Home > Money > Question
Need Expert Advice?Our Gurus Can Help

How Can I Afford a 60 Lakh Flat in Mumbai with a 60,000 Salary and No Savings?

Ramalingam

Ramalingam Kalirajan  |8009 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Sumit Question by Sumit on Jul 22, 2024Hindi
Listen
Money

My monthly salary 60000. I have no any savings but right now I stay in rented house in Mumbai. I want purchase own flat Rs.60 Lakhs how’s is possible?

Ans: Current Financial Situation
Your monthly salary is Rs. 60,000. You live in a rented house in Mumbai. You have no savings currently.
Housing Goal
You want to buy a flat worth Rs. 60 lakhs. This is a big goal for your income level.
Challenges

Your income is limited compared to property prices in Mumbai
You have no existing savings to use as down payment
Mumbai real estate market is very expensive

Possible Strategies

Start saving aggressively from your salary each month
Look for ways to increase your income through side jobs
Consider more affordable areas in Mumbai's outskirts
Explore government housing schemes for first-time buyers
Look into home loan options from banks

Saving Plan

Aim to save at least 30-40% of your salary each month
Cut unnecessary expenses and create a strict budget
Start an automatic transfer to a separate savings account
Look for higher interest savings options like FDs

Increasing Income

Ask for a raise or promotion at your current job
Take on freelance work or a part-time job
Upgrade your skills to qualify for higher-paying roles

Home Loan Considerations

Most banks require 10-20% down payment
Your current income may not qualify for a Rs. 60 lakh loan
Work on improving your credit score for better loan terms

Government Schemes

Look into PMAY (Pradhan Mantri Awas Yojana) for subsidies
Check eligibility for Maharashtra Housing schemes

Timeline Expectations

Saving for down payment may take 3-5 years or more
Be patient and consistent with your savings plan
Property prices may change, so stay updated on market trends

Finally
Buying a Rs. 60 lakh flat on a Rs. 60,000 salary is challenging. Start saving, increase income, and explore all options. Stay focused on your goal.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Ramalingam

Ramalingam Kalirajan  |8009 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 21, 2024

Money
Hello All. I am 46 and my earning is 40k pm. . I have investment in various equity and sgb of around 1lac. I have around 5lac in bank. What can do so that I can buy flat or plot in coming years.
Ans: At 46, with a monthly income of Rs 40,000 and a goal to buy a flat or plot, it's essential to plan strategically. Let's explore the steps to help you achieve this goal.

Understanding Your Financial Situation
Income and Savings

Your monthly income is Rs 40,000. You have Rs 1 lakh invested in equity and SGBs, and Rs 5 lakh in the bank.

Expenses and Savings Rate

Understanding your monthly expenses will help determine your savings rate. Aim to save at least 20-30% of your income, i.e., Rs 8,000 to Rs 12,000 monthly.

Setting Clear Financial Goals
Primary Goal

Save enough to buy a flat or plot in the coming years. Determine the approximate cost of the property you wish to purchase.

Secondary Goals

Ensure financial security for emergencies, retirement, and other long-term needs.

Building an Emergency Fund
1. Emergency Fund

Maintain an emergency fund covering 6-12 months of expenses. This will safeguard you against unexpected financial setbacks.

2. Liquid Assets

Keep this fund in liquid assets like a savings account or short-term fixed deposits for easy access.

Optimizing Your Investments
1. Equity Investments

You have Rs 1 lakh in equity and SGBs. Continue investing in these for long-term growth. Equity can provide higher returns over time.

2. Bank Savings

Your Rs 5 lakh in the bank is a good start. However, bank savings offer low returns. Consider moving some funds to higher-yield investments.

Monthly Investment Strategy
1. Systematic Investment Plan (SIP)

Start SIPs in mutual funds. Invest Rs 8,000 to Rs 12,000 monthly. Choose a mix of large-cap, mid-cap, and small-cap funds for diversification.

2. Gold Investments

Continue with SGBs as part of your investment portfolio. Gold can act as a hedge against inflation and economic uncertainty.

