Iam 40yrs old with 1.6lakhs take home with house wife and 3 yr old baby girl. Below is my current financial condition: 1. Taken Home loan for 35 lakhs for apartment worth of 55lakhs in 2022 with emi requirement of 41k for 11yrs (iam paying monthly 45k and one extra 45k emi yearly) 2. Took Gold loan of 11lakhs in 2022(paying from mar2024 onwards monthly 35k) for apartment purpose 3. Holding 2440 sqft land costs 25lakhs in 2021 now it is 35lakhs planned for baby girl marriage 4. 5lakhs emergency fund in FD 5. 6 lakhs FD for SBI life smart wealthbuilder plan purpose for next 6yrly premium payment, 6. Equity 5lakhs invested now mkt value 8lakhs, 7. Mf 8lakhs now 11lakhs (monthly 20k for 10 different funds with 1k stepup yearly) 8. EPF 20lakhs not withdrawn from beginning for retirement plan 9. Ssy 1.2lakhs for baby girl education (monthly 6k) 10. Ppf 50k for baby girl education (monthly 3k) 11. Nps 4.9lakhs now 6lakhs (monthly 12k from company deduction and 50k annually from my side) 12. Holding agriculture land 1acre 7lakhs near hometown purchased in 2018 now it is same price no increase... Holding bcoz I like to have agriculture land... 13. Holding Gold coins 50gms purchasing when there is Amazon offers.. for baby girl ornaments purpose 14. Term insurance 1crore for me and 50lakhs for my wife purchased in 2022 15. Health insurance 20lakhs with premium 60k for 3yrs purchase in 2022... Monthly 1.6lakhs take home spending as below: 1. 45k home loan emi (annually 45k as one extra emi) 2. 30k mf sip ( 3k each for 10 funds - quant infra, quant smallcap, quant elss, 360 one focused, canara robeco smallcap, canara robeco emerging, mirae largecap, pgim flexicap, parag elss, ICICI prudential technology fund) 3. 35k gold loan prepayment 4. 35k home maintenance expenses 5. 10k ssy and ppf 6. 5k apartment maintenance 7. 45k LIc premium annual requirement 8. 40k term loan premium annual requirement taken 1crore for me and 50lakhs for my wife total to 40k premium 9. 30k annually for bike insurance, services and other maintenance 10. 1.3lakhs for baby girl school fees from this year 50% already paid 50% to be paid in oct 2024 11. 60k premium for health insurance once for 3 years purchased in 2022... I have few ask sir: 1. Want to buy 13 to 15Lakhs car.. when to buy with my financial condition and I have no down payment free cash now 2. Should I change my financial saving/investment please suggest as I am not having any free cashflow post the monthly commitment 3. Want to generate 2nd source of income suggest plz which is good to have it 4. Want to become financial freedom by next 10years so what I need to do for it and plan better. 5. Any changes in the current plan suggestion

Ans: Your financial situation requires a structured approach to ensure long-term security. You have multiple income sources, a property, investments, and financial commitments. A clear plan will help manage expenses, investments, and future goals effectively.

Income Sources and Stability
Salary – Rs. 1.15 lakh per month

This is your primary source of income.
It provides stability and helps with regular expenses.
Pension – Rs. 1.15 lakh per month (reducing to Rs. 90,000 after 10 years)

This is a strong financial support.
Future reduction needs to be considered in planning.
Rental Income – Rs. 14,000 per month

This adds to cash flow.
It helps with loan repayment or investment.
Total Monthly Income – Rs. 2.44 lakh (reducing to Rs. 2.19 lakh in 10 years)

This is a good financial position.
A structured approach is required for long-term financial stability.
Home Loan Repayment
Current EMI – Rs. 15,000 per month

The principal outstanding is Rs. 5 lakh.
The loan will be cleared in 20 months.
Should You Prepay?

Yes, if there is no prepayment penalty.
Clearing the loan early gives peace of mind.
It saves on interest costs.
Impact on Finances

Prepaying Rs. 5 lakh reduces financial burden.
Monthly expenses will reduce after the loan is cleared.
Term Insurance Decision
Premium – Rs. 1 lakh per year for 10 years

Term insurance is necessary for your daughter’s security.
Ensure the sum assured is adequate.
Is It the Right Amount?

The premium seems high.
Reassess whether a lower premium plan can provide sufficient coverage.
Living Arrangement and Rent Planning
Current Situation – Staying with Sister

This reduces expenses.
It provides emotional support.
Moving Out – Additional Rs. 25,000 Rent per Month

This will increase monthly costs.
Ensure rental expenses fit within your budget.
Alternative Approach

Consider staying for a while longer to save more.
Delay moving out until your home loan is cleared.
Investment Strategy for Rs. 40 Lakh
Debt and Fixed Income Allocation – 30-40%

Provides stability and liquidity.
Ensures emergency fund availability.
Equity Mutual Funds – 50-60%

Helps with long-term wealth creation.
Beats inflation over time.
Actively managed funds perform better than index funds.
Systematic Investment Plan (SIP) for Growth

Investing monthly ensures rupee cost averaging.
Builds a strong financial corpus over time.
Emergency Fund

Keep at least 6-12 months’ expenses in liquid assets.
Ensures financial security in case of unexpected events.
Managing Future Financial Stability
Reducing Pension in 10 Years

Plan investments to compensate for lower pension.
Build a corpus that generates passive income.
Retirement Planning

Ensure investments support post-retirement needs.
Avoid pension plans, as they often provide lower returns.
Daughter’s Education and Future

Ensure sufficient funds for higher education.
Create a separate investment plan for this goal.
Finally
Your financial position is strong, but structured planning is key. Clearing the home loan, investing wisely, and managing expenses will ensure financial stability. With a balanced investment approach, you can secure a comfortable future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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