I, 23, am working for the last eight months. I earn Rs 22,000 a month and have saved Rs 60,000. Our HR executive says I need to show investments worth another Rs 15,000 to avail tax benefits. What kind of instruments should I invest in and in what proportion to avail benefit? I have invested Rs 12,000 in public provident fund over the last three months.
You enjoy the advantage of starting early. Saved sum of Rs 60,000 shows your average savings at Rs 7500 a month (35 per cent of your income), which is decent. Channelise savings into investments. Best would be to put money in equity-linked savings scheme that provide tax benefit. Invest through the systematic investment route Rs 5,000 every month, which will not only offer tax benefit, but also growth.
Also, buy a health cover. If you have dependents, have a pure life insurance.
I, 31, earn Rs 70, 000 a month, of which I set aside Rs 25,000 for financial goals. Rs 10,000 is put in an equity fund and the rest in a recurring deposit. This is meant to cover education expenses for my child (Rs 20 lakh needed 10 years later). I also want to buy a home on loan and build a retirement corpus that can give a monthly income of Rs 60,000. How do I meet my goals?
I suppose you wish that at the time of your retirement (say at 60) you will draw Rs 60,000 a month as of today. At an estimated six per cent annual inflation, this would look like Rs 3.25 lakh. If the inflation is eight per cent annually, the amount would be Rs 5.60 lakh. What I am pointing here is you need consistent planning to reach the target of comfortable retirement.
You are saving 35 per cent of earnings, which is good. But putting 60 per cent of it in a recurring deposit is not right, as you are subjected to taxes on it. If you want to remain in a risk-less instrument, the ideal would be an income fund, as of now.
I, 27, work as a freelance content editor and don't enjoy a fixed income. Even if I invest in a fixed deposit, I end up breaking it. How can I save better? I earn over Rs 10,000 at a time, once in three months.
There are only two options. One, find a way to increase cash flows; and two, plan cash outflows in a manner that you remain within your means. The choice should be suitable.
The writer is director, Gliese Consulting. Views expressed are his own. Send your queries at yourmoney@bsmail.in
