Savings and Investment

Financial lesson : 1

Habits leads to SuccessImportant habits for successful lifeRegular ExerciseEating RightRegular Savings and InvestmentRegular StudiesRegular communication with Parents and friends

Financial Lesson 1 : Save Regularly

But, how to save money?

Start with Piggy bank or a Real bank

But, It is really difficult to save moneyWhy?

Why we dont save?Spending is fun

Saving is pain

Marshmallow Test

Learnings from Marshmallow testIt is indeed difficult to save

How do we avoid the trap and save more?

Keep the money in some place where it is not easily available to usDont keep the marshmallow in front of you.. You will eat it

Options to keep money away and not accessible for 24hrs, but safelyRecurring Deposits

How it is done?Give instruction to bank and they will transfer automatically to Deposit every month for 6 or 12 monthsWhat if your Bank balance is not enough in a particular month?Bank may put a penaltyWhat if I want to withdraw for expenses?If you want take out money before 6 or 12 months, they may charge you penaltyHow much more interest will I get than savings bank?2%-2.5% more than Savings BankLiquid Mutual Funds

How is it done?Open a Mutual Fund Account through a qualified advisor and link your bank account. Once Bank Account is linked with Mutual Fund account, you can transfer any time, any amountWhen should I transfer?Whenever bank balance is more than Rs.1000 transfer bank balance to Liquid Mutual FundWhat if I want to withdraw?You can withdraw any time. Just go to mutual fund account and redeem the amount you want to spendHow much should I redeem every ?Redeem only the amount that is required for immediate expensesAre there any penalties for withdrawal?No and you can withdraw in multiples of 500How much more interest will I get?2.5% - 3.5% more than savings bank account

Examples of Liquid Fund SchemesSBI Insta Cash FundTata Liquid FundHDFC Liquid FundICICI Liquid FundAxis Liquid Fund

Savings A/c vs RD vs Liquid Mutual FundFeatureSavings Bank AccountRecurring DepositsLiquid FundsReturnLow (4%-6%)Medium (6%-7.5%)Moderate( 7-8.5%)-Higher than SB and RDRiskNo RiskNo RiskVery Low RIskConvenienceVery HighHighModerately HighOffered byBanksBanksMutual Fund CompaniesLiquidityAny timeSame DayWithin 24 Hours KYCYESYESYES

Financial Lesson 1Keep money away from you in Liquid Mutual Funds to increase savings

Next ChapterIs Savings = Investments?

Savings Investment

Savings = Just accumulating surplus moneyInvestment = Not just accumulate but make it grow by taking some risks