Buy a roof over your house. It doesn't make financial sense to see an apartment / house as an investment. But it is worth having your own roof. I bought my first apartment at your pay in 2022. We had our first baby in 2023 and I feel proud of my decision to purchase an apartment. You don't need to live at the mercy of landlords. My emi is now lesser than equivalent rental. I'm also creating memories with my baby, spouse, friends and family members at my own house.
Don't listen to those advising you not to buy one without having experienced it.
Save for retirement. Max out your PF contribution (some employers deduct only 1800 for PF). Invest in NPS both 50k tax saving and employer contribution upto 10% of basic, if your employer supports it. I see my relatives struggling after retirement because they did not plan how to fund their lifestyle after retirement. They have to cut down on everything they like (travelling, gifting etc.) in their golden years. Finally, never touch your retirement fund until you actually retire.
Save for your daughter's education. Do not invest in SSY. 18 yrs is a sufficiently long period for safe equity investments that grow at 14% pa. SSY will yield half the total corpus at 7.xx% interest rate. There are better avenues to save tax under 80c like ELSS.
Save for emergency @ 18 months of your take home. For SINK or DINK, emergency fund is 12 months of take home. I've forgotten the count of occasions on which this has helped me tide over expenses. My expenses are on the higher side as my wife and I take care of my mother, younger sister and a kid.
Save for travel. Save a lot of money until 35 and spend it to see the world. Travelling gives you memories and a life of no regrets. Save for your planned luxuries (car).
Donate to the less privileged. It can be sponsoring the lunch in an orphanage or old age home or sending money to the less fortjnat ones in your family, extended family who made you.
@jason5261 Would you mind sharing which part of the country you stay in and what kind of a home you bought?
Have you done any prepayment, or made a large down payment?
Really curious to know how come the EMI is lower than the equivalent rent. That's a rarity in India.
BTW, agree with the recommendation against SSY just because it's available. Unless one is the kind of person who won't otherwise invest for a daughter, it should be looked at as another long term debt investment.
@br4nd0n I purchased my apartment at the peak of covid wave 2 in bangalore. So, I got a discounted rate. My apartment is financed through home loan for 90% of the purchase value. However, it's a 30 yr loan.
Above combined with a near 100% increase in rents have made my EMI lesser than current rents. I don't think it's surprising. A lot of my friends purchased in that period and have the same story.
In my opinion, home loan is the cheapest source of leverage and one should maximize the loan amount and tenure. Instead of making a sizeable down-payment or making prepayments, one can invest excess funds in equity mutual funds (or direct equities) to earn more than the interest lost on home loan.
@jason5261 This is a very interesting take. Reducing the EMI load and investing the amount heavily in the stock market instead will compensate for the overall larger amount one will pay for the loan. Hmmm. I think just from a sense of safety perspectivem I'd want my emergency fund to be at least a year worth of my expenses+ Home loan EMI. I've no fallback option in case things go bad and this is what makes me cautious, maybe a bit too much even
@cryssy Agree with your take too. I'm in the same boat - no ancestral cushion. The emergency fund is a cushion, so you are right to ensure all expenses are covered incl. emi. Once that is done, I'd pay 5k or lower in monthly pre-payments depending on how the market is. At this point I am sitting on a pile of cash as markets are at all time high. So I'm putting it into a liquid fund and waiting for the inevitable crash.
But I'm digressing. If your worry is taking a huge home loan with not enough fund in cushion. It is legitimate if you are in an unsafe sector like tech (I am). So save up 12 months of emi and then take the plunge.
@cryssy Hi OP, you are doing very well and I am assuming that you were able to manage it well as you are disciplined and hence, I do not see that habit changing, therefore, the future is bright. Many have given suggestions and now it's upto you to choose the ones that fit you best. Only thing I would like to add is if possible spend some money on yourself. The reason I am saying this is because you have come a long way and it might be a good idea to spend some money on things which give you/your family happiness apart from the things which you are already doing as a part of your responsibilities. I had a frugal mindset as well, due to reasons similar to yours. But few years I realised that I can actually do things to enjoy life as I felt that I was in a kind of a rat race to save more and more. Though my frugal mentality hasn't changed, but I started traveling (alone/with friends/with family) and it keeps me sane and without regrets. Ofcourse I plan from my timeoffs/vacations financially but it is not a drudgery for me and I look forward to it. Result is, I created memories, I have lot of stories to tell to others, and I know I won't regret it. I don't spend on gadgets/ luxury/ or other items which I don't need, but travel is the only guilty pleasure that I have . Maybe you can choose yours and allocate some money towards it. Just saying !! Be happy and Healthy and congratulations on being a father...best of luck
@hejte Hello Friend. A genuine thanks for the detailed response. Your words remind me of what my wife often tells me. I'm pretty much like you. Not into accumulating gadgets -- although I'm quite tech savvy. I can no longer travel alone (obviously) but yes, it's definitely a worthwhile hobby to have !
I recently purchased a goggles (my first ever) for about 4k and kept worrying for days about spending so much money for something like that
Thanks for your kind wishes and I hope you do great as well
@cryssy I am also like you people and even though I am not married and have responsibilities apart from my family, I think at least ten times before buying something. I don't purchase much clothes, I am also not a foodie but like gadgets but I can't digest the fact that these things are so costly( offcourse according to my mindset). I recently bought a tws for 1.8k and I was worried that I have spent too much on an 'earphone'.
@cryssy Great advices here.
Since you’re from a humble background, I’d give a clichéd answer to your question: You earn enough to meet your needs twice, but there’s no end to desires. Since your father, sister and daughter are dependents, I take it that your wife earns enough to make her ends meet. Even if she didn’t, 2.15L is very much enough to meet the needs twice for the entire family.
So please make an investment decision based upon your ambition only after meeting all the needs. While it seems easy, people easily forget this in today’s glam world
@cryssy everything is fine, but maybe you should think to keep ten years of your income as term insurance coverage and more over, health insurance of your father is preferred, as he is dependent on you. usually the hospital bills can kill all the savings. If you can invest time, then stocks are fine but if you cant, its better to go with only mutual funds as you already holding quite a good sum of it. Emergency fund can also be parked in liquid bees or someother form, not all 14 lakhs may not be really required basing on your statement above. But still its good to go as it is. considering your future plans, u should start increasing your investing than the ones available or going on now.
. Maybe you can choose yours and allocate some money towards it. Just saying !! Be happy and Healthy and congratulations on being a father...best of luck
but yes, it's definitely a worthwhile hobby to have !
