It is needless to say that saving money is essential. While some may be fortunate enough to earn an amount that cover their expenses easily, many have to cut down their wish list after barely covering the monthly expenses. The habit of saving will take years for you to build. However, the sooner you start, the better it is. A lot of people do not save money as they feel that they do not earn enough to save and splurge at the same time. But if you manage your money in the right way, you can end up saving a lot in the long run, even if you start small. Remember, every time you put some money away, you are helping your future self. Some people may relate saving money with cutting down on unnecessary expenses, while others might say that it’s a combination of both – cutting down on unnecessary costs and money management. Whether you choose a savings plan to put aside your money, or you decide to go ahead with systematic investment plans – never put all your eggs in one basket. Draft a mixture of saving pots to get maximum benefits out of the invested money.
10 Smart ways to save money every month
You can choose to invest in monthly income schemes to save money. There are several other ways to invest your hard-earned money to secure your future. Here are 10 smart ways to save money:
1. Direct equity
There is no guaranteed return on investing in stocks. This is a risky way, and not everyone can handle it properly. As an investor, you should be very careful in choosing the right stock and managing your entry and exit. The advantage of direct equity relies on longer periods of investments. If investing in equity, you should be prepared for risks and losses and know the other procedures to cut down your losses when presented with the right opportunity.
2. Debt mutual funds
This is popular for yielding returns that is stable. People who are unwilling to invest due to risks can select this option for themselves. These funds invest in corporate bonds, treasury bills, government securities, markets, commercial paper, etc.
3. Equity mutual funds
Equity mutual fund plans invest at least 65% of the total assets in equity-related instruments. These schemes are differentiated according to the market capitalization or the sectors they invest in. In an actively traded fund, return relies upon the ability of the manager to generate returns. A person should be aware of the high risks associated with investing in equity.
4. National Pension System (NPS)
This scheme is best for people looking for better returns after retirement. This scheme and all its procedures are managed by the Pension Fund Regulatory and Development Authority (PFRDA). This long term retirement plan requires RS.1000 of minimum annual contribution for NPS Tier -1 accounts to remain active.
If a person is looking for a systematic saving scheme to save while they earn, they can opt for a NPS. You can ensure regular income after your retirement by investing in this scheme. The best advantage of NPS is low investment cost.
5. Bank fixed deposit
This is one of the safest investments that most people choose over equity or mutual funds. The returns are guaranteed with good interest over specific periods. There are several options available, and you can choose the ones which will suit you the best in the coming years. The interest given upon the principal amount is taxable, but the person can spread the investment over monthly income and bank FDs to ensure the lowest tax liability.
6. Public provident fund (PPF)
For tax-free returns, you can turn to the Public Provident Fund (PPF). The tax-free interest is considered the best advantage along with long fixed periods. Getting returns that are not taxable is the best thing that you can expect when you are investing.
If you're investing your money in the hope of saving and getting good returns, then PPF might be the best option for you. PPF is also safer than most of the other investments, as decreed by the sovereign. The zero risk feature and no tax liability make it the best savings plan for most people.
7. Senior Citizen's Saving Scheme (SCSS)
As the name itself suggests, this scheme is available only to the senior citizens of India. Those above the age of 60 can invest in this scheme. You can apply for this scheme from a post office or a bank to avail its benefits. SCSS has a fixed term of 5 years that will be extended by three years after the scheme matures. The maximum investment limit is 15 lakhs. The interest rate that is paid quarterly is taxable. The interest rate will remain constant once the investment is made till the scheme matures.
8. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
This is applicable for the people who are aged above 60 years. It is a good scheme to get a fixed monthly income after retirement. A person can choose to get the returns monthly, quarterly, half-yearly, or yearly. The maximum amount a person can get each month is Rs. 9,250. The upper investment limit in this scheme is 15 lakhs. When the scheme matures, the investment amount is returned to the investor.
9. Real estate
Buying properties is a great way of securing funds and investing your money. It is probably the most popular among people who can afford to channel their money into real estate to boost their savings and investments. Several factors play an important role in determining the value of your property, including the location and resources surrounding the property.
10. Saving Plans
Saving plans are designed for encouraging and saving and investments. There is a wide variety of saving plans that you can invest in to secure your future. For example, Guaranteed Savings Plan, and Guaranteed Income4Life are two such plans by Canara HSBC Life Insurance that will help you build your retirement and pension corpus.
You can sell it at a good price or rent and ensure a steady monthly income as well. There are no fixed terms in real estate investment. You can sell it or rent it to generate a significant amount of cash at your leisure or when you need it the most.
Saving up as you earn is essential to build a financial safety net for you and your family when you are no longer earning. By investing a part of your earnings into some of the best investment plans can be a great use of money. Not only will it build a great future but also make you financially disciplined and help you meet your life goals.