Where Should Salaried Employees Invest Their Savings?

First you learn how to save. Then, you wonder what to do with it!

 
Where Should Salaried Employees Invest Their Savings?
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The life of salaried employees is always full of questions. While outsiders find fixed salary fascinating, the actually employed ones know how it is not! To begin with, they struggle with savings. They almost always find themselves broke by the end of the month. But with time and experience, they figure that out! Now that they know how to save, they are presented with a new confusion- what to do with the savings? Let us try and answer that!

Mutual Funds SIP – For Diversified Equity Investments

“Mutual Fund investments are subject to market risks”
“Mutual Fund investments are subject to market risks”

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This is the most popular and fairly rewarding option of investment. SIP stands for Systematic Investment Plan and it is exactly that! The best aspect of this investment plan is that you can choose to spend an amount as small as 1000 per month. Flipside of investing here is what we have all been hearing since childhood- “Mutual Fund investments are subject to market risks”. Yes that they are! The investments in Mutual Funds SIP are not 100% safe. Although, the diversified investment plans that various SIPs offer hardly have any chance of incurring any significant loss. And yet, the risk factor exists.

Fixed/Recurring Deposits – For The Conservative Investors

A Fixed Deposit is undoubtedly the safest form of investment as the return is guaranteed after the tenure is over. The concept of fixed deposits is simple. Instead of keeping your money in the savings account, keep it in fixed accounts and earn higher rate of interests. Fixed Deposits are readily available for use, if and when there is an emergency. While fixed deposit is a decent option, salaried individuals looking for liquidity should prefer Recurring Deposit option.

PPF – The Public Provident Fund For Long Term Returns

Government funds are safe and provide tax benefits.
Government funds are safe and provide tax benefits.

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PPF is another widely popular option of investment. Not only it is popular, it is also one of the most preferred ones because of its tax benefits. The interest earned on PPF is exempt from tax and it also offers you tax benefit Under Sec 80C. The interest rate earned currently is an excellent 8% which is as good as or better than fixed deposits. However, the flipside of investing in PPF is the maturity period of 15 years.

ULIP – Unit Linked Insurance Plan For Smart Allocation

This is an investment plan offered by Life Insurance companies. In ULIP, the principle of diversified investments is followed. A part of the premium is invested in equity, government bonds and other market-linked investments. While, another part of the premium is paid against your life insurance! The advantage of this instrument is that it provides both, death as well as maturity benefit. The lock-in period is 5 years after which you can withdraw money.

Happy Investing! Your savings are precious. Analyze carefully before you invest!