Hi, I'm 38 yrs old. Currently my salary is 1.1 lakhs & expenses is 1 lakh including unnecessary loan emi's which will end in another 4 yrs. No investments. Expected to work for another 15 yrs. How much to save more for peacefully retirement. 2 - Kids education & marriage. No own home. Monthly expenses will be 50000 without loan emis

Ans: Navigating the complex landscape of finances, especially with looming expenses and future uncertainties, can feel like trying to solve a puzzle without all the pieces. It's a challenge many of us face, and it's understandable to seek guidance on charting a path towards financial security and peace of mind.

1. Current Financial Snapshot:
You and your husband are in your late 30s and early 40s, respectively, with a combined annual income of Rs 20,64,000. Here's a breakdown of your financial standing:

Income and Savings:
Annual savings of Rs 6 lakhs allocated towards various financial instruments such as mutual funds, insurance policies, and savings schemes.

Annual expenses totaling Rs 50,000 for essential insurances (medical, term, car) and Rs 6,00,000 for day-to-day living expenses.
Loan Obligations:

Existing loan of Rs 17,24,112, including interests, being paid annually up to Rs 4,31,000 until Feb'28.
Planning to purchase a new car next year, expected cost up to Rs 14-15 lakhs, which will likely require additional financing.

2. Planning for Retirement and Future Security:
With retirement on the horizon and the desire to secure your future, it's essential to map out a robust savings strategy:

Retirement Goals:
Discuss and define your retirement aspirations with your husband, envisioning your desired lifestyle and financial needs during retirement.

Savings Strategy:
Determine an ideal savings rate that balances current expenses with long-term goals, including retirement, your child's education, and potential healthcare costs.

Investment Mix:
Explore a diversified portfolio comprising mutual funds, insurance policies, and government-backed savings schemes, tailored to your risk tolerance and time horizon.

3. Addressing the Car Purchase:
The decision to replace your expiring car involves careful consideration, especially given your existing financial commitments:

Financial Implications:
Evaluate all options for financing the new car, considering potential down payments and minimizing loan burden to maintain financial flexibility.

Alternative Solutions:
Explore alternative transportation options or delaying the purchase until you've built more financial reserves to lessen the impact on your budget.

4. Building an Emergency Fund:
Establishing an emergency fund is crucial for weathering unexpected financial challenges:

Setting Savings Goals:
Determine specific savings goals for your emergency fund, considering factors like living expenses, loan obligations, and potential emergencies.

Automating Contributions:
Consider automating contributions to your emergency fund to make saving more manageable and ensure consistent progress towards your goal.

Conclusion:
While navigating the complexities of financial planning can be daunting, remember that you're not alone on this journey. By carefully managing your income, expenses, and savings, and seeking guidance from a Certified Financial Planner, you're taking proactive steps towards securing your future and achieving your long-term goals. Keep focusing on your priorities, stay adaptable to change, and trust in the process as you work towards financial freedom and peace of mind.

Ans: Hi Mathew,

Thank you for reaching out for financial advice. It's great that you're already allocating a portion of your income towards savings and investments. Let's delve into how you can optimize your finances to achieve your goals of purchasing a car, buying a house, planning for a family, and managing other expenses effectively.

Current Financial Situation:
Income Allocation:
Sending home: ?25,000
Charity/tithe: ?10,000
Rent: ?13,000
Credit card bills: ?12,000
Loans and EMIs: ?15,000
MF investment: ?3,000
Monthly savings: ?15,000
Internet bills and Recharges: ?1,500
Maximizing Savings and Investments:
Budget Review:

Analyze your expenses to identify areas where you can cut back. Consider if there are any non-essential expenditures that can be reduced or eliminated.
Increase Monthly Savings:

Aim to increase your monthly savings by allocating a higher percentage of your income towards savings and investments. You may consider gradually increasing the amount you set aside each month.
Reduce Credit Card Expenses:

Try to minimize credit card usage to avoid accumulating high bills. Create a budget for discretionary spending and stick to it to prevent overspending.
Explore Additional Income Streams:

