34 Engr: My 1Cr Home Savings Plan, Am I Losing Out?

Hi Hemant Bokil Ji, My name is sathish residing in gandhi nagar, my age is 34 currently working as Engineer. My current salary is 2lakhs per month. After deducting PF employer & employee of 19200 and NPS 11200(14% of basic) and tax of 18967. It will be 1.5L. I am doing OT in the company payment for it will be 46,953. So total income which i will get is 1,96,953. I have taken home at Mumbai. Which is under construction of 1cr. Till date i have paid 26L. Loan of 24L. Which is 50% of deman raised. Still i need to pay 50L to builder. I need to pay still 50L to builder. Home loan is approved for 89L.Intrest rate of 7.9%. My intention is i dont want to go for loan. What ever the left over money after expenses i am keeping it in my account and paying to builder when he raises demand letter. Is i am doing the right thing or i need to invest the amount in the market for better returns. Please give the solution for this. Thank you

Ans: You have made a strong start.

At 34, planning such a high-value property is a responsible decision.

You are trying to avoid taking full home loan.

You are using your income balance to pay the builder.

This approach shows clarity and control.

Let us now evaluate the right approach from all angles.

Let us also help you make better financial decisions.

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Understanding Your Cash Flow

Your total monthly income is Rs. 1,96,953.

This includes OT income of Rs. 46,953.

Your fixed deductions are for PF, NPS, and tax.

This leaves you with a healthy monthly disposable surplus.

You plan to save and pay the builder stage by stage.

You have paid Rs. 26 lakhs so far.

Rs. 24 lakhs is already through loan disbursed.

You still need to pay Rs. 50 lakhs to the builder.

Loan is approved for Rs. 89 lakhs. You wish to avoid more disbursement.

This means you want to self-fund the remaining Rs. 50 lakhs.

That is a very disciplined approach.

But we must analyse the risk and return involved.

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Evaluate Opportunity Cost vs. Interest Savings

Home loan interest is 7.9% currently.

This is a moderate rate in current market.

If your investments earn more than 7.9%, they beat the loan cost.

Equity mutual funds have potential to deliver higher returns.

But they are volatile and need a longer time to grow.

You will need to withdraw for builder payment within 6-12 months.

Equity does not suit short-term goals.

Debt mutual funds also have market risks.

Bank savings or fixed deposits give 3%–6% currently.

That is lower than 7.9% home loan cost.

Hence, investing now and withdrawing later for builder is not profitable.

Your intention to avoid loan and use income is safer.

You save interest and avoid market volatility.

So, your current method is suitable for short-term funding.

No urgent need to invest the amount.

Keep the funds in a safe, liquid, and low-risk place.

For example, liquid funds or ultra-short-term mutual funds.

These are better than savings account.

They give 5%–6% return and quick withdrawal.

They don’t block the money.

Avoid equity mutual funds for now.

You need money in next few months, not after 5 years.

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Build Emergency Fund First

Before paying builder, ensure you have emergency money.

At least 6 months of your expenses in liquid form.

Around Rs. 2–3 lakhs kept aside is ideal.

Don’t put this in property or investment.

Keep in liquid fund or sweep-in FD.

You must never use credit card or personal loan in emergency.

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Future Strategy After Property Completion

After full builder payment, start goal-based investing.

Now you are using most of your surplus for property.

Later you can focus on building wealth.

Divide your investments based on financial goals.

Retirement, child education, travel, corpus for peace of mind.

Choose mutual funds with active fund management.

Index funds lack flexibility during market stress.

Actively managed funds have better downside protection.

Don’t invest directly. Use regular funds through MFD with CFP qualification.

Regular plans offer guidance, monitoring, and support.

Direct funds may miss out on personalised rebalancing.

This becomes risky in volatile markets.

Review your investments every 6 months.

Asset allocation should suit your risk level and age.

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Avoid Common Investment Mistakes

Don’t invest only in one asset class.

Equity, debt, gold, all must be balanced.

Don’t follow stock tips or social media advice.

Don’t stop SIPs during market correction.

