Dear sir Kindly guide me a better person scheme which I will get a handsome amount of money after 20 years

Ans: Hello Shankaranarayanan

Thanks for asking the question

I m glad that you are dedicated towards your savings, to assist you with your tax planning. Please consult your CA or a guru with a direct tax expertise

Ans: Your goal of achieving a monthly income of ?2 lakh after ten years is ambitious but achievable with disciplined planning. Here’s a detailed plan to help you meet this goal using your ?40 lakh corpus and current monthly income of ?65,000.

Step 1: Assess Your Current Financial Status
Your current financial standing includes:

?40 lakh corpus.
?65,000 monthly income.
To achieve a future monthly income of ?2 lakh, focus on disciplined savings, strategic investments, and regular reviews.

Step 2: Define Investment Goals
Your primary goal is to grow your corpus sufficiently to generate a monthly income of ?2 lakh after ten years. This requires your investments to grow significantly, taking into account inflation and taxes.

Step 3: Strategic Investment Allocation
Diversified Portfolio
A diversified investment portfolio can balance risk and return effectively. Here’s a suggested allocation:

Equity Mutual Funds (60%):

Amount: ?24 lakh.
Rationale: Equity mutual funds have the potential for high returns over the long term. They can help your corpus grow substantially. Choose actively managed funds to benefit from professional expertise.
Debt Mutual Funds (20%):

Amount: ?8 lakh.
Rationale: Debt funds provide stability and regular income with moderate risk. They help in balancing the volatility of equity investments.
Public Provident Fund (PPF) (10%):

Amount: ?4 lakh.
Rationale: PPF is a safe, long-term investment with tax-free returns. It adds a layer of security to your portfolio.
Fixed Deposits (10%):

Amount: ?4 lakh.
Rationale: Fixed deposits offer guaranteed returns and liquidity. Keep these funds accessible for emergencies or short-term needs.
Monthly Investment from Income
SIP in Equity Mutual Funds:

Amount: ?35,000 per month.
Rationale: Systematic Investment Plans (SIPs) help in averaging out market volatility and benefit from the power of compounding.
Recurring Deposit or Debt Mutual Fund SIP:

Amount: ?20,000 per month.
Rationale: Provides stable and assured returns, ensuring a balanced risk profile.
Step 4: Regular Reviews and Adjustments
Monitor your investments regularly. Review and adjust your portfolio based on market conditions and performance. Rebalancing your portfolio annually can help in maintaining the desired asset allocation.

Step 5: Focus on Tax Efficiency
To minimize taxes, consider:

Equity Funds: Long-term capital gains on equity funds are taxed at a lower rate.
Debt Funds: Hold for more than three years to benefit from indexation, which reduces taxable income.
Step 6: Inflation Adjustment
Ensure your investments are growing at a rate higher than inflation. Historically, equity mutual funds have provided returns that outpace inflation, making them essential for long-term growth.

Step 7: Projected Growth and Future Income
Assuming an average annual return of 12% from your equity investments and 7% from debt investments, your ?40 lakh corpus, along with monthly SIPs, should grow significantly over ten years. Regularly increasing your SIP amount in line with salary increments can further enhance your corpus.

Conclusion
Achieving a monthly income of ?2 lakh after ten years requires a strategic investment approach. Diversifying your portfolio, focusing on equity mutual funds for growth, and maintaining tax efficiency are crucial steps. Regular reviews and disciplined investing will guide you towards your financial goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Arniban!

Congrats on your stable jobs and secure future with government pensions! It’s fantastic that you’re thinking ahead and aiming for Rs. 10 crore in 20 years. Let's create a detailed plan to achieve this goal.

Current Financial Situation
You and your wife have a combined monthly income of Rs. 1,44,000. Since you mentioned you have no savings yet, it’s a good time to start planning.

Setting Clear Financial Goals
Aiming for Rs. 10 crore in 20 years is ambitious but achievable with disciplined saving and smart investing. Let’s break it down.

Building an Emergency Fund
First, create an emergency fund. This fund should cover at least 6 months of your expenses. It provides a safety net for unforeseen expenses like medical emergencies or job loss.

Starting with SIPs in Mutual Funds
Systematic Investment Plan (SIP):

SIPs are a great way to start investing regularly. By investing a fixed amount monthly, you can benefit from rupee cost averaging and the power of compounding.

Diversify Your Portfolio:

Invest in a mix of large-cap, mid-cap, and small-cap mutual funds. This diversification helps spread risk and enhances potential returns.

Actively Managed Funds:

Actively managed funds have skilled fund managers who can adjust the portfolio based on market conditions. This can potentially deliver higher returns compared to index funds.

The Power of Compounding
Compounding:

Compounding means earning returns on your returns. The earlier you start, the more your money grows over time. It’s essential to stay invested and reinvest the returns.

Example:

If you invest Rs. 50,000 monthly in mutual funds with an average return of 12%, in 20 years, you can reach your goal of Rs. 10 crore. The power of compounding significantly boosts your wealth over time.

