Hi, I am 32 years old with a salary of 50K per month. Currently I have 7 lacs of personal loan outstanding, 4 lacs in MF, 70k in PPF , 1.5L in FDs and 1 lacs in stocks. I have 1 kid 2.5 years old. How should I plan for kid's education, retirement and future investments
Ans: At 32, you’ve taken a good step by investing early. Having started SIPs and other investments shows financial maturity. With right course correction, you can build a strong and confident future.
Let’s evaluate your position and provide a holistic strategy.
» Your Current Financial Snapshot
– Salary: Rs 50,000 per month
– Outstanding personal loan: Rs 7 lakh
– Mutual Funds: Rs 4 lakh
– Stocks: Rs 1 lakh
– PPF: Rs 70,000
– Fixed Deposits: Rs 1.5 lakh
– Kid: 2.5 years old
» Understanding Your Cash Flow Constraints
– A personal loan is high cost. It can strain your monthly savings.
– EMI could be consuming a big share of your Rs 50,000 salary.
– Emergency savings are limited. PPF and FD are not liquid enough.
– With a young child, education expenses will grow fast.
– Future needs like retirement may get compromised without structured investing.
» Immediate Actions to Regain Control
– Prioritise clearing your personal loan in 24 months.
– Avoid new loans or credit card spends during this period.
– Put a pause on fresh equity investments till loan EMI is cleared.
– Channel all bonuses, gifts, or any side income into loan repayment.
– Create a tight monthly budget. Keep Rs 5,000 minimum as surplus.
» Emergency Fund Should Be Strengthened
– Your emergency fund must equal 6 months’ expenses.
– Aim for Rs 3–3.5 lakh in liquid form over time.
– FD of Rs 1.5 lakh is a start. Add to this monthly from your savings.
– Avoid breaking PPF. Let it grow long-term.
» Rebuild Investments After Loan Closure
Once the personal loan is closed, follow a fresh 3-part strategy:
Short-term – for liquidity and small goals (next 1–3 years)
– Maintain Rs 3–4 lakh in FD or liquid mutual funds.
– This will help manage school fees, medical costs, or urgent repairs.
Medium-term – for child education (next 10–15 years)
– Resume SIPs in mutual funds.
– Choose balanced and child-focused diversified schemes.
– Invest Rs 7,000–8,000 monthly if possible.
– Review performance every 2 years with your MFD/CFP.
Long-term – for retirement (after 55–60 years)
– Start monthly SIP of Rs 5,000–Rs 7,000 post loan closure.
– Choose diversified actively managed funds.
– Equity helps in beating inflation over 15–25 years.
» Avoid Direct Plans – Go with Regular Plans Through MFDs with CFP Credential
– Direct funds lack personalised guidance.
– Wrong schemes may erode returns in volatile times.
– Regular plans allow monitoring, reviews, and expert suggestions.
– MFDs with CFP background guide in tax planning and risk adjustments.
– Long-term investing needs hand-holding, not DIY guesswork.
» Disadvantages of Index Funds – Not Meant for Your Stage
– Index funds don’t protect from market falls.
– Returns follow average index moves – no downside protection.
– They lack active management in volatile markets.
– You need portfolio built by professionals at your income stage.
– Focus should be active funds with a track record of outperformance.
» PPF – Use it Strategically for Stability
– Continue yearly contributions.
– It helps build retirement safety net.
– Tax-free returns add stability to your risk-based MF portfolio.
– Don’t treat it as emergency fund or short-term tool.
» Stocks – Keep Exposure Limited and Informed
– Rs 1 lakh is fine, but don’t increase without research.
– Avoid speculation. Use stocks only for long-term goals.
– Don’t treat it as a SIP replacement.
– Direct stocks need time and skill – not ideal with your current income level.
» Child Education – How to Prepare Holistically
– Start a separate SIP for this goal.
– For example, Rs 8,000/month for 15 years can build Rs 30–35 lakh.
– Use mix of multi-cap, flexi-cap, and child-targeted mutual funds.
– Don’t invest in insurance-cum-investment plans for child education.
– Take a term insurance separately for protection.
» Avoid Investment-Cum-Insurance Plans
– They give poor returns.
– Lock your money for long durations.
– Not ideal for education or retirement goals.
– Keep insurance and investment separate.
» Life and Health Insurance is Must
– Buy a term plan of at least Rs 50 lakh for now.
– Coverage should be 12–15 times your annual income.
– As income grows, raise the coverage later.
– Get family floater health insurance of at least Rs 10 lakh.
– It protects savings from medical shocks.
» Tax Planning – Use All Available Sections
– Invest Rs 1.5 lakh in PPF or ELSS under 80C.
– Use health insurance under 80D.
– Avoid insurance policies bought just to save tax.
– Instead, use SIPs that also help in long-term wealth creation.
» Build SIP Discipline After Loan is Closed
– Start SIPs gradually as EMI burden ends.
– First increase emergency fund to target.
– Then, allocate for education and retirement SIPs.
– Stick with SIPs through ups and downs.
– Avoid stopping SIPs due to market correction.
» Avoid These Common Pitfalls
– Don’t chase hot stock tips or new fund launches.
– Don’t mix insurance with investment.
– Don’t use credit cards to invest.
– Don’t follow advice from unregistered YouTube channels.
– Don’t delay investments once you’re debt-free.
» Track, Review and Adjust Yearly
– Set a simple review every 6–12 months.
– Track SIP growth, MF performance, and insurance sufficiency.
– Rebalance portfolio when needed.
– Get guidance from a Certified Financial Planner for better results.
– Small corrections early can avoid big errors later.
» Build a Mindset of Long-Term Thinking
– Your goals are 10–25 years away.
– Equity will reward discipline and patience.
– Avoid over-checking NAVs and market moves.
– Stay focused on your child’s future and your retirement peace.
» Finally
– You’re still young and can fix the gaps.
– Clearing debt must come before wealth building.
– Step-by-step investing with goal clarity brings powerful results.
– Use support of experts and stay consistent.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment