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Is there an ideal spend-save-invest ratio?

By Finserv MARKETS - Aug 1,2019
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Is there an ideal spend-save-invest ratio?

Have you ever made pasta from scratch? Pasta dough is usually made up of flour and egg in the ratio 3:2 (3 parts flour and 2 parts dough). Can you use a similar ratio to manage your finances?

Those who have just started out with their careers may prefer some direction on how to begin financial planning. Those in the middle of their careers who don’t have a proper plan in place yet can be guided by a specific thumb rule. But such a rule can only provide general direction and may not present the perfect picture. The best investment options can be performed via budgeting as it takes very little effort and can do wonders for your overall financial picture. Let’s see how we can do this optimally.

How much should you set aside for investments?

Imagine yourself as the CEO of your own small-scale company where you are in-charge of organizing your cash flow and ensuring the company’s steady performance. While deciding how much to keep aside to save and invest, consider factors such as your age, disposable income, investment with high returns and liquidity needs.

50-20-30 rule

Under this rule, 50% of your income should be contributed towards living expenses such as household and groceries; 20% towards savings and investments and 30% towards spending, including travel expenses, food, lifestyle etc. The 50-20-30 rule keeps your personal finances simple so you can pay bills, add to savings and also have the freedom to spend money on things you enjoy. This makes it more likely that you will stay the course over time and reach financial stability ultimately. For short-term goals, the best way to invest money is in a high return investment such as a fixed deposit where you can take control of your investments by clubbing stability with attractive returns on the Finserv MARKETS platform.

Is there an ideal spend-save-invest ratio?

Source: TheBalance.com

Why consider fixed deposits as an investment?

  • Fixed deposits are a high return investment that provide investors with a higher rate of interest than a regular savings account, until the given maturity date. These are safe investment avenues that help you increase your wealth without risk to the principal amount.

  • You should consider an online investment in fixed deposits if you are keen on diversifying your investments and want higher returns with stability.

  • Since fixed deposit returns are unaffected by market forces, you can assume assured returns on your principal amount. Finserv MARKETS offers the best fixed deposit rates in India between 8% and 8.95% through which you can enjoy high returns on your online investment.

  • Your fixed deposit schemes can range from 1 year to 5 years depending on your goals. Irrespective of market fluctuations, even a one-time investment in a fixed deposit is beneficial as the regular interest payouts can help you meet your daily expenses. You do not need to visit a branch or go through a lengthy documentation process. With Finserv MARKETS, apply for a fixed deposit and keep track of your account online.

What is the Rule of 70?

The Rule of 70 gives you an estimate of the number of years it would take to double your investment at a given interest rate. Divide 70 by the interest rate to know how many years it would take to double the investment. As an example, a rate of 8% on FDs will take 8.75 years to double the value of your investment. This rule is key for retirement planning as it impacts the way you set up your monthly investments and withdrawals. Fixed deposits are a good way to ensure investments with high returns so that your future money value is not severely impacted.

Is there an ideal spend-save-invest ratio?

Source: camroselearning.com

What is your net worth?

Your net worth is your assets minus your liabilities. Assets include not only cash, investments and home equity but also valuables such as jewellery and furniture. If you are 40 and make Rs. 20 lakh a year, you should have a net worth equivalent to Rs. 80 lakh, assuming you have no inheritance. For adding to your assets, you can choose a high return investment between Cumulative Fixed Deposits or Non-Cumulative Fixed Deposits on Finserv MARKETS. In case of Cumulative Fixed Deposits, the interest you earn on the principal amount gets compounded annually. This means you can grow your wealth steadily and receive the entire interest income paid out at the time of maturity along with the principal amount.

Conclusion

Your finances need to be personalized according to your risk profile and situation. There is no one personable rule that will be an ideal fit for all, although the 50-20-30 rule is a good guide. You can set up your own thumb rule to review your finances over time and make changes to your plan accordingly. But making an investment with high returns is a good bet as it is one of the safest means of wealth creation in the short term. With competitive interest rates offered by Finserv MARKETS, you can easily begin your online investment in a fixed deposit even while you’re in your pyjamas.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no-cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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