I am 29 years old and earn Rs 26 lakh per annum. I plan to work in the same company for the next 15 years and assume that I will get 15-20% raise every year. I plan to build a house in my hometown for which I need Rs 60 lakh in the next three years. I also want to build a corpus of Rs 10 crore in the next six years to start my own venture. I don’t have any investments as of now. How do I go about this?
A lot of it will depend on how much you can save. This current salary will have two cash outflows—income-tax and your expenses. On average, you can aim to save 30% of your gross income. If you can save more, it will be a bonus and will add to the corpus.
Constructing a house can be done from a combination of personal funds and loan against property. Assuming you want to lease the property after construction, the loan may turn out to be tax-efficient.
The next three years can then be used to accumulate the funds for your venture (the first three years corpus was used for the house). However, depending on the borrowing cost prevailing at that time, you may end up taking a higher loan. Here also you have to take a large amount of business loan and depending on the kind of venture you want to start, the cost of loan will vary.
In the process of building the corpus for both your house and business venture, you need to be sure that these funds are meant for their respective needs and hence should not be touched for other needs that may come up over a period of time.
As the need for funds is large, you should ensure that you save the maximum amount possible given your personal circumstances.
Further, the savings can be made based on your risk appetite and the tenor of investments. As the tenor of investment for the first need of house is three years, the savings for the same cannot be allocated to high-risk assets. Hence, a major portion should be allocated to debt, hybrid and dynamic products. You can consider a combination of long-term debt (not more than three years), monthly income plans (MIP) wherein HDFC MIP, Reliance MIP and Canara Robeco MIP are good options. In the hybrid category, HDFC Prudence, HDFC Balanced and Birla Sun Life 95 Fund are good. In the dynamic category, Franklin Templeton India Dynamic PE Ratio FOF can be considered.
You should also consider having a life insurance cover for yourself. This you can take immediately if you have any dependants, otherwise you can take the same once you have taken a loan. Further, get your health insurance done. This you can take immediately even if your existing employer provides you a health cover.
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