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Keeping money only in fixed deposits can be counterproductive


NEW DELHI :

I am a retired pensioner. My daughter works in an MNC, and transfers a lot of her cash to my account saying that she tends to spend. Please inform me the utmost I can save in my mounted deposit and would it not be higher if she retains her wage in her personal account?

—Neela

 

Holding extra cash within the checking account or mounted deposit will be counterproductive. Your daughter might begin investing her wage in additional productive devices that may assist her develop her hard-earned cash as a substitute of simply preserving it parked within the checking account.

As a primary step, she will construct a contingency fund within the checking account which will be her six to 9 months’ bills. As soon as that’s constructed or if that is already in place, she will make investments her month-to-month financial savings for her future wants. A few of these wants might be shopping for a automobile, trip, wealth creation, and so on. If she wants the invested cash in lower than three years, she might spend money on debt, for future wants arising in three to 5 years she will spend money on a mix of debt and fairness and for any aim above 5 years she will take into account investing in fairness.

The truth that she transfers her wage in your account each month to keep away from overspending does present a powerful intent at her finish to avoid wasting. This saving behavior will be additional taken forward by following the above-suggested technique to construct a very good funding plan for herself. Mutual funds are top-of-the-line methods to spend money on asset courses akin to equities and debt. She will arrange systematic funding plans (SIPs) for each month the place the excess cash from her account will get invested in mutual funds on a pre-decided day each month. It will assist her diversify investments and on the similar time make the earned cash work extra for her. She can also be able to speculate for the long run and over the interval the compounding impact of those common investments will assist her construct a very good portfolio, which might be a lot increased than the cash simply mendacity idle in checking account.

Have private finance queries? E-mail us at mintmoney@livemint.com.

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