Can I prepay my education loan in breach of guarantee FD? | Jobs Vox


I have an education loan 10 lakh and two fixed deposits (FDs) worth 10 million as collateral for this loan. Can I break that security FD and prepay the education loan?

– Abhishek Swain.

Since FDs are used as collateral for education loans, you may not be able to break these FDs even if your intention is to repay the loan with these deposits. You may have to arrange other funds temporarily to prepay the loan and then have the fixed deposits withdrawn.

I am 38 and my take home pay is now. 1.3 lakh without increasing the amount of PF. I also get monthly rental income. 16,000.

Currently, my savings and investments include an emergency fund 1.3 lakh is deposited in FDs. I have two SIP 500 and 1,500 for a period of three years and nine months respectively. I have two LIC endowment policies. A person has maturity values. 15 million at the time of retirement and the other, 1 million policy will mature in 2027. I also have a cash back LIC scheme 2 thousand. My PPF account is active for three years, and the corpus is approx. 1 thousand. My EPF balance from previous employers is approx. 3 thousand. I pay a premium. 1,000 per month to the Atal Pension Yojna, which gives me a monthly pension 10,000 after retirement. I have a word plan 1 crore and health insurance of 20 thousand.

I have an unpaid home loan 25 lakh for another nine years and recently took a car loan 8 million for the next seven years. These are my monthly expenses including rent. 40,000.

Please suggest me what additional investments should I plan to achieve my two financial goals, the child’s education and my retirement?

– Name redacted upon request.

Based on the information provided, it is your net monthly household salary and rental income. 1.46 lakh. Your total monthly expenses, including the current EMI, are estimated to be approx. 85,000. We assume you must be paying home loan EMIs. 32,000 at an interest rate of 8%, car loan EMI of 13,000 at an interest rate of 9% for seven years and monthly operating expenses 40,000.

Accordingly, you should save around 55,000 to 60,000 per month. Given this amount, you should build a portfolio that is a mix of NPS and equity mutual funds as both these assets can help you achieve your goals. NPS is useful as it helps you build your retirement corpus systematically. You should consider investing in equity mutual funds, domestic and international funds along with active and passive index funds.

Vishal Dhawan is a Certified Financial Planner and Founder of Plan Future Wealth Advisors.

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