Where your salary lands every month?
Salary Account, right?
That should be the starting point to optimise & manage finances.
Let's optimise Bank accounts first and then move to the investment part.
Most of our money is parked at 3 places.
- Saving account - If you keep a large amount in the saving account then you would end up getting less than 4% interest.
- Fixed deposit - Indians love to save their money in fixed deposits. But that earns only of 6-7% p.a + tax is deducted.
- Tax saving investments - Mostly people make investments in safe options like PPF for tax saving purposes with an return of 7.9%.
I am sharing a quick money management tips
#1. Saving account - Keep max amount equal to 3 month expenses in your saving account.
Let's say, your monthly expenses is Rs 30,000, then your savings account should have a maximum of Rs 90,000.
Any type of sudden expenses wouldn't exceed that amount unless some medical emergency. In that case health insurance will take care of the expenses.
The excess funds should be invested in high return investment plans.
#2. Fixed Deposit - Save money in fixed deposit for
- Emergency fund (to keep safe & easily withdrawable)
- Money required within 1-2 years, like higher education or buying a house.
#3. Recurring Deposit - If you are saving money on a monthly basis for short term (1 year) expenses like planning a vacation or buying a bike.
#4. Tax saving investments
Diversify your tax saving investment to earn better returns and liquidity.
- PPF - 7.9% with 15 years lock-in period
- Sukanya Samriddhi Yojana (for girl child) - 8.5% age at least 21 years or at the time of marriage of the account holder, whichever is earlier
- ELSS - 12% to 15% with an lock in period of 3 years
ELSS is a great option to save tax with higher return potential. Also least lock-in period as compared to other investment options.
##. Potential Trap - ULIP (Evil of all)
Biggest mistake to avoid during investment planning
Plan your investment for bigger ROI, not for just the sake of tax saving.
Start your investment planning from the April (start of financial year) not from February (just before the end of financial year)
I want to ask you something, did you learn anything in today's lesson?
Pardeep Goyal
PS:
I am writing simple to digest & practially possible to implement tips...
Let me know if you want to know the anything more related to saving bank account, fixed deposits or tax saving investments..
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