A young couple is taking meaningful steps toward building long-term financial stability. With a growing investment portfolio, a car loan they aim to close early, and plans to purchase a home, they are now seeking expert guidance to bring structure and discipline to their financial journey. Their aspirations include securing their future, managing current liabilities, and aligning their resources with upcoming goals. Geojit’s Certified Financial Planner, Gibin John, provides a clear and actionable roadmap to help them gain financial clarity and move confidently toward their goals.
I am a 32- year-old employee in a private company, earning a monthly net salary of Rs. 91,000/- after all deductions. My wife, aged 29, works for a small company earning around Rs. 25,000/- per month. Together, we are trying to build a stable financial future, though our current investment strategy lacks structure.
At present, we have Rs. 30 lakhs invested in the share market. We are also investing Rs. 15,000 per month in an SIP, and its current value is Rs. 4 lakhs.
I have availed a car loan with an outstanding balance of Rs. 3.5 lakh, for which I am paying an EMI of Rs. 11,000/- with 38 payments remaining. Our monthly household expenditure is around Rs. 40, 000
While we have made some progress in investing, our financial planning is not well-organized or consistent. We are now looking to purchase a flat worth ₹80 lakh within a year and would appreciate your guidance on how to better manage our finances and align our investments with our long-term goals.
Gibin John, who is a Certified Financial Planner replies:
You have made a good start by investing a part of your income, but a significant part of your income is not being invested regularly. More discipline in your personal finance management can solve your problems. Your combined family income is Rs. 1,16,000 per month, out of which Rs. 40,000 goes towards living expense and Rs. 11,000 toward your car loan EMI. After netting of these income and expenses you have a surplus amount of Rs. 65,000. Out of these surplus amounts you are currently investing Rs. 15,000 in SIP and balance Rs. 50,000 is not used for any purposes. If you manage the surplus amount efficiently, you can achieve all your goals.
Firstly, beside your investments, it is important to build an emergency of Rs. 2.50 lakh. This amount can be created by setting aside Rs. 50,000 each month from existing unutilised surplus amount for the next five months. Once you accumulate this amount, you may invest this amount in debt oriented mutual funds and bank recurring deposits in equal proportion. After that you may utilise the surplus amount for next seven months to close the car loan. This will free up the Rs. 11,000 EMI, which can then be redirected towards your housing goal.
Your immediate goal is to buy a flat worth Rs. 80 lakhs within a year. Your existing investments in equity shares and mutual funds can be used towards the down payment. The value of these investments is Rs. 30 lakh and Rs. 4 lakhs, respectively. However, you will still need to arrange Rs. 46 lakhs, for which you can avail a housing loan, and the EMI would be around Rs. 37,000. Since you will need this amount soon, it is advisable to liquidate your investments by selling entire equity and mutual fund investments now and keeping the fund in bank fixed deposits or liquid mutual funds. This will ensure the money is readily available when required.
You have not yet factored in retirement planning, which is a critical part of long-term financial security. Your current monthly living expense is Rs. 40,000. Assuming an average inflation rate of 6%, this amount will grow to Rs. 1.53 lakh per month by the time you retire at age 55. To maintain your current standard of living post-retirement, you will need to build a retirement corpus of around Rs. 4.12 crores.
Considering you have 22 working years left (after allocating funds for your housing goal), you would need to invest Rs. 35,000 per month to reach this target. However, your current surplus of Rs. 65,000 may not be sufficient to cover both the retirement corpus and the EMI for the proposed house purchase.
As a practical approach, you can start investing Rs. 26,500 per month toward your retirement. Assuming a 12% annual return on investment, this could help you accumulate Rs. 3.10 crores by the time you retire —an amount that would be equivalent to meeting today’s living expense of Rs. 40,000 per month.
In the future, as your liabilities and responsibilities increase, you should consider taking a term insurance policy of at least Rs. 2 crore. This is a pure life insurance product, so the premium will be significantly lower compared to other types of insurance policies. You can plan to take this policy after paying off your car loan, which will free up some monthly cash flow for the premium.
Additionally, make sure you have adequate health insurance coverage. Without it, your savings could be severely impacted in case of medical emergencies. A comprehensive health plan will protect your financial goals and provide peace of mind.
As your life evolves and new financial goals emerge, increasing your income will be key to meeting those aspirations. With structured planning and disciplined execution, you will be well-positioned to achieve financial stability and long-term success.
