Financial planning Sumeet Vaid

I recently completed my graduation and took up a job. My monthly income is Rs 16,000. I am planning to do an MBA after three years. The cost of such a course, at present, is around Rs 4 lakh. Can you help me make a plan? Do you think I should save for other goals, too, such as retirement and house? Could I pursue these after my study break?
Recently, the government announced a policy to provide education loans at a modest rate of four per cent. Taking into consideration six per cent inflation, your MBA fees after three years will be around Rs 4,75,000.

We recommend you take an educational loan that covers 80 per cent of your fees. The remaining 20 per cent can be accumulated by investing in a proper ratio in equity and debt funds, which will generate a return of 10-15 per cent. From a taxation point of view, payment of interest on education loan is allowed as deduction from your gross total income under Section 80E.

Regarding other goals of retirement and buying a house, we don’t have adequate information about your monthly expenditure. It is always advisable to start retirement planning as early as possible, so that with a smaller amount and longer accumulation period, you can accumulate enough. But, we recommend you take the help of a certified financial planner to chart a road map for your goals.

I have read recently that art is a booming investment option. What should an investor look for before investing in art? If I buy works of upcoming artists, will they be good investments?
Art as an asset class for investment is emerging in India and is yet to mature. For any investment to be meaningful, it should have three following requisites: 

 

Adequate regulatory environment. 
 

Efficient market environment; in other words, liquidity depth. 
 

Easy access to expert advice.

Art as an investment class is yet to mature on all the above points. We advise you to keep a close watch and wait for it to mature. Meanwhile, look at investments in established asset classes such as equity, debt, real estate and commodities, among others.

One of my friends is working on a residential project in Raipur. He has advised me to buy a flat there, as prices are expected to escalate in coming months. I have been considering investing in real estate for a while. What do you suggest?
First things first. Investment is defined as ‘savings done for a defined goal and time period’. It is not clear why you want to invest in real estate. Your friend’s recommendation should not be the only factor. We recommend you get your financial plan written, which will help you articulate your life goals and events like retirement, housing, etc. After your plan is made, understand where this Raipur project fits in. Last, but not the least, avoid ‘herd mentality’.

The writer is the founder & CEO of Freedom Financial Planners. Send your queries at yourmoney@bsmail.in.