Loan Repayment Strategy
1. Avoid Unnecessary Debt

Avoid taking on high-interest debt. Focus on saving and investing rather than borrowing.

2. Efficient Loan Management

If you need to take a loan for the property, plan for a manageable EMI. Aim for a tenure that balances EMI and interest payments effectively.

Enhancing Your Income
1. Side Income Opportunities

Explore ways to increase your income. This could be through freelance work, part-time jobs, or leveraging any skills you have.

2. Skill Development

Invest in learning new skills that can help you get a better-paying job or a promotion. This can significantly boost your income.

Tax Planning
1. Tax-saving Investments

Maximize your tax-saving investments under Section 80C, like PPF, EPF, and ELSS (Equity Linked Savings Scheme). This will help reduce your tax liability.

2. Tax-efficient Returns

Opt for investments that offer tax-efficient returns. For example, long-term capital gains from equity mutual funds are taxed favorably.

Retirement Planning
1. Retirement Corpus

While your immediate goal is buying a property, ensure you also save for retirement. A diversified portfolio can help build a substantial retirement corpus.

2. Retirement Accounts

Continue with EPF and PPF, and consider investing in the National Pension System (NPS) for additional retirement savings.

Children's Education and Future Needs
1. Education Fund

If you have children, start a dedicated investment plan for their education. SIPs in equity mutual funds can help accumulate a significant corpus over time.

2. Future Expenses

Plan for future expenses like children's marriage or any other significant financial commitments. SIPs and long-term investments can aid in this.

Role of Certified Financial Planner (CFP)
1. Professional Guidance

Consulting a CFP can provide personalized advice and help in optimizing your investment strategy. They can guide you in selecting the right funds and managing your portfolio.

2. Regular Reviews

A CFP will regularly review your portfolio, ensuring it remains aligned with your goals and market conditions.

Benefits of Regular Funds Over Direct Funds
1. Expert Management

Regular funds offer expert management and advice, which can lead to better investment decisions and optimized returns.

2. Convenience

Your CFP handles all the paperwork, portfolio reviews, and rebalancing, providing convenience and peace of mind.

3. Cost vs. Benefit

The slightly higher expense ratio of regular funds is justified by the professional guidance and better portfolio management they offer.

Achieving Your Property Purchase Goal
1. Consistent Investments

Invest consistently in mutual funds through SIPs. Rs 8,000 to Rs 12,000 monthly for several years can grow significantly with compounding.

2. Higher Returns

Equity mutual funds can provide higher returns over the long term compared to traditional investments like FD or PPF.

3. Disciplined Approach

Maintain a disciplined approach to investing. Avoid high-risk investments and focus on long-term growth.

Final Insights
Your goal of buying a flat or plot in the coming years is achievable with a structured and disciplined investment plan. Focus on mutual funds, avoid unnecessary debt, and regularly review your portfolio. Consulting a Certified Financial Planner can provide valuable guidance and help you stay on track to meet your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8009 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2024

Asked by Anonymous - Jun 26, 2024Hindi
Money
I am 30 year old , recently married. I live on rent in Kolkata with my wife.I am only earning member having yearly income of 25 lakhs. I want to buy one apartment and also want to invest money securely.In present I didn't invest anywhere and have 26 lakhs in saving account so please guide me accordingly.
Ans: You’ve done well saving Rs. 26 lakhs at age 30. A yearly income of Rs. 25 lakhs is commendable, especially as the sole earner. Living in Kolkata with your wife and planning to buy an apartment shows strong financial planning and responsibility.

Financial Goals and Prioritization
Identifying and prioritizing your financial goals is crucial. Buying an apartment and investing securely are your immediate goals. It’s important to balance these with other long-term goals like retirement planning, emergency funds, and insurance coverage.

Building an Emergency Fund
Start by setting up an emergency fund. This should cover 6-12 months of living expenses. It provides a financial cushion against unforeseen events like medical emergencies or job loss. Allocate a portion of your Rs. 26 lakhs savings into a liquid fund or a high-interest savings account for this purpose.