Don’t mix insurance with investment.

Avoid ULIPs and money-back policies.

Surrender old LIC policies if returns are poor.

Shift that money to mutual funds.

Buy pure term insurance separately.

Get health insurance for you and dependents.

Protecting your family is more important than chasing returns.

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Tax-Saving Suggestions

Your NPS and PF already give tax benefit.

Check if you are using full Rs. 1.5 lakh under 80C.

Consider ELSS mutual fund if there is balance room.

They give tax savings and long-term growth.

Avoid 5-year FDs or ULIP for 80C.

ELSS has only 3-year lock-in.

Use NPS additional Rs. 50,000 under 80CCD(1B) fully.

Maintain home loan documents for future deductions.

Even pre-EMI interest can be claimed in 5 parts later.

Track capital gains from mutual funds properly.

New rule: Long-term capital gains above Rs. 1.25 lakh taxed at 12.5%.

Short-term equity gains taxed at 20%.

Debt fund gains taxed at your income slab.

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What You Can Do Next

Track builder demand schedule.

Keep your savings liquid.

Avoid locking funds in volatile investments now.

Prepare for EMI post possession.

Keep your CIBIL score healthy.

Maintain minimum 6-month emergency reserve.

After construction, relook at your finances with a CFP.

Plan for long-term wealth creation post home completion.

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Finally

You are managing your money thoughtfully.

You are avoiding high loan burden. That is wise.

You are not tempted by short-term market returns.

That shows maturity and patience.

At this stage, liquidity is more important than growth.

Once the house is complete, you can explore investments again.

Use regular mutual fund plans with guidance from a Certified Financial Planner.

That will keep your journey stress-free and aligned with your goals.

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Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: Appreciate your clarity and discipline at this young age. You are only 29.
Your Rs. 2 lakh monthly salary with strong savings shows maturity.
You also have SIPs, PF, term insurance, and savings. That’s very positive.
Now let us assess all options and offer full 360-degree clarity.

» Understanding Your Current Financial Picture

– Take-home is Rs. 2 lakh monthly.
– Rent is Rs. 11,000 per month, which is affordable.
– You pay Rs. 33,000 EMI on Rs. 15 lakh personal loan.
– You have Rs. 25 lakh in savings.
– SIP is Rs. 25,000 monthly.
– Your PF is Rs. 5 lakh and growing Rs. 50,000 monthly.
– You hold term insurance of Rs. 1 crore, which is correct.
– Your monthly surplus after all deductions is over Rs. 1 lakh.

Your situation is stable, but you must choose between two options wisely:
Home loan now or house construction using savings?

Let us understand each option clearly before making a decision.

» Option 1: Buying Land and Constructing with Savings

– You want to buy land in hometown using Rs. 25 lakh savings.
– Then construct house worth Rs. 50 lakh by taking a home loan.
– This option may feel emotional but can create financial strain.
– Construction will need continuous funds and time commitment.
– Savings will be fully locked in land purchase.
– Loan EMI for Rs. 50 lakh could be around Rs. 50,000 monthly.
– Your total EMI becomes Rs. 83,000 including personal loan.
– You will be left with Rs. 70,000 per month for SIP, lifestyle and emergencies.

This makes the cashflow tight and future uncertain.
Also, real estate is not liquid and is not advisable.
Hometown property may not give income or appreciation.
Unless you plan to live there soon, it becomes idle capital.
Also, owning land brings extra property tax, security, and upkeep costs.

» Option 2: Continue Staying on Rent and Invest Smartly

– Your rent of Rs. 11,000 is low compared to your income.
– You can invest your Rs. 25 lakh in debt and equity mix.
– With Rs. 1 lakh surplus monthly, continue SIP and diversify.
– Let your personal loan get repaid in next few years.
– This keeps your finances safe and gives investment compounding.
– When personal loan is over, you will save Rs. 33,000 extra monthly.
– That time, you can think of home construction or self-funding partly.

This path keeps your assets growing and avoids home loan pressure.
Also, investing at this young age gives you better compounding power.
You can create bigger wealth without locking into illiquid assets.

