Monthly Investment Plans, to prioritize savings
Men and women are given equal rights to work and earn livelihood to sustain. But earning money is not the sole thing. Saving money is an important aspect in life and Monthly Investment Plans is the easiest way to begin. One must realize this fact at an early stage in life. When you are in early forties, until that age group when every individual is fit and energetic enough to work hard and earn as much as they can possibly. But at the same time they in this age group are found to be spending extravagantly on shopping, partying etc. Saving money is important. Why? For a very simple reason, saving money makes us financially secure. It acts as a safety net.
From the day you start earning, you must incorporate the habit of saving. Saving money serves many benefits. And like a monthly salary, a monthly pocket money, a monthly expense sheet – a Monthly Investment Plan in place holds great significance.
Benefits of Saving through Monthly Investment Plans:
- The first and foremost important point is that it will help you become financially independent.
- You may retire from your services someday either by servicing fully or partially. So you need to prepare beforehand to plan your life after your retirement.
- Unexpected circumstances may arise anytime. Since these are beyond human control, these can’t be predicted. Though no one likes the idea of financial emergency yet one needs to be prepared for such circumstances.
- You start feeling boredom due to same repetitive schedule and work. So recreation and fun becomes another reason to save money.
- Saving money will help you support good and proper education of your child.
- Saving money now can help you in case of health problems in future.
- It can also cover the unplanned expenses like house renovation, car purchase etc.
- It may happen that you may lose job for any reason such as recession, unhealthy work environment or relations with people at work place. Thus, if you have already saved some money it will support you for these days.
- With the money you have saved, you can invest it and run your own business also.
You must check your spending pattern through your bills and accordingly decide as to what amount of your income you must save. Though you may not be able to save a large chunk of your income at the beginning, start with small amount but make sure that you save regularly. It is also important that you prioritize your savings. It is highly recommendable that you should first save for emergencies and retirements and then for other purposes and education.
At SBS Fin, our financial fitness expert, Rashi insists on starting early and she says Investment should be inculcated as a habit. The best way to begin is to start a SIP – Systematic Investment Plan. The benefit of starting SIP is you can start small and still make it big.
She encourages youngsters to start early even if it is Rs.1000/- a month. The simple rules of Systematic Investment Plan are like this:
Calculate your Savings
Step 1: Start with as low as Rs.5000 per month and invest the lump-sum which could be your bonus or appraisal or festival bonus in recurring deposits or liquid funds. SBS Fin recommends a debt fund as there is no TDS attached. Also Rashi insists on creating a buffer in the beginning so that investments can be stress free and are inculcated as a habit.
Step 2: She insists on an increase in savings every year by 10%. So if you have started with Rs.5000, you must take it to Rs. 5,500 per month. The increase shall again be invested in liquid funds.
The basic calculation here is this, if you keep on increasing the investment every year by 10%, in a span of 8 years your monthly SIP would be @Rs. 9,800/- which means you have totally saved an amount of Rs.1,17,600 and have also made investments in Debt & Equity which yes are certainly market related but still stand between 8-10 lakhs.
Start Saving now
The idea here is not to make you richer by 8-10 lakhs in 8 years but to help you understand the convenience of saving small and saving early. From your first salary onwards you must target to shell out an investment of Rs.5000/- in SIP and learn to grow your money systematically.
At SBS Fin, we intend to hand-hold the youngsters in their portfolio building, the idea is to guide them to their financial freedom by empowering them with financial fitness.
Don’t get frustrated or over worked if you are not able to meet your savings & investment goals. What is important is to get started, save regularly and constantly and make investments a habit. A habit to your self, a habit to financially fit you.