I have a monthly take home salary of 82K. All EMIs and maintenence goes around 50K monthly. I have around 1 lac in mutual funds and around 9K investment monthly in it. Ppf I invest around 500 and have around 30K in it. I already have a personal and family health insurance. Term plan is also taken for 75 lacs. How can i increase my emergency funds and savings?

Ans: You have taken good steps already.
SIP of Rs 9K monthly, PPF, term cover, and health plans – all are good starts.
Acknowledging the effort matters. Now let us take this further.
Let us work towards building emergency funds and increasing savings step-by-step.

? Income and Expense Overview

– Take home is Rs 82K monthly.
– Outgo for EMI and maintenance is Rs 50K.
– You are left with Rs 32K monthly surplus.
– From this, Rs 9K is going into SIPs and Rs 500 into PPF.
– That leaves you with about Rs 22.5K unallocated monthly.
– You can use this wisely to grow savings and emergency corpus.

? Emergency Fund – Why You Need More

– You must build 6 months’ worth of expenses and EMIs.
– In your case, Rs 50K x 6 = Rs 3 lakhs minimum.
– Right now, no clear emergency fund is seen.
– Mutual fund corpus of Rs 1 lakh is not ideal for emergencies.
– It fluctuates and may not be accessible when markets are down.
– Emergency corpus must be safe, liquid, and stable.

? Best Ways to Build Emergency Corpus

– Start a recurring deposit (RD) of Rs 10K per month.
– In 12 months, you will have around Rs 1.2 lakh.
– Add to that any bonuses or gifts you receive.
– Keep this separate from all other savings.
– You can also explore ultra-short-term mutual funds via MFD.
– These are better than keeping money idle in savings account.
– Avoid using equity mutual funds for this goal.

? Monthly Budget Allocation for Corpus Building

– Your current Rs 22.5K surplus must be used better.
– Allocate like this:

Rs 10K to RD for emergency fund.

Rs 2K to PPF (increase it from Rs 500 now).

Rs 5K to new mutual fund SIP via MFD.

Keep Rs 3-5K in savings account monthly for buffer.
– With this setup, you’ll grow your net worth steadily.

? Improving Mutual Fund Strategy

– You already have Rs 1 lakh in MFs and Rs 9K SIP.
– Check if SIPs are in regular plans via Certified MFD.
– Direct funds miss the guidance of Certified Financial Planners.
– Regular funds through MFDs offer goal alignment and handholding.
– This is essential for long-term wealth building.
– Also, direct funds can become risky when rebalancing is needed.
– Review the performance and diversification of your funds.
– Make sure you don’t have overlapping schemes.

? Increase PPF Contribution Strategically

– You are putting only Rs 500 monthly into PPF.
– Try increasing this to Rs 2K monthly for now.
– PPF gives stable, tax-free long-term returns.
– It’s ideal for long-term safety over 15 years.
– Slowly aim to contribute Rs 1.5 lakhs per year.
– That’s about Rs 12.5K monthly in future.
– But right now, step up gradually.

? Use Lump Sum Amounts Smartly

– Any annual bonus or windfall should go into 2 buckets:

Emergency fund

Debt reduction or PPF top-up
– This speeds up your financial progress.
– Do not use such lump sums for lifestyle expenses.
– This habit will create a strong financial foundation.

? Surrender Insurance-Cum-Investment Plans If Any

– If you hold any endowment, money-back, or ULIP policies,
– They give low returns and eat into your savings capacity.
– You already have a term plan of Rs 75 lakhs.
– That’s good and enough for now.
– Shift investment-based policies to mutual funds via MFD.
– Surrendering old policies should be done after break-even analysis.
– But in the long term, it always gives better returns.

? Build Short-Term and Long-Term Buckets

– Emergency fund is your short-term protection.
– After that, build short-term goals like travel or gadgets.
– Use liquid mutual funds or short-duration debt funds for them.
– Long-term goals like retirement or child education need equity exposure.
– Actively managed mutual funds offer wealth creation.
– They beat index funds which only track the market.
– Active funds adapt, select quality stocks, and manage downside.

? Avoid Index Funds in Your Case

– Index funds don’t protect during market crashes.
– They invest in every stock in the index – even the bad ones.
– No expert decision-making happens in index funds.
– You cannot beat inflation with lazy index investing.
– Actively managed funds adjust portfolios during volatility.
– That’s crucial for wealth safety.
– So prefer active mutual funds with long-term performance.
– Invest through Certified MFD who also holds CFP credentials.

? Stay Away from Annuities

– Annuities give very low returns.
– They lock your money and reduce flexibility.
– They don’t even beat inflation after taxes.
– You already have term and health plans – that is perfect.
– No need for annuities at this stage.

? Keep Debt in Control

– You already have Rs 50K going into EMIs.
– Do not take any new loans now.
– If you get extra cash, reduce personal loan first.
– Then focus on finishing other loans.
– Once loans are done, that Rs 50K can go into savings.
– That will take your net worth to the next level.

? Use a Goal-Based Investment Approach

– Emergency fund is the first goal.
– Then, assign mutual fund SIPs to different goals:

Retirement

Child’s future

Lifestyle upgrades
– Name your SIPs accordingly.
– This increases motivation and focus.
– Each goal should have a timeline and amount target.

? Tax Planning Optimisation

– PPF offers tax-free returns and deductions.
– ELSS mutual funds are also tax-saving options.
– But prefer actively managed ELSS via MFD.
– Avoid direct ELSS funds as they lack advisor insight.
– Equity fund gains over Rs 1.25 lakhs per year are taxed at 12.5%.
– Short-term gains under 1 year are taxed at 20%.
– Plan redemptions smartly with your MFD to reduce tax impact.

? Regular Review and Monitoring

– Check your portfolio every 6 months with a Certified MFD.
– They can rebalance and guide based on market changes.
– DIY approach may miss key reallocation opportunities.
– Also review your insurance every 2 years.
– Increase term cover if your liabilities or dependents increase.
– Update nominations in all accounts.

? Build Financial Discipline

– Automate SIPs, PPF, and RD.
– Avoid spending what’s left after saving.
– Instead, spend only what’s left after saving.
– Keep separate bank account for SIPs and savings.
– Use one-time mandates for investing regularly.
– Track progress using mobile apps or excel sheet monthly.

? Role of Certified Financial Planner and MFD

– Don’t try to do everything yourself.
– Certified MFDs who are also CFPs can guide better.
– They ensure goal alignment, right fund selection, and ongoing review.
– They help you avoid emotional mistakes in markets.
– Their fee is included in the fund expense ratio.
– So, it’s value-added and cost-effective.

? Finally

– You are already on the right track.
– Focus now on building emergency funds in next 6-9 months.
– Re-allocate your monthly surplus with clear priorities.
– Avoid direct plans, index funds, or annuities.
– Use regular active funds via Certified MFD with CFP tag.
– Stick to the plan and review it regularly.
– Slowly you’ll see compounding work in your favour.
– Discipline and strategy will lead to peace of mind.

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