I am 31 years old and my husband is 32 years old. Our combined take-home salary is Rs70,000. We want to purchase a house. We have saved around Rs13 lakh and kept it in a fixed deposit (FD). Apart from that, I invest Rs2,000 through systematic investment plans (SIPs) each in the following mutual funds—HDFC Long Term, Birla Sunlife Frontline Equity, DSP BlackRock Top 100 and Reliance Pharma Fund. I have also invested Rs1lakh in HDFC Standard Life Crest Plan and Rs50,000 in HDFC Long Term. Should we continue with the FD next year? I want to know if my investments are streamlined and should I increase my SIPs from the current Rs8,000 per month. We don’t have any loan or liability as of now. Should I wait for a year or two to buy a house?
It is good that you have started monthly investments and as you rightly pointed out you should consider increasing the same. These are the years of earning where you should save the maximum. You can consider stopping your SIP in HDFC Long Term and instead go for HDFC Prudence or HDFC Balanced Fund. This will give some stability to your portfolio. If you have done it for the purpose of saving tax, then HDFC Tax Saver or Fidelity Tax Advantage are better options. The other fund which needs your attention is Reliance Pharma Fund—it has done well but being a sectoral fund will be dependant on how that particular sector performs. You can remain in this fund only if you are bullish on this sector, otherwise look at a multi-cap fund where you leave this decision on the fund manager and let him decide the sectors and stock which he believes will do well in the long term. Options you can explore are HDFC Equity, Fidelity Equity or ICICI Prudential Dynamic Fund.
As far as your proposed investment in real estate is concerned, you need to decide your budget as that will decide your housing loan equated monthly instalments (EMIs). Also, factor in the fact that interest rates may further go up, so budget for increase in EMIs.
It may also be prudent to accumulate more funds and go for a lower housing loan. For this, you may wait for another year or two. If that is the case, you can renew your FD and be on a lookout for the property you need to buy. Under all circumstances, make sure that these funds remain in liquid assets.
Also, make sure whenever you buy property, you get adequate life cover protecting both your lives. You should also consider a health insurance.
—Queries and views at firstname.lastname@example.org