Five Golden Tips For Early Rising Birds

(In Indian context only)

Hello! Dear friends, today we all are so busy in our personal and professional life that we don’t think of stealing some moments for ourselves. However, to be a relaxed and happy person, it’s the need of the hour that we must spare some time for ourselves also in order to accomplish our desired goals.

I am of the view that my young friends, who have just started earning in different professions and locations, must cultivate a very first habit of savings immediately when you start earning. The younger you are, the more savings and less financial worries tomorrow.

Here, I am going to provide some most important tips and advice to youth community how to start savings and how and where to invest for a secured and financially well-balanced future. Here are the following tips:

(1) TERM INSURANCE PLAN: During the first two years of service, it is always advisable for everyone to take a Term Insurance Plan from a reliable Insurance Company covering your life risk. Sum assured may vary from person to person depending on net monthly income. Always remember, insurance does not help you avoid the risk in life, but reduce the risk

Here I advise you to go for a minimum amount of sum assured of Rs.5000000/- with a minimum premium. This is a plan that pays you nothing on maturity, but still a very good plan as you have to pay meager amount of premium. Insurance is a matter of solicitation.

(2) PPF ACCOUNT: You may open a PPF account with any nationalized bank. All branches of banks don’t provide this facility except main branches, This account is opened for 15 years and you will get benefit of Tax savings up to Rs.15,0000/- under section 80C of Income Tax Act. PPF amount payble on maturity does not attract any income tax. This is one of best of options for savings and tax savings as well.

You can deposit certain amount in PPF account not exceeding 12 transactions in a year. And one transaction only permitted in month. Make the habit of doing first transactions the very first month of year.

(3) HEALTH INSURTANCE PLAN: This is, also known as “Mediclaim” Insurance Plan. This Plan can be purchased from any good and reputed insurance company with excellent track record of post-sale service and settlements. If you are unmarried, you may buy this plan individually. And if married, you may cover all the members of your family i.e. wife, children, old parents subject to the condition that they are dependent on you as per rules of the insurance company,

The sum assured may vary from Rs,50000/ and above. Maximum amount as per Insurance Company. However, it is always advised to opt for a plan with minimum amount of sum assured of Rs.300000/- and above since today medical cost and expenses are very high. Premium depends on amount of sum assured and health conditions of the insured members. This plan, I am sure, will give you a sigh of relief. Under Sec.80D of Income Tax Act of India, tax benefit is available subject to maximum of certain limit.

(4) BANK RD ACCOUNTS: Generally all banks provide this facility to its customers. Bank deposits are the most secured scheme and plan, though rate of return may be low. I advise you to start immediately one or two Recurring Deposit Accounts with your bank. RD account is a monthly scheme where every month you have to deposit a certain amount. You may start with Rs.s100/- and above. This scheme will give a certain rate of return fixed at the time of opening. Main advantage of the scheme is that you may close the account any time and get back your deposit amount with some interest (if run for a minimum period as per bank’s scheme).

This scheme is meant purely for savings and is not covered under 80C of IT Act where you can save up to Rs.150000/- to avoid tax. However, I will advise everyone to start this popular account with a minimum monthly instalment of Rs.1000/- for longer period. Longer is the period, more is the savings. You may also start this scheme keeping in view the educational expenditures of your children in the future. That is why  recommend this scheme for a long period of 10 years. On maturity, you have accumulated a size-able amount in your lovely portfolio. And I guarantee that this size-able amount is a boon to fulfill the desired dreams of your children’s education. So be happy and relaxed.

(5) MUTUAL FUNDS SCHEME: The younger you are, the more is your risk appetite. I recommend this scheme as a last, but not the least one. After you have taken all the above plans, as recommended, depending on your requirement, age and financial capacity, if still some funds are available for savings you may opt for this plan. Here, many plans are available such as ELSS(Equity Linked Saving Scheme), Equity Funds, Balance Funds, Debts Funds.

This scheme also has very good tax savings plan known as ELSS (Equity Linked Savings Scheme) and some of them are very attractive giving good returns. Here is a Lock-in period of 3 years and you can’t come out of the scheme before  the locking  period of 3 years. Under sec.80C if IT Act, you can save up to Rs.150000/-to avoid tax.

For young people, I recommend investing large portion in Equity Funds and then in balanced Funds. Though Equity Funds have more risk, yet provide good return. HIGHER THE RISK, HIGHER THE RETURN.  Young people have high risk appetite, so they may invest large portion in equities. Before investing in any kind of mutual funds scheme, investors are advised to consult their financial advisor for making your portfolio more attractive and more balanced. Always remember “investments in mutual funds are subject to market risks’.

I advise all the young friends, who have started earning for the last 2-3 years, but I would recommend to cultivate the habit of size-able savings from the very first salary you receive and then see the results after your targeted period.

So dear friends start early and taste the fruits later. ALL THE BEST. (the above ideas are writer’s own ideas and you may consult your financial advisor before investing in the above plans).

Kishan Singh Negi

(Writer, Reader, Blogger, Thinker & Motivator)