HOW AND WHERE TO INVEST SAVINGS

THE YIELD OR THE RETURN ON INVESTMENT IS DIRECTLY PROPORTIONAL TO THE RISK YOU TAKE. SO YOU SHOULD TAKE A WELL CALCULATED RISK AND IT DEPENDS UPON YOUR OWN JUDGEMENT AS TO HOW MUCH RISK YOU ARE PREPARED TO TAKE. PLEASE AVOID TAKING HIGH RISKS UNLESS YOU ATTAIN EXPERTISE IN MARKET FORCES

Once you are in the habit of saving, you should start investing in different schemes of different financial institutions. Four things are to be taken into consideration before deciding to park your saved funds in different schemes. Financial institutions/mutual fund companies have all types of tailor-made schemes for different maturities and you can choose those which suit your requirements. The issues to be considered before investment are:- 

  • Safety of your funds.
  • The risk involved or quantum of risk you are prepared to take for your investment.
  • The rate of growth of your invested funds.
  • The maturity period of scheme you intend to invest in.

You may have bulk funds available or a regular monthly salary/income. Options available for investment of bulk funds in order of safety and risk are:

  • Sovereign Gold bonds.
  • Real estate.
  • Banks term deposits.
  • Debt linked instruments of the reputed mutual fund company.
  • Equity-linked instruments of the reputed mutual fund company.

For savings out of regular monthly salary/income, the available options are:

  • Saving bank account of banks
  • Recurring deposit account of banks
  • Debt linked SIP(Systematic investment plan) of the reputed mutual fund company.
  • Equity-linked SIP of the reputed mutual fund company.

                                   THE GOLDEN RULE OF INVESTMENT

THE YIELD OR THE RETURN ON INVESTMENT IS DIRECTLY PROPORTIONAL TO THE RISK YOU TAKE. SO YOU SHOULD TAKE A WELL CALCULATED RISK AND IT DEPENDS UPON YOUR OWN JUDGEMENT AS TO HOW MUCH RISK YOU ARE PREPARED TO TAKE. PLEASE AVOID TAKING HIGH RISKS UNLESS YOU ATTAIN EXPERTISE IN MARKET FORCES.

Then there are high-risk options such as Equity market. It is always advisable to avoid investment in equity market directly unless you fully understand the nitty-gritty of the Equity market as well as the movement of local as well as world economies and political climates. Investment in the equity market is advised through equity-linked mutual fund schemes.

Ponzi schemes promising very high returns don’t have any sound base and support systems and people have lost their fortunes in such schemes. Don’t get lured by such schemes.

RECENTLY BITCOINS HAVE COME INTO GLOBAL MARKET WHERE PEOPLE HAVE ALTHOUGH MADE EXTORBITANT PROFITS YET IT IS HIGHLY RISKY TO INVEST IN BITCOINS BECAUSE THEY DO NOT HAVE ANY BASE. NO GOVT. OF ANY COUNTRY HAS RECOGNISED BITCOIN AS A SOUND INVESTMENT.
IT IS CRYPTOCURRENCY HAVING NO SUPPORT. IT’S BUBBLE CAN BURST ANY TIME RESULTING IN VERY HEAVY LOSSES, SO DONT BE LURED BY SUCH RISKY INVESTMENTS.

60% of your net monthly saving is advised to be invested in reputed mutual fund companies in the ratio of 50% in debt and 50% in equity-linked SIP or Recurring deposit scheme of banks for a period of 15 years. 40% of net saving every month be kept in saving bank account. Amount so accumulated in this account be converted into term deposit of 50 thousand or one lac or 5 lac as the case may be for the period of your of your choice. Keep on renewing the term deposits on due dates or invest in any high yielding scheme of financial institutions. You should not keep all eggs in one basket.

And above all, there is an investment which we should never forget to make whenever we receive an income or salary and that investment is CHARITY for a good cause. The amount of investment/donation depends upon your own will; no bindings. However, some religions have mandated a percentage of income as charity, like Sikhism, which advice to donate 10% of your income in the charity called DASWANT and in Islam the limit is 2.5% called ZAQAAT. Charity purifies your income provided it is out of honest means, and purely organic in nature. Any income out of dishonest means, corruption, cheating or any illegal means is inorganic in nature which may infect your organic and healthy income. No charity of whatsoever amount out of such income can purify your wealth. No one can get peace of mind in life out of such income and it always leads to problems and problems only.
Slowly and steadily you will accumulate enough wealth to take care of your future needs.

Till you are in active service/earning stage, you should continue parking your savings in growth schemes and meet your social and moral responsibilities. And once you retire, better keep saved funds in monthly yielding schemes of financial institutions to augment your monthly income and live a peaceful life with financial independence.

Author: Kuldeep Kumar Sharma

I am an Ex-banker having 38 years of experience in different fields and capacities in banking and social life. I started the career at a very humble position and ended at a senior position of President of the bank.

10 thoughts on “HOW AND WHERE TO INVEST SAVINGS”

  1. Looking at the present expenses and lifestyle, its hard to save sufficient amount using traditional ways of savings. So, we have to consider new ways of investments and take some amount of calculated risks but yes we need to invest wisely.

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  2. Yet another excellent aspect touched with craft. The mankind has a tendency to scratch anything inwards to obtain maximum in minimum effort , so he has been following avenues to obtain more in investments to ensure high return. I was some months before attended EDII Ahmadabad and had a chance to visit IIM, where Mr .Rattan Tata delivered a lecture. He surprisingly opposed the subject of saving. He emphasized to save for a weak only. Copy of the extract was just some day before presented in my lecture at jkimpa and a copy shall be presented to you as well ;

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    1. Thanks for your comments.I have not read Tara’s views but can understand what he could have said.He is an industrialist and and a big job provider.which everybody can’t be. Situations and circumstances differ for individuals and we have to take a view for the masses and not few.In countries where social security doesn’t exist so one has built it for himself. I feel one has to save for present and future and earlier one is on this path it is better. However if one has the inbuilt enterprenureship qualities he can build up fortunes for himself and for others like Great Tata. He need not save but invest for growth,I do agree. Thanks again dear.pl continue providing inputs.

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  3. Every.time I read your article it resonates with practicality and purpose. The experience of an astute banker flows superbly in your write ups. I was looking for the comparison of savings into liquid and illiquid assets in the article. The reference to bitcoin and charity was excellent…keep writing Sir…

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