WHAT TO DO WITH THE SAVINGS

Now I assume that you have taken the term insurance,made your monthly budgets well, keeping the dos and don'ts in mind and started focusing on savings and are happy doing all this and now have some savings. If not please refer to my earlier blogs and get down to it. Earlier the better. Assuming you have some savings , the next logical question which comes to mind is what to do with the savings and with what purpose. The purpose is very important because if these savings don’t earn at a rate better than the inflation then your net worth in real terms is getting eroded and it will not help towards becoming wealthy, achieving financial freedom or retiring early. We all know that there is a time value to money and thus to our savings. You cannot purchase tomorrow or at a later time what you can purchase today with a similar amount of money. So if you have to buy it later your money must grow to that level when you want to buy it. So that gives us the purpose “ Savings must grow at a rate faster and better than inflation” Without getting into how bank rate are fixed etc it is enough to know that banks will have to give you interest at rates lower than inflation if they have to further lend , take risk and make some profits. Does that mean we don’t consider the bank deposits at all--- No, banks fulfill a need and serve a purpose in the overall plan , we shall come to it a little later. Now let us consider the avenues available to deploy these savings are: 1. Bank fixed deposits – Nationalized, Private sector and Cooperative banks 2. Company fixed deposits 3. Mutual funds and ETFs 4. Public Provident Fund 5. Equity investments 6. Buying gold or silver 7. Taking Insurance as investment 8. Buying a house/real estate/plot/agricultural land 9. Lending it further to a person or business I plan to discuss all these avenues to deploy your savings in details in my future blogs so watch out for them and refer them to your near and dear ones who may find them useful. Theory and knowledge is available on the net but for implementation you may need support from me , visit www.moneymonk.me.