Am married and salaried employee and I have Home loan for 25yrs which started recently , after all expenses and deductions am able to save around Rs15 to 20k .
I don't have any Emergency fund as of now .
Planning for sip , term insurance which I don't have yet as monthly saving for sip and
Could please guide me how do I start here with both of these investments .
Ans: You are taking the right step now.
You want to begin SIP and term insurance.
You are also managing a home loan.
Let us guide you with a full 360-degree plan.
It will help you build wealth and protect your family.
Your Current Financial Picture
Let’s understand your key facts first:
You are married and salaried
You recently took a home loan
Loan tenure is 25 years
After expenses and deductions, Rs. 15,000 to Rs. 20,000 savings remain
You have no emergency fund
You don’t have term insurance
You want to start SIP and insurance now
Your steps are correct and timely.
Let us now guide you step-by-step.
Step 1: Build an Emergency Fund First
You have no emergency fund now.
This is very risky.
If any expense comes, you may stop your SIP or miss loan EMI.
This leads to penalty or more loan burden.
So emergency fund is the first and most urgent step.
Save at least Rs. 50,000 to Rs. 1 lakh first
Park in sweep-in FD or liquid mutual fund
Don’t keep in savings account
Don’t use for spending
Build slowly month by month
Use Rs. 5,000 to Rs. 7,000 from savings for this purpose
Complete this target in 6 to 9 months
This fund will protect your loan EMIs and SIP from disruptions.
Step 2: Buy Term Insurance Immediately
You do not have term insurance now.
This is a big risk since you have a loan and a family.
In your absence, your spouse may not repay the full loan.
This may lead to legal or mental stress.
So term insurance is non-negotiable.
Choose a pure term plan
Avoid return-of-premium type
Cover amount should be minimum 15 to 20 times your annual income
If you earn Rs. 6 lakh annually, cover must be Rs. 90 lakh to Rs. 1.2 crore
Premium will be around Rs. 8,000 to Rs. 12,000 per year
Pay yearly premium, not monthly
Choose 30 to 35 years coverage
Take from reputed insurer
Do not take from LIC combo plans
Do not mix investment with insurance
You can set aside Rs. 700 to Rs. 1,000 per month for term insurance.
This protects your loan and family.
Step 3: Begin SIP After Insurance and Emergency Fund
Once you set term insurance and begin emergency fund, start SIP.
Don’t wait for a big amount.
Start small but keep it consistent.
Begin with Rs. 7,000 to Rs. 10,000 monthly SIP
Choose regular plans through MFD guided by CFP
Avoid direct plans
Direct plans give no advice, no service
Mistakes in direct plans lead to bigger losses
Use equity mutual funds for long term wealth
Use 3 types of categories:
Flexi cap fund – Rs. 4,000
Multicap or Balanced Advantage – Rs. 3,000
Small/Mid cap – Rs. 2,000
Do not select sector funds or international funds
Do not put SIP in ELSS for now
Start SIP with ECS/auto debit.
This creates discipline.
Why Index Funds Are Not Suggested
You may hear about index funds being low-cost.
But cost is not the only thing that matters.
Index funds copy the market blindly
They buy bad stocks if they are in index
They do not avoid market bubbles
They don’t have active human decisions
You can’t outperform markets with index funds
During market crashes, they fall more
No exit timing or rebalancing is done
Actively managed funds give:
Better returns with lower risk
Fund manager control during volatile markets
Sector rotation when needed
Better performance during crisis
So use actively managed regular funds with MFD and CFP guidance.
Suggested Plan for Rs. 15,000 Savings
You save Rs. 15,000 to Rs. 20,000 monthly.
Here is how to use it step-by-step:
Month 1 to 6:
Rs. 7,000 – Emergency Fund
Rs. 1,000 – Term Insurance
Rs. 7,000 – SIP in hybrid or flexi fund
Month 7 onwards:
Emergency fund will reach Rs. 50,000 to Rs. 1 lakh
Increase SIP from Rs. 7,000 to Rs. 12,000 or Rs. 15,000
Use flexi cap, multicap and midcap combination
Increase SIP by Rs. 1,000 every year
Home Loan EMI Management Tips
Your home loan EMI is ongoing for 25 years.
Do not focus on prepayment now.
Use money to create better return in SIPs.
Don’t use emergency fund to prepay
Don’t stop SIP to pay more EMI
Keep good credit score by paying EMI on time
Later, when salary grows, do prepayment in chunks
If interest rate is above 9%, consider balance transfer after 2 years.
Avoid These Common Mistakes
Don’t invest in LIC or ULIPs
Don’t put all savings in FD
Don’t skip health insurance
Don’t use credit card for regular expenses
Don’t rely on office group term insurance
Don’t try stock market without experience
Don’t keep money in savings account
Avoiding mistakes is as important as doing right investments.
Tax Rules to Keep in Mind
Equity mutual funds have new tax rules.
Long term capital gains above Rs. 1.25 lakh are taxed at 12.5%
Short term capital gains are taxed at 20%
For debt mutual funds, all gains taxed as per your slab
So, don’t do frequent switching.
Hold long term to save tax.
Track Your Progress Yearly
Once you start SIPs and insurance:
Review SIP performance every 12 months
Increase SIP amount with salary hikes
Rebalance between large, mid, and flexi caps
Track loan statements and insurance status
File tax returns correctly to claim benefits
Use a Certified Financial Planner to guide every year.
Final Insights
You are starting your financial journey correctly.
Start by securing your family through term insurance.
Then protect your life with an emergency fund.
Next, build long-term wealth through SIP.
Avoid risky products and low-return instruments.
Use active mutual funds through regular plans.
Take support from a Certified Financial Planner.
Avoid investing in direct plans without guidance.
Stay consistent and patient.
Your wealth will grow strongly over time.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment