According to Kate Ryan, head of research for BNP Paribas Real Estate Ireland, investors ploughed almost €1 billion into Dublin’s private rented sector (PRS) last

Where and how do you invest your monthly salary?

To my international audience, currency like INR, USD, Euro, GBP, etc. doesn’t matter. My answer may be in INR but principles of Maths and Investments remains same.

The only difference is, people in USA, UK, etc. may not be able to earn 15+% return from Mutual Funds but everything else remains same. But what we get in MF return is offset by cost of money which is cheaper in USA, UK, etc.

My wife and I both are 37 years old with two daughters 7 and 3.

We earn about 30,60,000 (30.60L) in combined annual post-deduction take-home income which comes to 200,000 for me and about 55,000 for my wife, monthly.

That’s combined take-home income of 255,000 monthly.

Out 255,000: –

  1. 70,000 monthly goes into Equity based Mutual Funds thru Systematic Investment Plan (SIP).
    I started with 5000 monthly SIP back in 2005 when I was 24 years old. Today my MF portfolio is over 18,000,000 (1.80 Cr./18Mil).
  2. 10,000 monthly goes into Tanishq Gold Investment Scheme. This helps us buy a nice piece of jewellery during Diwali/Dhanteras.
  3. 7,500 monthly goes into Gold Savings allocation. It is only allocation and not expense.
    During Diwali, this allocation lets us buy 25gms gold coin annually which comes to about 85K.
  4. 6,000 monthly (72,000 Annually) goes into Pension from National Pension Scheme (NPS) – (5000 for self Contribution to NPS + 903 NPS contribution thru Atal Pension Yojana).
  5. 3,000 monthly (36,000 Annually) goes into Medical Insurance from MaxBupa with a combined cover of 43 Lakhs for all 4 of us (2 adults + 2 Daughters).
  6. 2,500 monthly (30,000 Annually) goes to Life Insurance under Term Plan for cover of 1.75 Cr.
  7. 2,400 monthly (28,800 Annually) goes into ULIP with 300K Life cover (which is a waste of money & investment).
  8. 2,000 monthly (24,000 Annually) goes into Accidental Cover of 1 Cr. for each both of us.
  9. 33,000 monthly goes into Rent & maintenance.
  10. 25,000 monthly goes into EMI for Automobile Loan of 2017 Hyundai Elantra top end.
  11. 5,000 monthly (60,000 Annually) goes into Automobile Insurance. I got it from Bajaj Allianze with DriveSmart Prestige plan.
    It is bumper to bumper coverage plan.
  12. 6,000 monthly goes into Automobile Operation and Maintenance of 2 cars (Fuel + Maintenance).
    My running is less than 500kms per month combined. So its not every month that I spend money on fuel or maintenance.

    However, we do undertake long drive once a year. Recently we did 2,500 KMs road trip of Kerala via Ooty, Conoor, Coimbatore.

  13. 25,000 monthly goes into School fees for my two daughters including transport.
  14. 1,000 monthly goes into School incidentals like Annual functions, fancy dress, picnics, etc.
  15. 15,000 monthly goes into Groceries, Fruits and Vegetables (includes milks/eggs etc.).
  16. 5,500 monthly goes to domestic help (2500 each for 2 maids and 500 for car wash).
  17. 10,000 monthly goes into Leisure (movies, dining out, shopping, birthdays, anniversary, etc.)
    Total amount is an allocation and we may not spend it every month. Having said that, allocation helps us plan expenses like Diwali.
  18. 5,400 monthly goes into 2 Mobile + 2 Broadband + 2 DataCard connections.
  19. 2,500 monthly goes into electricity bill.
  20. 2,000 monthly goes into LPG & other household incidentals (newspapers, ironing, doctor’s visit, medicines, sanitary napkins, etc..).
  21. 5,000 monthly (60,000 annually) goes into charity. My wife and I have undertaken expense of teaching 4 girls upto graduation.
    Currently they are in class 7th and I undertook their expenses when they were in class 1.
    It also allows us to claim 100% tax rebate under section 80G.
  22. 11,200 monthly unplanned savings or cash left in hand (or whatever the figure is at the end of the month) goes into kids accounts equally.
    After every 6 months, saved amount goes into buying additional units of existing Mutual Funds allocated for the kids.

I do not believe in RDs and FDs as what they generate is way below inflation and also taxable at highest slab if interest income is above 10,000.

Apart from this my wife gets quarterly incentives ranging between 30,000 – 50,000 while I get annual bonus of 700,000 – 1,500,000. All the incentive and bonus again goes into investment.

My wife puts her incentives into buying additional units of existing Mutual Funds while I split my bonus into buying additional units existing Mutual Funds and/or investing in Stock market directly.

Part of my bonus also goes into investing lumpsum in a Debt fund and/or Bonds to balance out Equity Exposure. Equity portfolio which I started with 5L in 2005 when Sensex was 4000 points and Nifty was 800 odd points had 10 stocks.

Today also, it has only 10 stocks, with value of over 15,000,000 (1.5Cr/15Mil). Till date no profit has been booked.

Any increment we get, 75% of that increment goes into our Mutual Fund portfolio and 25% goes into maintaining/upgrading existing lifestyle and expenses (luxury/leisure, etc.). This helps us increase our MF investment annually beating inflation and also helping us build good corpus for retirement.

Some of the expenses listed occur only quarterly, half yearly or annually but needs to be provisioned for monthly like Personal/Car/Health Insurance, School fees etc. Other expenses may or may not occur (like doctor’s visit and/or medicines).

Any money saved at the end of the months goes into kids account equally.

Investment in Pension and Gold is to balance out Equity exposure to some extent. 72K NPS also gives me 50K additional rebate during Income Tax. Gold investment over time, including what we received during our wedding 10 years back, is over 60L now.

10,000 allocated to leisure takes care of our short and sweet weekend getaways or extended weekend trips nearby. Budget for big planned holidays above 5 days or out of country or which may require Air Travel comes out of our Mutual Fund investments.

Our cash usage is restricted to less than 3,000 per month. Most of payment are done thru Credit/Debit Cards, Cheque/Net Banking, Electronic Wallets like PayTM.

I do not have a self owned property and/or house/land. I do not plan to buy anything for another 3–5 years. I did inherit 2 houses in Delhi. One was Ground Floor DDA apartment which I sold few months back and invested all the money in Mutual Funds. Other is a 220 Sq. Ft. 3 Storey bungalow lying closed.

That’s the story 255K monthly.

Edit 1: Additional Details –

  • ~41% goes in planned Savings, Insurance & Investments for self and family.
  • ~25% goes into Household, Rent, Groceries and monthly bills.
  • ~14% goes into automobile ownership, maintenance & running.
  • ~10% goes into Education.
  • ~2% goes into Giving Back – Charity.
  • ~4% is cash saving at the end of the month.
  • ~4% goes in Lesiure.

Edit 2: Thank you for overwhelming response. ~206.2K+ views, 10.4K+ upvotes and your questions and comments….WOW!!! Thank you! Never thought I’ll get this overwhelming response.

Thank you for my first 10K upvotes and 200K+ views.

Edit 3: If you have any questions let me know, I’ll be happy to respond.

Edit 4: For international audience grappling with conversion: –

  • 0 Units
  • 10 Tens
  • 100 Hundred
  • 1000 Thousand
  • 10,000 Ten Thousand
  • 100,000 Hundred Thousand/ 1 Lac/Lakh/L
  • 1,000,000 Million/10 Lacs
  • 10,000,000 Ten Million/ 1 Crore/Cr./C

Edit 5: Our Background!

I am Computer Science graduate with MBA in Marketing.

I am a (or at least I was as certifications needs to be refreshed/renewed every 3/5 years) qualified Wealth manager with NCFM certification in Capital, Derivatives and Commodities Market. I am also certified by AMFI for Mutual Funds and IRDA for Insurance.

Having said that, I am marketing and strategy consultant for some of the Fortune 500 companies for last 9 years. My wife is into operations management with an ITES/KPO firm.

