Financial Planning by Malhar Majumdar

I am 49 years of age. My wife and I earn Rs 75,000 (expenses come to Rs 15,000). Our son will start going to college from next month and the expenses will rise by Rs 10,000-15,000. We are currently servicing a home loan, car loan and personal loan. Our total monthly outgo is Rs 40,000. The extra Rs 20,000 is invested for our retirement. Other investments include Public Provident Fund (Rs 4.5 lakh), equity funds (Rs 8 lakh) and fixed deposits (Rs 3 lakh). How should we plan to meet the new expense?

You have a savings surplus of Rs 20,000. Once your son starts college, a part of it may be utilised for his education. So, you need not liquidate any of your investments right now. However, your savings towards retirement will get reduced to the extent of your son’s educational expenses.
One issue is that at 49 years, and with income of almost Rs 9 lakh a year, your gross savings of Rs 16.5 lakh are very low. You need to ensure that whenever your short-term loan repayments are over (personal & car loan), you divert the surplus money to your investment account. Further, any additional money in the form of bonus and increments needs to be invested.

I inherited Rs 50 lakh in fixed deposits. I want to put this aside for my daughter. Most people advise investing in equities. But, I don’t want to invest the entire sum in one instrument. I am considering portfolio management services and debt. Please advise.

Let me offer you a third option. You may continue your fixed deposit with the bank. However, withdraw the interest every year and invest only the interest in diversified equity funds. Continue this through your investment horizon.

The negative side of this process is the tax you need to pay on the interest income. The positive side would be that your capital would remain intact. Also, you will be able to invest in equity markets with regular instalments, over a long period.

I am 35 years of age. I earn Rs 55,000. My house rent is Rs 16,000 and monthly expenses are Rs 18,000. I invest Rs 5,000 in mutual funds and Public Provident Fund. I am left with a surplus of Rs 11,000. I want to send my son to a better school, which charges a higher fee (Rs 60,000 annually, as against Rs 35,000 now). I also plan to buy a car (need a loan of Rs 5 lakh). How should I plan for my goals?

Your investment solution largely depends on your priorities. You have a monthly investment surplus of Rs 11,000. If you spare Rs 2,000 from that, you can ensure your son goes to a better school. The Rs 5-lakh car needs to wait a little more as the loan payout could otherwise wipe out your investment potential. So, you need to prudently invest your surplus and build real assets

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Beware, Your Investments are Reported

Income tax notice for me? Not possible! My friend Natarajan reacted in disbelief when his wife informed him on phone. He had no reason to believe her. He immediately called me to know what could be the reason. I had to dig details to know what could be the reasons for which my friend Natarajan and the likes are served such notices.


You may be the one to whom the income tax department has sent the notice about the investments you made in bonds/debentures /shares /mutual funds. You are further surprised that how the income tax department has come to know about it.


So for all you first timers, I would like to share with you that as per the existing provisions under income tax laws some entities are required to report the details of those transactions which you have entered into or registered with them. This way we see that such notices are the result of the details furnished by those companies/mutual funds whose shares, bonds and units, etc you have purchased directly from the company.....(Read More)

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