BEST WAY TO START SAVING – NOW

Here is a guide on how to save money for the future. The best time to do this is now and the present moment.

 

1. Make a budget. Stick to it at all costs.
2. Keep track of all spending. You’ll be surprised at what you can cut back.
3. Set a financial goal for yourself every month and invest whatever you have left over from the spend.
4. Take packed lunch to work instead of eating out everyday.
5. Try and restrict yourself to two or three indulgences a month.
6. Rent a DVD and invite your friends for a movie. It’s fun and cheaper than going out.

Current cost-cutting, future saving

National Savings Certificates

Deposit that matures six years after the date of investment

Benefits-Invested amount qualifies for tax deduction upto Rs 1 lakh per annum

Minimum amount of money required: Rs 100

Rate of Interest : 8% a year (compounded) and theinterest is taxable.

Better returns than the bank or post office? NO

Comparative study:NSCs offer no liquidity and the money invested is locked in for a period of six years with no premature withdrawals and interest payments.

 

Debt mutual funds

Funds are invested in bonds, fixed return investments issued by financial institutions, debentures and money market instruments.

Benefits : Safer than other MFs, plus dividends inthe hands of investors are tax free.

Minimum amount of money : 5000

Dividends: Not fixed or guaranteed.

Better returns than the Bank or  Post Office? Not necessarily. Better returns are seen in schemes that have an equity element.

Comparative study:Safer than equity mutual funds with fair prospects of growth when the portfolio contains equity. High liquidity is another advantage.

 

Insurance

A promise of compensation for specific potential future losses in exchange for a periodic payment.

Benefits:Risk cover, can avail of loans from banks, tax benefits, a form of saving for the future.

Minimum amount of money : Rs 1,000 per year.

Dividends:No dividends. Entire risk cover is payable if there is any mishap or when the policy expires.

Comparative study: Mainly offers risk cover. A secondary aspect is that these policies act as an investment option. since no other form of investment offers risk cover, they have a unique benefit.