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OLM Desk - 31 July 2021

Online Demat Account Eases Managing Investments

Anil Kumar S, Thiruvananthapuram

I am 46, working in the government service and my retirement is at 56. My current salary is Rs 60,000 and I have savings of around Rs 30 lakh in fixed deposits, NSC (National Savings Certificate), and gold. At the current rate, I am expecting a pension of Rs 23,000 per month. My gratuity and PPF benefits will be around Rs 20 lakh at today’s rate. LIC is expected to give around Rs 8 lakh after 12 years. Kindly suggest an investment plan for me to have an income of Rs 50,000 per month.

Considering your current requirement of Rs 50,000 monthly, you will need approximately Rs 93,000 monthly. From this requirement, Rs 23,000 will be provided by your expected pension. There will be a shortfall of approximately Rs 70,000.  You will require a retirement kitty of Rs 1.70 crore to take care of this shortfall.

From your existing investment, you can expect a return of approximately 7 per cent and after 10 years it will be Rs 99 lakh. So, your shortfall in the retirement kitty will be approximately Rs 71 lakh.

You can invest Rs 21,600 SIP to accumulate a corpus of Rs 71 lakh. Consider investing in good aggressive hybrid mutual funds or a mix of equity funds with exposure to large cap and part in midcap funds taking into consideration your risk appetite.

If you want to consider reshuffling 65 per cent of the debt investment to invest lumpsum in a Balance Mutual Fund with an assumption of around 12 per cent return over 10 years, your SIP amount will be reduced.

Hina Shah, Certified Financial PlannerCM & Financial Coach, LUHEM


Sarita Krishnamurthy,  Chennai

I am in the restaurant business and have, over the past few years, invested in money market funds and various other low-end debt funds to sustain my cash management systems. Lately, I find these funds to generate little value in terms of growth. Some of them have been reduced to mere parking places, good only for a few weeks. I can easily keep money in current accounts with half the hassle. What should I do?

Yes. The returns in these funds have come down as the interest rates have been falling. Kindly note that you will earn 0 per cent interest in your current account. There is no upside here. However, whenever the interest rates increase, you will find the returns in these funds also going up. Since you have mentioned it is a hassle to invest in debt funds, I believe you are investing in physical mode. If you open a Demat account with a good online platform provider and invest in mutual funds through that route, the online procedure will make it easier for you to manage your investments and redemptions.

Uma S Chander, Certified Financial PlannerCM, Handholding Financials


Nitish Kumar,  Delhi

I’m having an EPF (Employee Provident Fund) account with an employer. Recently, I have changed my job and joined a new firm as a fresher and my new employer is getting me registered in NPS (National Pension System). Is it possible to have both EPF and NPS at the same time with different employers?

You can have both EPF and NPS. However, in case your EPF is not getting carried forward and the interest on your EPF after leaving your job is taxable. Your EPF account will become inoperative if you do not apply for withdrawal (full or partial) within 36 months from the date you become eligible to make the withdrawal application. After the account gets inoperative, it does not earn further interest.

As an employee, if you terminate the employment contract with the old employer and do not take up any other employment within two months with an employer who is registered under EPF, the entire fund balance in EPF can be withdrawn in a lump sum. Withdrawal from EPF is tax-free, provided the employee has served continuously for five years or more.

You also have an option to transfer your EPF balance to your NPS Tier 1 account. This transfer can be done only once for tax exemption benefits. It will neither be taxed nor can you claim the deduction on this transferred amount under section 80CCD.

Uma S Chander, Certified Financial PlannerCM, Handholding Financials

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