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How to Save Money - Few Logical Tip

We as an Indian believe in savings to secure our future. The liberalization of Indian economy in 1992 and jump in IT services during 2000 changed the dynamics of Indian employment sector. Most of the professionals started learning IT related Subject to get into lucrative sector.

The growth of Indian economy during 2001 till 2007 changed the business environment of India and resource cost went up. As the salary of people went up and the expenses went up. The reality sector boom during 2004 to 2010 was nothing but the changed mindset of Indian household.

The easy money access from bank and higher salary attracted youngsters to invest in property sector to make quick money or to own their own house.

It resulted in lower saving rate in India which is not the good sign. Most of us faces problem to reorganize our finance in such as way that we should have the liquidity plus non movable assets without stretching ourselves.

The young Indians believes in lavish lifestyle with outgoings, dinning, vacations etc but they generally miss to identify the impending threat of uncertain economy. When economy go down then many of us loses our job and lands ourselves in huge financial stress.
How we should avoid such circumstances and define our financial strategy to secure ourselves for future. I recommend the followings:

  • Whatever Salary you are getting should be bifurcated in two part, part 1 should be related to daily expenses and part 2 should be kept aside for saving.
  • Part 1 kitty should have 70% of your salary. It include your EMI, Kids Education, Accommodations, Food, Outings
  • Part 2 Kitty should have 30% of your salary. It include the bank deposit, Stocks or Mutual Fund, Gold, Insurance - General, Health Insurance
Today I will talk about Part 2.

  • Keep 30% of your part 2 kitty in bank and that is 9% of your salary
  • Invest 10% of your kitty in Gold. We as an Indian believe in Gold and in Weddings one's are forced to shell of hell of money at one go to buy gold. If your salary is small then keep saving the amount for few months and then go and buy the Gold. For ladies, one should save through society oriented kitty parties. Once you get your turn then immediately invest in gold. Dont expect the result in 6 months but post 24 months, you will be sitting on 30 to 40 grams of gold.
  • Invest 20 % of your kitty in insurance. In Insurance sector please ensure that you invest in two form such as money back and long term. Please ensure that you select monthly payment model so that it donot bother you.
  • Invest 15% of your kitty in fixed deposit
  • 5% must go in Health Insurance. Please note that you get tax benefit on that
  • 20% of your investment should be directed towards Stocks or Mutual fund. In stock market, please don't play around with Future & Option
If one do the above then your life will be much happier in two to three years

Please consult your financial advisor too before investing
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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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