ot a question about your money? What you should or should not do with it?
Our expert Uma Shashikant has the answers.
Monthly income: Rs 16,875 (take home)
Expenses: Rs 5,000 (to my parents), Rs 2,500 (bike loan), Rs 1,500 (phone bill), Rs 2,000 (entertainment).
I'm going to get married to an engineer after a year-and-a-half but I have no savings. How can I manage after marriage?
Bijoy Meethal
Work on the principle that what you don't have in your hands is not available for spending.
Sign in for a mutual fund Systematic Investment Plan that will directly debit your salary and invest the money in a diversified equity fund. An SIP will require you to invest a fixed amount of money every month. To understand how SIPs work, read How to invest in a mutual fund.
Open a Public Provident Fund account and give the bank standing instructions to take away Rs 500/1,000 from your account every month. To figure out how to do that, read Open a PPF account in 11 easy steps.
Do not worry much about not having a high rate of saving. At your stage in life, managing a 10 to 20% saving is an effort. Target a 20% saving, begin with 10% of your salary and over a period of time, you will accumulate wealth.
It is not as if all of us began life with a lump sum savings in the bank -- we had eight cardboard cartons of books, one iron box, an alarm clock and Rs 5,000 in the bank when we began life 18 years ago.
Your fiancee is educated, ensure that she is employed. Even after marriage, continue the practice of saving 10%. By the time you are 40, the money would have grown, and you will be able to add so much more as your spend falls, and earnings grow.
Don't panic yet, but start an investment plan right away.
Age: 26 years, 23 years (wife)
Monthly income: Rs 18,000
Investments: Tax saving
More than half my salary goes in servicing my home and car loan.
What must I do?
Sameer D Bagde
Clear the car loan as quickly as possible. If you cannot pay the car loan, sell the car and close the loan. It is good to move up in measured steps, rather than running up a large loan.
Perhaps the home loan will help save some taxes, and perhaps the house will not fall in value.
If you had a credit card loan, and I advised you to keep the loan and save some money, both of us would be foolish.
Unless your investment gives you more return than the rate of interest you pay on the loan, it makes no sense to keep the loan and make the investment. Pay off the loans first.
You may put yourself through some hardships, perhaps some loss of social standing (if you really sold the car) but trust me, no one will come to help you with your finances. You have to take charge. Step back, and undo the loans that you cannot service.
Your investment plan comes after that.
Family: Me, wife and 2-year-old child
Monthly earnings: Rs 70,000 to Rs 75,000
Loans: Personal loan (Rs 15,000 every month), home loan (Rs 20,000 every month)
I manage to save around Rs 15,000 a month. Where must I invest it? I have been toying with the idea of trading as well.
Arun Kumar
It is a good idea to invest some money every month.
You should not look to investments to generate any income for you. You have your salary income to do that.
Even before you do that, make sure you have kept some basic investments in deposits (to meet any emergencies) and choose from PPF and mutual funds for the rest.
i. You need to focus on wealth building for yourself and securing your child's future. Buy basic insurance cover to protect her education and upbringing. Invest in a child care plan every month, say Rs 5,000.
ii. Invest about Rs 2,500 in the PPF every month.
iii. The remaining Rs 7,500 can be split into two parts of Rs 2,500 and Rs 5,000. Invest the first in a diversified equity fund for long term growth. Invest the second portion in a tax saving plan to save on tax as well as ensure growth. If you are still keen on getting an income, you can choose a dividend option.
If you can invest some time in arming yourself with the skills to understand the markets and companies, if you have the attitude to take risks and the stomach for losses, if you can spend a good amount of time monitoring and understanding markets, you can 'invest' directly in equity.
To trade without investing, and without the background skills, is to gamble -- it's very similar to buying lottery tickets or betting on horses. If you are comfortable doing that, go ahead. But be prepared for both the best and the worst.
Don't stake all your saving in trading. If you must speculate, do not stake more than 10% of your money.
Illustration: Dominic Xavier
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