I started investing in 2005 with a only 1.8L fixed salary, comes to 15,000 per month. I also had incentives which were uncapped which went into partying, dining out and buying a car (Swift VX which I bought in 2006 cash down for 4.20L, 12 months after starting the job).

Out of my salary, 5000 monthly was invested in Equity SIP. It left me with 10k which went into my expenses which included EMI for Bajaj Pulsar 150.

I was based in Delhi and living with my parents at family house. I had no liabilities around rent or anything else. Only condition of my dad was to get groceries once a week.

When I started investing BSE Sensex was 4,000 odd points in an unprecedented bull run. NSE Nifty was 800 odd points. During those times, 100 point drop meant bloodbath/market crash.

Edit 6: Buying a House or a property on Loan.

As of today, I live on rent in Bangalore. I do not own any real estate of my own.

I personally think they are sink hole and at 37 it is too early to buy a house and get bogged down. 25–45 are your prime working age/most productive age when you want mobility to grab any mouth watering opportunity. You need to be flexible.

I think 40–45 is the right time to start planning to buy a house when you are settled in place/city/job of your choice, your kids are in middle/senior school and moving for job is out of question unless something out of dream comes.

On an average EMI for Housing Loan comes to 1,000 Per Lakh (these days it is at about 850/lakh but won’t stay for long). Home Loan of about 60 Lacs will need around ~60,000 as EMI per month for 20 years.

60,000 is the money you have blocked on your house. You are not saving it. You are not investing it. You are not earning out of it. Moreover, on a Housing loan of 6,000,000 (60 Lacs) at 10% interest rate over 20 year period, you’ll end up paying around 1.4 Crores (14,000,000).

Whereas, 60,000 invested for 20 years in a Mutual Fund giving 15% will give you 9.1 Crores in 20 years. Also, if you are living in the house, then it is not an asset. Besides every year it needs house tax. Every 3–5 years it will need a new coat of paint. 10 years it will need minor repairs, By the time your Loan is paid (20 years) it will require major repairs.

Having said that, I did inherit 2 residential properties from my father in 2017. One is 2 BHK DDA apartment in Delhi other is 220 Sq Mtrs. Bunglow in Noida. DDA Apartment I sold few months back and money invested in MFs and Stocks. Bunglow in Noida is locked and empty. I can tell you from my experience, house is a sink hole. There are better ways of investing money. Real Estate is not what it used to be.

Edit 7: Financial Discipline!

I learnt financial discipline the hard way after I lost my job due to 2008 global meltdown just 15 days before my marriage.

It took me 10 months to get a new job.

Good thing we didn’t have any liabilities, kids or any emergencies. My wife was working and my dad was also working.

We were living in my parent’s house.

Since then, it was all about being prepared. Life, Medical & Accidental insurance are for contingencies.

I have a premium medical insurance and I pay big bucks for it. This has allowed me to breath easy in case of any medical emergency.

Edit 8: Insurance is wastage – A very important & necessary Wastage!

Make no mistake, Insurance is not an investment. It is a wastage unless you require it and eventually everyone DOES requires it.

Insurance is only to cover your risk and contingencies. As one of you have asked, my Term Plans (Life Insurance) are for the family. They do not mature and return anything.

Having said that, Insurance is cheaper when you are young. It becomes exponentially expensive as you age. Above 35, it become crazy with all the medical tests coming in.

Someone pointed our that I am inadequately insured. You are correct!
I plan to correct that over next few years. Ideally, life insurance should be 20 times of your annual take home income, in my case it should be around 6 Cr.

Edit 9: Systematic Investment Plan

SIP, initially looks slow and waste of time but in 12 months you start seeing the corpus building. In 12 months, 5000 monthly becomes 60,000.

After 5 years you start witnessing the compounding effect in large scale.

SIP can be started any day with minimum of 500 Rupees.

10,000 invested for 10 years in SIP monthly earning 15% will give you 28 Lacs in 10 years time. Over 30 year period, it becomes 7 Crores.

Best part is 15% is the minimum you can expect to earn out of your well placed SIP.

Many MFs, over last 5 years have delivered over 21% in returns.

