Am I doing fine?

[cryssy]

Hi Good folks of PFIndia!

31M, married, father to a week old daughter, father and sister are dependents as well

Take home - 2.15L, Non-tech.

Current Portfolio: 22L in MF (20K SIP ongoing, overall return of nearly 24% annually), 3.5L in selected stocks, PF 5L, high interest SB a/c 14L (this is my emergency fund+opportunity fund to buy in stock market dips). I'm also planning to buy some SGBs in the upcoming window.

Expenses: 20k rent+20k sent home+20k all other expenses (approx)

I have a 1.5cr term insurance and a 5+95L Health insurance that covers me and my wife

I come from a really poor background. Father could never really keep the money he made. Lost my mother when I was young.

I have to plan for a house, children's education and marriage, a car maybe.

 

[inhissight]

@cryssy You are doing not just fine but great... Congratulations for being a father...You can explore Sukanya Samriddhi Yojana and try to max out the investment limit every year. Include your child in your insurance, I hope there will be provision to do so.

As far as house and Car are concerned, keep increasing your MF portfolio contribution. But keep in mind that you need to let the MF grow for 5-7 years to get the benefits. Also, you can save long term capital gains taxes by investing MF amount by purchasing a home.

 

[cryssy]

@inhissight So are you saying if and when I sell the MFs to buy a house, I'll be spared the LTCG? That's really nice then! No?

I want to increase my MF portfolio too but I'm really nervous because markets are super high and given how much the family depends on me, I'm wary going in hard

What do you suggest?

Oh and yes, my daughter is an angel. I just wish I can give her a good life -- not as hard as the one I had

 

[reenmatty]

@cryssy yes. you can save ltcg taxes by using those gains to buy a house . see herehere

 

[megan26]

@cryssy Keep doing a minimum amount of SIPs each month. When markets have dipped, increase the value of SIP.

 

[preachgrl61]

@megan26 I personally think there is no point of trying to time the market in SIP, since the whole point of SIPs are to average and compound over a really long time. Buy the dip is only for individual stocks you think will fare good in future.

 

[macbosch]

@cryssy An old saying: It's not about timing the market, but about time in the market.

Nobody knows how high will market go, or if it falls how low it'll fall. But one thing everyone for sure knows is, it will bounce back and break all highs again.

If you don't feel comfortable investing in MF at this time, what you could do is ki if you invest 100 rs in MF, invest 60, save 40, invest saved up ammount when market falls, if ever, or when market corrects. This way if market goes high, you can gain, but if it falls, you can also gain. Win-Win situation.

Also if you think ki market is at all time high, you can also book some profit in MF and invest that amount in SGB or reinvest in MF if market falls.

There are many things you could do, but you should first be sure, that will market fall/correct? And if yes, do you want to time the market? Remember it needs a lot of patience, knowledge, emotion control to do these things.

 

[cryssy]

@macbosch That's a good strategy. You're right. No one can time the market. But given how sharply it has ran up, there's always that fear that it would at least correct, if not crash

 

[athena74]

@cryssy Think again. Your tough life made you what you’re today. Won’t you want that for your daughter too?

 

[cryssy]

@athena74 Interesting perspective. I would want it to be tough for her in the sense that I would want her to push herself and aim for the stars - not be worried about where the next meal is going to come from and whether I'll be asked not to come to school because my fees are due. I hope that makes sense!

 

[pollostyle]

@cryssy 2.15L income, 60k expenses, 20k SIP, where does the rest of 1.2L go? I think you can SIP significantly higher.

Good to see you can manage in low expenses, that's an important trait to keep. Also 24% ROI on MF is outstanding, what funds are returning you so much?

Also, tell me more about the 5+95 insurance I've been thinking to get one too..

 

[cryssy]

@pollostyle Thanks mate. The rest goes to the high interest SB ac. My difficult childhood has made me frugal. I have seen such bad times, I want to be rather prepared if ever things go south rather than feel like a headless chicken.

The high return is mostly a function of starting early, investing through the COVID crisis and kind of pausing whenever markets shoot up in short timeframes. That's the reason my corpus is only 22L. I sacrificed a larger corpus for better returns. And of course, I buy dips.

Don't know if it's the right way to do it though!

The health insurance is from Niva Bupa. I have a top-up over and above the base of 5L. So currently, since I've not made any claims, my coverage is 10L (base has doubled) + 95L top-up.

 

[flower38]

@cryssy Hey, could you share which high interest SB acc you use?

 

[lilsongbird]

@pollostyle

24% ROI

Yes this is really outstanding. I need to know it too.

 

[lookingfortruth]

@lilsongbird Any small or mid cap funds

Any quant funds, some sectorial funds (PSU, construction)

They have all shot up since covid with upto 50% annualized returns in the last 3 years.

I have 20% xirr and that's with a large portion in debt funds. No secotrial/outperformer funds. Just 50% exposure in small and mid cap funds. Started investing in July 2020. This is nothing special and most likely won't repeat

 

[believerwithquestions]

@cryssy Don't get into trap of buying a house now. Keep doing incremental investment in equity + debt. Think of getting a home after 45, when you have decided to settle in a specific city

 

[cryssy]

@believerwithquestions Thank you very much. This is very practical. I just worry sometimes what if house prices shoot up faster than how quickly my income grows

 

[davidanderson1985]

@cryssy

Thank you very much. This is very practical. I just worry sometimes what if house prices shoot up faster than how quickly my income grows

That's exactly the FOMO and greed that gets people to suck out all their savings and put it in a house loan. Because there's an ingrained belief that prices of apartments will keep going up to infinity and beyond.

Here's my two cents on this subject. Try to think deeper on exactly WHY prices of real estate in India keeps going up. I'll tell you. It is directly related to growing transport infrastructure. 30 years ago, no Indian city except for Mumbai had a well developed public transport system. And even Mumbai only had shitty local trains where people would pack like sardines in a can, smell sweaty armpits, and basically "make do". And because of that one fact alone, Mumbai apartment prices even 30 years ago were 5x higher than in most other cities.

Because of this lack of transport infrastructure, unlike Western cities, Indian cities were a LOT geographically smaller than American cities. For example, if you see a US second tier city, there will be tons of people who live 50-75 km away from the city center. That's unthinkable in India. Why? Because in the US, you can just take a freeway or train and cover that distance in under an hour. In India, that would take 3 hours.

Then there's the lack of civic infrastructure like security and safety, water, electricity, trash collection, plumbing, sewage, playgrounds for kids, parks for adults, trees, clean air etc. So in India, in the last 30 years, you had big builders create large gated societies inside which all these amenities exist as privately funded infrastructure.

Short answer, if you're buying a flat, if you buy in a well run society with a lot of these amenities, especially playground and parks, aka very large societies and not small ones, and if that society has (or will have in near future) access to good transport infrastructure, it is still a good investment.

 

[lion2808]

@cryssy I regret not buying a home when I was 25. At that time in 2018, 3bhk flat with 1500 sqft in Hyderabad is around 50-60L. Now the prices shot up to 1-1.5 CR. Better think about buying a home at early stage.

 

[guynad]

@cryssy Prices of houses will shoot through the roof. At 45, you will regret not buying it at 30.