ot a question about your money? What you should or should not do with it?
I have been married for almost six months. My husband and I each earn around Rs 38,000 and Rs 24,000 per month.
Our investments are in LIC, RBI bonds, PPF, NSC and fixed deposits.
We are expecting our first child in July and I plan to quit working by September. I need some form of financial return every month after I quit.
I would like to invest around Rs 25,000 to Rs 30,000 and get a monthly return of around Rs 1,500 to Rs 2,000 so that I do not have to touch my investments.
How should I manage that?
- Jasmin Pannu
You could consider the post office monthly income scheme. The return is decent.
Since you do not plan to work, if you do not have a taxable income that exceeds Rs 1,00,000 a year, you should be fine.
Your example, however, has to be corrected to be more realistic.
On an investment of Rs 30,000 if you hope to get Rs 2,000 a month, you expect about Rs 24,000 per year, which translates into a return of 80% p.a.
You need to be able to put aside about Rs 300,000 to be able to get the income you are targeting.
My wife and I have a combined salary of about Rs 50,000 per month.
We ended up taking a personal loan of Rs 500,000 and a credit card loan of about Rs 150,000. We are in our late 20s.
Though we expect our combined monthly salary to increase, we are paying heavily to service these loans. How do we get out of this trap?
- Jay Shankar
A credit card is a huge temptation to spend. And, given the rate of interest, it surely is a debt trap, as you have already said.
It is a good habit to save. But at your age and stage in life, there are so many things to do.
You might have plans for a house, car, and fixtures and furniture for the house. There could be expenses on going out with friends and the like. It happens to all of us.
The best phase in our lives actually arrives around 40, when we have climbed the ladder, taken care of the basics, earn a good salary and have the highest propensity to save. Until then, here is what you can do:
i. Give yourself the next 12 to 18 months to clear all your debts completely. Use the increase in salary to pay off the debts.
ii. Work on a saving ratio. It could be as little as 20% of your earnings. Simply put it aside every month as if you never earned it at all. That is the only way you can save at this stage of your life.
iii. Open a PPF account, a mutual fund systematic investment plan (which forces you to invest a small amount every month) or any such investment. That should take care of your current investment needs.
iv. Now, focus on the large lumpsums, like a bonus or a huge gift. Invest at least half of it every year in a good investment.
v. Don't worry too much about insurance at this stage, though a basic term policy can be bought at a small premium to cover both your lives.
Don't worry, you are not alone. Simply deny yourself some of your earnings and invest regularly. Well begun is half done.
I am 25 years old. In three years, my sister will be getting married and I have to help my parents with the expenses.
I would need Rs 150,000 by then. I can invest only Rs 2,000 every month.
Over the next two years, I will be able to invest Rs 4,000 to Rs 5,000 every month.
- Nitin Parikh
The amount you are planning to save is about Rs 150,000. So there should be no problem.
Invest in the growth option of a monthly income plan (schemes offered by mutual funds that aim at a monthly return) where not more than 30% is invested in equity (the stock market). You should be able to withdraw the sum when you need it.
If you are also keen to save some tax, go for the balanced funds.
Be sure you invest through a Systematic Investment Plan (which allows you to make fixed investments every month), so that your investments are spread out over a period of time.
Illustration: Dominic Xavier
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