With full of excitement and commitment, I would like to make the topic ‘finance’ easier and help you become wiser to check on your financial health and get better.
What are the simple things you need to do to begin the process of investments?
For easy tracking and smooth transaction, I follow one account for last 8 years or so, be it mutual funds, insurance or paying credit card bills, it also helps in maintain records. Let’s start with the most traditional investments, Bank deposit.
One can have multiple fixed deposits parallelly with a different combination of amount, term and interest rates at the same time. The minimum amount could be Rs. 1000/ 5000/ 10,000 depending on the bank you are operating in. Choosing a nominee is advisable for a large fixed deposit, its available in online deposit window.
Another traditional Deposit named as a Recurring deposit is somewhat a precursor to the SIP of Mutual Funds. Similar to the fixed deposit option, you need to click the deposit option, choose the tenure (mostly year and multiple of years or 6 months). In this deposit scheme, you need to choose a fixed sum of money to be added to your kitty every month and the interest is accumulated on pro-rata basis. This is a good option to create an emergency fund or accumulating wealth in 1-2 years times span.
Advantage of Deposits
- It is the most liquid investment
- It can be used as an emergency corpus
- It gives fixed interest/return on the investment
- One can take a loan against the deposit, most accepted collaterals by Banks
Cons of Deposits
- Bad vehicle for medium to long-term wealth creation
- Doesn’t have any potential for upside/ variable return
- Fixed deposits are insured upto 1 lakh Rupee. Money above 1 lakh is not risk-free, so in case the bank goes bust, they will not have any liability over 1 lakh Rupee
- The interest earned on the deposits are taxed basis the individual’s tax bracket.
Stay healthy, stay fit, and be money wise!