Insurance Needs
Ensuring adequate insurance is essential. As the sole earner, life and health insurance are crucial.

Life Insurance: Term insurance is recommended. It provides high coverage at low premiums, ensuring your family's financial security.

Health Insurance: A comprehensive health insurance policy covering yourself and your wife is necessary. It helps manage medical expenses without dipping into savings.

Investment Strategy
With Rs. 26 lakhs in your savings account and a steady income, diversifying your investments is key. Here’s a step-by-step approach:

Public Provident Fund (PPF)
PPF is a safe, long-term investment option. It offers tax benefits under Section 80C, and the interest earned is tax-free. Although it has a 15-year lock-in period, it’s a good option for risk-averse investors seeking steady returns.

Fixed Deposits (FDs)
FDs are low-risk investments that provide guaranteed returns. They are suitable for short-term goals and emergency funds. While the returns are lower than other investment options, the safety and liquidity they offer are beneficial.

Mutual Funds
Mutual funds are excellent for long-term wealth creation. They offer various categories based on risk and return profiles. Let’s explore different types:

Equity Mutual Funds: These invest in stocks and have the potential for high returns. They are suitable for long-term goals like retirement. Consider large-cap, mid-cap, and small-cap funds based on your risk appetite. Large-cap funds are less risky, while small-cap funds offer higher returns with higher risks.

Debt Mutual Funds: These invest in fixed-income securities like bonds. They are less volatile compared to equity funds. Suitable for short to medium-term goals, debt funds provide stable returns with lower risk.

Hybrid Mutual Funds: These invest in a mix of equity and debt. They offer a balanced approach with moderate risk and returns. Ideal for medium-term goals, hybrid funds provide a diversified portfolio.

Systematic Investment Plan (SIP)
SIPs allow you to invest a fixed amount regularly in mutual funds. They help in rupee cost averaging and compounding. Given your stable income, you can start SIPs in different mutual funds. This disciplined approach ensures consistent investing, reducing the impact of market volatility.

Avoiding Index Funds and Direct Funds
Index Funds: Index funds passively replicate market indices and offer lower returns compared to actively managed funds. Actively managed funds aim to outperform the market through research and analysis, providing better returns.

Direct Funds: Investing directly in funds without the guidance of a Mutual Fund Distributor (MFD) with a CFP credential can be risky. Regular funds through an MFD offer professional advice and better service, ensuring your investments align with your goals.

Power of Compounding
Compounding is the process where returns generate their own returns. The longer you stay invested, the more your money grows. For instance, investing Rs. 10,000 monthly for 20 years at an annual return of 12% can significantly increase your corpus. This emphasizes the importance of starting early and staying invested for the long term.

Planning for Home Purchase
Buying an apartment is a significant financial commitment. Here’s how you can plan for it:

Down Payment: Use a portion of your Rs. 26 lakhs savings for the down payment. Aim for at least 20% of the property value to reduce loan burden.

Home Loan: Research home loan options to find the best interest rates. Ensure the EMI is affordable, ideally not exceeding 30% of your monthly income. This ensures you have enough funds for other expenses and investments.

Loan Tenure: Choose a tenure that balances EMI affordability and total interest paid. Longer tenures mean lower EMIs but higher total interest. Shorter tenures mean higher EMIs but lower total interest.

Pre-Approval: Get a pre-approval for your home loan. It gives you a clear idea of your budget and speeds up the buying process.

Balancing Investments and Home Loan
While saving for your home, don’t neglect your investments. Here’s how you can balance both:

Allocate Savings: Split your Rs. 26 lakhs savings. Use a portion for the down payment and invest the rest in mutual funds, PPF, and FDs.

Continue SIPs: Even after taking a home loan, continue your SIPs. Allocate a portion of your monthly savings to SIPs for long-term wealth creation.

Extra Payments: Make occasional extra payments towards your home loan principal. It reduces your interest burden and shortens the loan tenure.

