Save at least three to six months’ salary in a contingency fund so that you don’t get tangled in hard times, and that too without any money
2018 has rolled in. Especially for professionals who just received their annual increment. So what’s on your mind? Where do you want to indulge the extra bucks you just earned?
This 2018, let your money not be lost to unnecessary buying but grow with you. Here’s a list of six smart investment ideas that you should definitely consider:
Equity investments
This one’s for all those risk-takers and the know-it-all-about-capital-markets sort of people who are constantly and very closely watching the rhythm of the equity market. If you relate to this, investing in equity stocks is go-to for you.
Aim for your investment to run for a long-term, say for 7 to 10 years at least. Circumspect every stock you want to pick. For instance, choosing stocks with a lower P/E ratio is a brilliant move already.
You can also go for some quality mid-cap or small-cap stocks as they performed surprisingly well in the past year.
Contingency funds
Plan B is always a problem solver if plan A succumbs to some reason. A contingency fund is very much needed when you’re planning to switch jobs.
You’re already transitioning a great part of your life, your career. And if you don’t have a job offer in place, sometimes you do bank on your savings from the previous one, right? In critical times, a contingency fund will come in handy.
Save at least three to six months equivalent salary in the said fund so that you don’t get tangled in hard times, and that too without any money.
You don’t really need a bank account for this, invest the money in a short-term liquid fund and earn reasonable returns.
Self skill enhancement
In the extraordinarily competitive job market today, every industry is looking for people with something quality extra.
In such a scenario, certifications and other sought after diploma courses will give an edge to your qualifications and versatility.
Pay up tax-inefficient loans on priority
You know every loan that you take is not deductible, right? A very common mistake almost all of us have done at some point in our lives was having a credit card debt, a long procrastinated, unpaid personal loan. These are the ones you should pay back on priority.
Furthermore, the government, as we know, has capped the total deduction on home loan to Rs 2 lakh.
In case you’re planning to buy your second house, the loan you take won’t be eligible for tax deduction.
Go for an SIP in ELSS
Who doesn’t want to retire with a bank full of money? Except not everyone knows what’s the ideal way to find that.
Equity Linked Savings Scheme or ELSS is the way, people. ELSS, also known as one of the smartest types of equity funds that invest your money in the most reliable equity stocks, your capital gains from these become tax-free after a lock-in period of just three years. One can even save up to Rs 45,000 with ELSS, that is if they fall in the highest tax bracket.
What’s got your risks covered?
Life’s full of risks, and sure, you can’t have all of them covered. But some, you can.
A risk cover such as ‘term insurance’ is a sensible way to ensure a financially comfortable life for your loved ones when you are not around.
Keep in mind that the sum assured should be at least 10 to 15 times your net income.
You can’t buy good health, but you can definitely invest in a good ‘Health Insurance’ plan and keep you and your family’s health in check.
Even for those who can afford should get it covered under a reliable Health Insurance plan.
If you think, these ideas make sense to you, invest for the good times.
STAY PRUDENT
- Save at least three to six months’ salary in a contingency fund so that you don’t get tangled in hard times, and that too without any money
- Invest in ELSS, where your capital gains become tax-free after a lock-in period of just three years
- A risk cover such as ‘term insurance’ is a sensible way to ensure a financially comfortable life for your loved ones when you are not around
The writer is founder & CEO, ClearTax
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