SAVE FROM YOUR MONTHLY SALARY (TYPICAL MIDDLE CLASS)

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

1. Tax saver deposit for Rs. 100,000 per year - Rs. 8,333/Month     -  Balance - Rs. 76,667

2. Invest in infrastructure bonds Rs. 48000 per year - Rs. 4,000/Month - Bal.  - Rs. 72,667

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
3. Trade currencies - Forex - investment in US/Australian dollar