Author Topic: Help with deciding on fixed return and Equity percentage of our saving  (Read 921 times)

Mrs. S

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Brace yourself this is going to be long!
We are a 30 year old couple living in India and currently saving over 25% of our take home income from salary and also working to earn more on the side. We do earn above average pay but we currently run two households supporting my husband's parents.
We are on path to close our home loan and hence looking for investment streams. In India the returns are relatively higher (inflation is higher as well). Following rates are currently prevalent
Fixed returns/Bonds/government schemes/ provident funds: 7.5-8.5%
Equity based Mutual Fund- Average return over 20 year period: 10-15% ( I have reaped 25% returns over 3 years because of right timing)
Inflation floats between 6-8%

We are currently considering a 40-60 breakup of fixed and equity investments. We are also aiming to be Financially independent in another 10 years. Also planning to have a kid in another year or two. We get 3 months of paid maternity leave and the talks are on for increasing it to 6 months. I love my job and would love to continue working so we don't hope to loose one person's income anytime soon.
Also rental from our House should be adding to the income soon. Our job takes us from one city to another every 4-5 years.




Here's a break down

Take home after taxes: 130,000/-
Home loan(Mortgage) : 25,000/-
Rent: 23,000/-
Monthly Expenses: 19,000/-
Parental support: 20,000/-
Insurance and other savings:10,000/-
Provident Fund contribution (not included in take home): 11,000

Provident fund and other investments worth: ~7,00,000/-

The home loan we have allows us to park money in the overdraft account and charges us interest only on the remaining principle. We have been saving aggressively and will equate the remaining principle in 3-4 months. This means that we will not be payign any interest and also that the home loan component will be out of the equation. For those who are curious the interest rate here is 9.5% and we took a 10 year loan which we will finish in 3 years.

We have no other debt,since our education was highly subsidized (top government funded college) and remaining was born by our parents. We pay our credit card in full every single month.
We own a motorbike which gives around 40Kmpl ~90mpg. Both of us work at the same company so commute is shared. We are planning on buying two cycles so that we can cut it down even further and I loose some weight.
Our freelance money finances our travels and we don't use our salary for any of our travel expenses. We have travelled quite a bit over last few years still managing to equate our loan.

We believe we can be a bit more aggressive in our savings as for the first time in 3 years we will have access to our complete salary without sharing it with the bank.

Parul