Hello, Iam a software professional,I want to buy house please guide me how much percentage i need to save out of loan amount assuming cost of flat may be 1 crore, also please suggest and also please advise me some mutual funds to invest in which i can expect return of around 30% and currently i have an active car loan which cost me an emi of 13k per month, i want to invest 10k in sip please suggest me some good mutual funds which can give me return around 25 to 30%

Ans: Hello Manjunath and thanks for writing to me.

While we see that over the long run, equity investments beat other investment avenues like fixed deposits, one cannot assure any returns.

Ans: Hi Murgendra, thank you for writing in.

I notice you are currently investing around 70% of your funds in index funds, HDFC Nifty 50 & HDFC Nifty Next 50. With this, your portfolio returns will mostly mirror index returns.

You can consider investing Rs.10,000 in HDFC Nifty 50 Index Fund and Rs.10,000 in HDFC Nifty Next 50 Index Fund & invest the balance Rs.10,000 as follows:
1-SBI Magnum Midcap Fund-Growth Rs.5,000
2-Franklin India Smaller Companies Fund- Growth Rs.5,000

This will give you more midcap and smallcap exposure that have the potential to outperform the index and help you generate higher returns.

To create a corpus of Rs.50 Lakh in 5 years, you will need to invest around Rs.60,500 per month, that is increase your SIP’s by Rs.17,500. You need not invest in any new schemes, but simply increase the SIP amounts in the same proportion.

Annual step ups of around 10% will help you achieve your goals faster.

Ans: Investing your inheritance of 40 lakhs in mutual funds with a diversified balanced portfolio is a prudent approach to potentially grow your savings for a future down payment on a home in Delhi NCR. Here's a suggested approach:

Define Your Investment Horizon and Risk Tolerance: Given your goal of accumulating a down payment within 5-8 years, it's crucial to align your investment horizon with the timeline of your objective. Also, assess your risk tolerance to determine the appropriate allocation between equity and debt funds.
Asset Allocation: Since your investment horizon is relatively short-term (5-8 years), consider a balanced portfolio with a mix of equity and debt funds. Allocate a larger portion to debt funds to mitigate the impact of market volatility and ensure capital preservation. A typical allocation could be 60% in debt funds and 40% in equity funds.
Choose Mutual Funds: Select mutual funds with a proven track record of delivering consistent returns over the long term. Opt for diversified equity funds with exposure to large-cap and mid-cap stocks for growth potential, along with debt funds such as short-duration or dynamic bond funds for stability.
Systematic Investment Plan (SIP): Invest your lump sum amount through SIPs to benefit from rupee-cost averaging and reduce the impact of market volatility. Set up a systematic investment plan to invest a fixed amount at regular intervals, ensuring discipline and consistency in your investment approach.
Regular Monitoring and Review: Monitor the performance of your mutual fund investments regularly and review your portfolio periodically to ensure it remains aligned with your goals and risk tolerance. Consider rebalancing your portfolio if necessary to maintain the desired asset allocation.
Regarding financial advisory services, consulting with a Certified Financial Planner can provide personalized guidance tailored to your financial goals, risk tolerance, and investment horizon. A financial advisor can help you develop a comprehensive investment plan, navigate market fluctuations, and make informed decisions to achieve your objectives.

Ans: You are 31 years old.
Your goal is to buy a house in Mumbai in the next 5 years with a budget of Rs. 35-40 lakhs.
You seek investments for both long-term and short-term with minimal risk.
Financial Planning for House Purchase
Short-Term Investment Strategy (5 Years)
Recurring Deposits (RDs):

Suitable for disciplined savings.
Low risk and guaranteed returns.
Ideal for accumulating funds over a fixed period.
Bank Fixed Deposits (FDs):

Safe investment with fixed returns.
Opt for a laddering strategy to ensure liquidity.
Debt Mutual Funds:

Invest in high-quality corporate bonds and government securities.
Lower risk compared to equity funds.
Suitable for generating stable returns with moderate risk.
Suggested Allocation for Short-Term
Recurring Deposits (RDs): 30%

Provides disciplined savings with fixed returns.
Bank Fixed Deposits (FDs): 40%

Safe investment with fixed returns.
Ensure liquidity by laddering FDs.
Debt Mutual Funds: 30%

Invest in high-quality debt funds for stability.
Aim for moderate returns with lower risk.
Calculating Monthly Investment for House Purchase
Assuming you need Rs. 40 lakhs in 5 years.
Recurring Deposits (RDs): Rs. 12 lakhs
Monthly investment: Rs. 20,000 (approx.)
Bank Fixed Deposits (FDs): Rs. 16 lakhs
Monthly investment: Rs. 27,000 (approx.)
Debt Mutual Funds: Rs. 12 lakhs
Monthly investment: Rs. 20,000 (approx.)
Long-Term Investment Strategy
For Retirement and Other Long-Term Goals
Public Provident Fund (PPF):

Safe investment with tax benefits.
Long lock-in period suitable for retirement savings.
Employee Provident Fund (EPF):

Ensure regular contributions if employed.
Provides long-term growth with tax benefits.
Equity Mutual Funds:

Invest in high-quality actively managed funds.
Aim for long-term growth with moderate to high risk.
Suitable for wealth creation over 10-15 years.
Systematic Investment Plan (SIP):

Regular investment in equity mutual funds.
Helps in rupee cost averaging and disciplined investing.
Suggested Allocation for Long-Term
Public Provident Fund (PPF): 20%
Provides safe returns with tax benefits.
Employee Provident Fund (EPF): 20%
Ensure regular contributions for long-term growth.
Equity Mutual Funds: 60%
Invest in high-quality actively managed funds.
Aim for wealth creation over the long term.
Final Insights
For Short-Term: Invest in recurring deposits, fixed deposits, and debt mutual funds for house purchase.
For Long-Term: Invest in PPF, EPF, and equity mutual funds for wealth creation and retirement.
With disciplined investing and regular reviews, you can achieve your financial goals with minimal risk.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

Ans: Buying a Rs. 2 crore house without a loan by age 34 is ambitious and smart. With strong income and discipline, this is possible. Let us now build a step-by-step, practical approach to achieve it.

