Feeling the financial squeeze: Can I survive in Bangalore on a 40k monthly income?

Ans: I hope that your job loss has not affected you emotionally. I see that you are close to your retirement age! One good thing to know is that you do not have any loans outstanding. On the other hand, you still have some responsibilities in your kid’s education apart from taking care of monthly expenses. Ideally, your investments should have covered your kid’s education expense annually given you have 1.30 cr in FD’s. However, if you continue to significantly depend on FDs, you may not be able to achieve your goals- as your returns would not beat inflation on a post tax basis.
At the same time, you are nearing retirement age, which makes you ideally risk conservative. As a first step, I would suggest you move some of your FDs to dynamic asset allocation funds like ICICI Balanced Advantage Fund. Part of your portfolio you can use Large Cap and Flexicap/Multicap funds. Second step is if you can look at some sources of earning to at least cover household expenses for a few years. Your can get it reviewed and see if it is delivering returns in line with managed funds. If not, you can move some of this also to managed funds.
A combination of looking for sources of income, and improving your returns will help you in this journey. One backup you have is that of a reverse mortgage on your house to take care of your expenses.

Ans: Please be specific as to what do you need the help for , investments or taxation ?

Ans: Current Financial Overview
Your income is Rs. 1,50,000 per month.

Your monthly expenses are approximately Rs. 1,00,000.

You are investing Rs. 17,500 per month in mutual funds, Rs. 12,500 per month in PPF, Rs. 50,000 annually in insurance, and Rs. 50,000 annually in NPS.

Assessing Your Investments
Mutual Funds

Investing in seven different mutual funds is good for diversification.

PPF

PPF is a safe investment with tax benefits.

Insurance

Ensure you have adequate term insurance coverage.

NPS

NPS is good for retirement planning with tax benefits.

Financial Goals and Strategies
Goal: Buying a House
You previously faced a loss in property investment.

Saving for a house should be a priority.

Consider saving separately in a high-interest account.

Goal: Children’s Education
Plan for your children’s education expenses.

Start SIPs in education-focused mutual funds.

Goal: Retirement Planning
You are already investing in NPS and PPF.

Consider increasing contributions to NPS.

Monthly Savings Allocation
Increase Savings

Try to save more from your monthly income.

Aim for saving 25-30% of your income.

Investment Diversification
Equity Mutual Funds

Allocate more to large-cap and mid-cap funds.

These funds offer balanced growth and stability.

Debt Funds

Invest in debt funds for stability and regular income.

Balanced Funds

Consider balanced advantage funds.

These funds provide a mix of equity and debt.

Insurance Review
Term Insurance

Ensure you have adequate term insurance coverage.

A cover of Rs. 1 crore is recommended.

Health Insurance

Ensure comprehensive health coverage for your family.

Emergency Fund
Maintain an emergency fund.

Keep at least 6 months of expenses in a liquid fund.

Professional Guidance
Consult a Certified Financial Planner.

They can provide personalized advice and regular reviews.

Action Plan
1. Increase SIPs

Gradually increase SIP contributions.

Focus on large-cap, mid-cap, and balanced funds.

2. Save for House

Save separately in a high-interest account for buying a house.

3. Plan for Education

Start SIPs in education-focused mutual funds.

4. Review Insurance

Ensure adequate term and health insurance coverage.

5. Maintain Emergency Fund

Keep an emergency fund for at least 6 months of expenses.

Final Insights
Your financial plan should focus on increasing savings, diversifying investments, and planning for future goals.

Regularly review and adjust your investments to stay on track.

Seek professional guidance to ensure a comprehensive financial strategy.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Since a job change is difficult, focus on increasing income through skill development, freelancing, or side businesses.

Look for online certifications or part-time work to improve financial stability.

Cut unnecessary expenses and build savings despite the rent burden.

Stay consistent with investments, even if small, to create long-term security.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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