Your Financial Plan



I am 37, working in a private company. My wife is a homemaker and my daughter is six months old. I need to save for my financial goals. I live in a rented house in Hyderabad and own a flat in Guntur. Is it good to sell that flat and buy a new one in Hyderabad? I have term insurance for ₹1 crore and health insurance for ₹5 lakh.

Madan

Solutions: Since you are likely to work until retirement in Hyderabad, it makes sense to buy a property there. Assume you buy a property worth ₹50 lakh with a ₹30-lakh loan for 15 years at 8.75 per cent interest rate, your EMI will work out to ₹30,000. If your Guntur property fetches ₹20 lakh and since you are reinvesting, you need not pay any capital gains tax. As your family is young now, the expenses are likely to increase, going forward. It is also one of the reasons you should consider buying property in the near future. With your current surplus you can meet all the goals.

Retirement: Your anticipated retirement corpus is low. In the years to come, when your salary increases, your contribution towards EPF will also improve. This will push up your retirement kitty along with other retirement benefits. The EPF and PPF will account for ₹57 lakh; the shortfall will be ₹93 lakh. When you buy property, your tax liability will come down; so stop investing in PPF. The surplus generated out of tax benefits can be used to build an emergency fund. Your current SIP mutual fund portfolio is neat; continue with the same. Earmark the investment for your child’s goals and a part for your retirement.

The writer is a SEBI-registered investment advisor and founder of MyAssetsConsolidation.com. Send your queries to blinefp@gmail.com

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