Financial Planning: Malhar Majumdar

Last Updated: Sun, Nov 11, 2012 19:41 hrs

I am 26 and have been working for two years. I earn Rs 45,000 a month. I have no dependents. My monthly expenses are Rs 15,000-20,000. The rest is saved, though I am yet to start investing. I want to buy a car in six months. The equated monthly instalment (EMI) is expected to be Rs 8,000-9,000. How should I go about this? I also want to start investing the money I save every month. What are my options?
You are saving Rs 25,000 a month for the past two years. Therefore, you must be having around Rs 6 lakh at your disposal at this time. Check your bank account and ensure you have the funds. If you don’t, then you are probably spending more than your estimation.

In case you plan to buy a car, you will have the option of buying on EMI or cash, as you will have a substantial sum at the bank (around Rs 6 lakh). Even if you buy it on EMI, you would still have around Rs 15,000 a month savings (after EMI). It is time for you to invest in a balanced manner. I suggest you first buy yourself a health cover of at least Rs 5 lakh. As for the remaining surplus, you may put 30 per cent into the New Pension Scheme, which will help you create a pension flow once you retire. The remaining 70 per cent may be put in mutual funds (60 per cent of in equity-based fund, 20 per cent in gold funds and the rest 20 per cent in bonds). Also, you may park 50 per cent of the money currently in your savings account in short-term bond funds for better returns.

I am 35, working for the past 10 years and earn Rs 10 lakh a year. I plan to pursue an MBA in two years. At the moment, I do not have any liabilities like a home or car loan. I have savings of Rs 7 lakh in equity and debt mutual funds, bank fixed deposits and some cash in a savings bank account. How should I go about planning my financial kitty for the period I would study? The monthly expense of my family is Rs 25,000.
You need to make meticulous planning if you plan to study at your age. There are two issues. First, you need to take care of the cost of your study, which is steep. If you are looking at an education loan to partly fund it, you need to scout for the best terms and conditions available.

Second, when you are studying, you should be free from any routine monetary issues. As you mentioned, your current family expenses are around Rs 25,000 monthly. Ensure this amount is corroborating to your actual expenses. For that, you may draw up an actual expense sheet for the next three months. Further, anticipate all type of contingencies requiring cash which could arise when you are at college. Once these two, that is, the regular budget schedule and contingency schedule are drawn, ensure you have enough cash to cover these expenses, ideally in an easily accessible bank account. Draw up the detailed schedule of expenses and explain these to your family members, as to how much they should draw every month from the account. Also ensure that during these two years, your life policies and your health policies remain active.

Today, Gliese Consulting Director Malhar Majumdar answers your questions

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