If you have managed to save Rs.1 lakh, you deserve a standing ovation from all! When you have saved a lakh, it denotes that you are very good at saving.
However, you may be wondering as to what to do with the money that you may have in your saving or recurring deposit (RD) account, right?
Will it be a good decision just to let it stay there or make it earn ever more such as investing in a company fixed deposit and more options?
You have the freedom to open a bank fixed deposit, invest in mutual funds or stocks, open a PPF account, open yet another RD account, and buy some bonds or gold these days.
But, after having said that, you need to be asking three vital questions before you finally decide what to do with your lakh! Have a look!
Question #1 – Is your lakh enough to last you for a few months without an income?
Unfortunately, if you don’t, it may be a wise decision to keep the money as it is in a bank savings account or an RD account. A better thing that you can do is – move the money to an FD account and earn up to 8.10% FD interest rates with leading online lenders. You can also get your savings moving to a debt fund. You can utilize the amount as a backup for crisis situations as the emergency fund.
Do you have a stable emergency fund already? It’s time to pat your back yet again! It must be stated that you have outclassed your peers quite amazingly when it comes to financial planning. Ok, let’s move on to the next question!
Question #2 – Have you planned a big spending in 1-3 years? What are your saving plans for the same?
If your emergency fund is already ready or shaping up well, but you have not yet planned for a big-ticket purchase in the near future, you can make the most of your lakh rupees.
You can go ahead and keep the amount in a debt fund until the time the major spending is up! What will happen? At a decent rate, your money will keep growing letting you also earn even some extra.
However, if you have a crisis fund in action and you have been saving up for the big spending, you deserve accolades yet again for your sharp execution of the financial planning.
You are miles ahead of your peers, and you are now eligible to move to the third and the last question about the lakh that you possess.
Question #3 – What are your plans for the distant future and are you saving up enough to fulfill your long-term goals?
Distant future means 20-30 years from now. But can you predict a distant future or save up for it? It may not sound easy! Nevertheless, if your emergency funds and short-term needs are ready, it will be advisable to keep your lakh for facilitating long-term goals.
What will be a feasible option to get a good return on your one lakh rupees? You can look out for a good equity mutual fund and set it free to grow for 10 years or more. By the time you will retire, your one lakh rupee will also be ready to serve you with great ROI.
The Bottom Line
Are you an individual who has an emergency fund, also ready to cover up in the next five years and even have an investment plan up for your retirement?
You are a great financial planner whom your peers can inspire.
You are at the peak of your game and will always be comfortable when it comes to money matters.