Dear Sir I had ancestral property at native place which fetch 14K Rent monthly...Property is 40Years old.. Will it be good If I sell that property for 70Lakh and keep that money in Balanced fund or in NPS account

Ans: You are thinking wisely about your assets.

Let’s look at this from a 360-degree perspective.

Rental Income vs Sale Value

The property gives you Rs. 14,000 monthly rent.

That is Rs. 1.68 lakhs per year.

Over 10 years, you may earn Rs. 16 to 18 lakhs from rent.

Maintenance cost, property tax, and repairs will reduce this further.

Also, a 40-year-old property needs more upkeep.

Its resale value may not grow much more from here.

Selling now for Rs. 70 lakhs gives you full value in hand.

You can use that money in better investment options.

Emotional Value vs Financial Value

Being ancestral property, emotions may be attached.

But emotional value won’t solve financial needs.

If the property is not well located or not appreciating well, selling is practical.

You can honour the legacy in other ways.

Should You Invest in NPS?

NPS is a retirement tool with lock-in till age 60.

You can’t withdraw freely.

It is good for building a pension corpus.

But not suitable if you want liquidity or flexibility.

Once you invest, you cannot move the funds easily.

Also, returns are not consistent. Depends on market and fund manager.

Use NPS only for a part of your funds if your retirement goal is clear.

Should You Put in Balanced Funds?

Balanced funds (also called hybrid funds) invest in both equity and debt.

They are good for moderate risk and stable returns.

Suitable for long-term goals like retirement, child's education, or financial freedom.

They give better return than traditional options.

But don’t invest in direct plans.

Direct funds don’t guide during volatility.

Regular plans through MFD with CFP support are better.

You get timely advice and fund switching support.

Active fund managers make strategy changes.

Index funds or passive options don’t do that.

Actively managed balanced funds are better for Indian investors.

What You Should Do Now

Sell the property if there’s no growth and rising maintenance.

Use part of the Rs. 70 lakhs to reduce any high-interest debt.

Keep 6 to 12 months of expenses as emergency fund in liquid mutual fund.

Invest the rest through SIP and STP in regular hybrid funds.

Plan your financial goals with a Certified Financial Planner.

For retirement, use mutual funds along with PPF and EPF.

Use NPS for small part only, due to lack of liquidity.

Tax Impact You Should Know

On sale, capital gains tax will apply.

Since it's ancestral property, indexed cost and holding period matter.

Tax can be planned using capital gain bonds or reinvestment.

Don’t keep all money in savings account. Plan it step-by-step.

A Suggested Allocation Strategy (Not Specific Schemes)

Rs. 10 to 15 lakhs – emergency and contingency in liquid or short-term fund.

Rs. 40 to 45 lakhs – invest gradually in hybrid and multicap mutual funds.

Rs. 10 lakhs – use for NPS only if you have no urgent needs till age 60.

Avoid direct funds, index funds, or annuity options.

Use regular funds via MFD under CFP guidance.

Final Insights

Selling old property and investing is a progressive step.

You are unlocking stuck value into a growing asset.

Old assets slow down your money’s growth.

Balanced mutual funds help you grow with moderate risk.

NPS gives tax benefit but lacks flexibility.

Don’t invest entire money in NPS. Use mix of better tools.

Avoid emotional attachment if the property is non-performing.

Turn this decision into a lifetime opportunity.

Your wealth deserves active planning, not passive holding.

Take support from a Certified Financial Planner to execute wisely.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Asked on - Jun 02, 2025 | Answered on Jun 02, 2025

Thank you very much Sir...Thanks for guiding me in proper direction...

Ans: You're welcome! If you have any more questions or need further assistance, feel free to ask. Best wishes on your financial journey!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: You are managing across two countries—Hyderabad, Chennai, and the US—which already shows impressive discipline. You have three large areas to manage:

Your outstanding home loan on a Hyderabad apartment

Your son’s private engineering college fee of Rs?2.5 lakh annually

US 401(k) savings equivalent to Rs?28 lakh

You want to know which option suits you best:

Sell Hyderabad apartment, pay off loan, invest remaining in FD

Sell inherited property

Use your US 401(k) savings

I understand this is not just finance—it’s your son’s future and your family’s security. Let me provide a careful, 360-degree evaluation without overload, but with clear guidance.

