overwhelming. Direct plans require constant monitoring and a deep understanding of markets.

Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner can provide expert advice. A professional helps with portfolio rebalancing, tax-saving strategies, and timely switches between funds. This structured support can optimise your wealth-building journey.

Active Funds vs. Index Funds
Index funds passively follow the market, but they may not provide the best results during market volatility. Actively managed funds, on the other hand, aim to outperform the market through the expertise of fund managers.

In volatile times, active funds have the flexibility to adjust holdings. This ensures your investment portfolio remains aligned with market trends. Active management adds value, especially for long-term goals like retirement or wealth accumulation.

Long-Term SIPs and Financial Freedom
Shifting your LIC premium to SIPs for 15 to 20 years can help build substantial wealth. Even with market fluctuations, staying invested ensures you benefit from compounding and market recoveries.

SIPs also offer the flexibility to increase contributions over time as your income grows. This ensures your wealth-building efforts remain in sync with your financial aspirations.

Final Insights
Redirecting your LIC premium to SIPs can enhance your financial growth. However, surrendering the policy needs careful evaluation of costs and benefits. If the surrender value is low, continuing the policy till maturity could be wiser.

Separating insurance and investment ensures better coverage and optimised returns. Mutual funds, through SIPs, offer a versatile approach to building wealth, providing liquidity, flexibility, and professional management.

A balanced approach, where you retain essential life cover and invest systematically, will secure both your financial future and your family's needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: Firstly, your selection to start investing in mutual funds is commendable. As you’re new to mutual funds and looking for a 5 to 10-year investment horizon, a balanced approach across different fund types is a sound choice. This portfolio aligns well with a diversified strategy, as it includes large-cap, mid-cap, small-cap, multi-cap, and focused funds. Now, let’s look at each aspect in detail for better clarity.

Diversification: A Strategic Mix of Funds

Large-Cap Funds: Large-cap funds typically invest in established, stable companies. They bring stability to a portfolio and help balance the potential risk associated with mid-cap and small-cap funds. Large-cap funds are especially beneficial if you want consistent growth with lower risk than small- and mid-cap segments. They are known for their ability to protect capital during market downturns, offering smoother returns over the long term.

Small-Cap Funds: Small-cap funds tend to offer high growth potential but with a higher risk factor. They invest in emerging companies, which may experience considerable price fluctuations. However, for a 5- to 10-year horizon, small-cap funds can yield substantial returns as these smaller companies mature and grow in market valuation. Your allocation to small-cap funds can be a growth driver but requires monitoring.

Multi-Cap Funds: Multi-cap funds provide exposure to large-, mid-, and small-cap companies in a single fund. This gives them the flexibility to adapt to market conditions. Multi-cap funds are beneficial because they can shift their asset allocation to match market dynamics, offering growth potential with moderate risk.

Mid-Cap Funds: Mid-cap funds invest in companies that are in the growth phase and have the potential to become large-cap companies over time. They offer a blend of stability and growth. Including a mid-cap fund in your portfolio is advantageous as it balances the risk and return profile between large-cap and small-cap funds.

Focused Funds: These funds concentrate on a limited number of stocks. This focused approach can yield higher returns if the fund manager's choices perform well. However, it carries higher risk due to limited diversification. For a 5 to 10-year horizon, a focused fund can add significant value to your portfolio but should remain only a part of it.

Evaluation of Regular vs Direct Plans

Since you are investing through ICICI Direct and using regular plans, let’s examine the benefits of regular funds, especially for NRIs. Regular funds offer access to certified financial planners (CFPs) who can provide guidance on market trends, rebalancing strategies, and portfolio reviews. This is advantageous as managing a portfolio from abroad can be challenging. With a regular plan, the extra expense ratio cost is justified by the value-added services provided by ICICI Direct and their advisory services.

