A basic savings strategy follows the 50/30/20 rule of budgeting. If you’re new to finance, let me introduce you to the 50/30/20 rule, which states that 50% of your total after-tax income should be spent on necessities, 30% on necessities, And 20% should go towards savings. By saving more money, this simple rule of thumb will not only enable you to meet your financial goals on time but also enable you to make a healthy budget for the next year 2023. As we are soon going to 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. 2022 will always be a reminder of high inflation rates, crisis, recession worries, high loan and deposit rates etc. year by being a wise investor rather than a thrifty fellow.
Savings Planning Strategy by Abhishek Dev, Co-Founder & CEO, Epsilon Money Mart Pvt Ltd
Equity Savings Scheme:
A common equity fund invests only in equities; Thus, they behave as the progress of the stock market. However, the Savings Plan is a hybrid fund investing in a mix of equity, debt and arbitrage securities. While equity helps generate wealth, the combination of debt and arbitrage acts as a cushion to reduce downside volatility. Thus, they not only provide moderate capital growth but also steady income and capital protection. Equity Savings Scheme is more stable, operates on a very low risk appetite. Additionally, they are taxed like equity funds, which is again a plus point.
An investor with a time frame of 5 years and looking for decent returns with moderate volatility can look at this. This fund category is relatively under-tapped; That’s why the prasad is also less. However, investors can research HDFC Equity Savings Fund and SBI Equity Savings Fund to park their money.
savings plan 2023
Let’s quickly rewind to 2022: NFT mania, high inflation rates, wars, fears of recession, etc. And yet we welcome 2023, we are bullishly optimistic and cautiously bullish on the Indian economy. Hence, whatever the next 12 months may bring, it is important that we achieve our goals in an efficient manner without any headache. Some pointers:
Instead of just saving money, it makes sense to invest that money and earn returns. It goes without saying that asset risk appetite can differ from investor to investor.
Have realistic goals that are attainable within a specified time frame
Create a budget: A simple equation of saving 30% before spending helps. Try cutting down on unwanted expenses. The same can be done by having separate bank accounts for spending, saving and needs and wants.
Plan your taxes in advance: It’s January, but many investors start planning their taxes as early as March. It makes sense to plan it for the whole year.
Get Insurance: If nothing else, Covid has shown us the value of human life. It is necessary to have term insurance and health insurance.
Invest wisely: Asset allocation is the key here. We still prefer investing in FDs and real estate. While the higher rates in FDs are now demanding a look at them, allocating funds in different uncorrelated asset classes will help you better.
Let’s take a resolution that in this new year we are more financially literate and independent than the years before.
Savings Plan Strategy by CA Manish P Hinger, Founder of Fintu
There are many savings and investment options that can be a part of your investment portfolio in the coming year depending on your goals and risk tolerance. Some options to consider as part of the savings plan for the next year include mutual funds for your medium to long term investments as they have the potential to beat inflation and generate good returns. For your short term or emergency needs, you can consider investing in bank or corporate fixed deposits or liquid funds for at least six to nine months of your required monthly expenses.
If you are planning to start investing for your retirement, then a combination of investing in PPF and NPS can be a good option as both come with certain tax benefits and good returns to bulletproof your retirement. Equity Savings Funds can also be considered as they are suitable for moderate risk appetite investors and the risk in these funds is less than the more aggressive hybrid funds like Hybrid Equity Funds or Balanced Funds. The main advantage of equity savings funds is low volatility due to some credit risk. Having said that before starting any investment in the year 2023 make sure that you are adequately insured and have enough emergency fund.
It is important to carefully research and compare the various options available to you before making a decision on where to invest your money. Consider your long-term goals, risk tolerance and the potential tax implications of various investment options. It may also be helpful to consult with a financial advisor to determine the best course of action for your specific investment needs.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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