Myself Saibal from Kolkata. I need your suggestion about the shaving scheme and future plan.
I am a Private employee salary PM (94000 in hand)
Saibal(39)
Wife (39)
One Daughter(12 years)
Expense per Month
school Fees:-2000/- PM
EMI for Flat:-- 33500/- PM in kolkata (Loan amount 38 L started from Nov 2021 present interest rate 9.3)
1 extra EMI every 3 Months (after getting a variable amount of 25K ) started from this month only.
home expense 12000 -PM(approx)
shavings PM :----
Post office 10,000 PM(RD) from May 2014
SBI, 2000 PM(RD) from March 2014(maturity date March, 2024 ammount 200000)
SIP in mutual fund 18000 from Aug 2021 and want to continue at least 10 yrs.
Mirae emerging direct 5500 PM
Mirae Tax saver Direct: 5000 PM
DSP Blackrock micro capital: 1000 PM
SBI Bluechip growth: 2000 PM
Quant small cap 2000 PM.
Motilal Oswal TAX saver: 2500 PM
Lic(4000) per year - Money-back policy
existing
7,50000 in mutual fund through SIP.
Post office 400000 TD from Dec 2020
FD 66000 at Uco Bank.
Health insurance through office up to 14 L.
Fund for Daughter's Higher Education.
Fund for Daughter's Marriage.
plan to complete the home loan within 10 yr.
one confusion in 2025 I will get approx 18Lakh from the Post office should I deposit all money against the home loan or keep as TD, and use the interest amount to reduce the home loan?
please let me know if any change is required for shavings.
Ans: Hey Saibal, it's great that you're thinking about your financial future. You've done a commendable job planning for various needs. Your detailed approach shows dedication. Let's dive into your financial plan and future strategy.
Income and Expenses
You have an in-hand salary of Rs. 94,000 per month.
Monthly expenses include:
School fees: Rs. 2,000
Home loan EMI: Rs. 33,500
Additional home EMI every three months: Rs. 25,000
Home expenses: Rs. 12,000
Your current commitments are substantial but manageable with your income.
Savings and Investments
Your savings and investment portfolio includes:
Post office RD: Rs. 10,000 per month (since May 2014)
SBI RD: Rs. 2,000 per month (since March 2014, maturing in March 2024 with Rs. 2,00,000)
SIPs in mutual funds: Rs. 18,000 per month (since August 2021)
Your SIPs include:
Mirae Emerging: Rs. 5,500
Mirae Tax Saver: Rs. 5,000
DSP Blackrock Micro Cap: Rs. 1,000
SBI Bluechip Growth: Rs. 2,000
Quant Small Cap: Rs. 2,000
Motilal Oswal Tax Saver: Rs. 2,500
Additionally, you have:
LIC policy: Rs. 4,000 per year
Post office TD: Rs. 4,00,000 (since December 2020)
FD: Rs. 66,000 at Uco Bank
Health insurance: Rs. 14 lakhs through your office
Future Goals
You aim to:
Fund your daughter's higher education and marriage
Complete your home loan within 10 years
Optimize the Rs. 18 lakh maturity amount in 2025
Analyzing Your Current Strategy
You've diversified well across savings schemes and mutual funds. Here's a closer look at each aspect.
Savings
Your recurring deposits (RDs) are steady, providing a reliable return. However, as these mature, you may consider shifting some funds to higher-return investments like mutual funds.
Mutual Funds
Your mutual fund SIPs are a strong point. They offer potential for significant returns over time. However, it's crucial to periodically review the performance and adjust if needed.
Home Loan Management
You plan to complete your home loan within 10 years. Your current EMI is Rs. 33,500 with an additional EMI every three months. This is a smart move to reduce the principal faster.
Insurance
Your health insurance coverage of Rs. 14 lakhs through your office is good. Ensure it's adequate by considering additional coverage if needed.
Fund Utilization in 2025
You’ll receive Rs. 18 lakhs from the post office in 2025. Here's a strategy to consider:
Pay Off Home Loan
Using the entire amount to pay off a portion of your home loan can significantly reduce your outstanding principal. This will lower your EMI burden and save interest costs in the long run.
Term Deposit (TD) Strategy
Alternatively, keeping the Rs. 18 lakhs as a TD and using the interest to pay your EMIs can provide liquidity. However, this might not be as effective in reducing your overall loan burden compared to direct repayment.
Recommendations for Adjustments
To optimize your financial plan, consider these adjustments:
1. Reviewing Mutual Funds
Regularly review your mutual fund portfolio. Monitor performance and make changes if funds consistently underperform.
2. Increasing SIP Investments
If possible, increase your SIP contributions over time. This will compound returns and build a substantial corpus.
3. Evaluating Insurance Needs
Assess if your current health insurance is adequate. You might need additional coverage for unforeseen medical expenses.
4. Home Loan Prepayment
Whenever you receive bonuses or windfalls, consider prepaying your home loan. This reduces the principal and interest burden.
5. Educational and Marriage Fund
Start dedicated investments for your daughter’s education and marriage. Consider child plans or earmarked mutual funds for these goals.
Final Insights
Your financial plan is robust, but a few tweaks can optimize it further. Prioritize prepaying your home loan to reduce interest costs. Regularly review and adjust your mutual fund portfolio. Ensure your insurance coverage is adequate for your family’s needs.
Moving Forward
Monitor Investments: Regularly check your SIPs and make adjustments as needed.
Prepay Home Loan: Use any extra income or bonuses for prepayments.
Ensure Adequate Insurance: Reassess your health insurance coverage periodically.
Dedicated Funds for Goals: Set up specific investments for your daughter’s education and marriage.
You're on a strong financial path, Saibal. With a few adjustments, you can achieve your goals efficiently. Your dedication to securing your family’s future is commendable. Keep up the great work!
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
