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Rediff.com  » Getahead » 'I'm in a Rs 70L credit card debt trap'

'I'm in a Rs 70L credit card debt trap'

By rediffGURU SANJEEV GOVILA
April 02, 2024 09:59 IST
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Do you have financial planning queries?
You can ask rediffGURU Colonel Sanjeev Govila (retd) your questions HERE.

Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives (external link), a financial planning company dedicated to the armed forces and their families.

He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.

Illustrations: Dominic Xavier/Rediff.com
 

Anonymous: Hello Col. I am 34 years old, monthly salary is 1 lakh. My investment is mentioned below (all direct plan). Please review and share your thoughts. I want to create a large corpus in long term. No fixed target for me.
1. Mirae Asset Large and Mid cap-5000/month 2. Quant flexi cap- 5000/month 3. Navi Midcap 150 Index- 5000/month 4. Axis Smallcap fund- 5000/month 5. FAANG ETF- 2500/ month 6. NPS-5000/month 7. EPF-12000/month 8. 10 gm Gold bond every year 9. Some stocks for long term (Jio financial, IDFC Bank) Worth 1.25 lakh.

Your portfolio seems well-diversified across asset classes and investment avenues. We recommend you to maintain the same discipline with your investments and also suggest you to monitor the performance of each investment and periodically review your portfolio to ensure it aligns with your current financial goals and risk appetite.

Also, you can consider consulting with a financial advisor for personalised advice based on your specific situation.

Hemant: I am in a big debt trap. Have credit card outstanding of Rs. 70 lakh and can't repay the same. My salary is completely being used to service personal loans with no saving from it. How can I come out of this?

To tackle a significant debt of Rs. 70 lakh, start by assessing finances and creating a budget to understand income, expenses, and debt obligations. Prioritise high-interest debt, negotiate with creditors for better terms, and consider consolidating debts for easier management.

Increase income through additional work, cut expenses, and seek advice from financial counsellors if needed.

Stay persistent, celebrating small victories, and remaining focused on long-term financial goals.

With dedication and a well-structured plan, it's possible to gradually overcome debt and work towards a more stable financial future.

Sumeet: I was running a business from last seven year with my brother we had dispute and due to financial crisis i was unable to pay my credit card bill and loan amount. Due to this from last 2 years i am unable to file IT return and this year it's the 3rd, what should i do?

If you're facing legal issues related to your business dispute, it may be helpful to consult with a lawyer who specialises in business or financial law. They can provide guidance on your rights and options.

Prioritise your debts based on factors such as interest rates and consequences of non-payment. Focus on paying off high-interest debts first while making minimum payments on others.

It is important to file your tax returns. Failing to file can result in penalties and interest charges. It is advisable to seek guidance from an income tax professional who can provide you with a personal solution.

Kumar: Sir My age is 53. My PF contribution from salary is (20K PF+ 20K VPF + 5K PPF) per month, NPS 50K/per year and insurance premium of 30K/per year. Invested Rs 20 Lakh in 2400 sq ft land. Rest all contribution as of now is Rs 60 Lakh (PF and Insurance). My son is in 6th Standard. My take home after deduction is 1.5 lakh. Don't have any home and staying in rented house. Total expense per month around 40K, including son's education. I have not shared in any share market or mutual fund as of now. Is it right age for me to invest in share or mutual fund? What else I can invest so that I can construct a house after retirement and sons education? Thank you

Upon reviewing your financial status, it's evident that you've made prudent choices in utilising EPF, VPF, PPF, NPS for retirement savings, alongside owning land assets. However, your investment portfolio is heavily skewed towards debt instruments, lacking significant exposure to equity for potential long-term growth.

It's advisable to assess your risk tolerance with a financial advisor to ensure an appropriate asset allocation. Additionally, consider diversifying into gold or other asset classes depending on risk appetite. By implementing these strategies, you can enhance your financial resilience and pursue long-term wealth accumulation effectively.

Anonymous: Hello Sir, I plan to invest in the following funds for 2 years through SIP from April 24. Investment holding time frame is 15 years. Nipon India Small Cap (10K); HDFC Small Cap (10K); HDFC Mid Cap Opportunities Fund (7.5K); Motilal Oswal Nifty Mid Cap 150 Index Fund (7.5K); Mirae Assets Large & Mid Cap (5K); ICICI Pru Value Discovery (10K). All funds selected are of Growth option and Direct investment option. Requesting your expert comments in the fund selection/ amount allocation. Looking forward to your response. Thanks.

In the mentioned funds, most of them are of Small & Mid cap categories and they carry higher risk in comparison to most other categories.

Although, in the recent past these funds have delivered decent returns supported by the ongoing market rally, you should be ready for the uncertain volatilities and may witness negative returns in the short term.

Secondly, funds overlapping in a similar category increases the concentration risk of the portfolio and returns may be impacted during market stress. Hence, it is recommended to diversify the portfolio among categories & across the market capitalisation.

The investment horizon in mid & small cap should be of 7+ years for decent returns.

As you have mentioned your investment horizon as 15 years, these funds could be the suitable investment but in the absence of any idea of your risk appetite, it is difficult to assess that. Therefore, selection of funds should be based on your risk appetite, investment horizon and your goals not on the basis of their performance.

Consider diversifying your portfolio beyond PPF and NPS by exploring mutual funds (equity and debt) instead of just limited diversification.

  • You can ask rediffGURU Colonel Sanjeev Govila (retd) your questions HERE.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

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