Look for opportunities to supplement your current income. This could involve taking up freelance work, starting a side business, or exploring passive income streams such as investments in dividend-paying stocks or rental properties.
Financial Goals Planning:
Car Purchase:

Determine the timeframe and budget for purchasing a car. Start setting aside a portion of your savings specifically for this goal. Consider factors such as down payment, monthly EMIs (if applicable), and ongoing maintenance costs.
House Purchase:

Begin planning for buying a house by setting a target amount for the down payment and estimating your affordability for a home loan. Allocate a portion of your savings towards building your house fund.
Family Planning:

Factor in future expenses related to family planning, such as marriage and children's education. Start setting aside funds in advance to meet these financial obligations.
Investment Strategy:
Review Portfolio Allocation:

Assess your current investment portfolio and ensure it aligns with your financial goals, risk tolerance, and investment horizon. Consider diversifying your investments across different asset classes for optimal risk management.
Long-Term Investing:

Focus on long-term wealth accumulation through disciplined investing in mutual funds, stocks, and other financial instruments. Regularly review your investment strategy and make adjustments as necessary.
Emergency Fund:

Build an emergency fund to cover unforeseen expenses or financial emergencies. Aim to have at least 3-6 months' worth of living expenses saved in a liquid, accessible account.
Seek Professional Advice:
Consult a Financial Planner:
Consider seeking guidance from a Certified Financial Planner to develop a comprehensive financial plan tailored to your specific goals and circumstances. A professional advisor can provide personalized recommendations and help you navigate complex financial decisions.
By implementing these strategies and maintaining financial discipline, you can work towards achieving your short-term and long-term financial objectives while ensuring a secure and prosperous future.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: You are 37 years old with a stable income of Rs. 1.10 lakh per month.

Monthly expenses are Rs. 35,000, leaving Rs. 75,000 as surplus.

There are no savings currently, which means you need to start from scratch.

Retirement at age 55 leaves 18 years for financial planning.

Set Your Retirement Goal
Decide your retirement corpus based on lifestyle needs.

Consider inflation and plan for 30+ years post-retirement.

Assume monthly expenses of Rs. 35,000 today. Adjust them for inflation.

A Certified Financial Planner can help calculate your retirement corpus.

Determine Savings Target
Start saving at least 50-60% of your surplus.

Target saving Rs. 50,000 to Rs. 60,000 monthly consistently.

Increase savings as your income grows in the future.

Early and disciplined saving will ease the burden later.

Create a Diversified Investment Portfolio
Equity Mutual Funds
Equity mutual funds offer long-term growth.

Invest 70% of savings here for higher returns.

Choose actively managed funds for wealth creation.

Invest regularly through monthly SIPs.

Debt Mutual Funds
Allocate 20% of savings to debt mutual funds.

These funds ensure stability and lower risk.

Use them for medium-term goals and rebalancing.

Public Provident Fund (PPF)
Invest 10% of savings in PPF for tax-free returns.

PPF is a secure, long-term investment option.

Regular Review and Rebalancing
Review your portfolio yearly to track progress.

Rebalance investments to maintain equity and debt ratio.

Adjust for changing income, expenses, and market conditions.

Emergency Fund and Insurance
Build an emergency fund with 6 months of expenses.

Keep this fund in liquid instruments like FDs or savings accounts.

Get adequate health and term insurance coverage.

Avoid Common Mistakes
Do not invest in real estate for retirement planning.

Avoid ULIPs or investment-cum-insurance policies.

Focus on investments aligned with your goals.

Tax Efficiency in Investments
Use tax-saving instruments under Section 80C.

Stay updated on mutual fund capital gains taxation.

Use the guidance of a Certified Financial Planner for tax planning.

Final Insights
Start saving Rs. 50,000-60,000 monthly immediately.

Invest in equity, debt, and PPF for diversification.

Review and adjust your plan regularly for better results.

Stay disciplined and focus on long-term goals for retirement at 55.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment