I am 40 years earning 1.2 lakhs now take home salary. I have not done any investment till now. In MF i have 1 lakh, shares 1.5 lakhs, 14 lakhs education loan, no property. I am paying 20000 emi for education loan. I am married and have 7 year old kid. I regret that i have not saved my entire life. Kjbdly help me so that i can have 3 crores by 45 years and able to start my own business at 45 years and inculcate saving habit in me.
Ans: you are 40 years old, with a take-home salary of Rs 1.2 lakhs per month. You currently have investments of Rs 1 lakh in mutual funds and Rs 1.5 lakhs in shares. You also have an education loan of Rs 14 lakhs, with an EMI of Rs 20,000.
You have expressed a desire to build a corpus of Rs 3 crores by age 45, and to start your own business.
Immediate Financial Health Assessment
Debt Management: Your education loan is significant. Focus on repaying this as quickly as possible. Prioritise clearing high-interest debts to reduce financial strain.
Current Savings and Investments: Your existing investments are a good start. However, you need a more structured approach to achieve your financial goals.
Investment Strategy for Wealth Creation
Emergency Fund: Before making significant investments, build an emergency fund. Aim for at least 6 months' worth of expenses. This will protect you against unexpected events and reduce financial stress.
Debt Repayment Plan: Allocate a portion of your monthly income towards repaying the education loan. Consider making extra payments towards the principal to reduce interest over time.
Systematic Investment Plan (SIP): Start a SIP to build long-term wealth. Investing Rs 10,000 to Rs 15,000 per month in actively managed mutual funds could help you achieve your goal.
Diversification: Your current investments are limited. Diversify into different mutual funds, such as large-cap, mid-cap, and multi-cap funds. This can reduce risk and improve potential returns.
Regular Monitoring: Review your investments regularly. Adjust your portfolio based on performance and changing financial goals.
Retirement and Business Goals
Retirement Planning: Given your goal of Rs 3 crores by age 45, focus on aggressive yet manageable investments. Allocate a significant portion of your savings to high-growth mutual funds.
Business Planning: Start planning for your business now. Save a portion of your income separately for this purpose. Ensure you have a solid business plan and financial cushion before starting.
Savings Habit Development
Budgeting: Create a monthly budget to track your income and expenses. Identify areas where you can save more.
Automate Savings: Set up automatic transfers to your savings and investment accounts. This ensures consistency and helps build wealth over time.
Financial Discipline: Avoid unnecessary expenditures and focus on your long-term financial goals. Consistent saving and investing will help you achieve financial independence.
Final Insights
Focus on Clearing Debt: Prioritise repayment of your education loan to improve financial stability.
Start Investing Wisely: Use SIPs in well-researched mutual funds to build wealth. Regularly review and adjust your investments.
Build Savings Habit: Create a budget, automate savings, and practice financial discipline to achieve your goals.
By following these steps, you can work towards building a substantial corpus and achieving your goal of starting a business.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
.jpg)