INFORMATION
2023-12-12T15:55:49
02 Mins to read
Share this post:
Listen
Krishan Singh Rauthan
2023-12-12T15:55:49 | 2 Mins to read
Listen
Share this post:
With a bare minimum salary and so many overheads to meet, how does one decide how to go ahead in this journey of savings? How to not indulge and enjoy the hard-earned money in the present but save for the future? What are the right methods to save? Where should we invest? What if I lose my money? How much money is enough? Is credit cards worth it for all the freebies offered? My salary is only Rs.10,000, I can save only 20%, where can I invest only Rs. 2000?
Adulting is not easy, as time passes our responsibilities only increase. From being a dependent, we start our journey of independence eventually having our own set of dependants and responsibilities. So how do we begin investing? With a fresher’s salary of Rs10,000 a month, most people can barely save Rs. 2,000 at the end of the month!
1. The key to beginning investing is-“Starting small but regularly”
From one’s small savings every month, a potential investor can start by purchasing bonds (minimum investment Rs. 5,000). He can take up monthly payments, so the cash flow pressure is lesser. A regular allotment from his monthly savings will ensure that his wealth-building journey commences. Today’s financial markets offer multiple options to retail investors, making it very easy to delve into options like digital gold, bonds, ULIPs, and equity.
By exploring diverse options, with small amounts, an investor can build confidence gradually and find his risk tolerance and desired rate of returns. Financial independence is a cumulative of the habit of savings and regular investing.
Also, once salaries increase, our savings should increase, so we can allot more funds to investments. Eg. If you can start with a SIP of Rs. 5000 per month and eventually increase it by 5% every year, the total final value after 30 years at 12%p.a. will be around Rs. 50,00,000/-
Related Post: How Does Investing Make You Rich?
2. The power of choosing your expenses wisely:
When it comes to planning your expenses, the self-control for indulgence rewards significantly in the long run. A small “no” matters, every penny saved is a penny earned!
Eg. An apple iPhone costs approx. Rs. 1,00,000 today. A youth would want to use an EMI scheme and buy it with a monthly outflow of Rs. 10,000.
Now instead if he buys an Apple stock worth Rs. 6,000 every month and opts for a cheaper cellphone with Rs. 4,000 monthly EMI, he will be able to create an asset worth Rs. 60,000 (assuming 10 months EMI). This Rs.60,000 will give him a return of 10-12% or above, per annum
A simple refusal to indulge in the latest trend can give one Rs. 200,000 in a decade or more!
Apart from our primary source of income, for every new investor it is very important to set up a passive source of income in the long run. This majorly helps in 2 ways
The extra cash inflow can take off certain outflows: For eg. If there is an investment of Rs. 100,000 in 11% Indiabulls Secured Bonds, the bondholder receives Rs. 11000 every year as interest. He can choose to reinvest this interest or use it to pay annual outflows like insurance premiums etc.
The extra cash inflow will help survive unforeseen emergencies/ loss of jobs: When an individual loses a job/unseen cashflows in business/family medical emergency, he can survive afloat if he has created a secondary/passive income source
Qt. I am 35 years old and have Rs 9 lac in all. I lost my job recently. What can I do to earn at least Rs 30k monthly from that money?
Ans: If this Rs.900,000 was invested, then a secondary income would have been generated earlier which could have grown the capital. To earn Rs. 30,000 from Rs.9,00,000 is not possible even with the most risky products in the market. 30k monthly means Rs 3.6Lakhs pa, it is very difficult to earn such a high return from the principal of Rs. 9Lakhs. Investment in risky products like AIFs (alternate investment funds) tends to promise a 24-36% return but that also comes with a very high investment amount. The savings of Rs. 9 Lakhs in this case are precious and should be invested in a creditworthy and secure option like bonds or mutual funds (still riskier) and enable a lower S
WP of Rs 10,000 per month. Earning 30k per month on 9 Lakhs is not advisable and is very risky, can lead to capital deterioration too.
Once our level 1 ie basic needs are covered, we can manage to keep aside some savings. Bonds are the right product if you are at level 2 of earnings. Once you earn more, you can buy insurance policies and secure your future at level 3. Once these basics are created- an emergency fund, some savings and insurance products we can enter into level 4- of wealth creation via growth investment plans.
Investing wisely involves selecting plans that align with your specific needs and goals. As a result, investment plans can be categorized into three primary types, each tailored to fulfil distinct purposes.
| Growth Investment Plans. | Safe Investment Plans. | Income Investment Plans. |
| Long–term investment option | Medium-term investment option. | Low-risk investment option. |
| Usually aggressive, and volatile. | These investments keep your capital safe. | Turns your lump sum investment into a monthly or quarterly income. |
| Have a lock-in period or they do not allow premature withdrawals. | Doesn't allow withdrawal within the first few years of investment. | Bonds, Fixed-Income Security, G-secs, etc. |
| Equity stocks, mutual funds, ULIPs, PPF, NPS, etc. are a few examples. | Bonds, Fixed Deposits, etc. |
Optimal Choices for Debut Investors: RBI Floating Rate Savings Bonds.
The RBI Savings Bond lasts for seven years and currently provides an interest rate of 8.05%. You can start investing with as little as Rs1,000, and there's no maximum limit. Now, the Reserve Bank of India allows retail investors to buy these bonds online through the Retail Direct portal, just like they can with other government investments.
Mistakes to avoid in your journey:
Always remember, that investing is a long-term journey, and patience is key. Don't be swayed by short-term market fluctuations, and always make decisions based on your financial goals and risk tolerance.
More blogs
Running out of
time? Loop!
BondsIndia is a brand name of Launchpad Fintech Private Limited, an e-business platform for Fixed Income securities that uses technology as a means to provide quality & real-time financial solutions to users.
