I have a housing loan & want to plan out my investments.



Dear Fpguru,


I have a monthly commitment of my Housing Loan Rs 60,000/- My total monthly income is Rs 95,000/-.  Please let me know how do I plan out my investments. I have two dependents,   i.e. my wife and daughter.


Deepak Nair



Dear Mr. Deepak


We thank you for visiting our website & asking us a question. You have asked us a question regarding how to plan out your investments. You have not given us all the details of your household expenses and have just provided us your housing loan commitment. With this it is difficult to understand your surplus.


Your first and foremost goal should be to lower your loan commitment. Your loan constitutes 65% of your total income. This means more than half of your income goes in paying a loan. We are not saying this is a bad loan as it is for your home, but at the same time such a major chunk of your income going towards this is alarming.


You have not given us exact details of your housing loan so our advice will be more general than specific. You should first think of extending your loan term period so that the EMI amount reduces. This will give you higher monthly surplus. If you have any investments currently you may think of pre-paying part of the loan to reduce debt burden. These steps will help you in first ensure that your EMI commitments are manageable. Also ensure you take your tax benefits on the housing loan to save tax.


Another important thing for you is to ensure that you are adequately insured as you have two dependents & a big loan. A term life insurance plan is the best solution for you. The premium will be low and the sum assured will adequately cover you.


The surplus you currently have, if any, should definitely be invested for goals like your retirement & for your daughter’s education & wedding. Again as you have not mentioned yours and your family members’ age, we don’t know how long is left for these goals.  Assuming that these are in the long term equity mutual fund SIP route is the best for you.


Do keep in mind one important thing that financial planning is not only about your investments but covers all aspects of your personal finance. Before adding investments, you need to reduce loans. To reach a healthy net worth, you don’t only have to increase the assets side of you personal balance sheet but also need to reduce the liabilities side as well.

Hope this solves your query!



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