1. Lifestyle
    2. Planning Finances for Family
    3. EXPERT ANSWERS SERIES - DAY 1 | Loans and Managing Cash Flows [18th May 2020]

    Planning Finances for Family

    EXPERT ANSWERS SERIES - DAY 1 | Loans and Managing Cash Flows [18th May 2020]

    Planning Finances for Family

    EXPERT ANSWERS SERIES - DAY 1 | Loans and Managing Cash Flows [18th May 2020]

    ParentCircle presents an exclusive Expert Answers 3-Day Series on Financial Planning during Uncertain Times. Post your queries anytime before 1:00 PM on 18th May. Our expert, Certified Financial Planner, Dr. A. V. Senthil will answer all questions by 5:00 PM on the same day. You may choose to post your questions anonymously too. ... more

    • Team ParentCircle
    • 399
    • 8
    • May 16 2020


    naraynan sethurao May 19 2020

    post covid19, apartments prices are set to go down .....can we opt for
    1. bargain/negotiate price on existing unsold villas/flats...?
    2. go for secondhand /resale flats in vantage locations quite old ...but convenient due to infrastructure /utilities available...?

    naraynan sethurao May 19 2020

    @naraynan sethurao Thank you for your question sir. We have reposted your question here https://www.parentcircle.com/circle-topic/expert-answers-series-day-2-is-it-a-good-time-to-buy-an-apartment-20th-may-2020-7bb53/

    Our expert will be answering your question by May 20th, 5 PM.

    Thank you!

    Team ParentCircle May 18 2020

    We'd like to extend our warm gratitude to Dr. AV Senthil for his time and efforts in answering questions of our users.

    Stay tuned for the DAY 2 topic!

    Shobha Mitra May 18 2020

    Paycuts are something that might happen during this period for salaried employees. How can we better manage our expenses and what are certain things we should avoid doing?

    Shobha Mitra May 18 2020

    Dhinakaran Raj May 18 2020

    Is it a good time to avail any kind of loan or make any major investment in a home or car or other properties?

    Dhinakaran Raj May 18 2020

    @Dhinakaran Raj Hello Dhinakaran Raj


    I would like to know more about the purpose of investment. Is it a need (or) a want. If you want to avail a loan for a business need or personal need then we may consider, subject to your cash flows, overall financial situation.

    Kindly note Car can be both a need and a want. For example, assume that Im the bread winner of the family and I work as a Doctor at a local hospital earning Rs. 90,000 per month. Then I would say that buying a Car for less than 6 Lakhs is a NEED, because it will protect both me and others.

    On the other hand, if the car manufacturer advertises that Sedan Cars (costing Rs. 10L) are available at 5% interest and we will buy back the car in case of a Job Loss This is a WANT.

    Suggest to borrow only when you are confident about the cash flows and opportunities. More importantly focus only on the NEEDS and not on WANTS.

    Regarding HOME, If you get it from a reputed builder, attractive price, location is advantageous, amenities are good, sound title (no litigations), then you may consider it. No emotional decision making. I have created a good video content on Buying an Apartment. Total watching time is 55 minutes (6 short videos). If you are interested you can call 9841671678 or email cgo@avsenthil.com

    Team ParentCircle May 18 2020

    I have a home loan taken around 34 years. Now I am 38 years and the property's rate will be 30% below the market today. Is it advisable to sell it and stop the EMI or should I continue with it? It is my 3rd home. I don't have any other PI loans or car loans except this.

    Team ParentCircle May 18 2020

    @Team ParentCircle Dear ___

    I can understand the emotions you would be going through. On the one hand lot of efforts would have gone to finalize the property, furnish the property and let it out to a good tenant. Now on top all this, there are two complexities Property value has eroded by 30% and Outlook for the sector is not that great, considering job market.

    If I were you, I would reach out to an advisor and create two or three alternate scenarios and make an informed decision. I will sell the property at a loss, as I will be able to carry this loss in my Income tax returns. I would invest in other asset classes which are at a discount (Example NIFTY) and will sell it off during the next bull run. This way I can harvest the tax loss against future gains. Once again, there are few assumptions here.

    I have created a good video content on Buying an Apartment. Total watching time is 55 minutes (6 short videos). Those who are interested can call 9841671678 or email cgo@avsenthil.com

    Ramani Varsha May 17 2020

    During these times when companies are laying off people and imposing pay cuts, how can individuals and families better manage to pay their existing loans and EMIs?

    Ramani Varsha May 18 2020

    @Ramani Varsha Dear Ramani Varsha

    Great question. I had gone through this situation in 2008. I used to work for a Tech Company at that time and had both Home Loan and Vehicle Loan. Our jobs were at stake. I used to have a Direct Equity portfolio and that went down by 50%. Used to have sleepless nights.

    The biggest lesson I learnt from that event was Asset Allocation and having an Emergency Fund. Suggest investing in Government Schemes (or) Liquid Mutual Funds towards Emergencies. At least 3 to 6 months of our monthly expenses should be in liquid form.

    By this, even if there is a layoff, we can manage the situation.

    Like we a Family Doctor, suggest having a Family Financial Coach (or) Consultant (or) Advisor, who can do a periodical portfolio analysis. It should cost about Rs. 500 to Rs. 1000 per month, if he is a qualified person. Once again price is a function of many factors Location, Portfolio Complexity, Assets to be Managed, Scope of services (like Tax planning), Effort Required etc.

    So step 1 is creation of Emergency Corpus Invest in Liquid Mutual Funds. You can reach out to us for questions - 9841671678 or write to us at cgo@avsenthil.com

    Chittal Subramanian May 17 2020

    Loans is it wise to take..when we are not aware on repayment capability. Cash flow in as well out has to segregated percentage for past loans, present needs and future..how to decide upon

    Chittal Subramanian May 18 2020

    @Chittal Subramanian Good afternoon!

    Would like to thank the person who asked this question. It will benefit all other readers.

    Money is one of the important resources to start a business (or) build an asset (or) increase our income. 98% of the population will not have all the money that is required. In my personal case, when I wanted to buy my first apartment, I had to go for a home loan. Now to increase the career prospects, I recommend youngster to go for Educational loan. For Business men, their cash (or money) will be locked in inventory (or) collections. They need Working capital loan.

    So, it is wise to take Loans, only when we can repay them. Suggest creating three scenarios - Pessimistic scenario, Most Likely Scenario and Optimistic Scenario, when it comes to cash flow. There will be times when you cash flows will be difficult like the present time, in which suggest paying only the interest component and let the duration of the loan be extended. You need to approach the Lender for this.

    Here are the thumb rules A maximum of 35% of your take home pay can be towards EMI (Equated Monthly Instalments) towards all types of Loans Personal, Home, Education, Vehicle etc. Try to become debt free by the Age of 45. You can take a 20 year home loan when you are at 30 years, but pre-pay the principal through additional savings.

    I have created an online content, runs for one hour on this topic Leveraging Loans. Those who are interested can call 9841671678 or email cgo@avsenthil.com