Use gold and FD savings to fund marriage

Va run Shah can afford to buy a house immediately. However, he needs to wait to buy a car

Varun Shah, 28, from Gujarat works as a senior design engineer in Truchip Solutions, a Noida-based IT company. Buying a car and marriage are his near-term goals. Buying a house and overseas travel are some of his other medium-term goals. At present, Shah has very low equity exposure. His other financial weakness is that he solely depends on his employer’s health insurance and has

also ignored life and disability insurance. On the positive side, he has been maintaining a contingency fund and does not have any liability. His parents are also not dependent on him.

Shah brings home a monthly salary of ~123,000, and his monthly household expenses add up to ~30,000, including house rent, utility and lifestyle expenses. He also spends around ~30,000 annually on vacations.

Contingency fund

Shah should create an emergency fund equal to his three months expenses. His existing fixed deposit of ~300,000 should be allocated towards this, and he should invest in an ultra short-term fund.

Life insurance

Shah already has a traditional plan and is paying an annual premium of ~7,000. The internal rate of return of both his traditional

plans from LIC, after considering present surrender value, future premiums payable and expected maturity value based on current bonus rates is unlikely to beat inflation. Hence, he should surrender the plan. Accordingly, he is advised to get an online term plan of ~10 million for 30 years, which will cost him ~12,000 p.a.

Health insurance

Under the health insurance provided

by his employer, Shah is covered for ~250,000, which is not sufficient. He should buy a health plan of ~500,000 sum assured. This will cost him around ~6,000 annually. He should also get ~2.5 million critical illness insurance and ~5 million accident disability insurance. This will cost him around ~13,000 a year. The premium paid up to ~25,000 for self and family and additional ~50,000 paid for parents is available as deduction u/s Section 80-D.