Edit 10: Time is Money! More time you have more money you make.

One thing everyone needs to understand (especially people starting their first jobs or are relatively new into jobs (1–5years) or do not come from strong financial background) the sooner your start the more money you make.

It is all about “Compound Interest”.

Once you have good enough corpus, hire a wealth manager to manage your investments.

You need to work as hard to grow your investments as you do in your job to earn salaries or incentives/bonus.

Check your SIP investment calculations here to get an idea.

Always remember, “Money Attracts Money.” The more you have it the more it will attract.

Edit 11: Giving Back!

We were approached by Oxfam for a donation for Girl Child Education campaign. We told them we’ll only do it if we can track the progress quarterly and if they can make sure my donations goes to the girls we want and not spread over the entire organisation. They agreed!

Giving back does not have to be in terms of money only. It can be your time and efforts. We agreed to teach 4 girls because at that tie we could only afford that. Also, my mother was a teacher and during her 4years of cancer treatment, she never missed a day of her school always saying her students need her more.

Our efforts to teach these 4 girls, is in a very small way, to honour her memory.

There are new and upcoming NGOs doing excellent work in teaching kids, girls, women. 17000Ft Foundation is one such NGO. Checkout their website – 17000 ft Foundation.

One of my friend’s volunteered for this NGO. She went to Ladakh to teach kids for few weeks. She told me about the entire experience. I have been wanting to do the same. May be I’ll get an opportunity at some point in time.

Disclaimer – My wife and I are in no way associated with 17000ft Foundation.

Edit 12: My Portfolio of MFs

My MF portfolio is 62% Equity & 38% Debt. Out of Equity : –

  • 12% is Equity Balanced
  • 52% is Equity Diversified
  • 10% is ELSS
  • 22% is Equity Small and Midcap
  • 4% Equity Special Fund

I cannot help you with your investment as I am not qualified to advice you on same. But I tell you that Investments are specific to person based on his risk profile, income profile, background, capacity, capability, goals, age, requirements, liability and above all motivations.

I can only share where I am investing:

  1. Axis MidCap – Growth
  2. DSP Black Rock Small and Midcap – Growth
  3. DSP Black Rock Opportunities – Growth
  4. DSP Black Rock Dynamic Asset Allocation Fund – Growth
  5. DSP Black Rock MicroCap – Growth
  6. Edelweiss Balanced Advantage Fund – Growth
  7. Edelweiss Maiden Opportunities Fund Series Fund – Growth
  8. ICICI Prudential Balanced Fund – Growth
  9. ICICI Prudential Balanced Advantage Fund – Growth
  10. Reliance Retirement Fund – Wealth Creation Option – Growth
  11. Reliance Tax Saver (ELSS) – Growth
  12. Reliance Regular Savings Fund – Equity Option – Growth
  13. Tata India Tax Savings Fund – Growth
  14. SBI Multicap – Growth
  15. HDFC SmallCap – Growth

Debt fund investment is used to finance purchase of additional units of existing MFs on dips to average out.

My investments into Equity market (stock market) is my own and is balanced by investments into NPS, Gold, PPS.

For every 5 Rupee invested in Stocks, 1 goes into Debt funds, bonds, NPS, Gold.

I am not very concerned about the risks right now, I have age on my side.

India is in a golden period. Booming market, growing economy, and low interest rates along with higher than expected Global Economic growth with US growing between 3–5%.

Edit 13: Health Insurance!

I got it in 2010 after the birth of my 1st daughter. My wife and I were 29 years of old.

During child birth, we found out that health insurance provided to us by our jobs were seriously inadequate and highly deficient.

MaxBupa was newly launched Medical Insurance provider that time with USP of ‘Direct Dealing with Company without any TPA.’

Since then we have used it 6 times including birth of my 2nd daughter. All those times only thing I paid was 100 Rupees for the thermometer which was not covered.

I never had any problems with the claims. I deal directly with the Insurance Provider, i.e. MaxBupa. There is no TPA involved. Additionally, I get annual health check up and loyalty bonus.

