Nancy Tirthani
Etawah. To make your lifestyle comfortable in this era of rising inflation, it is not enough just to save and invest. Regular assessment of your existing investments and exploring new options is also very important to get the most out of your existing investments.
What is the right way
Suppose if your income is increasing and you suddenly start spending excessively, then it will disturb the balance of your budget. In such a situation, it can be beneficial to invest the savings in an option that gives higher returns. An increase in the school fees of the children, illness or any sudden difficulty increases the cost of the house. In such a situation, it will be beneficial to make a financial plan only through regular assessment of your income, expenses and investments. If you have taken a loan to buy a house or a car, then its assessment is also important. The increasing debt burden negatively impacts an individual’s investment and financial goals. Similarly, see that the family has adequate cover for life and health insurance. If the insurance cover is less, then after assessment, you can consider increasing it. Considering the way the cost of treatment is getting expensive, you can also decide to increase the health insurance cover by assessing it. Similarly, it is very important to have an emergency fund for any accident, long illness or sudden problem, so that you do not have to take help from others in case of emergency.
What are rights shares
Companies need capital from time to time to expand their business or start a new business. To raise capital from the market, some companies sell rights (authorized) class shares to their shareholders, among other options. These are called rights shares because the first right to buy them goes to the old shareholders of the company. Rights shares are sold in proportion to the number of shares held by the shareholder. These are usually priced below the market rate of the company’s shares to attract investors.
Importance of emergency fund
It is very important for every person to save at least two to six months’ expenses according to his income, so that his emergency needs are met. Even if that person is paying any kind of EMI, then at least three months installment amount should be in his emergency fund. This is because it is also very important that in case of non-payment of EMI for three months, the bank Start the process of declaring that person a defaulter.
Understand the math of interest you have in FD, RD or mutual fund
Be fully aware of the interest rate fluctuations wherever you have invested. For example, nowadays the interest rate on FD of five years is around 7.50%. This interest rate can also fluctuate according to the monetary policies of the Reserve Bank. Retail inflation is currently at 5.41%. If you subtract the inflation rate from the FD interest, then you should assume that you are getting only 2% interest on this investment. If you pay 10% of your income as income tax, then this interest rate will be less than 1.50%. In such a situation, instead of FD, PPF can be a better investment option.
Also Know also mutual funds
If you have invested in any such mutual fund scheme, which has performed poorly and there is no hope of improvement in the near future, then you should sell your shares and move away from there. Don’t take any more risks trying to make up for past losses. In such a situation, your investment should be shifted to a scheme with a fixed interest rate. If you keep a close watch on your investment from the very beginning, then you will get the full benefit of it.
