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34 Engr: My 1Cr Home Savings Plan, Am I Losing Out?

Ramalingam Kalirajan |8912 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jun 02, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by T on May 17, 2025Hindi

Hi Hemant Bokil Ji, My name is sathish residing in gandhi nagar, my age is 34 currently working as Engineer. My current salary is 2lakhs per month. After deducting PF employer & employee of 19200 and NPS 11200(14% of basic) and tax of 18967. It will be 1.5L. I am doing OT in the company payment for it will be 46,953. So total income which i will get is 1,96,953. I have taken home at Mumbai. Which is under construction of 1cr. Till date i have paid 26L. Loan of 24L. Which is 50% of deman raised. Still i need to pay 50L to builder. I need to pay still 50L to builder. Home loan is approved for 89L.Intrest rate of 7.9%. My intention is i dont want to go for loan. What ever the left over money after expenses i am keeping it in my account and paying to builder when he raises demand letter. Is i am doing the right thing or i need to invest the amount in the market for better returns. Please give the solution for this. Thank you

Ans: You have made a strong start.

At 34, planning such a high-value property is a responsible decision.

You are trying to avoid taking full home loan.

You are using your income balance to pay the builder.

This approach shows clarity and control.

Let us now evaluate the right approach from all angles.

Let us also help you make better financial decisions.

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Understanding Your Cash Flow

Your total monthly income is Rs. 1,96,953.

This includes OT income of Rs. 46,953.

Your fixed deductions are for PF, NPS, and tax.

This leaves you with a healthy monthly disposable surplus.

You plan to save and pay the builder stage by stage.

You have paid Rs. 26 lakhs so far.

Rs. 24 lakhs is already through loan disbursed.

You still need to pay Rs. 50 lakhs to the builder.

Loan is approved for Rs. 89 lakhs. You wish to avoid more disbursement.

This means you want to self-fund the remaining Rs. 50 lakhs.

That is a very disciplined approach.

But we must analyse the risk and return involved.

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Evaluate Opportunity Cost vs. Interest Savings

Home loan interest is 7.9% currently.

This is a moderate rate in current market.

If your investments earn more than 7.9%, they beat the loan cost.

Equity mutual funds have potential to deliver higher returns.

But they are volatile and need a longer time to grow.

You will need to withdraw for builder payment within 6-12 months.

Equity does not suit short-term goals.

Debt mutual funds also have market risks.

Bank savings or fixed deposits give 3%–6% currently.

That is lower than 7.9% home loan cost.

Hence, investing now and withdrawing later for builder is not profitable.

Your intention to avoid loan and use income is safer.

You save interest and avoid market volatility.

So, your current method is suitable for short-term funding.

No urgent need to invest the amount.

Keep the funds in a safe, liquid, and low-risk place.

For example, liquid funds or ultra-short-term mutual funds.

These are better than savings account.

They give 5%–6% return and quick withdrawal.

They don’t block the money.

Avoid equity mutual funds for now.

You need money in next few months, not after 5 years.

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Build Emergency Fund First

Before paying builder, ensure you have emergency money.

At least 6 months of your expenses in liquid form.

Around Rs. 2–3 lakhs kept aside is ideal.

Don’t put this in property or investment.

Keep in liquid fund or sweep-in FD.

You must never use credit card or personal loan in emergency.

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Future Strategy After Property Completion

After full builder payment, start goal-based investing.

Now you are using most of your surplus for property.

Later you can focus on building wealth.

Divide your investments based on financial goals.

Retirement, child education, travel, corpus for peace of mind.

Choose mutual funds with active fund management.

Index funds lack flexibility during market stress.

Actively managed funds have better downside protection.

Don’t invest directly. Use regular funds through MFD with CFP qualification.

Regular plans offer guidance, monitoring, and support.

Direct funds may miss out on personalised rebalancing.

This becomes risky in volatile markets.

Review your investments every 6 months.

Asset allocation should suit your risk level and age.

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Avoid Common Investment Mistakes

Don’t invest only in one asset class.

Equity, debt, gold, all must be balanced.

Don’t follow stock tips or social media advice.

Don’t stop SIPs during market correction.

Don’t mix insurance with investment.

Avoid ULIPs and money-back policies.

Surrender old LIC policies if returns are poor.

Shift that money to mutual funds.

Buy pure term insurance separately.

Get health insurance for you and dependents.

Protecting your family is more important than chasing returns.

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Tax-Saving Suggestions

Your NPS and PF already give tax benefit.

Check if you are using full Rs. 1.5 lakh under 80C.

Consider ELSS mutual fund if there is balance room.

They give tax savings and long-term growth.

Avoid 5-year FDs or ULIP for 80C.

ELSS has only 3-year lock-in.

Use NPS additional Rs. 50,000 under 80CCD(1B) fully.

Maintain home loan documents for future deductions.

Even pre-EMI interest can be claimed in 5 parts later.

Track capital gains from mutual funds properly.

New rule: Long-term capital gains above Rs. 1.25 lakh taxed at 12.5%.

Short-term equity gains taxed at 20%.

Debt fund gains taxed at your income slab.

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What You Can Do Next

Track builder demand schedule.

Keep your savings liquid.

Avoid locking funds in volatile investments now.

Prepare for EMI post possession.

Keep your CIBIL score healthy.

Maintain minimum 6-month emergency reserve.

After construction, relook at your finances with a CFP.

Plan for long-term wealth creation post home completion.

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Finally

You are managing your money thoughtfully.

You are avoiding high loan burden. That is wise.

You are not tempted by short-term market returns.

That shows maturity and patience.

At this stage, liquidity is more important than growth.

Once the house is complete, you can explore investments again.

Use regular mutual fund plans with guidance from a Certified Financial Planner.

That will keep your journey stress-free and aligned with your goals.

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Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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