Benefits of Actively Managed Funds Over Index Funds

Actively managed funds aim to outperform the market through expert stock selection, which is valuable for short- to medium-term horizons like 5 to 10 years. Actively managed funds can react to market changes, unlike index funds, which simply track an index without considering market fluctuations. Moreover, index funds might not offer the same level of diversification in emerging markets, potentially limiting returns.

Tax Considerations for NRIs

Mutual fund investments for NRIs in India are subject to tax implications that can affect your returns. The new capital gains tax rules specify that:

Long-Term Capital Gains (LTCG): For equity mutual funds, gains above Rs 1.25 lakh are taxed at 12.5%. Holding funds longer than one year generally qualifies as long-term for equity investments.

Short-Term Capital Gains (STCG): Gains realized within a year are taxed at 20%.

Having a clear tax strategy is important to manage the impact of these taxes on your returns. You may consult your financial planner or tax advisor to structure withdrawals efficiently and keep tax liabilities manageable.

Investment Horizon and Risk Management

With a 5- to 10-year investment horizon, a balanced risk profile is critical. Here’s a recommended strategy to ensure a well-rounded portfolio:

Allocate according to time frame: Given your timeframe, it may be wise to invest more in large-cap and multi-cap funds initially for stability, then gradually increase exposure to mid-cap and small-cap funds if your risk tolerance grows.

Systematic Withdrawals: Nearing the 5-year mark, consider a systematic withdrawal plan (SWP) to start securing profits. SWPs allow you to take out funds in a structured way, protecting gains while minimizing tax impacts and potential market volatility.

Market Timing and Rebalancing

Market volatility can affect returns, especially in mid- and small-cap funds. Regularly reviewing and rebalancing your portfolio can help you adjust exposure to each category as needed. Your ICICI Direct advisory service can help assess when market conditions favor reallocating funds, ensuring you stay aligned with your goals.

Final Insights

Your portfolio selection indicates a thoughtful approach, diversified across market segments. With regular plans through ICICI Direct, you’re well-positioned to receive professional support, critical for managing your investments as an NRI. Staying focused on your financial goals, rebalancing as needed, and maintaining a tax-efficient strategy will help you make the most of your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: Dear Anonymous,
I understand that it is hard to see your parents disappointed by the choices you make in life. If the only issue is the distant relationship between your parents and your partner, then I am not sure why they are so against it, but then again, all families have a certain set of rules and opinions they can't bend for anything or anyone. This might be theirs. Maybe give it one last try; let them know your decision and express how happy it would make you if they could be happy for you and join you for your wedding. If it still doesn't work, I would suggest you focus on finding peace in the fact that you have tried.

Best Wishes.

Ans: Dear Anonymous,
There is no hard and fast rule that a doctor should marry a doctor, an engineer an engineer, and so on. It is just their school of thought. If you do not adhere to it, you should clearly communicate the same. You both are consenting adults and well-settled; you have every right to make your own choices especially if that makes you happy. And I am assuming that your partner is also a good person, which, by the way, matters more than his profession. Please sit with your parents and have a clear conversation with them. In today's day and age, the man does not mandatorily have to earn more in a marriage. Women can and are in many cases, earning more and that has nothing to do with how happy and healthy their marriage will turn out to be; please speak to your parents. Consider introducing your partner to them. It would help humanize him.

Best Wishes.

Ans: Dear Anonymous,
I understand you have given her reasons to distrust you but do you think a relationship can work without trust? Whatever you have done to cause this, if the both of you have decided to set it aside and move forward, then this constant stalking isn't right on her part. A healthy relationship focuses on the present and future, not the past. Give her a moment to cool down and once the time is right, you can contact her again and have a clear discussion with her about the same. But more importantly, I'd suggest you think long and hard before you put in effort to make things right.

Reconsidering the relationship might be good for both your mental health. Even if you two decide to patch things up, there is only one right approach to any relationship- she will trust you, and you will never break it again. That's the only way this relationship can work. This is merely a suggestion. Please reflect on it before you rush to any decision.

Best Wishes.