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Ramalingam Kalirajan |10874 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 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 15, 2025Hindi

Hi sir, I am a 35 year old working in a private company. I earn around 1.6 lakh a month. My savings are as follows: Mutual Funds -70 lakhs, FD - 18 lakhs ESOPs - 40 lakhs NPS - 11 lakhs EPF - 13 lakhs Direct stocks - 10 lakhs SGB - 6 lakhs Others - 5 lakhs My monthly investments are around 25k and I try to invest any surplus at the end of the month. I have no emi now. My wife is also working and makes around 80k. We have a 1 year old son. My wife invests around 5k every month but has good savings in gold e I am looking to purchase a flat in Bangalore to stay. How do I plan this? Our budget is around 1 cr.

Ans: You are 35, earning Rs 1.6 lakh monthly. You hold strong investments. You live with your wife and a 1-year-old son. Your wife also earns Rs 80,000 monthly. You plan to buy a flat in Bangalore worth around Rs 1 crore.

Let’s go step-by-step to plan this smartly.

? Current Asset Assessment

– You have Rs 70 lakh in mutual funds.
– Rs 18 lakh is parked in fixed deposits.
– You hold Rs 40 lakh worth of ESOPs.
– NPS is at Rs 11 lakh.
– EPF savings stand at Rs 13 lakh.
– You also have Rs 10 lakh in direct stocks.
– SGB worth Rs 6 lakh is part of your assets.
– Others total Rs 5 lakh.

Your total financial net worth is above Rs 1.7 crore. This is a solid base at age 35.

? Monthly Investment Pattern

– You invest Rs 25,000 regularly.
– Any month-end surplus is also invested.
– Your wife contributes Rs 5,000 monthly.
– She has good savings in gold as well.

You are disciplined. That’s excellent. You’re building long-term wealth quietly.

? Debt Status and Cash Flow

– You have no EMIs now.
– That gives you high monthly liquidity.
– Both you and your spouse are earning.

This gives flexibility in planning a property purchase. Your financial strength is good.

? Property Purchase Budgeting

– You want to buy a flat for self-use.
– Your budget is around Rs 1 crore.

That is a reasonable figure. With your current net worth, it is feasible.

But the question is how you should fund this home without disturbing long-term wealth.

Let’s explore that part.

? Using Your FD for Property

– You have Rs 18 lakh in fixed deposits.
– These are safe, but give low returns.
– You can use Rs 10–12 lakh from here.
– Keep Rs 6–8 lakh as liquidity buffer.

That takes care of part down payment. Use only partial FD. Don’t empty this corpus.

? Using Mutual Funds for Purchase

– You have Rs 70 lakh in mutual funds.
– This is your wealth creation engine.

Avoid touching mutual funds meant for long-term goals like retirement, child’s future or financial independence.

If some portion is parked for short-term, then use that only. Otherwise, avoid redeeming equity funds.

Equity mutual funds work best when untouched for 10+ years. Use only non-core funds if you must.

Also, remember taxation:
– Equity mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
– STCG is taxed at 20%.

Avoid redeeming large amounts from mutual funds in one shot. Split redemption across financial years if possible.

? Using ESOPs for Home Buying

– You hold Rs 40 lakh in ESOPs.
– ESOPs are linked to your employer’s stock.
– That means they carry concentration risk.

You should gradually reduce ESOP exposure. Diversify into mutual funds.

You can consider selling some ESOPs to raise property funds. This is better than redeeming mutual funds.

But don’t rush. Check for tax impact. Coordinate selling with a CFP or MFD to reduce tax load.

Also, check if ESOPs are vested, liquid and tradable easily.

Use part of this for home purchase. Retain some for future value gain.

? Using SGB, EPF, NPS, Stocks

– Don’t redeem SGB now. Gold works as a hedge.
– EPF and NPS are for retirement. Don’t touch these.
– Direct stocks are only Rs 10 lakh. Avoid using them unless market is high.

Use only liquid and low-return assets for home buying. Never use long-term retirement assets.

? Ideal Funding Strategy

Let’s break this into a simple plan:

– Use Rs 10–12 lakh from FD.
– Use Rs 10–15 lakh from ESOPs.
– Add Rs 3–5 lakh from any liquid mutual funds.
– Remaining Rs 70 lakh can be home loan.

You get tax benefits on home loan interest and principal. You also maintain investments.

You can prepay loan slowly using bonuses or surpluses later.

? Monthly Affordability of EMI

– With Rs 1.6 lakh income and no EMI,
– You can easily handle Rs 35,000 to Rs 45,000 EMI.
– This is less than 30% of your income.

Even if your wife’s income is not counted, your EMI comfort is high.

So home loan is manageable and strategic.

? Emergency Fund Position

– Keep at least Rs 8–10 lakh as emergency fund.
– Use FD or liquid mutual funds for this.
– Never put emergency fund into real estate.

Emergency money protects you from job loss, medical shock or market correction.

Don’t weaken this for down payment.

? Wife’s Financial Role

– Your wife earns Rs 80,000 monthly.
– She also saves and invests.

She can take part ownership of the flat. That improves loan eligibility and tax planning.

Let her contribute to EMI or home expenses. It increases joint accountability.

Also, ask her to slowly increase monthly investment from Rs 5,000 to Rs 10,000 or more.

She has potential to grow her own corpus.

? Child’s Future Planning

– Your son is 1 year old.
– Plan for his school, college, and higher education.

Use separate mutual fund SIPs tagged to these goals. Don’t mix with property planning.

Avoid touching those funds for flat or loan.

Long-term child goals should grow untouched for 15–20 years.

? Insurance Cover for Protection

– You are planning a big home investment.
– Make sure you have proper term insurance.
– Cover should be minimum 15–20 times your annual income.

If your income is Rs 20 lakh/year, get at least Rs 3–4 crore term cover.

Same for health insurance. Cover whole family adequately.

This ensures your family is protected in worst-case scenarios.

? Regular Plan vs Direct Plan Review

– You likely invest in a mix of plans.
– If some are direct plans, do check performance.

Direct plans give no advice or support. You carry all risk alone.

Regular plans through CFP or MFD give guidance, review, and correction support.

When doing large decisions like property purchase, advice from a CFP-backed MFD becomes very useful.

So keep major goals aligned with regular plan route.

? Real Estate Is Not an Investment

– You are buying a flat to stay. That is fine.
– But don’t treat real estate as an investment.

Real estate has hidden costs. There’s low liquidity. Long holding periods. Legal risks.

Also, returns are low after factoring taxes, interest, and maintenance.

So don’t add more property for investment.

Focus instead on growing mutual fund corpus via SIP.

? Finally

– Your financial base is strong.
– Buying your own home is possible now.
– Use fixed deposits and ESOPs wisely.
– Take a home loan for the rest.
– Don’t touch long-term assets like EPF, NPS or core mutual funds.
– Keep emergency fund untouched.
– Plan EMIs carefully. Prepay slowly.
– Protect with insurance.
– Keep growing mutual fund SIPs.
– Don’t depend on real estate for wealth creation.
– Review your financial plan each year with a CFP.
– Avoid direct plans if you need support or review.
– Guide your wife to increase monthly investment.
– Start dedicated SIPs for child’s education and future.

This is how you buy a house and continue building wealth.

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

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