Sir, I have around 1 million fund in MF portfolio, now I am planning home construction shall I go for home loan or I shall utilize the entire MF so as to enable me to take minimum home loan, please suggest

Ans: Rs. 2500 in each

1. Axis ESG Equity fund – Growth
2. UTI Flexi Cap fund – Growth
3. PPFAS Flexi Cap – Growth
4. DSP Quant Fund – Growth

Ans: It's great to see your enthusiasm for starting your investment journey at such a young age. Since you're new to investing, it's essential to prioritize understanding your risk tolerance and investment goals.

For your MF investment of Rs. 10,000 per month, you can consider starting with a balanced mutual fund or a diversified equity fund. These types of funds offer a mix of equity and debt instruments, providing a good balance between potential returns and risk. Look for funds with a track record of consistent performance and a low expense ratio.

Before investing, take some time to research and learn about different MF options, consider seeking advice from a Certified Financial Planner, or use online resources and investment platforms that offer guidance for beginners.

Remember to stay disciplined with your investments and regularly review your portfolio to ensure it aligns with your financial goals and risk tolerance. As you gain more experience and confidence, you can explore diversifying your investment portfolio further.

Ans: Here's a breakdown to help you decide between a home loan and borrowing from family/friends:

1. Taking a home loan:

• Loan feasibility: With a combined monthly income of Rs 1.8 lakh, you can comfortably afford an EMI of around Rs 50,000- Rs 60,000 (assuming a 20-year loan tenure and interest rate around 8%). This would be sufficient to cover the Rs 50 lakh loan you require. You can use an EMI calculator on many bank websites to get a more precise idea.
• Benefits: There are tax benefits associated with home loans. You can deduct the interest paid on the home loan from your taxable income, which can bring down your tax liability. Additionally, owning a property appreciates in value over time.
• Drawbacks: Home loans come with processing fees and other charges. There can also be prepayment penalties if you choose to close the loan before the tenure ends.

2. Borrowing from family/friends:

• Benefits: You might be able to negotiate a lower interest rate compared to a bank loan. There's also more flexibility in terms of repayment schedules.
• Drawbacks: Borrowing from friends or family can strain relationships if there are delays in repayment or disagreements over terms. Make sure to have a written agreement outlining the interest rate, repayment schedule, and other important details.

3. Considering your situation:

• The EMI for Rs 50 lakh loan seems manageable based on your income.
• Home loan interest rates are currently around 8%, which might be lower than the interest rate you would be charged by friends or family.
• Tax benefits on home loans can give you additional savings.

4. Recommendation:

Given your financial situation, taking a home loan seems like a viable option. However, it's always good to compare interest rates and terms offered by different lenders before finalising a deal.

You can also talk to your family and friends to see if they are willing to offer you a loan at a competitive rate.

5. Here are some additional things to consider:

• Stability of income: Make sure your job is stable enough to ensure timely EMI payments.
• Down payment: A larger down payment will bring down the loan amount and your EMI burden.
• Future expenses: Factor in other expenses associated with property ownership such as maintenance, property taxes, etc.

Ultimately, the decision of whether to take a home loan or borrow from family/friends depends on your individual circumstances and comfort level.

Ans: 1. Clearing Home Loan with Mutual Fund
Pros of Retaining MFs:

Compounding Benefits: Mutual funds grow significantly over time due to compounding.
Higher Returns: Potential to achieve higher returns compared to the interest saved from home loan repayment.
Liquidity: Flexibility to withdraw funds when needed without impacting your entire corpus.
Pros of Clearing Home Loan:

Reduced EMI Burden: Lowers your monthly outflow, freeing up cash for other uses.
Financial Freedom: Offers peace of mind by eliminating debt.
Interest Savings: Saves interest paid over the loan tenure.
Recommendation: If your mutual funds are yielding higher returns than your home loan interest rate, it’s better to retain them and continue investing. Otherwise, consider partially clearing the loan.

I appreciate your trust and willingness to connect for CFP services.
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Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in