Let’s look at this with a 360-degree perspective. This includes savings, investment options, asset allocation, risk, taxation, and flexibility.

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?Target Value Understanding

The home price you want is Rs. 2 crore.

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Since there is no plan to take a loan, you need the full amount saved.

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The timeline is 5 years, which is a medium-term goal.

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Because this is not a long-term goal, the investment must be low to medium risk.

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You will also need flexibility and liquidity near the fifth year.

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The value of Rs. 2 crore will not change, as it is assumed to be in today’s terms.

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?Savings Target Evaluation

To reach Rs. 2 crore in 5 years, you must save and invest every month.

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A rough estimate shows that you may need to invest around Rs. 2.5 to 2.7 lakh monthly.

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This assumes a return of 9–10% per year from your investments.

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You earn Rs. 4 lakh monthly, so this goal is within reach if you maintain high savings.

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Keep your monthly expenses tight and focused during these 5 years.

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A disciplined savings plan is more important than investment returns.

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?Asset Allocation Strategy

Do not invest 100% in equity. That is very risky for 5 years.

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Use a balanced approach of equity and debt mutual funds.

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Consider 60% in equity-oriented hybrid or multi-asset funds.

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Keep 40% in short-duration or conservative hybrid debt funds.

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This balance gives growth and protection from sudden market fall.

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Review this mix yearly and reduce equity in last 1.5 years.

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You may go from 60:40 to 40:60 and then to 20:80 before withdrawal.

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?Mutual Fund Category Selection

Avoid pure small cap or sector-specific funds. They are too risky.

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Choose diversified equity mutual funds with good track record.

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Include large-cap oriented or equity and debt hybrid funds.

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Debt side can include short-term, low duration, or corporate bond funds.

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These can give reasonable returns without high risk.

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Please do not invest in index funds. They follow the market.

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In volatile times, index funds offer no downside protection.

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Actively managed funds adjust to market conditions.

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A good fund manager adds value by protecting capital in bad markets.

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?Direct vs Regular Fund Investing

Do not invest directly into funds if you are not experienced.

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Direct plans have lower cost but no guidance or service.

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Regular plans through Certified Financial Planner offer full support.

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CFPs select suitable schemes and help review every year.

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Also help in planning redemptions, tax, and rebalancing.

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?Taxation Planning and Exit Strategy

Short-term capital gains in equity funds are taxed at 20%.

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Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.

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For debt funds, all gains are taxed as per your income slab.

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You are in the highest slab. So, tax planning is key.

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Start exiting your equity funds in the 4th year in a phased way.

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Use STP (systematic transfer plan) to move equity gains to low-risk debt.

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This spreads out gains and helps reduce tax burden.

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?Liquidity and Risk Management

Market volatility can affect your fund value in short term.

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So don’t wait till the last month to redeem.

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Begin moving the funds 12 to 18 months before your house purchase.

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This protects your goal from any sudden crash.

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Also, maintain a 3 to 6-month emergency fund in liquid mutual funds.

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Do not touch this fund even if markets fall.

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?Contingency and Insurance Coverage

Ensure you have term insurance covering 15–20 times your annual income.

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This protects your family in case of uncertainty.

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Have Rs. 25 lakh or more of health insurance as well.

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Don’t rely only on company insurance.

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?Avoid These Common Mistakes

Do not keep money in FDs only. FD returns may not beat inflation.

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Don’t invest in ULIPs or traditional insurance for this goal.

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Avoid new-age options like crypto or PMS. They carry extra risk.

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Don’t blindly trust social media fund suggestions.

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Don’t chase past returns. Choose funds based on quality and process.

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?Review and Track Progress

Review portfolio every 6 months with a CFP.

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Stay flexible. Adjust fund types and allocation if needed.

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Track goal progress. You must stay on Rs. 2 crore path.

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If market underperforms, increase monthly saving a little.

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If you earn more in future, raise your SIPs too.

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?What You’re Doing Right

You are 29 and earning Rs. 4 lakh. Great starting point.

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You have no loan now. So, more savings power.

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You have set a clear goal and time frame. Very focused plan.

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You are avoiding debt. That builds long-term strength.

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?What You Should Watch Carefully

Don’t let expenses creep up with income growth.

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Don’t delay investing. Every month matters.

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Don’t go for short cuts or risky bets.

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Stick to the plan, stay calm in ups and downs.

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?How a Certified Financial Planner Helps

A CFP helps you choose funds that match your risk.

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Helps align tax and liquidity needs.

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Helps you exit smoothly at the right time.

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Offers full hand-holding over these 5 years.

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You focus on earning. Let the planner handle the rest.

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?Final Insights

Saving around Rs. 2.5 to 2.7 lakh monthly is required.

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Balanced allocation of equity and debt mutual funds is the way.

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Stick to plan, monitor annually, reduce equity before maturity.

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Tax planning, risk control, and goal protection are must.

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You are already on the right track with strong income and discipline.

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Make this goal the top priority. Avoid distractions.

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A home bought debt-free gives great peace and freedom.

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With focus and care, you will reach this dream in 5 years.

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