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26-Year-Old Earning 70k With 25 Lakhs Savings: How to Buy a 50 Lakh Flat, Car, and Build an Emergency Fund Before 30 for Marriage?

Ramalingam

Ramalingam Kalirajan  |7953 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 2024

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 02, 2024Hindi
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I am 26 years old, earning around 70k per month. I have 25 lakhs flat from my parents but they have no earning. so I want to buy a flat worth 50 lakhs at least and a car as well as build an emergency fund. I want to do everything before I turn 30 so that I can get married. How shall I plan all these?

Ans: Current Financial Overview
Age: 26 years old
Monthly Income: Rs. 70,000
Assets: Rs. 25 lakhs flat from parents
Parents' Earnings: None
Goals Before Age 30
Buy a flat worth Rs. 50 lakhs
Buy a car
Build an emergency fund
Prepare for marriage
Financial Planning Strategy
Emergency Fund
Recommendation: Start by building an emergency fund.

Amount: 6 months of expenses (approximately Rs. 3-4 lakhs)

Investment: Put this amount in a liquid fund or high-interest savings account.

Reason: Provides a safety net for unexpected expenses.

Buying a Flat
Current Flat: Rs. 25 lakhs

Target Flat: Rs. 50 lakhs

Difference: Rs. 25 lakhs

Recommendation: Take a home loan for Rs. 25 lakhs.

EMI Calculation: With a tenure of 20 years and an interest rate of 7%, your EMI will be around Rs. 19,400.

Reason: Leverages your income to afford the flat.

Buying a Car
Budget: Rs. 7-8 lakhs for a mid-range car.

Recommendation: Opt for a car loan or save for the next two years.

Down Payment: Save Rs. 2-3 lakhs for the down payment.

Loan Amount: Rs. 5-6 lakhs with an EMI of around Rs. 10,000 for 5 years.

Reason: Manageable EMIs without straining your finances.

Monthly Budget Allocation
Emergency Fund: Save Rs. 15,000 per month until you reach Rs. 4 lakhs.

Home Loan EMI: Rs. 19,400 per month.

Car Loan EMI: Rs. 10,000 per month.

Living Expenses: Rs. 20,000 per month.

Savings/Investments: Rs. 5,600 per month.

Investment Strategy
Short-term Savings: Use a high-interest savings account or liquid funds for the emergency fund.

Medium-term Goals: Consider recurring deposits or debt mutual funds for saving towards the car down payment.

Long-term Investments: Invest in SIPs in mutual funds for wealth creation and future needs like marriage expenses.

Final Insights
Emergency Fund: Build it first, Rs. 15,000 per month.
Home Loan: Take Rs. 25 lakhs loan, EMI around Rs. 19,400.
Car Loan: Plan for Rs. 10,000 EMI, save for the down payment.
Budgeting: Allocate your income to manage loans, expenses, and savings.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |7953 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 18, 2024

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I have 41yrs old and earning 1.8 lacs per month,, married 14years ago two kids one daughter Nd son,I have home loan,own flat and bought one flat by paid cash flat worth 75lac and another plot 30lacs have 5lacs health insurance,2cr term insurance How do I plan my financial plan please suggest me
Ans: Current Financial Overview
Age: 41 years
Monthly Income: Rs 1.8 lakhs
Family: Married with two children
Assets:
Own flat (home loan)
Flat worth Rs 75 lakhs (paid cash)
Plot worth Rs 30 lakhs
Insurance:
Health Insurance: Rs 5 lakhs
Term Insurance: Rs 2 crores
Appreciating Your Efforts
You have made good progress with property investments and securing your family's future with health and term insurance.

Financial Goals
Children’s Education and Marriage
Retirement Planning
Loan Repayment
Emergency Fund
Investment Strategy
Children's Education and Marriage
Systematic Investment Plans (SIPs):

Start SIPs in diversified mutual funds.
Allocate specific SIPs for education and marriage goals.
Recurring Deposits:

Open RDs for medium-term goals.
Ensure liquidity for urgent needs.
Retirement Planning
Public Provident Fund (PPF):

Maximize annual contribution to PPF for tax benefits and long-term savings.
National Pension System (NPS):

Invest in NPS for an additional retirement corpus and tax benefits.
Mutual Funds:

Invest in a mix of equity and debt funds.
Consider balanced advantage funds for stability and growth.
Loan Repayment
Home Loan:
Prioritize paying off the home loan.
Increase EMI payments if possible to reduce tenure and interest.
Emergency Fund
Maintain Liquidity:
Keep at least 6 months of expenses in a savings account or liquid fund.
Asset Allocation
Equity:

Invest 60% in diversified mutual funds.
Allocate towards large-cap, mid-cap, and small-cap funds.
Debt:

Invest 30% in PPF, NPS, and debt mutual funds.
Ensure stable returns with minimal risk.
Gold and Bonds:

Allocate 10% to gold bonds and other safe instruments.
Hedge against inflation and market volatility.
Insurance Review
Health Insurance:

