I am 26 and work for a multinational consulting firm. I am single and live with my parents. My father works for a bank and will retire in two years with pension benefits. His employers have a post-retirement medical scheme. I hope to get married within two years. I am paying a higher EMI than required on my education loan to repay it early. Except EPF, I have no savings. I live in Hyderabad, but have not made up my mind on which city I will eventually settle down in.
Since you are yet to make up your mind on where you wish to settle down, postpone your car purchase plans. Buy a car after marriage after you decide on the city of your choice. If you buy a car in Hyderabad and then move to another state, you may have to pay additional taxes to the authorities in the new place for the vehicle.
Education loan: Continue with your accelerated repayment schedule. Note that when you repay the principal you are not entitled to tax exemption. Or, you can invest in equity mutual funds, if you have a minimum time horizon of three years.
Tax savings: In the new Budget, tax exemption on section 80C has been enhanced to ₹1.5 lakh. Since you are contributing ₹3,000 towards EPF, you can invest another ₹1.14 lakh. Invest ₹1 lakh in tax-saving funds. Your current life cover is low and also it is employer sponsored. You would also need cover if you quit your present company. So, buy a term cover separately for ₹50 lakh.
Car purchase: Save ₹15,000 every month for the next two years in debt investments. This will reduce your borrowings.
Marriage: To accumulate ₹2 lakh in two years you need to invest ₹8,000 every month and it should earn post-tax return of 7 per cent. Open a recurring deposit account.
The writer is a financial planner and founder of myassetsconsolidation.com.
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