» Problems with Real Estate at This Stage

– Buying land and building home is not urgent now.
– Real estate is not liquid. Selling takes time and cost.
– You also lose flexibility if your career changes city.
– Property in hometown does not generate income.
– It does not support your retirement or children goals.
– Regular property maintenance becomes a burden from distance.

So instead of locking savings, use it for better goals.

» Smart Use of Surplus Income

– Your Rs. 1 lakh surplus must be protected and grown.
– First build emergency fund equal to 6 months expenses.
– Second, repay personal loan faster. Prepay from bonus or extra cash.
– This reduces your EMI burden and interest cost.
– Third, boost SIP to Rs. 40,000 monthly gradually.
– Fourth, review and increase term insurance to Rs. 2 crore over time.
– Fifth, plan for future goals like marriage, children, retirement.
– All these need financial assets, not real estate.

» Strengthen Long-Term Financial Base

– At 29, your priority is wealth creation, not house ownership.
– Let your PF grow steadily through compounding.
– Increase your SIP in actively managed equity funds.
– Do not invest in index funds. They lack human management.
– Actively managed funds outperform with smart rebalancing.
– Avoid direct funds. They don’t offer guidance or strategy.
– Regular plans through a CFP-backed MFD give long-term discipline.

This way your money is monitored and adjusted with market cycles.
It is not just about returns but peace and smart tracking.

» Home Construction Can Wait for Right Time

– Build home when personal loan is cleared.
– When savings are above Rs. 50 lakh, build without big loan.
– Or take small home loan with low EMI.
– This protects you from interest burden and mental stress.
– Home ownership should never disturb cashflow or investment plan.
– Wait until you are ready both emotionally and financially.

» Rent vs Own Decision Must Be Logical

– Rent is not waste. It gives flexibility and peace.
– Your rent is low. No reason to rush home buying.
– Home buying in hometown is not income-generating.
– Instead use the same money to grow faster in financial assets.
– Later, you can buy house in city if needed.
– Till then, stay on rent and invest fully.

» Build Goals-Based Investment Strategy

– Split your goals in 3 types: short, medium, long-term.
– Emergency fund and insurance is short term.
– Loan repayment and marriage planning is medium term.
– Retirement and child future is long term.
– For short-term, use liquid or short-duration debt funds.
– For medium-term, use hybrid or low-volatility funds.
– For long-term, use actively managed equity funds.

Avoid keeping idle cash or gold for future.
They don’t generate returns matching inflation.

» Regular Review and Risk Management

– Review portfolio once every 6 months with certified professional.
– Check performance, risk level, asset allocation.
– Realign if market changes or goal priorities shift.
– Rebalance debt and equity as per plan.
– Avoid high-risk bets, ULIPs, or guaranteed plans.
– Do not mix insurance with investment. Keep both separate.

Your current plan is strong. Stay alert and flexible.

» Insurance is Not Investment

– Your term insurance is correct.
– Do not take traditional LIC or ULIP plans.
– They offer low returns and lock money long.
– Use term plan for pure protection.
– For wealth creation, rely only on mutual funds and PF.

» Tax Planning with Investment Discipline

– Use SIPs for long-term equity growth.
– LTCG above Rs. 1.25 lakh is taxed at 12.5%.
– STCG is taxed at 20%.
– For debt funds, tax is as per your slab.
– Use debt funds smartly for short and medium goals.
– Track gains yearly and adjust withdrawals to manage tax.

» Career Growth and Asset Building

– As your salary grows, increase SIP gradually.
– Make every increment and bonus work for you.
– Avoid lifestyle inflation and unnecessary luxury expenses.
– Save and invest more in early years.
– This gives long-lasting wealth in future.
– Don't chase quick gains or risky trends. Stay steady.

» Keep Flexibility for Future Life Events

– Life can change in career, marriage, family.
– You may shift city, change job, or take sabbatical.
– So keep assets liquid and flexible.
– Real estate blocks your options and adds pressure.
– Better to keep funds in financial assets till clarity comes.