When we are young in 20s we never think about mortality or medical emergencies. Unfortunately, nobody sells Medical Insurance to 20 something youth in their 1st jobs.

Whenever you join your 1st job all you is credit card guys lining up to get you singed up. There is no harm in getting Credit Card. But Medical Insurance is very important.

In 20s, you can get top of the line 10L medical insurance for as little as 5–7K per annum. In your 20s, there is no medical test, no exclusion and everything is covered from Day 1.

As you age, Medical Insurance becomes very expensive. Once you turn 35, insurance companies will make you undergo series of medical tests.

Do not rely on you medical insurance provide by your employer, if you lose your job, you lose your insurance as well.

Disclaimer – My wife and I are in no way associated with MaxBupa Health Insurance.

Edit 14: Inheritance or not, Start Early!

I was not sure if I’ll get my parent’s inheritance. My father and I were estranged due to the fact I married a girl he didn’t like.

I have 2 elder siblings. My mother passed when I was still in graduation and my father passed away in 2016 and didn’t leave any will.

It was my sisters who decided to give me the complete inheritance. Part of the reason I have huge portfolio is I was certain that I’ll never get any inheritance.

Start early and be proactive.

No inheritance doesn’t mean you cannot become wealthy. It is difficult but it is doable.

Edit 15: Get a Wealth Manager!

Yes, I have a wealth manager who takes care of my investments. We meet once a month and go over the portfolio and investment strategies.

I have some knowledge about markets but I am not in the market. He is! He is the professional.

The amount of time that is required to build portfolio is serious. You cannot do it alone.

Fortunately my wealth manager is my very best friend. We started together in the Financial Services industry. He went to start his own Wealth Management firm.

Being friend, his services are free of cost.

Usually WMs charge 1–2.5% of investible amount or portfolio for consulting and management.

You would happily pay 5000 per month to your maid to clean your house but you will not shell out money to pay professional wealth managers who are managing your money and to large extent your future & security.

Edit 16: Social Security Scheme!

If you have not invested in PMJJY, APY and other social security scheme by the govt. then you are loosing out on the almost free money on the table.

Edit 17: Stay Invested!

There will always be market rallies and crashes. It doesn’t matter when your outlook is 10–20–30 years. In my case, my investments are for my kids and retirement.

As I said earlier, I started investing when Sensex was 4000 odd points and Nifty at 800 something. Maruti Suzuki share was at 450 Rupees. Today same share is around 9000 rupee.

I have seen 6 months of rally in 2005 then a 250 point crash in month of September. Diwali was muted that year.

I have seem Sensex cross 10K, 15K, drop back to 11K, touch 18K drop back again to 11K and brach 20k, 25k, 30k, 36k.

What matter is fundamentals in Indian market. To put things in perspective India was $450 Billion economy in 2003. Today we are over $2.5 Trillion. In last 15 years, India has grown by 5+ times and we are growing at 7+%.

Edit 18: Compound Interest!

When you buy MF, units gets allocated to you. These units have Net Asset Value. Fund Managers in turn invest your funds in to stocks, debts, bonds, gold, etc. depending on Fund’s Focus Area.

As stocks and other asset class grows, Fund Manager book profits or get dividends which increases NAV of your MF. While fixed income investments like FD, RD, PPF etc. are limited by fixed percentage return, MF NAVs are market linked.

Also, fixed income assets like FD/RD and others are Quarterly/Half Yearly/Annually compounding while MF NAVs are continuous compounding.

For E.g. you invest 100 rupees and get 100 units as Rs. 1 NAV. 20% increase will mean 1.20 NAV and fund values increases to 120. Another 20% increase will be take fund value to 144….So on so forth.

While this is excellent when markets are doing good, declining markets can be scary. However, 5 year outlook for MF will always be positive.

Rarely there are fund which have gone negative in 5 years timeframe. There can be some fund which have long gestation period meaning 3 years is neutral or even negative. Eventually every MF turns profitable. If it doesn’t, change it.

Edit 19: Money and Happiness and Retirement!

Well, happiness has nothing to do with money or wealth you have. Money comes and goes.

