Hello Sanjeev I have lost all the financial savings capabilities. I sold my only home 10 years ago when my mom passed away. I earn 2 lakhs but still unable to save anything due to commitments. House rent, house related expenses, loans, child school and other expenses Can you please guide me here

Ans: It's commendable that despite financial obligations and family responsibilities, you're looking to pave a path towards savings and investment. Balancing present needs with future goals can indeed be a tightrope walk.

Firstly, let's look at your expenses. Allocating 80k for family expenses is a significant chunk of your income. While family comes first, there may be areas where you can optimize spending without compromising on essentials.

Given your combined income of 3.2 lacs post-tax, even a small percentage saved can make a difference over time. Start by creating a budget that outlines all your monthly expenses and identifies areas where you can cut back.

For savings and investments, consider starting small with a systematic investment plan (SIP). It allows you to invest a fixed amount regularly in mutual funds. Even a modest monthly SIP can accumulate into a substantial sum over time, thanks to the power of compounding.

Lastly, review your loans and obligations. Are there opportunities to refinance at lower interest rates or consolidate debts? This could free up some funds for savings.

Remember, financial planning is a journey, not a destination. It's okay to start small. The key is consistency and patience. With time, as your income grows and obligations reduce, you'll find it easier to save and invest more. Best of luck on your financial journey!

Ans: It's never too late to start saving and investing, even at 55 years of age. Let's outline a plan to help you accumulate 25 lakhs in the next 5 years:
1. Assess Current Finances: Begin by evaluating your current financial situation, including income, expenses, assets, and liabilities. Understanding your financial baseline will help in setting realistic savings goals.
2. Create a Budget: Develop a monthly budget that accounts for all your expenses, including essentials like utilities, groceries, and medical expenses. Identify areas where you can potentially reduce spending to increase savings.
3. Emergency Fund: Prioritize building an emergency fund equivalent to at least 6-12 months of your living expenses. This fund will provide a financial cushion for unexpected expenses or emergencies, ensuring you don't dip into your savings prematurely.
4. Investment Strategy: With a 5-year timeframe, consider a combination of savings and investment avenues to achieve your goal of accumulating 25 lakhs. Since you have a relatively short investment horizon, focus on low to moderate risk options with potential for growth.
5. Systematic Investment Plan (SIP): Start a monthly SIP in mutual funds or other investment vehicles that align with your risk tolerance and financial goals. Consider diversified equity funds for growth potential, balanced funds for stability, and debt funds for capital preservation.
6. Additional Income Streams: Explore opportunities to increase your income through part-time work, freelancing, or utilizing any specialized skills or hobbies you may have. Even a small additional income can significantly boost your savings over time.
7. Minimize Expenses: Continuously review your expenses and look for ways to minimize discretionary spending. Cut back on non-essential purchases and focus on living within your means to maximize savings.
8. Regular Review: Periodically review your financial progress and adjust your savings and investment strategy as needed. Monitor the performance of your investments and make any necessary changes to stay on track towards your goal.
9. Seek Professional Guidance: Consider consulting with a Certified Financial Planner who can provide personalized advice tailored to your specific situation and goals. They can help you create a comprehensive financial plan and navigate the investment landscape effectively.
By following these steps and staying disciplined in your approach, you can work towards achieving your target of saving 25 lakhs in the next 5 years, securing your financial future.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: Here are some suggestions on how you can save for your child's future with a monthly income of ?75,000, a car loan of ?14,000, and an existing SIP of ?8,500:

Analyze your current spending:

Track your expenses for a month to understand where your money goes. This will help you identify areas where you can cut back and free up additional savings for your child.
Revisit your car loan:

If possible, consider refinancing your car loan to a lower interest rate. This can free up some money each month that you can then redirect towards your child's savings.
Optimize your SIP:

Review your existing SIP and ensure it aligns with your child's future goals and your risk tolerance. You may want to consider increasing the SIP amount if there's room in your budget after accounting for other expenses.
Prioritize Child Savings:

Once you have a better understanding of your spending and have potentially reduced your car loan outgo or optimized your SIP, allocate a specific amount towards your child's savings.
Investment options for your child's future:
1. Increase Existing SIP:

Consider increasing your existing SIP in the well-diversified equity mutual fund by ?3,500 per month. This brings your total SIP contribution to ?12,000 per month. This focuses on long-term growth for your child's future.
2. Diversification with Debt Fund:

