Me and my wife both work. I earn Rs 1.84 lakh per month, and she earns Rs 88,000, excluding tax deductions. I have a home loan EMI of Rs 36,500 per month for 30 years and a car loan of Rs 20,000. I have a 3.5-year-old kid. I have taken term insurance of Rs 1 crore for myself and Rs 75 lakh for my wife. I am planning to take medical insurance. I am investing in NPS (10k) and mutual funds (65k). I also deposit an extra amount in my car (7k) and home loan (13k) every month. I am thinking of buying farmland for investments. How can I plan my family's future?
Reply by Reply by Sushil Jain, CEO, PersonalCFO.in
We appreciate that you are trying to plan your finances and take exposure to all options. But it would be best if you planned as per your requirement and not as one should have. First and foremost, you should have an adequate health plan, which you are already planning. Secondly, you should have adequate life insurance, which you have, but with the limited information, it seems you need more insurance coverage; Rs 1 crore may not be sufficient. Third, you should have an adequate emergency fund for 3 to 6 months of your household expenses. Fourth, you need to work out the corpus required for your retirement and start investing for that. Fifth, you should have a proper Will.
Investing in farmland is a good idea as far as taxation and if you have your personal interest and background to manage it. Purchasing farmland can be a proactive way to leave behind a legacy. Owning a piece of land allows you to cultivate or lease the farm, providing a potential secondary income source.
Also read: Why and how investing in commodities helps make a balanced portfolio
Also read: I'm 41 and have annual income of Rs 6 lakh. How should I plan my savings for my two kids' future?
However, you must understand that buying farmland is not just a purchase but a long-term investment. Hence, a significant portion of your income should be set aside for this purpose. An ideal strategy would be to save about 30-40% of your income each month to accumulate the down payment for the farmland property. This may require you to be frugal and curb your discretionary expenses.
But we advise you first to create a corpus for your kid's education and marriage. Farm investment also needs a lump sum amount, and it may be difficult to liquidate it at the time of need. Nonetheless, planning and thoughtful financial management are necessary to make this dream come true while also securing our family's future.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)