Consider increasing coverage for comprehensive protection.
Include family members under the same plan.
Term Insurance:

Ensure the term insurance amount is adequate.
Review periodically to match with life stage changes.
Financial Discipline
Budgeting:

Track monthly expenses diligently.
Cut down on unnecessary expenditures.
Regular Review:

Review portfolio quarterly.
Rebalance based on performance and goals.
Final Insights
You are on a solid financial footing. Prioritize children’s future, retirement, and loan repayment. Ensure a balanced portfolio for growth and stability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |7953 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 16, 2025

Asked by Anonymous - Jan 14, 2025Hindi
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Hi, I am 36 years old earning 1 lac per month. I am unmarried and has recently bought a house with 55 lacs loan for 25 years. I plan to get married this year. I wonder how should I do financial planning as I can't be working till the age of 60. Please suggest.
Ans: You have made a significant financial decision by purchasing a house with a Rs 55 lakh loan. At 36, you earn Rs 1 lakh per month and plan to marry soon. Let us structure a robust financial plan to ensure stability and early retirement without working until 60.

1. Assess Current Financial Situation
Understanding your financial commitments is the first step.

Your home loan EMI will form a major part of your monthly expenses.

Calculate your fixed expenses like loan EMIs, utilities, and essential needs.

Identify discretionary spending and aim to save 30–40% of your income.

2. Prioritise Emergency Fund Creation
An emergency fund ensures financial security during unexpected events.

Set aside 6–12 months’ expenses in a liquid fund.

Keep this fund accessible but separate from regular savings.

This fund can handle unexpected expenses like medical emergencies or job loss.

3. Clear High-Interest Debt First
Your home loan is long-term and tax-efficient, so focus on other debts if any.

Repay credit cards and personal loans quickly as they have high interest.

Avoid unnecessary borrowing for lifestyle expenses.

4. Plan for Marriage Expenses
Marriages often involve significant costs, so plan them wisely.

Allocate a specific budget for marriage-related expenses.

Avoid using savings for marriage; consider creating a short-term investment plan.

Discuss shared financial goals with your partner before planning expenses.

5. Home Loan Repayment Strategy
Reducing your home loan burden over time is essential.

Use salary hikes or bonuses to make part prepayments annually.

Prepayments reduce the interest burden and shorten the loan tenure.

Claim tax benefits on principal and interest under Sections 80C and 24(b).

6. Invest Wisely for Early Retirement
Building a corpus for early retirement requires disciplined investing.

Allocate a significant portion of savings to equity mutual funds for growth.

Use hybrid or balanced funds for moderate risk and stability.

Invest in debt mutual funds for stable returns and diversification.

7. Health and Life Insurance
Insurance protects your family from financial instability.

Buy adequate term insurance for life cover, considering your loan liability.

Opt for health insurance to cover medical expenses for you and your future spouse.

Avoid investment-cum-insurance policies like ULIPs as they offer low returns.

8. Retirement Corpus Estimation
You need a sizeable corpus to retire before 60 comfortably.

Factor in inflation and increasing expenses while planning the corpus.

Use systematic investment plans (SIPs) for long-term wealth creation.

Choose funds with consistent performance and invest through an MFD with CFP credentials.

9. Tax Planning and Savings
Tax efficiency is vital for increasing your disposable income.

Maximise deductions under Section 80C using EPF, PPF, or ELSS investments.

Claim home loan interest under Section 24(b) for tax benefits.

Avoid investing in products with lower post-tax returns.

10. Discuss Financial Goals with Your Spouse
Financial alignment with your spouse is critical.

Plan for joint expenses like home management and child education.

Discuss shared goals like retirement, travel, or higher education for children.

Create a joint financial plan to achieve these goals effectively.

11. Revisit and Rebalance Investments Regularly
Your financial goals and risk tolerance may evolve over time.

Review your investment portfolio annually with a Certified Financial Planner.

Rebalance your investments to maintain optimal asset allocation.

Adjust investments based on income changes, expenses, or major life events.

12. Avoid Unnecessary Financial Risks
Avoid high-risk investments as they could derail your plans.

Stay away from speculative stocks or volatile investments.

Avoid over-diversification in mutual funds, which dilutes returns.

Ensure investments align with your risk profile and time horizon.

Final Insights
Planning for early retirement is achievable with disciplined saving and investing.

Build a robust portfolio with a mix of equity, debt, and hybrid funds.

Reduce loan liabilities through prepayments and tax benefits.

Align your financial goals with your partner to ensure stability and security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |7953 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 13, 2025

Asked by Anonymous - Feb 13, 2025Hindi
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Why do Debt Funds offer lower returns as compared to Equity Mutual Funds?
Ans: Debt funds and equity mutual funds serve different purposes in an investor's portfolio. Debt funds offer stability and lower risk, while equity mutual funds focus on high growth with higher risk.

Below are the key reasons why debt funds provide lower returns than equity funds.

1. Nature of Underlying Investments
Debt funds invest in bonds, government securities, corporate debt, and fixed-income instruments.