Start a new SIP in a low-risk debt fund with ?3,000 per month. This provides stability and helps manage short-term financial needs your child might have. You can choose a short-term or medium-term debt fund based on your preference for when your child might need the money.
Benefits of this approach:

Flexibility: This approach allows you to manage growth and stability within your child's savings plan. The equity SIP focuses on long-term growth, while the debt SIP provides a buffer for immediate needs.
Control: You have more control over the asset allocation. You can adjust the SIP amounts in each fund as your child grows and their financial goals become clearer.
Cost-effective: Avoiding ULIPs eliminates high fees associated with those products. Regular mutual funds generally have lower expense ratios.
Additional Tips:

Review and Rebalance: Regularly review your investment strategy and rebalance the portfolio (equity vs. debt) if needed, to maintain your desired asset allocation.
Start Early, Invest Regularly: Even small increases in SIP contributions can make a significant difference over time due to compounding.
Consider PPF or Sukanya Samriddhi (if applicable): If you're in India, explore options like Public Provident Fund (PPF) or Sukanya Samriddhi Yojana (for girl child) for additional tax benefits and safe, guaranteed returns.
Remember:

Consult a financial advisor for personalized advice considering your risk tolerance and your child's age and goals.
They can recommend specific mutual funds based on your investment goals and risk profile.
By following these steps and consulting a professional, you can build a strong foundation for your child's financial future.

Ans: It's never too late to start saving for retirement, and kudos to you for taking this important step at 34! Here's how to get on track:

1. Assess your situation:

Track your expenses: For a month, track where your money goes. This will help identify areas to cut back and free up savings.
Emergency fund: Aim for 3-6 months of living expenses in an easily accessible savings account for emergencies.
2. Start saving:

Automated savings: Set up a Systematic Investment Plan (SIP) in a mutual fund. Start small, even with ?1,000 per month, and gradually increase as you get comfortable.
3. Retirement plan:

Employer benefits: Check if your employer offers a retirement plan like a Provident Fund (PF). Contribute the maximum allowed for tax benefits and long-term savings.
Individual options: Explore options like National Pension System (NPS) or Equity Linked Savings Schemes (ELSS) for long-term growth. Talk to a Registered Investment Advisor (RIA) for personalized advice based on your risk tolerance and goals.
Here's a breakdown based on your income:

You mentioned an average annual income of ?40 lakhs. Aim to save at least 10-15% of your income, which translates to ?4,000-?6,000 per month.
Remember: Consistency is key! Starting early, even with a small amount, allows time for your savings to grow through the power of compounding. Don't be discouraged if you can't save a lot initially. Every little bit counts!

Ans: Hello Madeswaran! It's commendable that you're seeking to take control of your finances and work towards financial freedom. Let's assess your current situation and explore steps to get you back on track.

At 33, with a monthly income of Rs. 45,000 and monthly expenses of Rs. 35,000, it's essential to understand where the remaining Rs. 10,000 is being spent. Tracking your expenses diligently can help identify areas where you can cut back and redirect funds towards savings and debt repayment.

Given your previous financial setbacks, it's crucial to prioritize building an emergency fund to cover unexpected expenses and avoid going into further debt. Aim to set aside at least 3 to 6 months' worth of living expenses in a separate savings account as a safety net.

Addressing your existing debt of Rs. 1 lakh should be a priority. Focus on clearing this debt as soon as possible by allocating a portion of your monthly income towards repayment. Cutting back on non-essential expenses can free up additional funds for debt reduction.

Considering your goal of achieving financial freedom by the age of 50, it's important to establish a long-term financial plan. Start by setting specific, achievable goals and creating a budget to track your income and expenses.

Explore opportunities to increase your income through additional sources such as freelance work, part-time jobs, or starting a side business. Generating a secondary income can provide a financial buffer and accelerate your journey towards financial freedom.

Investing in yourself through education, acquiring new skills, or pursuing career advancement opportunities can also enhance your earning potential over the long term.

Finally, seek guidance from a Certified Financial Planner who can provide personalized advice tailored to your financial situation and goals. They can help you create a roadmap for achieving financial freedom and offer support and guidance along the way.

Remember, financial freedom is achievable with determination, discipline, and strategic planning. By taking proactive steps now, you can pave the way for a brighter financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in