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Ramalingam Kalirajan |10876 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 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 33 years old. My husband and I have a combined income of 2.17 lakhs per month after deductions. We have a housing loan EMI of Rs. 50000 and a car loan EMI of Rs. 13000 each month. We invest only Rs. 6000 as SIP in mutual funds. Our household and other expenses together come to roughly Rs. 50000. Please advise how to save better for retirement, planning a family along with emergency fund and insurance. How to split the money into different buckets?

Ans: » Understanding your current financial picture
– You both earn Rs. 2.17 lakhs after tax each month.
– Your housing loan EMI is Rs. 50,000.
– Car loan EMI is Rs. 13,000.
– Household and other expenses are around Rs. 50,000 monthly.
– SIP investment is only Rs. 6,000 currently.

– That means your total monthly outflow is around Rs. 1.19 lakhs.
– Balance money after expenses is Rs. 98,000 per month.
– This balance is your financial opportunity.
– It must be used wisely across different goals.
– Each goal must have a separate bucket.

» Emergency fund creation is your first priority
– Emergency fund must cover 6 months of expenses.
– Your total expenses are Rs. 1.19 lakhs monthly.
– So you must build at least Rs. 7 lakhs emergency fund.
– Don’t invest this in mutual funds or stocks.
– Keep it in a high-interest savings account or sweep-in FD.
– You can build this over 6–9 months slowly.
– Start parking Rs. 15,000–20,000 every month in this fund.
– Don’t touch this unless it's truly urgent.

» Health insurance should be enhanced
– Health insurance is crucial for young couples.
– You should have Rs. 10–15 lakhs floater plan.
– Premiums are low at your age.
– This is much better than using emergency fund for hospital bills.
– Buy insurance outside your employer too.
– Employer cover ends when you leave job.
– Also add a top-up policy for more coverage.

» Life insurance for protection
– Only term insurance is recommended for life cover.
– Do not mix insurance with investment.
– Avoid endowment, ULIPs, or money-back policies.
– Term insurance is cheapest and purest form.
– Each spouse must take own term plan.
– Sum assured should be at least 10–15 times yearly income.
– Take Rs. 1 crore term cover each for now.

» Retirement planning must start early
– Retirement is a long-term goal, not urgent but very important.
– Start SIPs in equity mutual funds with long horizon.
– You are young and can take more risk.
– Equity MFs give good growth over long term.
– Monthly SIPs of Rs. 25,000–30,000 can be targeted.
– Choose 3 to 4 diversified equity schemes.
– Use MFD or Certified Financial Planner for regular plan.
– Regular plans provide guidance, fund monitoring, and handholding.
– Avoid direct mutual funds if you lack time and expertise.
– Direct plans have no human support for reviews.

» Goal-based investments for future family planning
– You may soon plan for children.
– Childcare, delivery, and early years need money.
– Create a separate fund for this short-term goal.
– Use hybrid or short-duration debt funds for stability.
– You can invest Rs. 10,000–15,000 monthly in this bucket.
– Don’t mix this with emergency fund.
– Set a goal horizon of 3 years.
– You can move funds to RD or liquid fund later.

» Car loan can be closed early if possible
– Rs. 13,000 EMI is manageable now.
– But closing loan early reduces interest cost.
– Check if any prepayment penalty is there.
– If none, try to prepay in 6–8 months.
– Use surplus from budget or bonuses for this.

» Housing loan provides tax benefits
– Rs. 50,000 EMI includes principal and interest.
– You get tax benefits under Sec 80C and 24(b).
– No need to prepay if interest rate is below 9%.
– Instead, use surplus to build wealth through SIPs.

» Proper budgeting and bucketing is essential
– Let us now divide your Rs. 98,000 surplus wisely:

Rs. 15,000 for emergency fund till you reach Rs. 7 lakhs

Rs. 25,000 for retirement SIPs in equity MFs

Rs. 15,000 for short-term family planning fund

Rs. 13,000 to close car loan early in next 6–8 months

Rs. 5,000 to upgrade term and health insurance premiums

Rs. 10,000 to keep aside for annual expenses or buffer

Balance Rs. 15,000 can be left for flexibility or one-time needs

– This kind of discipline builds strong financial foundation.
– Review buckets every 6 months.
– Increase SIPs whenever income goes up.
– Once emergency fund and car loan are done, increase other SIPs.

» Financial discipline is your biggest wealth creator
– Your income is strong.
– Expenses are reasonable and under control.
– Debt is moderate and manageable.
– Early start will give compounding benefit.
– Keep your goals separate.
– Do not merge different buckets.
– Avoid random investing.

» Things to avoid at this stage
– Do not invest in real estate for now.
– Do not go for endowment or ULIP policies.
– Don’t invest in direct mutual funds without support.
– Avoid gold as primary investment.
– Don’t invest in crypto or high-risk assets.
– Don’t lend money to friends or relatives casually.
– Avoid taking personal loans for holidays or gadgets.

» Family involvement and communication
– Both partners must know where money is going.
– Keep joint goals and tracking system.
– Use simple spreadsheet or budgeting app.
– Talk monthly about finances together.
– Plan major expenses together.
– Keep all documents in one file with copies.

» How to track your plan easily
– Keep separate savings account for each goal.
– Link SIPs and payments to these accounts.
– Check monthly if any SIP failed or bounced.
– Review fund performance once in 6 months.
– Don’t panic if fund value drops in short term.
– Keep insurance policies updated.

» Retirement corpus must be in crores
– You are 33. Retirement may be at 58–60.
– You have 25–27 years left to save.
– If you invest Rs. 30,000 monthly, you can build big wealth.
– Equity mutual funds can deliver inflation-beating returns.
– You may need Rs. 3–4 crores corpus for retirement.
– So early and regular investment is necessary.

» Once you start family, adjust budget again
– Childcare expenses will start from pregnancy itself.
– You may lose one income for some time.
– Maternity leave or break may affect inflow.
– Hence build enough buffer in advance.
– After child is born, increase medical cover.
– Also start child education SIPs after 1–2 years.

» Keep nominations and wills updated
– Add spouse as nominee in all accounts.
– Also create a simple Will.
– Mention all accounts and investments.
– Even young couples should do this.
– It avoids legal problems later.

» Stay consistent, don’t look for shortcuts
– Focus on steady monthly saving.
– Increase SIP every year by 10%.
– Avoid switching funds frequently.
– Don’t stop SIPs in market downturns.
– Use Certified Financial Planner if confused.

» Finally
– Your income is your strength.
– You are young and have time.
– Your spending is disciplined.
– With better saving habits, you can secure your future.
– Emergency fund, insurance, and SIPs are your base.
– From here, you can only grow stronger.
– Start now. Stay focused. Review often.
– Your financial success is a journey of steady steps.

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

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