Young persons could work around %age-wise allocations, out of their hard-earned monthly take-home salary (amounts given as illustration), as mentioned below:-
1. Essential household expenses: 35% - 35,000
2. Discretionary household expenses: 5% - 5,000
3. Emergency corpus: Short-term Debt Fund/Flexideposit: 7% - 7,000
4. Term Plan and Family Floater Health Plan: 3% - 3,000
5. Retirement corpus:Hybrid Aggressive Fund: 10% - 10,000
6. Tax-saving Investment: ELSS Fund: 5% - 5,000
7. Long-term Investment: Multicap Fund: 20% - 20,000
8. Home purchase Bank Loan EMI: 15% - 15,000
9. Monthly take-home salary: 100% - 1,00,000
1. Essential household expenses: 35% - 35,000
2. Discretionary household expenses: 5% - 5,000
3. Emergency corpus: Short-term Debt Fund/Flexideposit: 7% - 7,000
4. Term Plan and Family Floater Health Plan: 3% - 3,000
5. Retirement corpus:Hybrid Aggressive Fund: 10% - 10,000
6. Tax-saving Investment: ELSS Fund: 5% - 5,000
7. Long-term Investment: Multicap Fund: 20% - 20,000
8. Home purchase Bank Loan EMI: 15% - 15,000
9. Monthly take-home salary: 100% - 1,00,000
Further relevant points for consideration:-
1. For a salaried person, EPF corpus will become Debt component of Retirement corpus, hence NPS investment could also be done through employer by direct salary deduction, if possible, instead of opening own PPF account.
2. Annual premium of 30-yr Term plan cover of 1 Crore (10 years salary) for 35-yr salaried earner would be within 12,000 (i.e. 1,000 per month).
3. Annual premium of Family Floater plan of 10 lakhs for 35-yr salaried earner would be within 24,000 (i.e. 2,000 per month).
4. For home purchase, EMI of 15,000 would enable home loan of 16 lakhs for 30 years @10%, which should be opted as a floating rate.
5. By giving 20% down payment of 4 lakhs from accumulated savings, a house costing 20 lakhs can, therefore, be purchased as a first home, if going to actually reside in it for at least 15 years to save on rental expenses.
6. Systematic monthly investment of 10,000 in Hybrid Aggressive Fund for 30 years would build a retirement corpus of 2 Crores @10%CAGR.
7. Systematic monthly investment of 5,000 in ELSS Fund for 30 years would build another corpus of 1.25 Crores @11%CAGR, besides annual tax saving.
8. Systematic monthly investment of 20,000 in Multicap Fund for 30 years would build an investment corpus of 6 Crores @12%CAGR, from which other medium and long-term goals can be fulfilled by well-planned withdrawals from time to time.
9. Although there is a tax-saving in EMIs, prepaying a lumpsum amount from bonus or salary hikes, reduces substantial overall interest outgo, besides reducing tenure of home loan.
10. Even if one can afford to pay an extra EMI every year, outstanding principal amount, as well as interest, can be considerably reduced during total home loan period.
1. For a salaried person, EPF corpus will become Debt component of Retirement corpus, hence NPS investment could also be done through employer by direct salary deduction, if possible, instead of opening own PPF account.
2. Annual premium of 30-yr Term plan cover of 1 Crore (10 years salary) for 35-yr salaried earner would be within 12,000 (i.e. 1,000 per month).
3. Annual premium of Family Floater plan of 10 lakhs for 35-yr salaried earner would be within 24,000 (i.e. 2,000 per month).
4. For home purchase, EMI of 15,000 would enable home loan of 16 lakhs for 30 years @10%, which should be opted as a floating rate.
5. By giving 20% down payment of 4 lakhs from accumulated savings, a house costing 20 lakhs can, therefore, be purchased as a first home, if going to actually reside in it for at least 15 years to save on rental expenses.
6. Systematic monthly investment of 10,000 in Hybrid Aggressive Fund for 30 years would build a retirement corpus of 2 Crores @10%CAGR.
7. Systematic monthly investment of 5,000 in ELSS Fund for 30 years would build another corpus of 1.25 Crores @11%CAGR, besides annual tax saving.
8. Systematic monthly investment of 20,000 in Multicap Fund for 30 years would build an investment corpus of 6 Crores @12%CAGR, from which other medium and long-term goals can be fulfilled by well-planned withdrawals from time to time.
9. Although there is a tax-saving in EMIs, prepaying a lumpsum amount from bonus or salary hikes, reduces substantial overall interest outgo, besides reducing tenure of home loan.
10. Even if one can afford to pay an extra EMI every year, outstanding principal amount, as well as interest, can be considerably reduced during total home loan period.