A basic savings strategy that follows the 50/30/20 Budgeting Rule. If you’re new to finance, let me introduce you to the 50/30/20 Rule, which states that of your total after-tax income, 50% should be spent on needs. , 30% for needs, and 20% should be for savings. By saving more money, this simple rule of thumb will not only allow you to meet your financial goals on time, but will also allow you to create a healthy budget for the next year 2023. As we welcome 2023, we need to rely not only on savings but also on a combination of investments that can act as a hedge against any possible downturn. The year 2022 will always be a reminder of high inflation rates, crises, recession fears, higher lending and deposit interest rates, etc. Therefore, now is the right time to do a combination of these savings and investment solutions that improve one’s financial literacy and independence over the next year by becoming a wise investor rather than a frugal.
Savings Plan Strategy by Abhishek Dev, Co-Founder & CEO of Epsilon Money Mart Pvt Ltd
Equity savings plan:
An ordinary mutual fund invests only in stocks; therefore, they behave as the stock market progresses. However, a Savings Plan is a hybrid fund that invests in a mixture of equity, debt, and arbitrage securities. While Equity helps create wealth, the combination of debt and arbitrage acts as a buffer to mitigate downside volatility. So they not only provide moderate capital appreciation, but also provide stable income and capital protection. The Equity Savings Plan is more stable, running on a much lower risk scale. Additionally, they are taxed just like equity funds, which is another plus.
An investor with a 5-year timeframe and looking for decent returns with moderate volatility might consider this. This type of fund is relatively untapped; therefore, the offering is also less. However, investors can research HDFC Equity Savings and SBI Equity Savings Fund funds to put their money in.
Savings Plan 2023
Let’s fast rewind to 2022: NFT Mania, high inflation rate, war, recession fears etc and as we welcome 2023 we are bullish and cautiously bullish for the Indian economy . Therefore, no matter what happens in the next 12 months, it is important that we achieve our goals efficiently without headaches. Few suggestions:
Instead of just saving money, you should invest it and earn interest. It goes without saying that exposure to the asset can vary from investor to investor.
Have realistic goals that are achievable within a defined timeframe
Have a budget: a simple equation of saving 30% before spending will help. Find ways to cut unwanted costs. It is also possible to have different bank accounts for spending, saving and needs & wants.
Plan your taxes in advance: It’s January now, but many investors only start tax planning in March. It makes sense to plan the whole year.
Insurance: COVID, if not anything, has shown us the value of human life. Having term insurance and medical insurance is a must.
Invest wisely: Asset allocation holds the key here. We still love investing in FD and Real Estate. While the higher interest rates in FDs are necessitating looking at them right now, it’s better to allocate the money into different uncorrelated asset classes.
Let’s resolve that this New Year we are more financially savvy and independent than in previous years.
Savings Plan Strategy by CA Manish P Hingar, Founder at Fintoo
There are several options for saving and investing that could be part of your portfolio next year depending on your goals and risk tolerance. Some options to consider as part of a savings plan for next year include mutual funds for your mid to long term investments as they have the potential to beat inflation and generate good returns. . For your short-term or urgent needs, you might consider depositing at least six to nine months of your monthly essential expenses in a bank or company fixed deposit or liquidity fund.
If you are planning to start investing for your retirement, a combination of investing in PPF and NPS can be a good choice as both offer certain tax and profit benefits. good to secure your retirement. Equity savings funds may also be considered suitable for investors with a moderate risk appetite, and the risk in these funds is lower than aggressive hybrid funds such as Mixed Investments or Funds. balance. The main advantage of equity savings funds is low volatility due to some debt risk. Having said that, before starting any investment in 2023, make sure you are fully insured and have enough emergency funds.
It is important to carefully research and compare the different options available to you before making any decisions about where to invest your money. Consider your long-term goals, risk tolerance, and potential tax implications of different investment options. It can also be helpful to consult with a financial advisor to determine the best course of action for your particular investment needs.
Disclaimer: The views and recommendations expressed above are those of individual analysts or brokerage firms, not those of Mint.
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