Dear Mr. Khurana, I hope you are doing well. I am seeking your advice on how best to invest ₹5 lakh per month for the next five years, with the goal of purchasing a house at the end of this period. Given your expertise and experience, I...

Dear Mr. Khurana, I hope you are doing well. I am seeking your advice on how best to invest ₹5 lakh per month for the next five years, with the goal of purchasing a house at the end of this period. Given your expertise and experience, I would greatly appreciate your guidance on the most suitable investment options or strategy to ensure both safety and reasonable growth over this short-to-medium-term horizon. Looking forward to your valuable insights.

Ans: First of all create an Emergency Fund of Rs.15-20 lakhs, for any unforeseen situation you may face. Such situations could be loss of Job, Medical Emergency in the family/parents etc. This amount may be invested in Gold, which would offer you instant liquidity and reasonable return also.
Next step may be taken to Invest your saving in Mutual Funds adopting SIP route for a year.
After a year you may be having enough funds to invest in purchase of a house, as you want. At this stage, your MF Investment will serve the purpose of down payment & you can raise further funds through Housing Loan.
Hope this clarifies, what you wanted to ask. Most welcome for any further clarification on the subject. Thanks.

Ans: You have built a solid financial base. A debt-free lifestyle, strong asset base, and regular income are great starting points. Your focus now should be on fine-tuning your investments for growth, flexibility, and future security.

Income and Expense Summary

You earn Rs 2.5 lakh per month.

Your monthly expenses are Rs 70,000.

This leaves a surplus of Rs 1.8 lakh monthly.

You have no loans or liabilities. That’s an excellent position.

This gives you both flexibility and room for long-term wealth creation.

Asset Summary and Asset Allocation Review

Rs 2.1 crore in FDs (in non-earning family members’ names)

Rs 2.5 crore in real estate, including your own house worth Rs 1 crore

Rs 40 lakh in company RSUs

Rs 2 lakh in stocks

Rs 20 lakh in EPF

Rs 2 lakh in NPS (with Rs 16,000/month contribution)

Rs 20,000 SIP started recently

This is a total of around Rs 5.34 crore in assets (excluding SIP’s future value). However, the allocation is highly skewed.

Concentration Risk in Real Estate and FDs

Around 80% of your portfolio is in real estate and fixed deposits.

These two assets are illiquid and less tax-efficient over time.

Real estate lacks flexibility and often underperforms inflation-adjusted equity growth.

Fixed Deposits offer stability but post-tax returns are low.

This reduces your ability to beat inflation in the long run.

Why Equity Allocation Should Be Increased

Long-term goals need inflation-beating returns.

Equity mutual funds are better suited for 7+ year horizons.

You are young and in your prime earning years.

With no debt burden, your risk-taking capacity is high.

Equity SIPs can generate long-term compounding returns with better tax-efficiency.

Suggestions on Improving Investment Strategy

Increase SIPs gradually from Rs 20,000 to Rs 75,000–1,00,000 per month

Start with Rs 20,000 additional SIP now.

Increase SIPs every 6 months by 10-15%.

Prioritise equity mutual funds based on your goals.

Avoid index funds or direct funds

Index funds lack fund manager expertise and may underperform in volatile markets.

Actively managed funds with a proven track record perform better in Indian conditions.

Direct funds may appear cheaper but lack guided review, goal linking, or personalisation.

Investing through a Certified Financial Planner using regular plans gives you review support, rebalancing, and behavioural guidance.

Use FDs more wisely

Rs 2.1 crore in FDs is excessive.

FDs do not provide growth or tax advantage.

Consider liquidating Rs 1 crore from FDs gradually.

Reallocate to SIPs in equity funds and hybrid funds.

Company RSUs – treat it as part of net worth, not core investment

Rs 40 lakh is in company RSUs.

Do not rely heavily on employer equity.

Periodically sell and diversify into mutual funds.

Don’t let employment and investment risk overlap.

Stock holdings of Rs 2 lakh

This is fine at your stage.

Keep individual stock exposure under 5% of total investments.

Prefer mutual funds over stocks for long-term goals.

Insurance Cover Review

Rs 1.5 crore term insurance is good for your age.

Check if it covers till retirement age or beyond.

Also assess future needs if you plan to marry or have dependents.

Ensure a good health insurance plan of at least Rs 10–15 lakh for self and family.

NPS and EPF – Fixed Income Component

EPF of Rs 20 lakh is a great tax-efficient retirement tool.

NPS contribution of Rs 16,000 per month is sufficient.

Together, they give a stable retirement base.

Do not increase allocation to NPS too much.

Keep it below 10–15% of your total investments.

NPS has annuity rules at maturity, which limit withdrawal flexibility.

Thoughts on Buying Rs 1.5 crore Flat

Real estate is not the most efficient investment.

If the flat is for end-use, proceed after careful review.

If for investment, avoid. Your real estate exposure is already very high.

If buying the flat for self-use, consider these:

Buying outright from FDs will reduce liquidity.

Taking a loan of Rs 50–70 lakh may help retain investment growth.

Use FDs for the down payment and initial years' EMI buffer.

Continue SIPs even after EMI begins.

If buying for investment, avoid the purchase

Rental yields are low, 2–3% typically.

High capital, low return.

You already own multiple properties.

Repeating real estate investments will increase risk, not return.

Future Financial Goals Planning

Start goal-based investment planning

Define goals: retirement, children’s education, lifestyle needs.

Create separate SIPs for each goal.

Use flexible mutual funds for each time horizon.

Build Emergency Fund (if not already)

6 months of expenses in liquid fund or FD.

This gives peace during job changes or emergencies.

Tax Efficiency and Portfolio Rebalancing

FDs in family names help reduce tax temporarily.

But interest is still taxable for them if income exceeds basic limit.

Mutual funds offer better post-tax returns.

Equity mutual funds: Long-term gains above Rs 1.25 lakh taxed at 12.5%.

Debt mutual funds taxed as per income slab now.

Periodic rebalancing every year ensures alignment to risk and return expectations.

Investment Options You Can Prioritise

Actively managed equity funds for long-term growth.

Hybrid funds for medium-term stability.

Conservative hybrid or ultra-short-term funds for 1–3 year goals.

Invest through a Certified Financial Planner to receive ongoing reviews and risk-based rebalancing.

What You Should Avoid

Do not buy more real estate.

Do not hold excess FDs unless for emergencies.

Avoid direct funds without advisory support.

Avoid over-exposure to company RSUs.

Do not depend only on NPS for retirement.

Do not rely on stock tips or short-term bets.

Final Insights

You are in a powerful financial position.

You can achieve long-term wealth and freedom by shifting strategy.

Reduce dependence on real estate and FDs.

Gradually build mutual fund SIPs with review-based investing.

Avoid emotional buying of property unless needed for living.

Keep investments flexible, diversified, and tax-optimised.

Work with a Certified Financial Planner for long-term clarity and monitoring.

You are very well placed to build long-term wealth. With small tweaks, you can build a future that is both secure and fulfilling.

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