Your Current Financial Position
Monthly take-home: Rs?1.5 lakh post deductions and tax

Hyderabad home: Currently valued ~Rs?40 lakh, with Rs?12 lakh outstanding loan. EMI ~Rs?28k/month

Son’s education: Rs?2.5 lakh per year needed immediately

US savings: 401(k) showing Rs?28 lakh balance

Another inherited property: Amount and location not specified

No mention of emergency fund or cash buffer

No details on other investments (PPF, mutual funds, gold, etc.)

First, let us stabilise your situation, plan your cash flow, and then decide which asset to liquidate and how.

Step 1: Build or Review Your Emergency Fund
Right now, there is no mention of a cash buffer. Your EMI is Rs?28k/month and education fee is Rs?2.5 lakh yearly, but living expenses aren’t shown.

You need 6 months’ worth of living expenses including EMI and fee instalments. Let us assume expenses run around Rs?80k monthly for family living (food, commute, utilities). On top of EMI and annual fee, this suggests a cash buffer requirement as follows:

Living expenses for 6 months: Rs?4.8 lakh

EMI buffer for 6 months (EMI 28k x 6): Rs?1.68 lakh

Education fee corpus buffer in liquid fund: Rs?2.5 lakh

Total emergency + fee buffer therefore ~Rs?9 lakh
Build or ensure you have this liquid buffer before making any decisions.

Step 2: Evaluate Your Hyderabad Apartment Option
If sold at Rs?40 lakh:

Loan payoff: Rs?12 lakh

Net proceeds: ~Rs?28 lakh minus selling/transfer costs

EMI stops; cash flow improves by Rs?28k monthly immediately

Post-sale capital deployment:

Maintain Rs?9 lakh buffer in liquid funds

Remaining ~Rs?19 lakh for investment

If placed in FD at 7% returns, you get ~Rs?1.1 lakh per annum (Rs?9k/month)

This income can support your son’s yearly fee easily

You also now have no loans to the apartment; simplifies your cash flow and reduces financial stress. Your monthly income of Rs?1.5 lakh would no longer be partially diverted to EMI.

However, before selling you must confirm:

Do you have other suitable housing in Hyderabad? If you may want to reside or rent it, there may be better income opportunity via rental property.

Do you need the apartment in future for retirement or long-term stay? Consider that freedom wisely.

Overall, selling the Hyderabad apartment offers cash and removes financial burden quickly.

Step 3: Evaluate Selling Inherited Property
You mention a second inherited property but haven’t shared its value or location. Please consider:

Market value and liquidity (ease of sale)

Capital gains tax and transfer costs

Emotional or family connection to it

Term remaining in loan (if any) against it

If it is equally liquid and of similar value, selling inherited property could yield similar benefit while keeping apartment as an asset. But:

You may need the apartment if you plan to return to Hyderabad

Or if that property is more profitable for rental

Ask: which property sells easier, gives more net, and creates better post-sale return?

Step 4: Using 401(k) Savings — Is It a Good Idea?
You have Rs?28 lakh sitting in US 401(k). Liquidating it now might:

Provide Rs?28 lakh once cashed out

After considering tax and exit charges, net amount may drop by 20–30%

You lose the long-term compounding power in the 401(k) fund

Early withdrawal may incur tax and penalty depending on your US work visa status or age

And you might face currency conversion risk when converting to INR

So while it provides an immediate cash source, the downsides are:

Loss of tax-deferred retirement savings

Likely tax penalty and other charges

Reduction of future retirement corpus by Rs?50 lakh (accounting compounded return)

This makes it a last-resort option, after other methods are exhausted.