Retirement Planning
It’s never too early to plan for retirement. Here’s a strategy to ensure a comfortable retirement:

Determine Retirement Corpus: Estimate the amount you’ll need at retirement. Consider factors like inflation, lifestyle, and healthcare costs. A certified financial planner can help you with detailed projections.

Start Early: The earlier you start, the better. Compounding works wonders over time. Regularly investing in equity mutual funds through SIPs will help build a significant corpus.

Review and Adjust: Periodically review your retirement plan. Adjust based on changes in income, expenses, and market conditions. Stay flexible to ensure you’re on track.

Tax Planning
Effective tax planning helps in maximizing returns. Utilize available tax-saving instruments like PPF, EPF, ELSS mutual funds, and insurance premiums. Under Section 80C, you can claim up to Rs. 1.5 lakh deduction annually. ELSS mutual funds are particularly beneficial as they offer equity exposure with tax benefits.

Regular Monitoring and Review
Financial planning is not a one-time activity. Regularly monitor your investments and review your financial plan. Ensure it aligns with your changing goals and circumstances. Make adjustments as needed to stay on track.

Avoiding Common Investment Mistakes
Lack of Diversification: Don’t put all your money into one type of investment. Diversify across different asset classes to spread risk.

Ignoring Inflation: Consider inflation while planning. Ensure your investments grow faster than inflation to maintain purchasing power.

Emotional Decisions: Avoid making investment decisions based on emotions. Market fluctuations are normal. Stick to your plan and avoid panic selling.

Final Insights
Given your current financial position, you’re well-placed to achieve your goals. Start by setting up an emergency fund and ensuring adequate insurance coverage. Diversify your investments across PPF, FDs, and mutual funds. Use SIPs for disciplined investing and leverage the power of compounding. Balance your home purchase plans with ongoing investments. Regularly review and adjust your financial plan to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8009 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 19, 2025

Listen
Money
I have taken a floating home from Axis Bank for 30 lakh last year, with a interest rate of 8.5%, i have also prepaid 5 Lakh within five months, now i have an outstanding amount of arround of 24 lakh, as the RBI reduced the repo rate, Bank is refusing to reduce interest rate from 8.5% to 8.25%. please suggest what should i do now?
Ans: You took a floating-rate home loan from Axis Bank at 8.5% interest.
You prepaid Rs 5 lakh within five months, reducing your outstanding amount to Rs 24 lakh.
RBI reduced the repo rate, but Axis Bank refuses to lower your rate to 8.25%.
Why Your Interest Rate Is Not Reducing
Banks do not always pass repo rate cuts immediately to all borrowers.
Some loans are linked to MCLR (Marginal Cost of Funds Based Lending Rate), which adjusts slowly.
New loans might be under RLLR (Repo Linked Lending Rate), which reacts faster to RBI rate cuts.
Your loan agreement decides how and when rate cuts apply.
What You Can Do
1. Ask for a Rate Reduction
Request Axis Bank to switch your loan to an RLLR-based loan.
Banks charge a conversion fee, but it might save you lakhs in interest over time.
2. Compare with Other Banks
Check other banks' home loan rates for balance transfer options.
If a bank offers a lower rate, consider switching the loan.
Ensure the processing fee & charges don’t negate the benefit.
3. Negotiate with Axis Bank
If you have a good repayment record, negotiate for a lower spread or margin.
Mention that other banks offer better rates, increasing your bargaining power.
4. Make Partial Prepayments
If you have extra savings, consider small prepayments to reduce interest burden.
Prepaying reduces the principal, which lowers total interest paid.
5. Use a Home Loan Overdraft Account
Check if Axis Bank offers a home loan overdraft facility.
You can park surplus money and withdraw when needed, reducing interest payments.
Best Action Plan
Contact Axis Bank and request a switch to an RLLR-based loan.
Compare other banks for balance transfer options.
Negotiate for a lower spread if staying with Axis Bank.
Consider prepayments to reduce long-term interest costs.
By taking the right step now, you can save a significant amount on interest payments.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |8009 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 19, 2025

Asked by Anonymous - Feb 18, 2025Hindi
Listen
Money
I have sold a plot worth for 1.85 cr... I have bought a plot worth 1.4 cr... can i keep the remaining in my saving account for house construction or do i put the balance amount in a cgas account
Ans: Since you sold a plot for Rs 1.85 crore and purchased another plot for Rs 1.4 crore, you have a balance of Rs 45 lakh.

