My monthly expenses include investments in gold savings plan, and chit funds. I need ₹30-40 lakh in the next two years for my son’s marriage. How do I achieve a corpus of ₹75 lakh after 6 -7 years?
— Name withheld on request
Your current investments are all debt-based asset classes. The investments mainly are in sovereign/government debt in addition to FDs. It is recommended that you review the society FD primarily from the credit rating and risk aspect. The same holds true for your chit fund investments.
Alternatively, you may consider adding equity-based MFs to your portfolio. The allocation to the equity holdings can be started small via debt hybrid funds as well as balanced advantage funds with the total equity holding not exceeding 10% to start with.
This will also ensure that you are able to achieve your targeted corpus after a few years. Your total investible corpus is ₹96 lakh and your monthly pension more or less takes care of your expenses, not including PPF, NPS, or gold savings plan. Hence you do not need to withdraw from your investible surplus and instead let the corpus accumulate.
I am 29 and earn ₹81,000 per month. I plan to buy a house for which I need to take a home loan of ₹30 lakh and can pay ₹25,000 as EMI (equated monthly installment) comfortably. Should I take the home loan for a longer duration or opt for a higher EMI per month to cover the loan early?
— Rittika
You can consider taking a housing loan for a longer tenure. For a housing loan of ₹30 lakh with 20 years repayment tenure and 6.7% interest rate, the EMI comes to ₹22,722 per month. However, you can pay ₹25,000 per month easily, so you may consider a 15-year tenure where the EMI is ₹26,465. You also need to take in account that the interest rates may rise with rising inflation and hence your EMI may also increase. You should factor the same before deciding the period of repayment. And in case you have any funds accumulated in between, you may consider repaying the housing loan debt.
Surya Bhatia is managing partner of Asset Managers.
