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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 04, 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 - Jul 11, 2025Hindi

I am 26 years old and I am earning 12lpa. Considering the expenses I can save 50k per month and I am unmarried, Need to purchase own house(for parents) and a car. My father will get retired in 2 years and he won't get any pension. he is having pf amount of 18 lakhs and other savings(from me and my father) we have 10 lakhs. Later when my father get retired I need to support my parents(expenses-30k) and need to take care about my future as well.Please suggest me how should I invest and where should I invest to achieve my above interest.

Ans: You are already doing an excellent job by thinking early and planning well.

At 26, you’re laying the right foundation for long-term wealth.

Let’s create a simple and strategic path to help you invest and manage wisely.

» Monthly Cash Flow and Savings

– Income is Rs. 1 lakh per month (approx).

– Savings capacity is Rs. 50,000 monthly. That is very healthy.

– Rs. 30,000 future monthly support to parents is expected after 2 years.

– This gives a 2-year window to build a buffer for that responsibility.

» Immediate Goals Assessment

– Buying a house for your parents.

– Buying a car (can be a mid-term goal).

– Taking care of your parents’ monthly needs after 2 years.

– Your own future retirement and financial security.

We will now look at each goal one by one with practical action steps.

» Emergency Fund Setup

– First priority is to create an emergency fund of Rs. 3 to 5 lakh.

– Keep it in a liquid mutual fund or bank sweep-in FD.

– This gives peace of mind for job loss or urgent expenses.

– Do not invest this money in risky options.

» Support for Parents After Retirement

– Your father’s PF corpus is Rs. 18 lakh.

– He has another Rs. 10 lakh as savings from both of you.

– Total corpus = Rs. 28 lakh. Don’t let this sit idle in savings.

– Invest this amount in a conservative hybrid mutual fund (regular plan, via MFD-CFP).

– Use SWP option to generate Rs. 25K to 30K per month starting 2 years later.

– This will reduce the load on your income in future.

– Also keep Rs. 2 lakh separately in a savings account for their emergencies.

» Buying a House for Parents

– This is an emotional goal. You may buy or build.

– But buying early can block your savings.

– Instead, invest now for 5 to 7 years to create a bigger corpus.

– Start SIP of Rs. 20K per month in multi-cap and large-mid cap mutual funds.

– Use regular plan through a CFP-linked MFD.

– Avoid index funds. They are unmanaged, cannot protect you during market crash.

– Active funds, though costlier, give better risk-managed growth.

– After 6 to 7 years, use the corpus for down payment or buy outright.

» Car Purchase Planning

– If the car is needed in 2 to 3 years, do not invest in equity.

– Use a recurring deposit or short-duration debt fund for this.

– Invest Rs. 10K per month towards this goal.

– Target a practical budget (Rs. 6 to 8 lakh car).

– Prefer buying with partial loan to keep cash flow flexible.

» Retirement and Long-Term Wealth Creation

– This should be your highest focus besides family needs.

– Start SIP of Rs. 15K per month in aggressive hybrid and flexi-cap funds.

– You can also add Rs. 5K per month in a small-cap fund for growth.

– Do not invest in direct plans. Regular plans via MFD-CFP provide guidance and monitoring.

– Rebalancing, review and emotional control is handled better.

– Your own retirement will become smoother with early compounding.

– At age 26, 30+ years of compounding will create massive wealth.

» Investment Mix Suggestion (Monthly Rs. 50K Allocation)

– Rs. 20K – House for parents (multi-cap + large-mid cap)

– Rs. 15K – Retirement corpus (aggressive hybrid + flexi-cap)

– Rs. 5K – Small-cap (only if you can stay invested for 10+ years)

– Rs. 10K – Car (RD or short-term debt fund)

» Tax Planning and New Regime Consideration

– You fall under 30% tax bracket (including cess).

– Avoid any traditional insurance or ULIP products for tax savings.

– Do not mix insurance and investment.

– Choose pure term insurance for Rs. 1 crore at least (if not done already).

– Buy health insurance for yourself and your parents.

– Don’t rely only on company policy. Independent cover is a must.

– Consider Rs. 5 lakh base + Rs. 25 lakh super top-up plan.

» Insurance and Risk Management

– Term life cover is needed if you support dependents.

– Get cover of 15-20 times your income (Rs. 1.5 to 2 crore).

– Premium will be low as you are young.

– Buy from established insurer, don’t go for features or returns.

– Choose regular, non-return of premium option.

– Health insurance is non-negotiable. Start it now before any pre-conditions arise.

» Keep Goals and SIPs Separate

– Do not mix all goals in one investment.

– Use separate SIPs for each goal. Tag them properly.

– This helps track and avoids dipping into long-term funds for short-term needs.

» Avoid These Common Mistakes

– Avoid buying a house early if not urgent. It kills flexibility.

– Don’t put money in traditional LIC plans. They give low returns.

– Don’t invest directly in mutual funds without MFD-CFP advice.

– Don’t stop SIPs during market correction. That’s when you gain more units.

– Avoid FDs beyond 1 to 2 years unless goal is very near.

– Don’t buy endowment or ULIP policies. Returns are very poor.

» Future Responsibility Planning

– After 2 years, your expenses will rise by Rs. 30K/month.

– Begin reducing expenses 6 months before your father’s retirement.

– Build up a liquid buffer of Rs. 2 to 3 lakh to handle the transition.

– Your SIPs can be reduced if income gets tight. Flexibility is key.

– Review the situation annually and realign your SIPs and spending.

» Other Habits to Develop

– Track monthly cash flows using a simple Excel sheet.

– Review investments every 6 months with your MFD or CFP.

– Avoid social pressure-based purchases (like car upgrades or expensive gadgets).

– Focus on skill improvement to grow your income steadily.

– Set alerts to pay credit card bills fully and on time.

– Don’t take personal loans for vacations or gifts.

» Final Insights

– You are starting at the perfect age. That’s your biggest advantage.

– Keep your lifestyle controlled. Increase savings as income grows.

– You can easily balance parental support and personal goals if you follow a plan.

– Equity SIPs are your wealth engines. Direct equity is not needed now.

– Use professional guidance through regular plans with a Certified Financial Planner.

– Stay away from index funds. They blindly follow market without safety or smart decisions.

– Let active fund managers manage your money dynamically and protect during falls.

– Over time, you’ll not only achieve all goals, but also enjoy financial freedom.

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

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