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Ramalingam Kalirajan |10874 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

Asked by Anonymous - Jul 10, 2025Hindi

Hello sir, I am 32yrs old Tech professional earning 75000 per month. I have a mother and me in the family. I have no savings, I have recently purchased a flat, having a loan of 40lac and liabilities of 5lac. My first flat emi of Rs37000 starts next month. I want to start effective financial planning and also how can i build a good fortune and clear my flat loan early. I also want to start a medical insurance policy.

Ans: At 32, with a steady income of Rs. 75,000 per month, you are well placed to start building a solid financial base. You have taken a bold step by buying your own home. With Rs. 37,000 EMI starting soon and liabilities of Rs. 5 lakhs, you are at a critical juncture.

Let me help you build a 360-degree financial plan. This plan will focus on stability first. Then it will work toward growth, debt clearance, and long-term wealth.

Start With a Full Understanding of Your Current Finances

Your current monthly income is Rs. 75,000.

Your fixed outgo will include:

– Rs. 37,000 flat EMI
– Household expenses for two persons
– EMI or commitment to repay Rs. 5 lakh other liabilities
– Food, travel, bills, basic essentials
– Yet to start savings or insurance

So, your net monthly surplus after essentials will be limited. That’s okay. With smart structuring, you can still move forward.

Use the 50:30:20 Budget Method to Get Control

Start your monthly plan like this:

Essentials (50%)
– EMI, bills, groceries, transport
– Rs. 37,000 EMI + Rs. 10,000 expenses = Rs. 47,000

Financial Goals (30%)
– Emergency fund
– Insurance premium
– Mutual fund SIPs (when started)

Lifestyle + Flexi Buffer (20%)
– Family needs
– Medical support for mother
– Occasional personal spending

Stick to this budget for the next 12 months.

Avoid unnecessary online spending. Cancel unused subscriptions. Prioritise needs over wants.

Emergency Fund Is the First Goal to Focus On

You must build an emergency fund before any investment.

Target 4–6 months of monthly expenses first.

That means Rs. 2.5 to 3 lakhs minimum.

Use a liquid mutual fund for this. Or a sweep-in FD. Avoid keeping it in savings account.

This will help you in job loss, medical need, or EMI shortfall.

Till this is ready, delay mutual fund investing.

Next Priority: Get a Health Insurance Cover Immediately

Medical emergency can wipe out your savings.

Buy a good individual health policy of at least Rs. 5 lakhs for you.

Take one family floater of Rs. 5–10 lakhs including your mother.

Government hospitals are not reliable. Don’t depend only on company group cover.

After job change, group cover ends. You need personal policy.

Premiums are low at your age. Take it before health issues start.

Buy from reputed company. Avoid policies bundled with investment.

Don’t delay this even by one month.

Review and Restructure Your Loan Strategy Smartly

You have:

– Rs. 40 lakh home loan
– Rs. 5 lakh other loan or dues

Together, they put pressure on your cash flow.

Follow this plan:

Step 1: Pay Rs. 5 lakh liability faster. This may be personal loans or credit dues.

Use bonus or side income to clear this in 12–18 months.

Step 2: Keep paying home EMI regularly. Don’t delay or miss any month.

Step 3: After building emergency fund and clearing other loans, start prepaying home loan partly.

Even Rs. 20,000 extra per year reduces interest burden a lot.

Don’t close loan fully early. But reduce interest cost. Prepay partly every year.

Avoid Any New Loans or Credit-Based Expenses

Till your savings are stable, don’t take any new loan.

Avoid buying electronics or furniture on EMI.

If you need something, save first. Then buy.

Use credit card only for planned, repayable expenses.

Don’t roll over card payments. Interest is very high.

Buy only what fits your budget today.

Protect Your Family with a Term Insurance Policy

You are the only earning member. You must take term life cover.

Buy term insurance for at least Rs. 50 lakhs now.

Later you can increase it to Rs. 1 crore as income grows.

Term plans are low-cost and simple. No return, but full protection.

Avoid any insurance plan that says “returns + protection”.

These are bad for wealth building. Don’t buy ULIP or endowment.

If you already have LIC or ULIP, calculate IRR.

If return is below 6–7%, consider stopping it and investing in mutual funds.

Plan Your Mutual Fund Investment with a Purpose

You want to build fortune. That starts with monthly SIP.

But don’t rush before emergency fund and insurance is done.

Once your budget allows, start with Rs. 3,000 to 5,000 per month.

Increase SIP every year as your salary grows.

Use actively managed funds only.

Avoid index funds. They follow markets blindly.

They can’t protect during crashes. No expert handles your money in index funds.

Actively managed funds give better risk-adjusted returns.

Avoid direct plans too.

They have no human support. One wrong switch can harm years of savings.

Use regular plans through a Mutual Fund Distributor with CFP credential.

He guides you in selection, rebalancing, and goal tracking.

What Type of Funds to Start With

For a beginner like you, start simple.

Use these categories:

– Balanced advantage funds for stable growth
– Flexi-cap funds for long-term wealth
– Hybrid aggressive funds once you gain confidence

Don’t go for sector funds, small caps, or thematic funds.

Keep your portfolio simple and structured.

Once income increases, diversify slowly.

Track and Review Investments Yearly

Don’t forget to track your mutual fund SIPs yearly.

Check how much corpus is building.

Review if fund performance is consistent.

If not, take help from your Mutual Fund Distributor and CFP.

Stay invested in market ups and downs.

SIPs work only when continued for long.

Don’t stop SIP if markets fall. That is the time you get more units.

Manage Your Expenses As Salary Grows

Your Rs. 75,000 income will grow in 1–2 years.

But don’t increase lifestyle blindly.

When salary increases, raise SIP and prepay loans.

Follow this:

– 50% of hike goes to SIP
– 30% to loan prepayment
– 20% can go to personal use

This formula helps build long-term wealth silently.

Don’t copy others’ lifestyle. Focus on your own financial journey.

Avoid Real Estate and Unwanted Assets in Future

You already have one flat. That is enough for now.

Avoid buying more flats or land as investment.

They lock your money. Selling is difficult. Rental return is poor.

Maintenance cost is high. Liquidity is low.

Instead, build your financial portfolio with mutual funds.

They give better return, liquidity, and flexibility.

Also better taxation structure.

Understand Mutual Fund Taxation for Better Decisions

New tax rules for mutual funds are:

– Equity mutual funds: LTCG above Rs. 1.25 lakh taxed at 12.5%
– STCG taxed at 20%
– Debt mutual funds taxed as per income tax slab

Keep SIPs for long term to enjoy tax benefits.

Plan redemptions smartly to avoid big tax outgo.

Use SWP (Systematic Withdrawal Plan) after 10–15 years to create monthly income.

This is better than FD or annuity.

Don’t withdraw lump sum unless needed.

Build Health and Wealth Together

Wealth is incomplete without health.

Take care of your diet and fitness. Avoid medical costs later.

Ensure your mother also has good medical cover.

Encourage annual health check-ups.

Stay covered. Stay healthy. That is part of financial planning.

Finally

You are young and focused. That is your biggest strength.

Even with a home loan and liabilities, you can rise fast.

Start with simple steps. Emergency fund. Health cover. Term insurance.

Then clear loans slowly. Start small SIPs. Build discipline.

Avoid index funds. Avoid direct funds. Avoid real estate.

Invest in mutual funds with proper guidance through a CFP-led Mutual Fund Distributor.

Over time, increase SIPs. Review every year. Stay committed.

You can build wealth, repay loans early, and take care of your family peacefully.

Start today. Every rupee you save now is worth many rupees later.

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.