In the part one we saw the quick basics about savings and investments. Now let’s see how you have to divide your money into various options for your financially stable future.
Before getting started, let us talk about a very important investment – Health Insurance. Though this is not actually an investment that would give you returns, a health insurance is an investment for yourself, for your health! A medical emergency is something that can never be predicted and with the cost of medical treatments reaching sky high, it is very important to have an appropriate health insurance cover for you and your family. This will help to avoid getting into huge debts due to (god forbid) major accidents or any other critical illness treatment. So get a health cover today!
Now coming to how to divide your money into savings and investments.
- It is always recommended to have at least Rs. 5000 in cash in hand to meet your daily needs as well as other small emergency expenses
- Keep at least 20000 – 30000 in your savings account, which you can access immediately swiping your card or withdrawing as cash from ATM. These two are minimal requirements to meet emergencies.
- The amount of money that you should have in your mutual funds and fixed deposits/ recurring deposit and gold bonds etc., all put together should be equal to or more than at least 5 – 6 months of your monthly expenses. This buffer amount will come handy if in case you happen to lose your job or not able to go to work for a long period of time. For this, you should first sit and calculate your average monthly expenses.
- After saving and investing in the above-mentioned options, you can then start investing in real estate/ property. This is because, when buying a property through a loan, the maximum loan that you would get is 80% of the property value. This means you must have the remaining 20% of the money ready with you. As always, it is better to have some backup money for emergency needs and then start investing big.
If you are well versed in stock market and shares, and if you can afford taking risks, then you can definitely invest long term in stock markets as well.
Now this should give you a better picture of how to save/ invest your money and how much you should keep in each type of savings/ investment. It is always to invest long term whatever be the means that you are choosing to invest to get the best returns.