I am 35 now and getting in hand salary of around 275000. I have 3 years son and new born daughter. I have one flat where I am staying which has around 55L loan to be repaid with emi 65k. I am owning one more flat which gives me 20k rent and it has no loan dues. I have MF and Shares worth rupees 22L and ongoing SIP of 40k. I have bought one land of 35L as well for future migration purpose.
What should be my next steps to repay loan or increase SIP? I am planning to repay 50K extra each month to home loan and increase SIP to 70k. My home loan is having overdraft facility which gives me feasibility of liquid cash.Will this be fine?
I am planning to retire early by 45. Whatever I work beyond that will be extra.
Ans: You are 36 years old and debt-free. You also have Rs. 16–17 lakhs ready. That gives you a strong base. Now, let us look at your decision between plot purchase and mutual funds from a full 360-degree view.
Present Financial Strength
You have no loans. That is a good position.
You are already in a better financial place than most peers.
You have Rs. 16–17 lakhs free. This gives you flexibility.
Being loan-free and liquid at 36 is a powerful place.
Now your next step needs proper thought.
Investment in Plot – Reality Check
A plot looks attractive. But it is not flexible.
Once you buy, you lock your full money into one asset.
A plot does not generate monthly cash flow.
Maintenance, tax and legal issues can arise with plots.
Selling it quickly is tough during emergencies.
Growth in land price is very slow in many cases.
Location may not always favour appreciation.
You may need to spend more to develop it later.
No regular return means wealth is just stuck.
Plot investment is emotional, not financial.
It is not suitable for all financial goals.
If you plan to build a house, that’s different.
But for investment, it is not ideal.
Mutual Funds – A Better Path
Mutual funds offer variety and liquidity.
You can start small or big, as per your plan.
You can invest for short, medium or long term.
You can also pause or withdraw if needed.
They are professionally managed.
They bring diversification across sectors.
You don’t need large capital to start.
You also don’t carry holding cost or legal worries.
Mutual funds offer long-term compounding benefits.
They have transparency and regular reporting.
You stay in control, always.
Understanding Active Funds over Index
You didn’t mention index funds. Still, a quick word.
Index funds just copy the market. Nothing more.
They don’t adjust to risks or themes.
They fall as much as market does.
Actively managed funds try to reduce downside.
Fund managers try to beat market returns.
Active funds give more flexibility in asset selection.
They also follow investment discipline.
For goal-based planning, active funds are better.
Direct Plans vs Regular Plans
You didn’t mention direct mutual funds. Still, let’s clarify.
Direct plans may save cost, but offer no guidance.
When markets fall, they leave you confused.
You may act emotionally and harm your goals.
A Certified Financial Planner adds behavioural support.
A good Mutual Fund Distributor with CFP will guide you.
This is more important than cost saving.
Regular plans include advisory support.
So invest through qualified professionals.
Financial Goal Alignment
Think clearly—what do you want from the money?
Do you have goals like retirement, home, child education?
If yes, mutual funds fit better than land.
Plots don’t match financial goals well.
They can’t be sold in parts to meet needs.
Mutual funds can be used goal-by-goal.
You can create multiple funds for multiple goals.
Emergency Readiness
Plot doesn’t help during emergencies.
It is not liquid and can’t be partly sold.
Mutual funds give access within 1–3 days.
Liquid funds and ultra-short-term funds support emergencies.
Always keep 6–9 months of expenses in these.
Plots have no role in your emergency fund.
Taxation Understanding
Plot sale attracts capital gains tax.
You also need to reinvest sale value to avoid tax.
Mutual fund taxation is clearer and easier.
Long-term equity fund gains above Rs. 1.25 lakh taxed at 12.5%.
Short-term gains from equity taxed at 20%.
Debt funds taxed as per your slab.
Payout and reinvestment are flexible.
Tax filing for funds is also simple.
Growth and Wealth Creation
Mutual funds grow gradually with compounding.
Even small SIPs grow big with time.
You can add more each year as income grows.
You can track and review performance every quarter.
A plot may not grow consistently.
Land markets have ups and downs too.
Many plots stay stagnant for years.
With mutual funds, value creation is more visible.
Psychological Comfort
A plot may feel tangible.
It feels safe because we can touch it.
But this is emotional, not financial.
Mutual funds feel boring but are efficient.
Wealth creation does not need emotional attachment.
Rational decision wins in the long run.
Mistakes to Avoid
Don’t invest in plot without a clear personal use plan.
Don’t put all Rs. 16–17 lakhs into one asset.
Don’t invest just because others are doing it.
Don’t ignore liquidity while chasing growth.
Don’t take emotional decisions with big money.
Don’t delay decision thinking market is high.
Don’t invest directly in mutual funds without guidance.
Better Way to Use Rs. 16–17 Lakhs
Keep Rs. 2–3 lakhs in emergency liquid fund.
Allocate rest in 3–4 mutual fund schemes.
Choose based on goals: 3, 5, 10 years and beyond.
Use goal-based buckets with SIP and lump sum both.
Invest through MFD or Certified Financial Planner.
Review and adjust your portfolio yearly.
Increase SIPs each year as income grows.
Role of a Certified Financial Planner
A CFP will align investments with goals.
They help track your financial life clearly.
They offer behavioural support in tough markets.
They plan for taxes, cash flow and risks.
They help you avoid emotional decisions.
They don’t just sell products—they build strategy.
They keep your financial plan on track.
If You Already Have LIC or ULIP
If you have investment-cum-insurance policies, check returns.
Most give poor returns of 3–5%.
Surrender them if lock-in is over.
Reinvest that amount into mutual funds.
It will help you reach goals faster.
Use term insurance for protection only.
Final Insights
You are 36 and debt-free. This is your strength. Rs. 16–17 lakhs is a big opportunity. A plot may look attractive but has many limits. It locks capital, has no returns, and poor liquidity. Mutual funds are flexible, diversified, and goal-focused. You can start small and build big. You can track progress and change anytime. You can manage risk better with professional help. Avoid direct and index funds. Use regular plans through MFDs with CFP credential. If you have LIC or ULIPs, exit smartly. Mutual funds give you more freedom, growth and control. Take your next step wisely.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Aseem on May 25, 2025
