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POSTED BY ON January 31, 2013 10:16 pm COMMENTS (6)
Hi,
I want to plan for the year 2013-14. I am 28 years old and likely to get married in few months.I am the sole earning member in my family and lives with my parents as of now. My annual gross income is Rs.7 lacs.
Savings:
1)EPF of Rs.5k per month which turns out to be Rs.60k per annum
2)SIP of Rs.1k per month in each Mutual Fund
i) DSPRock Top 100 Equity Fund
ii) HDFC Equity Fund
I want to take home loan for Rs.20 lacs in this fiscal year.
Pls suggest me how to manage my income with good savings and investments and lesser income tax.
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Dear Mohan, 6000 Rs. mly rent means you are paying 72K Rs. yly rent. 72K Rs. yly rent translates into 40 times PE ratio.
I.e Price of 28L Rs. & earning of 72K Rs. ratio is 40 times. It’ll not save you the money as you are thinking. How & why?
For a 28L Rs. house, I’m not sure, it’s the final paid price or overhead expenses are extra? Even if I consider this final paid price, at least 6L Rs. you w’d have to arrnage from your own pocket. Balance 22L Rs. ‘ll come from bank Loan. Now on a rough, the EMI ‘ll be around 20K Rs. for a 20Y term for this 22L Rs.
Now do tell me from where you ‘ll arrange those remaining 14K Rs.
Instead of purchasing as of now, keep living on rent for few more years. In the mean time, save & invest heavily & after few years, when you do have at least 50% money, then only go for purchase of house.
Thanks
Ashal
Dear Mohan, what’s the rent you are paying as of now for your house> What’s the price if you purchase the same today from your land lord or same house in your area?
Thanks
Ashal
Rent is Rs.6000/-. The cost of house which i am supposed to purchase is 27.5 Lakhs
Dear Mohan, 7L Rs. yly income translates into roughly 60K mly income. Is it your cash in hand income or income before all deductions? What about your life’s risk cover? What about the down payment money for that home you want to purchase with a loan of 20L Rs.?
Do you really need that house or it’s just the peer pressure that you are committing yourself for such a huge burden?
Thanks
Ashal
I want to own a house because the rents has been rapidly increasing in Hyderabad so if a stay in a rental home, I should bear with this. But if I own a house with a loan, the rent which I will be paying moves into EMI slot and after some years it will be completely mine as an asset.
You need to first write down your goals, both short-term (less than 5 years) and long-term(more than 5 years)
You need to find out how much you can save and how much you need to save.
Use this calculator to find out how you need to save and how you can optimize it
http://freefincal.wordpress.com/financial-health-check-3/with-optimized-goal-investor/
If you take a loan for 20 lakhs the emi will be more than 20,000. This is more than 30% of your monthly income.
The max EMI you can take depends on your expenses and how much you can save for your goals.
If your income will increase in future and if your spouse is also married then you can afford to have a higher EMI and increase your savings down the line.
Please plan how you intend to save for your goals before taking the home loan
Once you are clear about your goals you can integrate tax saving with your goals.
Make sure you get enough pure life insurance (you can use the calculators in above website) and health insurance even if your employer provides it.