All
of us as soon as we start earnings, are being advised to save in early years of
career & we get a lot of advises as well as unwanted phone calls from
various agents to save & invest.
IS INVESTMENT IS AS GOOD AS
SAVING OR IS SAVING IS A KIND OF INVESTMENT?
Further
I will help you to explore the answer, let us first understand savings
Most
of us started or start a job in a salary range of 15-20 K per month (Trivia: I
started in 12.5K J)
Given
current conditions & temptation it can be assumed that not less than 9-10K
are required to survive every month. But, you will still have some spare money
in your account
So,
I am now taking multiple examples of amounts with which someone could plan
savings. I am also assuming that the amount is purely an additional amount. The
easiest way is holding a bank account or holding bank deposits
i.
2,000 a month – so 24,000 in a year
(Certainly,
this is not a big amount but every drop in the ocean is important.)
ii.
3,000 a month – so 36,000 in a year, better than above & good for a
beginner
iii. 5,000 a month – so 60,000 in a year much appreciated
saving
I
am taking a liberty of assuming that you have one more account with you other
than a salaried account
Why
one need this? Come on buddy, if you will see money in front of you will be tempted
with reasons to spend it. If you don’t have two accounts, then open one (Like ,
Paytm, Digibank or 811 Account – ZERO BALANCE & yearly total transaction
allowed is 1,00,000) or any other
Savings
of 2000 - > Transfer the additional amount to second account
Savings
of 3000 - > Transfer 2000 to your second account. Open a RD of 1000 per
month with rest
Savings
of 5000 - > Transfer 2000 to your second account. Open two RDs of 2000 &
1000 per month
(Why
two, to have liquidity options)
When
the RD is finished, please open two FDs with the final amounts you received
SUMMARY OF ACCOUNT TYPES
What is SB? – Normal
& generally practiced bank account & attracts the minimum yield
What is RD? – It
is a monthly deposit scheme of same amount which gives more interest than saving
bank interest – Usually for a year
What is FD? – It
is a fixed term deposit scheme of any amount which gives more yield than savings
account & a RD (Suppose
|
A/C Type
|
Duration
|
Explanation
|
Annual Int.
|
Simple
|
Term
|
|
Saving
Bank Account
|
Life Time
|
Small Amount
& Free Hand
|
3% - 7%
|
Simple
|
Continuous
|
|
Recurring
Deposit
|
Mid Term
|
Small Savings
Big Goal
|
6 - 7.5 %
|
Compound
|
Recurring &
Fixed
|
|
Fixed/
Term Deposit
|
Long Term
|
Try at least
20 Grand to deposit
|
6 - 7.5 %
|
Compound
|
Absolutely
Fixed
|
So
assuming, that one would still save a small amount to save & apart from
this I will also urge that you should always work on decreasing or controlling
your expenses.
LAST BUT NOT THE LEAST HOW TO
SAVE?
1.
Control your cost of living
You
will not die in absence of AC or Air Cooler when you can survive with a ceiling
fan accompanied by a table fan
2.
Share rented accommodation with people of similar job / salary / temptations
3.
Try to use same mobile handset for more years
4.
Avoid Flipkart / Amazon Sale
5.
Avoid Trip / Dinner / Date on every week-end
6.
Prepare your own food, avoid expensive thaalis, or go for cheap tiffin service
7.
Avoid Cocktails too
8.
Avoid Udhaari khaata on nearby Tea shops or Khokhas
HACK
There
are several Private Banks (Like IDFC, YES, etc) offering Saving Accounts
allowing more interest than Govt. Banks as well as some established banks (Like
ICICI, HDFC, Axis etc)
All
Private Banks allow online opening of account
IS SAVING AS SAME AS INVESTMENT?
Answer
is somewhat same but not absolutely same. Obviously you invest using your
savings. But Investments are for big goals, may include big risks. Savings are
those which you keep as spare for future use. Naturally, you will keep them in
bank which will yield something. But if you would need big returns, then you
need to think, search, then research, plan, compare& then calculating risk
& then to hold or buy something using your saved money
Please
wait for my next writing on tax planning & investment
Kind Regards
Piyush Gupta
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