Earn. Save. Spend. This is the financial cycle that we all adhere to.
A New Year may not bring a change to this cycle, but perhaps we could do something to avoid pinching pennies at the end of each financial year, and streamline our cash flow. The importance of saving has always been emphasized, but it is time to work towards growing your money by making smart investments.
Here are five investment and money management strategies that everyone must know:
Mutual funds combine investor’s money with the money of other investors which causes a pool of investments. This makes it easier for investors to hold variety of investments instead of having ownership of individual stocks or bonds.
Mutual funds are known to be ideal for beating inflation. The investment is divided as 20% to 30% in equity securities and the remaining 70-80% in debt instruments like deposit certificates. Investors can easily receive its monthly income during the tenure of 2 to 3 years by selecting a dividend pay-out option. Moreover, NBFCs like Bajaj Finance also allow investments in mutual fund online, which makes the process effortless.
Fixed deposit is the most reliable path of investment as it provides excellent returns in the long run. The interest rate of fixed deposits is higher than saving accounts because the amount is locked-in for a specific time before its maturity. Also, there are added benefits for senior citizens. While the interest rate of saving account is 4%, fixed deposit offers 7.85% of FD interest rate which can increase up to 8.20% for senior citizens.
While investing in fixed deposit, it is advisable to check for the company online and look for added benefits like fixed deposit calculators and online account management. Some NBFCs like Bajaj Finance also provides easy to use FD calculator that allows to check maturity amount of FD.
Senior Citizen Saving Scheme
Senior Citizen Saving Scheme includes everything a senior citizen investor may need. The SCSS offers tax benefits under 80C, assured returns, regular pay-outs, and safety of capital. This risk-free scheme is for people who are aged more than 60 years and are retired under the Voluntary Retirement Scheme.
In some cases, like super annuation, people between the age of 55-60 years can also be a part of this scheme. Investors can avail benefits at an interest rate of 8.6% on their investments. However, it is mandatory to open the account within the first month of retirement and the deposited amount should not exceed the amount received from retirement.
Regardless of how much one might earn, the future cannot be predicted. Buying life insurance is one of the most important financial decisions of your life. Life insurance may contribute towards household expenses, debts, and maintain the standard of living.
Moreover, under sections 80C and 10(10D) of the Income Tax Act, investors get tax benefits for premium paid. Some NBFCs like Bajaj Finance offer investors the power to make partial withdrawal from their fund in case of any unforeseen financial needs.
Indian Insurance companies offer low-risk annuity plans that provide regular income. Investors can earn income at fixed intervals as a retirement strategy by making a lumpsum investment. Annuity is a unique type of investment as it provides many benefits like tax deferral, guaranteed pay-out, and protection from probate and creditors.
Deferral annuity provides money after a fixed tenor, while the guaranteed pay-out which is also known as immediate annuity offers regular income as soon as the investor makes lumpsum payment. Many investors consider annuity as one of the key retirement saving options.