» Finally

– Do not build house now using savings and big loan.
– Postpone it until personal loan ends and savings grow.
– Stay on rent and invest surplus wisely.
– Increase SIPs and repay loans faster.
– Use financial assets to reach future life goals.
– Real estate in hometown is not wealth-building.
– Focus on financial freedom through investments.

Your early discipline will give you future peace and strength.
Keep building this strong base for a happy future.

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

Ans: You have explained your income, goals, current assets, and future plans with great clarity. Your early planning spirit is strong. This gives a very good base. You can reach a peaceful retirement with smart steps in the next few years.

» Your Current Position

You are 40 years old. You plan to retire in 3 to 5 years. You earn Rs 2.3 lakh per month. Your wife also works but will stop working soon. You have one daughter aged 10. Your current monthly cost is around Rs 1.1 lakh. This cost will reduce after retirement because you will shift to your parental flat.

Your investment base is already good. You have saved in bonds, stocks, mutual funds, PPF, FD, and SIP. Your wife also has her own savings and rental income from a flat. All these create a good starting point.

This early base helps you plan stronger. It also gives room for more shaping. You are on the right road.

» Your Family Goals

You need Rs 75 lakh for your daughter’s higher education and marriage.

You want Rs 75,000 per month for family living after retirement.

You want to retire in 3 to 5 years.

You will shift to your parental flat after retirement.

You will have rental income of Rs 10,000 from your wife’s flat.

These goals are clear. They give direction. They allow a strong plan.

» Your Present Investments

Your investments include:

Rs 50 lakh in REC bonds maturing in 2029.

Rs 42 lakh in stocks.

Rs 17 lakh in mutual funds.

Rs 16 lakh in fixed deposits.

Rs 15 lakh in PPF.

Rs 1.3 lakh as monthly SIP.

Your wife holds:

Rs 30 lakh corpus.

A flat worth Rs 40 lakh with rent of Rs 10,000 each month.

Your combined net worth is healthy. This gives good power to build your retirement fund in the coming years.

» Understanding Your Expense Need After Retirement

You expect Rs 75,000 per month after retirement. This includes all basic needs. You will not have rent. That reduces cost. This assumption looks fair today.

Your cost will rise with inflation. So you must plan for rising needs. A strong retirement corpus must support rising cost for 40 to 45 years because you are retiring early.

An early retirement needs a large buffer. So you need safety along with growth. Your plan must include growth assets and safety assets.

» How Much Monthly Income You Will Need Later

Rs 75,000 per month is Rs 9 lakh per year. In future years, this cost can rise. If we assume steady rise, your future cost will be much higher.

So the retirement corpus must be designed to:

Give monthly income.

Beat inflation.

Support you for 40 to 45 years.

Protect your family even in market down cycles.

Allow flexibility if your needs change.

A strong retirement fund must support both safety and long-term growth.

» How Much Corpus You Should Target

A safe target is a large and flexible corpus that can support long years without running out of money. For early retirement, the usual thumb rule suggests a very high number. This is because you need income for many decades.

You need a corpus big enough to produce rising income. You also need a cushion for unexpected health costs, lifestyle shocks, and inflation changes.

Your target retirement corpus should be in a strong range. For your needs of Rs 75,000 per month and for goals like daughter’s education and marriage, you should aim for a combined retirement readiness corpus in the higher bracket.

A safe range for your family would be a very large number crossing multiple crores. This large range gives you:

Income safety.

Inflation protection.

Peace during market cycles.

Comfort in long life.

Room for daughter’s future.

Strong backup for health.

You are already on the way due to your existing assets. You will reach close to this range with systematic building over the next 3 to 5 years.

» Why You Need This Larger Corpus

You will retire early. That means more years of living from your corpus. Your corpus must not fall early. It must grow even after retirement. It must give monthly income and long-term family protection.

This is only possible when the corpus is strong and well-structured. A weak corpus creates stress. A strong corpus creates freedom.

Also, your daughter’s future cost must be kept aside. This must be parked in a separate fund. This must not touch your retirement money.

