Most of middle class
people want to meet out the basic requirements with their hard earned salary
every month and save some portion of it for future emergency purpose. Yet
they have nothing to save and it happens every month. Maslow's Theory describes the human being's
requirement.
With simple planning and
logical thinking you can increase the value of hard earned money and can be
financially free even when you earn less money. The following are some ways
what I used in my life to maximize the value of the money what I earned.
Compulsory Option-1, Buy Gold
Traditionally in our
Indian society we used to invest in Gold. But investing on Gold with bulk
amount of money is not advisable. You should invest in Gold in a
systematic way so that you have a good quantity over a period of time
without facing any hardship in life. You have to buy gold for atleast 6%
of your monthly salary and the fund should not be touched unless you need in an
emergency. Unless there is a requirement of ornament do not
buy it. For savings purpose buying 22ct gold coins from a jewellary
shop where you regularly buy ornament gold is better, on later stage you can
exchange with ornament when needed from the same shop. If you have a girl
child this option is not avoidable.
Compulsory Option-2, Recurring Deposit
Recurring deposit in
banks or Post office or co-operative banks or rural banks etc. Why RD
than FD?? Most of us cant afford to keep a bulk amount in Fixed
Deposits. And often the money in FD will be sweeped in to savings account and
used by most of us.
If you have two
children, you save another 6%. Open a family account put 2% each
account of your wife and two children.
Compulsory Option-3, Medical insurance
Today there are more
insurance policies are available. My advice is not to invest in life
insurance policy. Most of the insurance companies are making more money
with our fear for death. Also even if you invest in a life insurance you
dependent gets only when you die. Also after maturity you will only get
the same amount of money what you paid for the insurance company and in some
cases evenless.
Then why medical
insurance, In todays world we dont know when we will get sick. Better to
save you savings which may drain when any one of our family member get
seriously sick.
Invest 3% in medical
policy.
For example:
Your monthly income - Rs. 100,000
Buy
Gold - Rs. 6,000 ------ Balance -
Rs.94000
Recurring
Deposit - Rs. 6,000 ------ Balance - Rs.88000
Medical
Policy - Rs. 3,000 ------ Balance - Rs.85000
For Tax savings which you will get back only after 5 years
For Tax savings which you will get back only after 5 years
1. Tax saver deposit for Rs. 100,000 per year - Rs. 8,333/Month - Balance - Rs. 76,667
2.
This Tax savings investment is only for first five years of your career. Then from 6th year your first year deposit will mature and can be rotated when years goes on.
For your other expenses
This Tax savings investment is only for first five years of your career. Then from 6th year your first year deposit will mature and can be rotated when years goes on.
For your other expenses
Remaining 72.6% shall be used
After one year what you
will save without any hassle is as follows,
Gold - say Rs. 2500/gram
- almost 29 grams/year is your saving
Money in your wife &
two children accounts - Rs. 24000 each and total of 72,000.
No medical expenses for
emergency hospitalization.
You should not take insurance policies with returns since the premium will be high for investment with returns policies.
The selection of Insurance policies should be for the purpose only.
Other options are
available for the money which is balance after your monthly expenses are as
follows
Investment in Securities using DMAT account
1. Buy non precious metals(copper, alluminum etc.) in Demat form
2. SIP of equities in fortune companies
