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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jun 29, 2025Hindi

I'm 36y old and monthly income is 86k in-hand. Monthly investment is 21SIP, 2500 LIC and expenses as follows 10k rent, 10k food. Now I m planning to buy flat of 45lakh. My question is how can I do better financial planning after start of homeloan

Ans: ? Current Income and Expenses – Understanding the Base
– Your take-home income is Rs?86,000 monthly.
– You invest via 21 SIPs (assuming Rs 21,000).
– LIC premium is Rs?2,500 per month.
– Rent is Rs?10,000 and food costs Rs?10,000.
– That leaves about Rs?42,500 monthly for all other needs or savings.

Your disciplined saving habit is commendable. You've already created structured financial discipline.

? Upcoming Home Loan Impact – Liabilities to Adjust
– You plan to buy a flat costing Rs?45 lakh.
– Typically, you may borrow around Rs?36–40 lakh.
– At current rates, EMI could be Rs?30,000–35,000 per month.
– EMI will reduce your free cash flow.
– You must align new EMI burden with your current budget.
– Avoid stretching EMI beyond 35% of in-hand income.
– Post–home loan, your spare monthly cash might drop to Rs?8–12K.
– Hence planning before taking this loan is vital.

? Pre?Loan Preparations – Strategy Before EMI Starts
– Build an emergency buffer of Rs?1.5–2 lakh (~3–4 months expenses).
– Keep this in liquid funds or ultra-short debt funds.
– Avoid tying it up in FD or illiquid options.
– You already have LIC cover; ensure your policy is pure term.
– If it's an insurance–cum–investment plan, consider surrender and switch to SIPs.
– Part of your current LIC spend could shift to boosting your emergency fund.

? Investment Adjustments Post?Home Loan – What to Prioritise
– After EMI starts, your in-hand surplus diminishes.
– Continue minimum SIPs to maintain habit—say Rs?10–12K.
– Focus on paying EMIs and building safety buffer in first 6–12 months.
– Once buffered, gradually scale up your SIPs to previous levels.
– This protects your goals and keeps investment discipline intact.

? Mutual Funds – Core Wealth Creators
– Equity mutual funds should form the growth engine.
– Actively managed regular funds are preferable.
– They help in market corrections with tactical adjustments.
– Index funds lack this flexibility and manager insight.
– Direct funds may look cheaper but lack advisor support.
– Through a Certified MFD with CFP, you get regular reviews and counselling.
– Start with 2–3 diversified equity funds—large-cap, flexi/multi-cap.
– Use monthly SIPs of about Rs?10K initially, scaling up to Rs?20K later.
– This tiered investment helps balance liquidity and long-term growth.

? Debt Funds and Liquid Instruments – Stability Post?Loan
– Maintain your emergency corpus in liquid or ultra-short debt funds.
– Do not break them for EMIs or lifestyle.
– After that, keep some in low-duration debt funds.
– These support upcoming goals or unforeseen needs.
– PG, amenity repairs, child education or minor lump sum needs may arise.

? Child Goals and Long?Term Planning – Future Security
– If you plan to have children, education funding must be an early focus.
– For a child born soon after house purchase, 15–20 years are available.
– Invest via separate SIPs from month 13–18 post?loan.
– Start with Rs?5K monthly and escalate annually.
– Use diversified equity funds aligned with goal horizon.
– This ensures purpose-driven investing without affecting day-to-day finance.

? Insurance Portfolio – Safety and Clarity
– Your LIC premium must be reviewed.
– If it’s an endowment or ULIP, it's sub-optimal.
– Better to surrender and redirect funds.
– Invest in pure term insurance of at least 10–12 times annual income.
– Ensure family health insurance of Rs?10–15 lakh floater.
– These cover your spouse and future children.
– Keep health policy active before EMI begins.

? Building a Financial Roadmap – 5?year and 10?year Picture
– Years 1–2: Build emergency fund, settle into EMI and income flows.
– Continue minimal SIPs + LIC cancel/replace.
– Years 3–5: Resume boosting SIPs to Rs?20K monthly.
– Start child education SIPs.
– Invest in balanced funds as shield against equity dips.
– Years 6–10: Increase SIPs further to Rs?30K–40K monthly.
– Child goal nearing; keep investments aligned.
– Review and rebalance yearly with professional input.

? Home Equity Strategy – Avoiding Overcommitment
– Avoid over-leveraging with high EMI commitment.
– Keep EMI below Rs?35–36K monthly.
– Maintain liquidity cushion even after EMI.
– Postpone discretionary expenses until financial base is strong.
– Avoid expensive renovations or luxury upgrades initially.

? Tax Efficiency – Maximising Benefits
– Use home loan principal and interest for tax deduction.
– Up to Rs?1.5 lakh in principal and Rs?2 lakh interest allowed.
– Make full use of Section 80C and 24(b).
– Use ELSS mutual fund SIPs to optimise tax outflow.
– Equity ELSS gives tax benefit and compounding potential.
– Monitor capital gains; long-term MF gains taxed at 12.5% over Rs?1.25 lakh.
– Keep switch/redemption activity minimal to avoid STCG and LTCG triggers.

? Asset Allocation – Strategic Mix for Wealth Growth
– Ideal mix: equity?60%, debt?30%, gold?10%.
– Equity via mutual funds.
– Debt via liquid, low-duration funds, PF contributions.
– Gold via ETFs or sovereign gold bonds.
– Your gold SIP creates portfolio hedging over time.
– Rebalance yearly to maintain desired allocation.

? Monitoring and Review – Yearly Checkpoints
– Track fund performance every 6–12 months.
– Use ULIP-free, actively managed regular funds for guided updates.
– Review EMI impacts on expenses and investment regularly.
– Adjust SIP top-ups or slowdowns depending on income changes.
– Monitor insurance policy again after child birth for update.

? Risks and Contingencies – Preparedness
– Job loss or transfer is possible.
– Maintain buffer of 4–6 months of EMI plus living.
– Income disruption should not derail goals.
– Major events like medical emergencies need quick funding.
– Liquid buffers help cushion such episodes without hurting investments.
– Insurance framework mitigates long-term financial shock.

? Planning to Buy Flat – Final Considerations
– Do not stretch EMI beyond sustainable level.
– Keep a buffer of Rs?10k monthly surplus after all outflows.
– Emergency fund of Rs?1.5–2 lakh must be in place before EMI date.
– After EMI starts, maintain SIP discipline rigidly.
– Work closely with certified MFD with CFP for periodic captains.
– Their guidance will keep tracking consistent and avoid mistakes.

? Finally
– Home loan is manageable with proper planning.
– Emergency buffer must be in place early.
– IPC while continuing SIPs protects two goals.
– Equity SIPs should be regular actively managed funds.
– LIC should be replaced by more efficient insurance and investing.
– Asset mix must be tracked yearly.
– Child education goals must start later post-buffer build.
– Tax efficiency leverages deductions and ELSS.
– With discipline and professional inputs, financial health will grow steadily.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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