Dear sir,
I am 26 years old and unmarried.my CTC is 24 lakhs in bengaluru.i am having term plan of 1.5 cr.i invest around 50000 pm in mf schemes.i want to invest in property in vadodara for creating asset and to get help in IT relief.
Please guide
Should I plan to purchase a teamament if yes how much should be installment? Or to increase Mf investment.
I have no financial liabilities as of now?
Ans: At 26 with a CTC of Rs?24?lakh and a disciplined mutual fund investment habit of Rs?50,000 per month, you have built a strong foundation. Let’s review your situation and craft a 360-degree strategy for wealth growth, tax optimisation, and long-term goals—without relying on real estate.
Reviewing Your Current Position
Age 26 gives you a long time horizon for wealth creation.
CTC Rs?24?lakh equates to around Rs?1.5–1.6?lakh net monthly income.
You have no financial liabilities—no home loan, car loan, or credit card debt.
You invest Rs?50,000 per month in mutual funds—this is impressive discipline.
Term life insurance cover of Rs?1.5?crore protects your dependents.
You are considering buying property in Vadodara for asset creation and IT rebate.
Understanding the Real Estate Intent
You intend to buy a property in Vadodara to get IT deduction.
Section 80C allows deduction on principal repayment of home loan only.
IT relief alone may not justify property purchase costs.
Buying a property ties up large capital and may slow down wealth creation.
Property involves legal, maintenance, and transaction risks, especially far from your city.
Your main goal should be active wealth building, not passive tax benefits.
Comparing Property vs. Mutual Funds Growth Potential
Real estate appreciation over 5–10 years may be modest.
It is illiquid—you cannot access it easily when needed.
Maintenance and property taxes add costs over time.
On the other hand, equity mutual funds offer higher returns with higher liquidity.
Actively managed funds adapt to market changes and reduce downside risk.
They help build capital faster and are easier to manage, especially from Bengaluru.
Maximising Income Tax Benefits Without Buying Property
You can use your existing mutual fund investments for tax saving.
Invest in tax-saving equity-linked savings schemes (ELSS) through regular plans.
ELSS investments qualify under Section 80C, up to Rs?1.5?lakh deduction.
This fulfils your tax-saving need without tying up capital.
You continue building your net worth while enjoying tax relief.
Suggested Monthly Investment Allocation
You invest Rs?50,000 per month into mutual funds, which is excellent.
Let us break this into a better diversified structure:
Equity Mutual Fund SIPs (Growth focus) – Rs?40,000
ELSS (Tax-saving equity) – Rs?10,000
This way, you enhance long-term growth and claim tax benefits simultaneously, while staying fully invested in equity.
Benefits of Actively Managed Funds
Active funds manage risk via stock selection and sector rotation.
Index funds merely mirror market movements without protection.
During corrections, active funds can pivot to safer sectors.
This reduces downside risk and supports smoother returns.
Regular plans through an MFD with CFP support give you ongoing monitoring.
They help rebalance your portfolio and suggest timely actions.
Should You Buy Property in Vadodara?
Let’s evaluate the downsides:
Requires large down payment, reduces liquidity.
EMI will increase monthly cash outflow if financed.
Rental income may not cover EMI fully, especially far from your primary work city.
Management, PACS issues, legal risk—especially for distant property.
You lose flexibility to move or change plans easily.
Instead, continuing in mutual funds keeps money liquid, growing, and flexible.
Freeing Up Money for Investing
Already investing Rs?50,000 per month is excellent.
If you considered property, that money gets locked away.
Stick to mutual funds to utilise your surplus fully.
This gives better returns and control over funds.
Building a Goal-Based Investment Approach
Your current investments may be undirected. Let’s align them with goals:
Goal 1 – Tax benefit every year: Rs?10,000 in ELSS.
Goal 2 – Wealth growth: Rs?40,000 in diversified equity funds.
Goal 3 – Future capital needs: Continue existing SIPs but classify them as medium?term and long?term.
Investing in goal-wise buckets makes planning and monitoring easier.
Monitoring and Portfolio Review
Review portfolio performance every 6–12 months.
Equity market and fund performance change over time.
Regular plans through MFD and CFP help with reviews and rebalancing.
They guide you when to take partial profits or top?up allocations.
This keeps your portfolio efficient and goal-aligned.
Insurance and Protection Requirements
Your term cover of Rs?1.5?crore is adequate now.
Review it annually as your income grows or responsibilities increase.
Health insurance is essential—even employer provided.
Buy a family floater health plan of Rs?10–15?lakh soon.
This protects your wealth from medical emergencies and keeps investments intact.
Estate Planning Reminder
As a young professional, create a simple will.
Nominate your investments correctly.
This ensures clarity and smooth transfer to your heirs.
A Certified Financial Planner or legal advisor can assist you.
Taxation Insight on ELSS and Mutual Funds
ELSS has a 3-year lock-in and counts under Section 80C.
Equity mutual fund LTCG above Rs?1.25?lakh taxed at 12.5%.
STCG within one year taxed at 20%.
Systematic investment and withdrawal help manage tax smoothly.
A CFP helps time redemptions and keeps you within tax efficiency.
Avoiding Common Pitfalls
Don’t tie capital in distant real estate for tax alone.
Don’t delay claiming ELSS tax deduction for lack of investment.
Don’t invest in index or direct funds—lack of professional monitoring.
Don’t stop SIPs or change plans based on market noise.
Don’t ignore health cover just because employer provides it.
Long-Term Growth and Legacy Strategy
Start with suggested allocations and discipline.
Increase your SIPs by at least 10% yearly to match inflation.
Rebalance your portfolio as needed.
Maintain health and term protection ongoingly.
Build an estate plan to protect your wealth and heirs.
Stay invested with a CFP guiding your journey.
Final Insights
You are in a powerful position at 26.
Investing Rs?50,000 per month already shows your financial commitment.
Buying property now for tax benefits can hinder your wealth growth.
Instead, invest Rs?10,000 monthly in ELSS to reduce tax liability.
Put the rest in actively managed equity funds for compounding returns.
Use regular plans via MFD and a Certified Financial Planner for expert guidance and rebalancing.
Protect yourself with term and family health insurance.
Adopt goal-oriented SIPs, yearly increases, and periodic reviews.
This 360-degree plan supports your wealth goals, tax strategy, and financial safety.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment