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Ramalingam Kalirajan |10872 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 30, 2025

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

Asked by Anonymous - Jul 14, 2025Hindi

Hi my salary is 70,000. But currently I don't have to pay any emi. I am trying to buit a house and to purchase a new car How to plan accordingly suggest

Ans: Earning Rs.70,000 with no EMI is a great stage to begin. Wanting to build a house and buy a car is natural. You can achieve both with the right steps and priorities.

? Define the Timelines for Each Goal
– When do you want to build the house?
– When do you want to buy the car?
– Are these goals 1 year away or 5 years?
– Short-term and long-term goals need different planning.
– Write down both timelines and expected amounts.
– Prioritise which comes first and which can wait.
– This clarity helps in proper fund allocation.

? Avoid Emotional or Rushed Decisions
– A house or car are emotional purchases.
– But don’t act in a hurry.
– Planning gives better comfort and long-term control.
– Don't borrow fully for both together.
– That creates unnecessary EMI pressure later.
– Always align purchases with income and future goals.

? Start Saving Aggressively Right Away
– No EMI now means more saving power.
– Save at least 30–40% of income.
– That means Rs.21,000 to Rs.28,000 monthly.
– Divide savings between house and car goals.
– Use goal-based mutual fund investments for this.
– Don’t keep savings idle in bank accounts.

? Use Mutual Funds Based on Goal Duration
– Car goal is likely short-term, within 2–3 years.
– Use hybrid or short-term debt mutual funds.
– Don’t use equity funds for short-term goals.
– For house, if goal is 5+ years away, use equity funds.
– Equity gives better compounding over time.
– Always use actively managed funds, not index funds.
– Index funds don’t avoid weak stocks during fall.
– Active funds have professional guidance.
– Fund manager decisions add value and protect downside.

? Avoid Direct Fund Route
– Don’t invest in direct mutual fund plans.
– Direct plans save cost but give no support.
– You won’t get alerts or reviews in direct mode.
– Wrong fund choice can delay your house or car plan.
– Regular plans through a CFP provide clarity.
– CFPs help avoid mistakes and track fund health yearly.
– Direct plans are risky when goal dates are fixed.

? Build Emergency Fund First
– Before planning big purchases, save 6 months’ expenses.
– Keep Rs.2 to 2.5 lakh in liquid mutual funds.
– This protects you in case of job loss or health issue.
– Never use this for house or car plans.
– Emergency fund gives you peace and confidence.

? Plan Car Purchase Smartly
– Buying a car needs careful budgeting.
– Avoid high down payments if savings are limited.
– Try to save at least 50–60% of the car cost.
– Balance can be taken as car loan.
– But avoid choosing loan just for full price car.
– Don’t go for luxury car in first step.
– Consider fuel, insurance and maintenance cost too.
– Check if public transport can delay car need.
– This gives more time to save without EMI stress.

? Plan House Based on Real Income
– Don’t plan house beyond your capacity.
– Avoid stretching too much into future earnings.
– Decide house cost based on how much EMI is safe.
– Usually 30–35% of monthly salary is max safe EMI.
– This means Rs.20,000 to Rs.24,000 EMI limit.
– If EMI crosses that, other life goals get delayed.
– Also keep money for interiors and shifting.
– House purchase is not just flat cost.

? Don’t Rush into Real Estate as Investment
– House for living is fine.
– But don’t consider another property for investment now.
– Real estate lacks liquidity.
– You can’t sell part of house during need.
– It also gives no monthly income.
– Property taxes and upkeep add hidden costs.
– Mutual funds are better for growth and flexibility.

? Avoid Buying Car and House at Same Time
– Two loans together increase monthly burden heavily.
– It reduces your future saving ability.
– Focus on one goal first, then plan the next.
– Space out both goals by 1–2 years minimum.
– This keeps your financial health strong.

? Don’t Touch PPF or EPF for These Goals
– These are for retirement and long-term safety.
– Withdrawing now reduces future security.
– Let these grow untouched till retirement.
– Don’t break them for house or car.

? Use Bonus or Hike to Boost Goals
– Any annual bonus can go to goal fund.
– Don’t spend bonus on luxury items now.
– Every extra Rs.10,000–20,000 adds faster progress.
– It reduces need for loans later.

? Consider Loan Only When You’re Ready
– Once you save part of the amount, loan is fine.
– Avoid full loan planning.
– Never take loan just because bank offers pre-approval.
– Loan should fit your saving pattern, not ego.
– EMI should not disturb your SIP and lifestyle.

? Keep Insurance Protection Before Loan
– If planning home loan, take term insurance.
– Loan cover gives peace to your family.
– Health insurance is also important.
– Hospital bills can disrupt savings if uninsured.
– Secure your income first before committing EMIs.

? Use SIPs to Save for Each Goal
– Start separate SIP for house and for car.
– Assign right funds based on goal period.
– SIP gives disciplined saving monthly.
– Start small but don’t stop.
– As salary grows, increase SIP gradually.
– SIP grows corpus faster than irregular savings.

? Track Progress Every 6 Months
– Use a simple sheet to track goals.
– Note how much saved and how much is left.
– Celebrate progress quietly.
– Don’t take early success as final target.
– Stay focused till goal is reached fully.

? Avoid Luxury Temptations Before Goal
– You may feel like spending when salary increases.
– But stay focused on goal.
– Small luxuries now can delay your car or home.
– Stick to budget till major goals are achieved.
– Self-control now gives freedom later.

? Use Regular Funds and CFP Support
– Always invest through regular plans.
– You get expert advice and guidance.
– Certified Financial Planners track and guide the right way.
– Don’t manage goal funds on own if unsure.
– Professional help keeps you goal-focused.
– Regular funds bring that long-term support.

? Don't Rely on Index Funds
– Index funds give market average.
– No protection in crash times.
– No switching of bad stocks.
– Active funds are better for life goals.
– Professional fund managers make decisions in active funds.
– You need that expertise for home and car plans.

? Keep Credit Score Clean for Loan
– When time comes to take home or car loan, credit score matters.
– Don’t delay bills or EMIs.
– Keep credit card usage under 30% of limit.
– Pay on time every month.
– Check credit score yearly.

? Once House Is Bought, Restart SIP
– After house goal is done, don’t relax.
– Restart SIP immediately.
– Next goal could be retirement or child education.
– Use compounding from early years.

? Finally
– You have strong savings capacity now.
– Start saving for goals before taking loans.
– Don’t combine both goals at once.
– Use goal-based SIP in mutual funds.
– Avoid index funds and direct mode.
– Use regular plans with CFP support.
– Keep emergency fund ready.
– Don’t break long-term instruments like EPF, PPF.
– Control lifestyle till goals are done.
– Take term and health insurance before loans.
– Review progress every 6 months.
– Stay patient, focused, and financially disciplined.
– You can build house and buy car stress-free.

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

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.