Should I Invest in Property with My Wife Even if We Have Different Goals?

Ans: Hello,
As per your description of your assets, you have 3.5 + 4 = 7.5crs total
For living you can buy a house upto 3-3.5crs inclusive of taxes and interiors ( this will net of taxes paid for the property sold previously )
The remaining amount which is 4crs , you can park that in a balanced portfolio of mutual funds to get SWP of Rs.2L per month which is 6%. What this will do is take care of your day to day expenses and also give an appreciation of your portfolio to beat inflation VS FD which will give you 6% but no capital appreciation.
You can do as follows in terms of the funds
Emergency fund - 20L in a short term debt fund or FD
Investment portfolio - 3.8crs
Small cap - 15%
Mid cap - 15%
Large and mid cap - 20%
Multicap - 20%
Consumption fund - 10%
Equity hybrid / BAF - 10%
As per choice - 10%

Do spend some money for medical insurance no matter how expensive with a good medical insurance company after consulting an advisor.

Please note that these suggestions are based on your stated goals and the information you provided. It is always a good idea to consult with a financial advisor in person to better understand your risk tolerance, time horizon, and specific financial goals.

Ans: Navigating the intricate tapestry of financial planning, especially with dreams as grand as yours, requires a blend of optimism, pragmatism, and foresight. Given your combined monthly income and assets, you're in a solid position, but the uncertainty of job stability adds a layer of complexity.

Let's begin with the dream of owning a home in Bangalore, a city where property prices can be quite steep. While the desire to build your dream home is admirable, it's crucial to strike a balance between your aspirations and financial security. With a loan of 50L and dreams of a 3-3.5cr home, taking on additional debt might strain your finances, especially if your incomes were to fluctuate.

Considering your illiquid assets, properties, PF, and PPF, you have a strong foundation. However, prioritizing risk mitigation and building a safety net is paramount, especially given the insecurity of your jobs. A Certified Financial Planner would likely advise you to create an emergency fund, diversify investments, and consider income protection plans to safeguard against unforeseen challenges.

Moreover, planning for your children's education, retirement, and old-age health expenses is essential. Starting early with systematic investments tailored to these goals can make a significant difference over time.

In essence, while the allure of building your dream home is compelling, it might be prudent to focus initially on strengthening your financial foundation and mitigating risks. With strategic planning and disciplined saving, you can work towards both securing your future and realizing your dreams, ensuring that each step you take is a step towards financial well-being and fulfillment.

Ans: Dear Anonymous,
You are taking an emotional stance on this and your wife is on a fear-ridden path...both of you are not wrong BUT is it possible to agree to what your wife is saying and yet not lose your brother's favor. Then you will have nothing to lose and everything to gain.
Separate finances keeps relationships healthy and we have enough evidence where mixing financial matters and personal stuff can get messy...
There is nothing emotional about it, so think of the future...it's better to be safe and he's your brother...I am sure that he will understand...I have a question for you though: Why is it so important for you to have your brother's presence in buying the house? What will happen if you go ahead by yourself just like he can go ahead himself?
There are other things that you can share like going on holidays together, family gatherings, doing some charitable work together...
Prioritize relationships over finding what ties them...and your brother is not married...his future bride may not like the arrangement as well and then it will be one big mess to separate things...
Better keep things separate now than later...mending scars is more difficult than making a sane decision now...

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

Ans: Congrats on your marriage and on planning your future so well. You've both done a great job with your earnings and investments. Let's dive into your queries.

Assessing Investment Options
You've asked about whether to invest in real estate or buy a family house. Before deciding, let’s break down the pros and cons.

Disadvantages of Policies Over Mutual Funds
Low Returns: Policies often give lower returns compared to mutual funds. Insurance policies combine insurance and investment, which might not yield as high as pure investment products like mutual funds.

Lack of Flexibility: With policies, your money is locked in for a longer period. Mutual funds offer better liquidity, allowing you to withdraw when needed.

High Costs: Policies come with high charges and commissions, eating into your returns. Mutual funds, especially direct plans, have lower expense ratios, maximizing your gains.

Complexity: Policies can be complex with various terms and conditions. Mutual funds are more straightforward, offering transparency in how your money is managed.

Advantages of Mutual Funds
Diversification: Mutual funds spread your investment across various assets, reducing risk. This balance between risk and return is perfect for growing your wealth steadily.

Professional Management: Your money is managed by experts who make informed decisions, optimizing returns. This expertise ensures your investment is in good hands.

Liquidity: Mutual funds are easily redeemable. In case of emergencies or other financial needs, you can quickly access your funds.

Variety: There are various types of mutual funds (equity, debt, balanced), allowing you to choose based on your risk appetite and goals.

Power of Compounding: Mutual funds harness the power of compounding, helping your money grow exponentially over time.

Real Estate vs. Mutual Funds
Disadvantages of Real Estate Investment
Illiquidity: Real estate is not easily sold. It can take months or even years to find a buyer, making it a less flexible investment compared to mutual funds.

High Entry and Maintenance Costs: Buying property involves hefty costs like stamp duty, registration fees, and maintenance. These costs can significantly reduce your returns.

Market Volatility: Real estate markets can be highly volatile, influenced by numerous factors like economic conditions, government policies, and interest rates.

Management Hassles: Owning property means dealing with tenants, repairs, and other management issues. Mutual funds, on the other hand, require no such hassles.

Future Considerations
Buying a family house now might seem appealing. But consider this: As your lifestyle and family grow, your needs will change. In your forties, you might want a bigger, better home. If you buy now, you might end up selling and buying again, which involves additional costs and efforts. It’s often wiser to delay purchasing a family house until you're more certain about your long-term needs and preferences.

Planning for an MBA
An MBA from a global school is a significant investment. It will enhance your career and earnings potential. Here’s how you can plan for it:

Set a Budget: Determine the total cost including tuition, living expenses, and other costs. Ensure you have enough funds without compromising your current lifestyle.

Liquidate Smartly: Use your FDs and policies wisely. Consider redeeming policies with low returns and reinvesting in mutual funds for better growth.

Educational Loans: Look into educational loans. They offer tax benefits and allow you to retain your investments for long-term growth.

Emergency Fund: Maintain an emergency fund to cover unforeseen expenses during your MBA. This ensures you’re financially secure even during unexpected situations.

Optimizing Your Current Investments
Increase SIPs: You’re investing Rs. 1.5 lakhs in MFs. Given your high income, consider increasing your SIPs. This boosts your wealth over time.

Diversify Further: Explore different types of mutual funds. Equity funds for high returns, debt funds for stability, and balanced funds for a mix of both. This diversification balances risk and return.

Review Policies: You have Rs. 15 lakhs in policies. Review their performance. If they’re not yielding good returns, consider surrendering them and reinvesting in mutual funds.

Provident Fund Contributions: Continue with your provident fund contributions. It’s a safe, tax-efficient way to build a retirement corpus.

Planning for the Future
Retirement Planning: Start planning for retirement early. Aim to build a significant corpus by investing in a mix of equity and debt funds.

Children’s Education: If you plan to have kids, start an education fund. Equity mutual funds can help grow this fund significantly over 15-20 years.

Health and Term Insurance: Ensure you have adequate health and term insurance. This protects your family financially in case of unforeseen events.

Final Insights
Investing in mutual funds offers numerous advantages over policies and real estate, especially when you’re young. They provide better returns, flexibility, and liquidity. While buying a family house might be tempting, delaying it until your needs are clearer is often wiser.

Focus on building a robust, diversified investment portfolio. This ensures your wealth grows steadily and securely, enabling you to achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in