I have seen it happening to my dad. My dad was an aeronautical engineer with very handsome high six figure monthly salary back in 90s. His entire savings were eroded when my mom was diagnosed with cancer. While his colleagues funded US education for their kids and brought extensive properties all over Delhi/NCR, my dad could only manage one 220 Sq Mtrs plot partly funded by my grandfather.

Happiness is the state of mind. I was happy when I was making 15k a month.I am happy when my daughter tops her class. Money/wealth makes me comfortable.

Am I comfortable? Definitely.

Do I worry about money? Yes, may be sometimes. I worry that it might not be enough to fund my daughter’s college or Post Graduation education.

Do I want to leave inheritance for my daughters? May be if they deserve it. Investments are being done so that I can fund their education from some of the top colleges and universities around the world. I have no desire to save/spend on their marriage. I would rather have my daughters spend my entire savings and retirement corpus on their education than on destination wedding.

There is an very old African Proverb –

If you educate a man you educate an individual, but if you educate a woman you educate a family (nation).”

Should I retire? Hell No! I love what I do. I agree I get generously compensated for it. Compensation is a gesture of thanks for my hard work, capability, skills and experience developed over the years. I work 14–16 hours a day, sometimes more. I take solid 45 vacation annually. My work makes me happy.

Edit 20: Salaries to House Maids!

Well, they work total of 28 hours each per month (2 maids, 1 hours daily for 28 days – 2 days off). 2500/30 = Rs. 84 per hour of work. That’s Rs. 840 for 10 hours per day coming to 25,200 per month.

It is more than lot of people with Engineering and/or MBA degree make. I started my career with 15,000 per month. My wife started her career with 5,000 per month.

Apart from salary they get lots of benefits including bonus equal to 2 months pay during Diwali.

I am not sure what is the right amount. I pay what they asked. I didn’t bargain. Lets have dignity of labour.

Edit 21: Car Loan!

My car loan is of 1,500,000 (15Lacs) at 9% P.A. for 7 years. On-road price of my Hyundai Elantra 2.0 VTVT is 2,250,000 (22.5 Lacs) in Bangalore.

I made the down payment of 750,000. Total interest I’ll pay over the period of 7 years is about 5.30Lacs.

Whereas, from 1 Jan 2017 till 25 Jan 2018, Indian stock market saw 37% increase.

There are mutual funds in my portfolio which increased by 35% in the same period making EMI paid for car loan inconsequential.

Bottomline is, cash in hand is more valuable. The amount of car loan and the interest being paid is inconsequential over long term. It is all about opportunity cost.

Edit 22: Why Life Insurance when you have money?

The answer is pretty straight, If I die today my family gets 1.85Cr in MF + 1.75 Cr from Term Insurance. That is total of 3.6Cr. Additionally, if I die due to accident then my family get another 1 Cr. taking total amount to 4.6Cr. which is not enough to educate my daughters thru post graduation.

Without Insurance all they have is 1.75Cr. from MF. Spending 54K annually gives my family potential access to 2.75 Cr. in case of my death. It is a no-brainer. Having said that, my insurance is not enough. It should be around 6 Cr.

Edit 23: Rule of 72!

The “Rule of 72” is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest.

By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.

  • At 1% Interest Rate – Money will double in roughly 72 years (69.66 years to be exact).
  • 2% – 36 years
  • 5% – 14.4 years
  • 7% (Most FDs, PPFs) – 10.24 years
  • 7.5% (India’s Growth Rate) – 9.58 Years
  • 8.5% (EPF, etc.) – 8.5 years
  • 10% – 7.2 years
  • 15% (Most MFs) – 4.8 years
  • 21% (MFs during extraordinary bull run) – 3.43 years
  • 35% (BSE Sensex in 2017) – 2.06 years

This will give you a great idea on your current investments and how much you are losing out on FDs.

The same rule also applies to an economy like India’s. Now you know why India is in golden period. It will double to 5 Trillion by 2024–2025.

Edit 24: Reformatting my answer as it was collapsed due to poor formatting. Removing some of the redundant information.

Cheers! Happy Investing!

Ash Bee