These instruments provide fixed interest, leading to predictable but lower returns.

Equity mutual funds invest in company stocks, which have the potential for higher capital appreciation over time.

2. Risk-Return Tradeoff
Lower risk means lower return potential in debt funds.

Debt investments focus on preserving capital rather than aggressive growth.

Equities are volatile, but over the long term, they tend to generate higher returns.

3. Interest Rate Sensitivity
Debt fund returns depend on interest rate movements in the economy.

Rising interest rates reduce bond prices, lowering returns in debt funds.

Equity funds are less impacted by interest rate changes and benefit from economic growth.

4. Inflation-Adjusted Returns
Debt funds often fail to beat inflation in the long run.

Equity investments provide inflation-adjusted growth due to rising corporate earnings.

Holding equities for longer durations results in compounding benefits.

5. Growth Potential
Equities represent ownership in businesses that expand over time.

Business growth translates to higher share prices and higher returns.

Debt instruments provide fixed interest, which limits potential upside.

6. Tax Efficiency
Equity mutual funds enjoy lower long-term capital gains (LTCG) tax rates compared to debt funds.

Debt fund gains are taxed as per the investor’s income tax slab, reducing post-tax returns.

This tax treatment makes equities more attractive for long-term wealth creation.

7. Market Performance
During economic growth, companies generate higher profits, leading to higher equity returns.

Debt fund returns depend on interest rate cycles, making them less rewarding in growth periods.

Equities have historically outperformed debt over longer durations.

Finally
Debt funds provide safety and stability but offer lower returns.

Equity mutual funds outperform over time due to business expansion and compounding.

A well-balanced portfolio should include both debt and equity, based on financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

...Read more

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Harsh Bharwani  |75 Answers  |Ask -

Entrepreneurship Expert - Answered on Feb 13, 2025

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Sir I am a Engineer by profession snd working in Qatar. Same time i had Cost accountant Degree and passed out way back at 2009. After that no touch with Cost Accounts. Now i am 48 yrs and after few yrs i want to move back to India. But that time if want open a cost accounting firm, what would be the best move i can do to open the consulting firm?
Ans: Hello Mr. Heman,
Reestablishing your career in cost accounting and setting up a consulting firm in India requires careful planning. Start by updating your knowledge through ICAI’s continuing education programs, industry seminars, and professional courses to stay current with evolving regulations and industry practices. Reactivating your ICAI membership and obtaining a Certificate of Practice (CoP) is essential to offer consulting services legally. While still in Qatar, gaining practical exposure by offering freelance or part-time cost auditing or GST advisory services to Indian firms will help establish credibility.

Next, choose a suitable business structure - Sole Proprietorship, LLP, or Private Limited Company - based on your growth plans and compliance preferences. Register your firm with the Ministry of Corporate Affairs and obtain the necessary licenses. Conduct thorough market research to identify your target clients, understand industry needs, and define your service offerings, such as cost audits, financial consulting, and management advisory. A well-structured business plan with clear financial projections will help ensure long-term sustainability.

Investing in technology and infrastructure is crucial. Setting up a professional office, adopting modern accounting software, and leveraging cloud-based financial solutions will enhance efficiency. Building a strong professional network is equally important - reconnect with former colleagues, join industry associations, attend networking events, and establish a digital presence through a website and social media to attract clients.

Lastly, focus on compliance and quality assurance. Adhering to ICAI regulations, tax laws, and ethical standards is critical for maintaining credibility and trust. By systematically following these steps, you can successfully transition back into cost accounting and establish a reputable consulting firm in India, ensuring a stable and rewarding career.

...Read more

Milind

Milind Vadjikar  |1013 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Feb 13, 2025

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Can I change my plan from star FOH to Star Assure. In plan migration form What I write in PED column. my policy number was taken on 19 February 2021, in the first week of March 2021 suddenly my blood pressure increased, due to which the doctor asked me to undergo angiography. After that the doctor asked to do angioplasty immediately and thus on 18 March 2021 I got angioplasty done. Now I am completely healthy, since my illness occurred within 31 days of taking the policy, company agent told me that there is no provision to cover any health related problem within 31 days. Company agent told me that there is no provision to declare any illness midway. Now I am completely healthy. Company not include my above mentioned health condition in my policy. And compny given me reply "Dear Mr. Jain, We acknowledge the receipt of your mail. With reference to our previous telcon, this is to inform that any disease or ailment/illness if found after inception of policy. It is not required to disclose under policy. But if you still wish to disclose the disease then kindly find the attached PED inclusion form, fill and submit us for further evaluation. Note : To note the disease in the policy PED form is mandatory. We request you to provide the Medical reports/ Discharge summary /any relevant /First consultation paper / medical document of the said procedure/diagnosis, which shall be kept for our reference. " What can I do.
Ans: Hello;

Regarding plan migration feasibility you may check with your insurer/insurance agent.

If you want to inform the insurer about your later acquired illness you may furnish the details to them as per their requirement and check their feedback on the same.

Their feedback will decide your next course of action.

Best wishes;

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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