Regular Review and Adjustment
Monitor Your Investments:

Regularly review the performance of your mutual funds. If a fund is underperforming, consider switching to a better-performing fund.

Stay Updated:

Keep yourself updated with market trends and economic news. It helps in making informed decisions and adjusting your investment strategy if needed.

Tax Efficiency
Tax-Saving Investments:

Some mutual funds, like ELSS (Equity Linked Savings Scheme), offer tax benefits under Section 80C of the Income Tax Act. They not only provide tax deductions but also have the potential for high returns.

Long-Term Capital Gains Tax:

Long-term capital gains (LTCG) from equity mutual funds are tax-free up to Rs. 1 lakh per year. Gains above this limit are taxed at 10%. Holding investments for the long term can be tax-efficient.

Risk Management
Understanding Risks:

All investments carry some risk. Higher returns often come with higher risks. Assess your risk tolerance and invest accordingly.

Managing Volatility:

Equity investments can be volatile. During market downturns, stay invested and don’t panic. Regular investments through SIPs can average out the costs and reduce the impact of market volatility.

Financial Discipline
Stick to Your Plan:

Financial discipline is crucial. Stick to your investment plan, avoid unnecessary expenses, and prioritize your financial goals.

Automate Your Investments:

Set up automatic SIPs from your bank account. This ensures regular investments without manual intervention.

Windfall Gains
Utilize Bonuses and Extra Income:

Any bonuses, tax refunds, or unexpected income should be directed towards your investments. This can accelerate your wealth-building process.

Financial Protection
Life Insurance:

Ensure you have adequate life insurance coverage. It provides financial security to your family in case of unforeseen events.

Health Insurance:

Adequate health insurance coverage is essential to protect against high medical costs. Review your existing policies and ensure they provide comprehensive coverage.

Professional Guidance
Certified Financial Planner:

While this guide provides a comprehensive strategy, consulting a Certified Financial Planner can provide personalized advice based on your specific situation. Professional guidance can help optimize your financial plan.

Benefits of Investing Through MFD with CFP Credential
Regular Funds:

Investing through regular funds with a Mutual Fund Distributor (MFD) who has a Certified Financial Planner (CFP) credential can be beneficial. MFDs provide expert advice and help you choose the right funds.

Disadvantages of Direct Funds:

Direct funds require you to do all the research and management yourself. It can be time-consuming and challenging without expert knowledge. Regular funds, through an MFD, offer personalized advice and support.

Regular Review and Adjustment
Stay Flexible:

Regularly review your financial plan and adjust based on your progress and market conditions. Flexibility is key to achieving your financial goals.

Celebrate Milestones:

Celebrate small milestones along the way. It keeps you motivated and reinforces positive financial behavior.

Final Insights
Achieving Rs. 10 crore in 20 years is ambitious but possible with disciplined saving and smart investing. Here’s a quick recap:

1. Start with an emergency fund:

Cover at least 6 months of expenses.

2. Invest through SIPs in diversified mutual funds:

Focus on actively managed funds.

3. Utilize the power of compounding:

Start early and reinvest returns.

4. Monitor and adjust your investments regularly:

Stay informed and flexible.

5. Ensure tax efficiency:

Utilize tax-saving investments like ELSS.

6. Manage risks and stay disciplined:

Stick to your plan and avoid unnecessary expenses.

7. Seek professional guidance:

Consult a Certified Financial Planner for personalized advice.

Your determination and strategic planning will help you achieve your financial goals. Keep up the good work and stay focused on your journey to financial success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You’re 66 years old and retired, which means you need to carefully manage your hard-earned money. Ensuring that your funds are invested wisely will provide you with regular income while protecting your capital. At this stage in life, it's important to focus on stability and regular income. You’ve worked hard for your money, and now it’s time for your money to work for you.

Why Systematic Withdrawal Plan (SWP)?
A Systematic Withdrawal Plan (SWP) is an excellent choice for retirees. It allows you to withdraw a fixed amount of money at regular intervals from your investment. This provides you with a steady income, similar to a pension.

Here’s why SWP can be beneficial for you:

Regular Income: SWP ensures a fixed income flow. This helps in managing your monthly expenses.

Capital Preservation: By withdrawing a fixed amount, you avoid selling too much of your investment at a low price, which helps in preserving your capital.

Tax Efficiency: SWP is also tax-efficient. The withdrawals are treated as part capital withdrawal and part gain, reducing the tax burden.

Flexibility: SWP gives you the flexibility to choose the withdrawal amount and frequency as per your needs.

Choosing the Right Investment for SWP
Since you’re seeking regular income through SWP, it’s important to invest in schemes that offer both stability and growth potential. However, avoid high-risk investments at this stage of your life. Here are the key factors to consider:

Risk Tolerance: Given your age and retirement status, it's wise to choose low to moderate-risk investments. Your focus should be on preserving capital while earning a steady income.

