I have taken home loan of 42L in the year 2017 (EMI 33000/Month) for 25Years (300 Months). Due to the continuous increase in the Interest rate, the remaining tenure is keep on increasing and maintaining in 300+ months even after paying the EMI for more than 7 years and
Home Loan Principal only 4.5 Lakh is reduced.
I am a private company employee of 35 years earning nearly 1Lakh per month and able to save around 15,000 rupees monthly. And with the 15000 monthly savings, i started the following investment/plans from this month
1. I am investing 5000 for Suganya Samriddhi Scheme for my daughter (5years Old).
2. I am contributing 5000 to VPF (My age 35). My existing EPF balance is 5.5Lakh and monthly PF is 4900 deducted.
3. I am making prepayment of 5000 to Home loan principal in addition to monthly EMI.
Also i have a Fixed Deposit of 5Lakhs maturing in this year end.
I am looking for a expert advise whether the above investment plan is good enough to get benefit in the longer run or any other better safe investment option is available.
Please note my year on year annual increment is very less approximately 5000 only.
Ans: Optimizing Your Financial Strategy for Long-Term Benefits
Understanding Your Current Financial Situation
As a 35-year-old private company employee, you're navigating the challenges of a home loan and striving to secure your family's financial future. Despite constraints like rising interest rates and limited annual increments, your prudent savings habits and investment efforts reflect a commitment to financial stability.
Evaluating Your Investment Portfolio
Your current investment strategy, including contributions to the Sukanya Samriddhi Scheme for your daughter, VPF for retirement, and prepayments towards your home loan, demonstrates a balanced approach to wealth accumulation and debt reduction. However, let's assess if there are opportunities for optimization.
Analyzing the Sukanya Samriddhi Scheme
Investing in the Sukanya Samriddhi Scheme for your daughter's future education and marriage expenses is a commendable decision. The scheme offers tax benefits and competitive interest rates, providing a secure investment avenue for her long-term financial needs.
Assessing VPF Contributions for Retirement
Contributing to the Voluntary Provident Fund (VPF) alongside your EPF is a wise move to bolster your retirement savings. Given your limited annual increments, VPF offers a disciplined way to accumulate a substantial corpus for your retirement years, leveraging the power of compounding.
Reviewing Home Loan Prepayments
Making additional prepayments towards your home loan principal accelerates debt reduction and can lead to substantial interest savings over the loan tenure. However, given the low interest rates on home loans compared to potential investment returns, it's essential to strike a balance between debt repayment and wealth creation.
Leveraging Fixed Deposit Maturity
Upon maturity of your Fixed Deposit of 5 lakhs, consider reinvesting the proceeds strategically. Evaluate investment options that offer a balance of safety, liquidity, and growth potential to optimize returns and diversify your portfolio.
Exploring Investment Opportunities
Given your risk appetite and financial goals, explore avenues such as mutual funds, systematic investment plans (SIPs), or diversified equity portfolios for long-term wealth creation. Consult with a Certified Financial Planner (CFP) to devise a customized investment strategy aligned with your objectives and risk tolerance.
Conclusion
Your proactive approach to savings and investments demonstrates a sound financial mindset. By optimizing your investment portfolio, exploring growth-oriented opportunities, and seeking professional guidance, you can enhance your financial well-being and secure a brighter future for yourself and your family.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in