‘Every penny saved is a penny earned’

The popular adage above may not quite be true when it comes to financial planning! After all, the value of your pennies decreases due to the passage of time and the effects of inflation. Thus, it is not enough to save, but to invest in the right channels.

Start small and make it a habit to invest in smart schemes. Balance out the risk associated with an investment along with the potential to earn to do your savings justice. Here are some principles to follow to help you do just that.

Bump up your savings with these habits

Do not wait for tomorrow

Why wait to set out on your path towards savings and investment, when you can do it now? Thinking that your income is too low for savings is a wrong way of looking at the situation in hand. Save at least 10% to 20% of your income every month and be consistent. Once you save, be proactive about investing.

Also Read : Why FDs are Sensible Investment Instruments?

Letting your savings lie idle will cost you money. For example, you may think that you will start an FD of Rs.50,000 next year, but why wait? Delaying this task will cost you an annual interest of around Rs.3800. Act now to get the full value of your savings. If you find yourself wanting a larger corpus for investment, at least start an FD. Bajaj Finance FD requires a deposit as low as Rs.25,000 and offers high returns.

Do set up a savings fund

Apart from a FD, you can also invest in an equity savings fund, which divides your money equally into three parts: debt, arbitrage and pure equity. This type of mutual funds investment is less risky than balanced equity, and can give you returns in just one year. An investment like this can help you tackle financial needs in the future, while ensuring that you are not tempted to use the excess cash.

Do not overbalance your portfolio

Rather than choosing to be a risk-averse investor, try taking a little healthy risk to see your money grow. On the other hand, choosing only equity investments exposes you to too much risk. So ensure that your savings are divided as per your risk appetite. Use a healthy mix of debt equity, arbitrage funds and pure equity as well as low-risk options like PPF and FD.

Choose a combination based on your tax-saving needs. Also divide your investments by calculating the lock-in period of various investments, allowing yourself to be able to access cash every year rather than choosing only long-term options. To further ensure that save each month, sign up for SIPs.

Also Read : How Fixed Deposits help you save tax?

Do budget for your goals

A goal always helps you invest smarter. Be it your daughter’s marriage, down payment for a home, buying a watch or even planning for an international holiday, make room for all your objectives and invest accordingly. Rather than being casual about your decisions, sit down with a financial planner to chalk out your goals and match your investments to them. This will help you boost your savings habit and set you on the right track.

Work out the budget for your responsibilities and aspirations and then do the math to know exactly how much you can spare every month. Once you do this calculation you will understand that for every penny you save and invest, you stand to earn a little more.

Now that you have these four guiding principles at hand, save a part of what you earn and invest a part of what you save. Prioritise your investments to benefit from better and bigger interest rates and achieve a diverse financial portfolio.

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