Step 5: Compare All Options
Option A – Sell Hyderabad Apartment:
Clears loan and EMI

Improves monthly cash flow

Gives lump sum to invest

Might lose future asset if you ever move back

Option B – Sell Inherited Property:
Clears loan without touching primary residence

Asset in place for future use

Liquidity depends on location and market

Requires time to ask family or emotional clarity

Option C – Use 401(k):
Tax and penalty leads to lesser net amount

Reduces retirement corpus

Fair solution only if you have no other option

Based on this, Option A or B—selling a property—is better.
Preferably not 401(k) now.

Step 6: How to Deploy Fund After Sale
Once you unlock capital:

Clear the outstanding loan immediately

Rebuild emergency fund of Rs?9 lakh

Allocate remaining funds—whichever property you sell—towards your child’s education

Suppose you have Rs?28 lakh after sale and Rs?9 lakh buffer:

Leftover Rs?19 lakh

You can invest this corpus wisely:

Split into two buckets:

Equity mutual fund/STP to generate growth

Debt/hybrid products to preserve short-term security for fee payments

Important: Avoid using FDs only, as they may not beat inflation over next 5–7 years.
Use actively managed equity funds via regular plans through a CFP-backed MFD.
Index funds alone increase risk without active evaluation.

Example deployment:

Rs?10 lakh into equity mutual fund via STP over 12 months

Rs?9 lakh into hybrid or debt fund to match fee payment schedule

If you prefer not to invest lump sum in equity, invest only in debt since you need cash for fee.
But with an EMI freed, you gain room to experiment with a small SIP of Rs?10,000 in equity too.

Step 7: Plan for Remaining Education Fee Needs
Your son needs Rs?2.5 lakh annually for engineering. Next 4 years means at least Rs?10 lakh.

You already have:

FD or corpus after sale

Option to start an equity SIP now (momentum of 12-month STP)

Line up:

Infrastructure fund or balanced advantage fund for next 4–5 years

Keeps money growing but safe closer to fee deadlines

Use STP to stagger equity into this portfolio

Also, maintain flexibility in reallocation if fee structure changes.

Step 8: Keep and Grow Your US 401(k) for Retirement
Avoid liquidating 401(k) now; leave it invested.

It provides:

Long-term retirement growth in USD

Flexibility to withdraw after 59½ years without penalty

Check if you can roll it into an IRA or Indian retirement product when you permanently move

By avoiding early withdrawal, you retain growth and retirement stability.

Step 9: Monitor Cash Flow and Budget Discipline
With monthly income 1.5 lakh and no Hyderabad EMI, your finances will look smoother.

Set up a monthly budget:

EMI-free living expenses (food, bills, commute) ~Rs?70,000

Education-oriented corpus contribution ~Rs?20,000 (SIP or debt investment)

Equity SIP of Rs?10,000

Emergency fund top-up ongoing

Health insurance premium for your son and self (if not already)

This ensures you have liquidity, growth, and no pressure on your current lifestyle.

Step 10: Insurance and Protection Review
Use freed-up resources or monthly gains to secure your insurance:

Health insurance for self and son with Rs?10–15 lakh cover

You already have loan protections? If not, take a term life insurance to protect dependents

Consider critical illness rider for large medical expense protection

These measures help prevent unexpected events from hurting your savings or son's education.

Step 11: Revisit Your Retirement Planning Periodically
Your retention of 401(k) plus India investments must work together.

You need to plan:

Tax-efficient withdrawal from Indian investments

Asset allocation across INR and USD

Review every 12-months with a Certified Financial Planner

You are likely setting up for retirement in India with part of your corpus in the US vesting.

Final Insights
You have three main choices:

Sell Hyderabad apartment – immediate EMI relief, invest proceeds

Sell inherited property – less emotional compromise, similar cash flow

Avoid selling or using 401(k) – that helps preserve retirement corpus

My advice:

Decide on which property to sell based on ease, taxes, and sentimental value

Use proceeds to pay off loan, rebuild emergency buffer, and invest as laid out

Build your son’s fee corpus via balanced and equity mutual funds

Preserve your 401(k) for retirement. Avoid early withdrawal

Use new cash flow wisely—budget, secure insurances, and begin long-term investing

With clear steps, you can support your son’s education and secure your financial future—without jeopardising your long-term stability.

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