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Making money is
not an event or
a particular
action that
happens or has
to be done;
making money is
more of a
process. It may
appear slow and
almost invisible
but the process
has to be
religiously
followed . The
first step is to
Save. Saving
results in
accumulating
capital for
investing. With
this
acquired
capital you can
invest in
other
types of
more
profitable |
investments. You should
be saving 10 to 15
percent of your earnings
regularly every month.
Some people even manage
to save 20 percent of
their income. Getting
into the habit of saving
is important. You and
your family must save to
have an emergency fund /
secured future. People
with fluctuating income,
few job benefits, and
little job security may
need a larger emergency
fund. Families with two
wage earners may need a
smaller emergency fund.
As a rule it is best to
have three to six months
of take-home pay in a
savings account, which
has a good liquidity so
that you can withdraw
for emergencies. If you
don't have an emergency
fund you need to
increase your savings. A
payroll deduction plan
into a Savings Account
or a Recurring Deposit
is often the most
painless way to achieve
the best results. On the
other hand, if you have
been saving a surplus,
you may want to consider
using these funds for
investing in a Fixed
Deposit.
Fixed
Income instruments in
India typically include
Company Bonds, various
deposit schemes of Banks
,Fixed deposits of
Corporates , Government
Schemes and Fixed Income
Mutual Funds. One of the
key benefits of
fixed-income instruments
is low risk i.e. the
relative safety of
principal and a
predictable rate of
return (yield). If your
risk tolerance level is
low, fixed-income
investments might suit
your investment needs
better. The money that
you are likely to need
in the short-term (for
capital or other
expenses), should be
invested in fixed-income
instruments.
Since
the secondary market for
fixed-income instruments
is not yet developed in
India, we discuss below
only the primary market
options available for
retail investors.
Company bonds /
debentures
Companies issue bonds
and debentures through
public issues that are
open only for a limited
period of time.
Application forms for
these issues are
available with primary
market brokers.
Bank Deposits
Traditionally all the
Banks usually have
various options for
everybody need under
fixed income instruments
viz.
Fixed Deposit
Recurring Deposit
Savings Bank Account
Company Fixed Deposits
Fixed
deposit schemes from
companies are typically
open round the year,
unless they have
exceeded their
collection limits. Even
in such cases, companies
accept renewal from
existing fixed deposit
holders.
Government schemes
-
You can invest in
RBI bonds mainly in
RBI Relief Bonds
directly through the
Reserve Bank of
India or through a
broker. Now a days
many banks are also
dealing in Govt.
Securities.
Investments in other
government schemes
can normally be made
through nationalised
banks and post
offices.
-
Treasury bills :
Treasury bills are
short-term money
market instruments,
which are issued by
the RBI on behalf of
the GOI. The GOI
uses these funds to
meet its short-term
financial
requirements of the
government. The
salient features on
T-Bills are:
-
These are zero
coupon bonds,
which are issued
at discount to
face value and
are redeemed at
par.
-
No tax is
deducted at
source and there
is minimal
default risk.
The maximum
tenure of these
securities is
one year.
Fixed income
mutual funds
Fixed-income and money
market mutual funds
offer investors an
exposure to fixed-income
instruments. Open-ended
mutual funds are
available round the year
and can be easily
purchased/ sold on any
business day.
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