Capital Gains Tax Implication
Long-Term Capital Gains (LTCG): If the plot you sold was held for more than 2 years, the profit is considered long-term capital gains (LTCG) and is subject to tax.
Tax Rate: LTCG on real estate is taxed at 20% with indexation benefit.
Reinvestment for Tax Saving: You can save tax by reinvesting the gains in a residential property under Section 54F of the Income Tax Act.
Can You Keep Rs 45 Lakh in a Savings Account?
No, if you intend to claim tax exemption under Section 54F, you cannot keep the balance amount in a savings account beyond the due date for filing your Income Tax Return (ITR).
If you don't invest in a residential house before filing your ITR, you must deposit the unutilized amount in a Capital Gains Account Scheme (CGAS).
You must use the CGAS amount within 3 years for house construction.
What Should You Do?
If You Are Constructing a House
Deposit Rs 45 lakh in a CGAS account before the due date of filing your ITR.
Use this amount within 3 years for house construction to claim full tax exemption under Section 54F.
If You Are Not Constructing a House
The Rs 45 lakh will be taxed as LTCG, and you must pay 20% tax (after indexation benefits).
Consider other tax-saving options, like investing in bonds under Section 54EC (with a 5-year lock-in).
Final Insights
If you plan to construct a house, deposit the Rs 45 lakh in a CGAS account before filing ITR.
If you don’t use this amount within 3 years, it will be taxed as LTCG in the year of expiry.
If you don’t want to construct a house, be ready to pay LTCG tax or invest in 54EC bonds for tax saving.

Best Regards,

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

...Read more

Rajesh Kumar

Rajesh Kumar Singh  |62 Answers  |Ask -

IIT-JEE, GATE Expert - Answered on Feb 19, 2025

Rajesh Kumar

Rajesh Kumar Singh  |62 Answers  |Ask -

IIT-JEE, GATE Expert - Answered on Feb 19, 2025

T S Khurana

T S Khurana   |364 Answers  |Ask -

Tax Expert - Answered on Feb 19, 2025

Asked by Anonymous - Feb 18, 2025Hindi
Listen
Money
My father started a business with his brother in XYZ name and got a Gala in Apmc in the same name where they shared 50-50% share in both business n property after my fathers death i was admitted in as a partner with same ratio after few years my uncle passed in his share to his son so as of now i and my cousin brother are partner the proerty was purchased 296200 in the year 1995 along with registration so 148100 was the share of each and now i want to leave the partnership and also to let go of my share in the premises for which my exixting partner will pay me 3750000 on or before 31.3.2025 I wanted to know how much capital gain tax will be for me if i do not invest secondly can i invest in residential property I would appreciate if guided Thanking you in anticipation
Ans: 01. Considering receipt of Rs.37,50,000.00 as Sale of your share in property/ premises, it would be LTCG in this case.
02. Amount of LTCG without Indexation is Rs.36,02,000.00 (Sale Rs.37,50,000.00 Less Cost Rs.148,100.00). Tax @ 12.50% is Rs.4.50 lakh app.
02. Amount of LTCG with Indexation is Rs.32.12 lakhs (Sale Rs.37,50,000.00 Less Cost Rs.5,37 lakhs {Index 100/363}). Tax @ 20.00% is Rs.6.40 lakh app.
03. You may go for the first option & plan your tax liability. You can invest in residential property to save LTCG tax.
04. Other option to save tax is to purchase Capital Gain bonds. However, investment in Real Estate is always better than other investment.
Most welcome for any further clarifications. Thanks.

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x