Investment Horizon: Since SWP is typically used for long-term income, consider funds that have a good track record over several years. They should be able to provide consistent returns.

Scheme Selection: Instead of investing in index funds or direct funds, consider opting for actively managed funds. Actively managed funds provide the benefit of professional management and regular monitoring, which can be valuable in generating steady returns.

Actively Managed Funds vs. Index Funds
Actively Managed Funds: These funds are managed by experienced fund managers who actively buy and sell securities to outperform the market. This active management can provide better returns compared to index funds, especially in a volatile market. Actively managed funds are particularly beneficial for SWP as they aim to deliver consistent returns, which is essential for regular withdrawals.

Index Funds: On the other hand, index funds merely track a market index. While they have lower fees, they do not have the flexibility to adjust to market conditions. This lack of flexibility can be a disadvantage, especially when you need steady returns for regular withdrawals.

Given your need for regular income, actively managed funds would be a better option. They are more likely to deliver the consistent returns required for an SWP.

Importance of Regular Plans Over Direct Plans
Regular Plans: Investing through a Certified Financial Planner (CFP) in regular plans can be beneficial. A CFP provides ongoing advice, helps in selecting the right funds, and offers support in managing your investments.

Direct Plans: While direct plans have lower fees, they do not come with the support of a financial advisor. This can be a disadvantage, especially in retirement when you need expert guidance to manage your investments effectively.

For a retiree, regular plans offer the added advantage of professional advice, which is crucial for maintaining financial security during your retirement years.

Setting Up SWP for Maximum Benefit
Withdrawal Amount: Decide on a reasonable withdrawal amount that covers your monthly expenses without exhausting your capital too quickly. It’s important to strike a balance between your withdrawal amount and the growth of your investment.

Frequency of Withdrawals: You can choose to withdraw monthly, quarterly, or annually, depending on your needs. Monthly withdrawals might be more convenient as they mirror the salary you used to receive, making it easier to manage your expenses.

Review and Adjust: Regularly review your SWP and overall investment portfolio. This ensures that your investment is still aligned with your goals and risk tolerance. You may need to adjust the withdrawal amount or switch funds if the performance of your current scheme changes.

Final Insights
Focus on Stability: At this stage in your life, the focus should be on capital preservation and steady income. Avoid high-risk investments and choose schemes that provide consistent returns.

Seek Professional Guidance: Consider working with a CFP to select the best actively managed funds for your SWP. They can help you navigate market fluctuations and make necessary adjustments to your investment.

Flexibility and Review: Stay flexible and open to reviewing your SWP. Adjust your withdrawals and investment choices based on your financial needs and market conditions.

Investing in the right scheme and setting up an SWP tailored to your needs will help you enjoy a stress-free retirement. Your hard-earned money deserves to be managed with care to provide you with a secure and comfortable future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You are 28 years old with Rs. 25 lakhs in hand and a monthly salary of Rs. 12,000. This is a strong position to start building your financial future. Let's plan step by step to secure and grow your wealth.

Understand Your Financial Position
You have a large sum of Rs. 25 lakhs.

Your monthly income is Rs. 12,000.

Your expenses must be carefully managed to ensure savings.

Your goal is to grow your wealth and secure your future.

Build an Emergency Fund
Set aside 6 months of expenses as an emergency fund.

This ensures you can handle unexpected situations without stress.

Keep this fund in a separate savings account for easy access.

Allocate Funds for Short-Term Needs
Identify any upcoming expenses in the next 1-2 years.

Allocate funds accordingly to avoid dipping into long-term investments.

Use fixed deposits or recurring deposits for these short-term needs.

Invest in Low-Risk Instruments
Consider investing a portion in fixed deposits for steady returns.

These are safe and provide predictable income.

Suitable for your current low-income situation.

Explore Mutual Funds for Growth
Allocate a portion to mutual funds for long-term growth.

Choose funds that match your risk appetite and investment horizon.

Start with small amounts and increase as you become comfortable.

Avoid High-Risk Investments
Stay away from speculative investments like cryptocurrencies or penny stocks.

These can lead to significant losses, especially with limited income.

Plan for Retirement Early
Start contributing to retirement schemes like the Public Provident Fund (PPF).

Early contributions benefit from compounding over time.

Secure your future by planning now.

Monitor and Review Investments Regularly
Keep track of your investments and their performance.

Review your portfolio periodically and make adjustments as needed.

Stay informed about market trends and economic changes.

Seek Professional Guidance
Consult a Certified Financial Planner for personalized advice.

They can help tailor a plan that suits your specific needs and goals.

Maintain Financial Discipline
Stick to your budget and avoid unnecessary expenses.

Prioritize savings and investments over discretionary spending.

Financial discipline is key to long-term success.

Final Insights
You have a solid foundation with Rs. 25 lakhs at the age of 28. By carefully planning and investing wisely, you can secure your financial future. Remember to build an emergency fund, invest in low-risk instruments, and seek professional guidance when needed. Stay disciplined and review your financial plan regularly to ensure it aligns with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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