We often think about saving while working. Despite our efforts, we always aim to save as much as possible. If you want to increase your savings in your 30s and 40s, here are some golden rules that can help you build a substantial fund.
By following these rules, you can not only meet your current needs but also lay the foundation for a secure financial future. These principles will simplify wealth creation and help you achieve your goals.
Make a Budget
Before saving, calculate your income and expenses carefully. This will help you identify essential and unnecessary expenses. Always aim to minimize unnecessary expenses, as they have the greatest impact on your savings.
Emergency Fund
In addition to saving, create an Emergency Fund to be used only in times of crisis. Ideally, this fund should cover 6–12 months of expenses. It provides financial support during unforeseen emergencies.
Start Investing Early
Investments can significantly grow your savings. Along with saving, begin investing early. Research thoroughly before investing. For secure options, consider PPF, FD, or Government Small Savings Schemes. For higher returns with some risk, explore the stock market or mutual funds.
Take Insurance
If you haven’t already, get insurance as soon as possible. Opt for both life and health insurance. Health insurance protects you from hefty medical bills, while life insurance ensures financial security for you and your family.
Do Retirement Planning
Plan for retirement alongside your job. Create a retirement fund early to ensure financial security for your future.
Here are some of the best investment options available in India
Low-Risk Investments
- PPF: Tax-free returns, tenure of 15 years, ~7.1% interest.
- Fixed Deposits (FDs): Guaranteed returns, ~5-8% interest.
- NSC: Tax-saving, 5-year lock-in, ~7.7% interest.
- POMIS: Monthly income, ~7.4% interest.
- Sovereign Gold Bonds: Gold-backed investment, 2.5% interest.
Medium-Risk Investments
- Mutual Funds: Equity and debt funds, SIPs for regular investments.
- ULIPs: Insurance + investment, long-term planning.
- Corporate Bonds: Higher returns, ~8-12% interest.
High-Risk Investments
- Stock Market: High returns, requires market knowledge.
- Real Estate: Long-term returns, high capital required.
- Cryptocurrency: High-risk, volatile returns.
Tax-Saving Options
- EPF: Tax-exemptions for salaried individuals.
- ELSS: Tax-saving mutual funds, 3-year lock-in.
- SCSS: For senior citizens, ~8.2% interest.