Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 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

Question by Rasheed on Jun 29, 2025Hindi

I earn 25000 rupees a month. I have no debt and I want to start saving. Why should I do this? I am 28 years old. I am married and have no children.

Ans: You are taking a wise first step. Starting early always helps your financial growth. Let me explain your situation in detail and give a 360-degree solution.

Understanding Your Financial Situation
– You are 28 years old.
– You earn Rs 25,000 monthly.
– You are married but have no children yet.
– You have no debt currently.

This is a simple yet strong starting point. Starting your savings journey early builds long-term wealth.

Why You Should Start Saving Now
– Saving creates financial safety and peace of mind.
– Emergencies can happen anytime. Savings protect you in tough times.
– Future goals like a child’s education need planning today.
– Retirement seems far now but needs long-term savings.
– Small savings today can become big wealth tomorrow through compounding.

Saving is not only about money. It is about peace and freedom.

Assessing Immediate Priorities
Before you invest, check your protection first.

Step 1: Create an Emergency Fund
– Life is unpredictable. An emergency fund protects your family.
– Start saving for 3 to 6 months of living expenses.
– Target Rs 50,000 to Rs 75,000 over time.
– Keep it in a savings account or liquid mutual fund.

Step 2: Get the Right Insurance Protection
– Buy a pure term insurance plan to protect your spouse.
– A cover of Rs 25 lakh to Rs 50 lakh is enough for now.
– The annual premium will be affordable at your age.

– Take a family health insurance policy too.
– A Rs 5 lakh to Rs 10 lakh cover is good to start.

This protection avoids financial trouble during emergencies.

Starting Systematic Wealth Creation
Once protection is done, start wealth building.

Step 1: Begin Mutual Fund SIPs
– Mutual funds are the right option for long-term goals.
– Start with equity mutual funds.
– Choose actively managed funds.
– Don’t pick index funds.

Why You Should Avoid Index Funds
– Index funds simply copy the stock market.
– They offer no protection in bad markets.
– They lack expert management.

– Actively managed funds are guided by expert fund managers.
– They aim to reduce risks and improve returns.
– This is better for first-time investors like you.

Step 2: Invest Through a Certified Financial Planner
– Don’t go for direct funds.
– Direct funds give no advice or monitoring.
– Regular funds through an MFD with CFP credential give personal guidance.
– They help you adjust your plans during market changes.

With a CFP, you get a long-term partner in your financial growth.

Recommended Saving Approach Based on Income
With Rs 25,000 salary, start simple.

– Save 20% to 25% for long-term wealth creation.
– That means start with Rs 5,000 monthly investments.

Breakdown your income as follows:

– Household expenses: Rs 15,000 to Rs 16,000.
– Term insurance and health cover: Rs 1,000 to Rs 1,500.
– Emergency fund savings: Rs 2,000 till the fund is ready.
– Mutual Fund SIPs: Rs 5,000 monthly.

Adjust these numbers as your income grows.

Setting Your Financial Goals Clearly
Your next life stages will bring financial needs.

– Future child’s education is one goal.
– Retirement corpus is another big goal.
– Family vacations, car purchase, or house down payment are small goals.

Assign your SIPs to these goals separately.

Start with your retirement and child’s education as priorities.

Understanding the Power of Early Start
You are 28 years old.
You have almost 30 to 35 years till retirement.

If you save Rs 5,000 monthly for 30 years, wealth grows large.
Even with moderate returns, it creates strong retirement support.

The earlier you start, the lesser you need to save later.

This is the benefit of compounding over time.

Why You Should Avoid Delaying Savings
If you delay saving by 5 to 10 years, you will need to save double later.
Also, life’s responsibilities will grow soon.

– Children’s school fees.
– Family health needs.
– Home purchase.

It will become harder to start saving later.
Now you are debt-free and your expenses are low. This is the best time to start.

Avoiding Common Money Mistakes
Here are some mistakes to avoid:

– Don’t think savings can wait until you earn more.
– Don’t spend fully on lifestyle upgrades like gadgets or vacations.
– Don’t invest in stocks directly if you lack expertise.
– Don’t fall for chit funds or get-rich-quick schemes.
– Don’t mix insurance and investments like ULIPs.

Focus on safe and proven options like mutual funds through MFDs.

Protecting Against Financial Shocks
– Accidents, illness, or job loss can hit anytime.
– Your emergency fund and insurance will protect you.
– Don’t ignore these safety nets.

They keep your savings journey stable when life throws surprises.

Reviewing Your Progress Every Year
– As your income grows, increase your SIPs.
– Review your investments with your Certified Financial Planner.
– Rebalance your portfolio if needed.
– Keep your emergency fund updated with inflation.

Discipline and review help in staying on track.

Future Steps as Life Evolves
Once you have children, your savings needs will increase.
Plan for school, college, and their marriage in advance.

At the same time, plan your retirement early.
Don’t depend on your children financially later.

Financial independence is a gift to yourself and your family.

Never Rely on Real Estate for Investments
You may hear people suggest buying plots or flats.
But real estate is illiquid and risky.

– Selling property takes time.
– Rental income is low compared to maintenance.
– Legal and tenant hassles are possible.

Instead, mutual funds give liquidity, diversification, and expert management.

Tax Benefits from Your Investments
– Start your PPF contributions for safe savings and tax benefits.
– Mutual funds help in wealth growth and tax efficiency.
– Equity mutual funds have lower tax rates after 1 year.

*LTCG above Rs 1.25 lakh taxed at 12.5%.
*STCG taxed at 20%.

Debt mutual funds are taxed as per your income slab.

Avoid unnecessary tax leakage by investing smartly.

Building a Lifetime Money Habit
Saving is a habit, not a one-time activity.
Follow this habit throughout your life stages.

As your income grows, increase your savings first, not expenses.
Lifestyle upgrades should wait till your goals are on track.

Creating a Second Income in the Future
After saving consistently, you can plan a second income.
This could be from skills like teaching, freelancing, or business.

Don’t jump into real estate for second income.
Mutual fund investments give long-term passive income through SWP.

Finally
You are in the best stage to start saving.
You have no debt and manageable expenses.

Start with the basics:

– Build an emergency fund.
– Get pure term and health insurance.
– Start mutual fund SIPs for your future goals.
– Avoid real estate, index funds, and direct stocks.
– Invest through a Certified Financial Planner and an MFD.

This will help you achieve financial freedom step by step.

Your future self will thank you for starting today.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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.