Your Financial Plan

I am 28 and work in a PSU bank. I plan to get married in a year. My parents are financially independent. I own a house. For my child’s higher education I wish to save ₹30 lakh in the next 15 years. I plan to borrow ₹7 lakh at 7 per cent from my bank to buy a car. My employer provides accommodation and hence my monthly expenses are minimal. Please suggest an investment strategy to help me meet my goals.

Daniel Simpsson

Although your current monthly expenses are minimal, they will go up after your marriage even if you continue to live in a tier II city. Your salary may not grow in tandem with your expenses. Hence, you need to spend judiciously.

Even if your car loan EMI is low, maintenance costs will rise and it will reduce your surplus. Unless it’s a compelling family situation, we suggest that you don’t buy a car, given your current income.

It is good that you want to plan for your family early. To save ₹30 lakh for your child’s education you need to save a sum of ₹6,000 a month for the next 15 years. This should earn 12 per cent annual return. Earmark your existing mutual fund investment for this goal. Besides fixed income securities, you can invest it in other asset classes such as equity to earn better return.

You have a term insurance and your recurring deposits are earning 10 per cent return; there is no need to buy an endowment policy. Since you don’t plan to buy a house in the immediate future, set aside more money to build a retirement kitty. Retain your deposit of ₹2.5 lakh until your marriage. In case you don’t need the money for your marriage, keep it for your retirement.

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