A strong corpus makes these two worlds separate and safe.

» Your Existing Assets and Their Strength

You already have good diversification:

Bonds give safety.

Stocks give growth.

Mutual funds give managed growth.

FD gives stability.

PPF gives tax-free long-term savings.

This blend is already a good start. But you need to make the blend more structured for early retirement.

Your Rs 1.3 lakh monthly SIP is also strong. It builds your future fast. You should continue.

Your wife’s rental income is small but steady. This adds strength.

Your combined financial base can reach your retirement target if you refine your allocation now.

» Your Daughter’s Future Fund Need

You need Rs 75 lakh for your daughter’s education and marriage. You should keep this goal separate from your retirement goal.

Your current SIP and future allocations should create a dedicated fund for this goal. A long-term fund can grow well when managed actively.

Do not mix this fund with your retirement needs. Mixing leads to shortage in old age. Always keep this corpus ring-fenced.

» A Strong Asset Mix For Your Retirement Path

A balanced mix is needed. You need growth assets to beat inflation. You also need stable assets for income.

You must avoid index funds because they do not give flexibility. Index funds follow a fixed index. They cannot make active changes in different markets. They cannot move to better stocks when markets change. They force you to stay in weak sectors for long. They also do not help you in down cycles because they cannot protect you by shifting to safer options. This can hurt retirement planning.

Actively managed funds are better because:

They give active asset selection.

They give scope for better returns.

They give flexibility to change sectors.

They give downside management.

They give access to a skilled fund manager.

They support long-term planning more safely.

Direct plans also carry risk. Direct plans do not give guidance. They do not give behavioural support. They do not give market timing help. They do not give portfolio shaping. They leave all the judgement to you. One mistake can cost years of wealth.

Regular plans with guidance from a Certified Financial Planner help you shape decisions. They help you remain disciplined. They help you avoid panic. They help you decide allocation changes at the right time. This saves wealth in long-term.

» How Your Investment Journey Should Grow in the Next 3–5 Years

Continue your SIP.

Increase SIP when your income rises.

Shift part of your stock holding into planned long-term mutual funds to reduce concentration risk.

Build a defined daughter’s education fund.

Keep a part of your REC bond maturity amount for long-term.

Avoid locking too much into fixed deposits for long periods.

Build a safety fund for one year of expenses.

This will create a full structure.

» Your Rental Income Role

Your rental income of Rs 10,000 per month is small but steady. Over time it will rise. This income will support your monthly cash flow after retirement.

You can use this for utilities or health insurance premiums. This gives a cushion.

» Your Emergency Buffer

You should keep at least one year of essential cost in a safe place. This can be in a liquid account or short-term fund. This protects you in shocks.

Since you plan early retirement, a strong buffer is important. It gives peace even in low months.

» A Structured Retirement Approach

A complete retirement plan for you should include:

A clear monthly income plan after retirement.

A corpus that can grow and protect.

A rising income system that matches inflation.

A separate daughter’s future fund.

A health cover plan for your family.

A tax-efficient withdrawal plan.

A market cycle plan to protect you in tough times.

This holistic approach keeps your family strong for decades.

» What You Should Build by Retirement Year

Your aim should be to reach a strong multi-crore range in investments before retirement. You already hold a large amount. You will add more in the next 3 to 5 years through SIP, stock growth, bond maturity, and disciplined saving.

Once you reach your target range, you can start the shifting process:

Move a part to stable assets.

Keep a part in long-term growth assets.

Create a monthly income strategy.

Keep a reserve bucket.

Keep a child future bucket.

Keep a long-term growth bucket.

This structure protects you in all market conditions.

» Final Insights

Your financial journey is already strong. You have a good income. You have saved well. You have multiple asset types. You have a clear timeline. And you have clear goals. This foundation is solid.

In the next 3 to 5 years, your focus should be on growing your combined corpus to a strong multi-crore range, keeping a separate fund for your daughter, reducing risk in unplanned assets, and building a stable long-term structure.

With the present path and a disciplined structure, you can retire peacefully and support your family with confidence for many decades.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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