With a developing economy and new investment opportunities generated in the economy, it is not a viable option to go for traditional investments and financial planning. Managing one’s money should not be boring, you just need to have a proper plan for your money management and show some commitment to your plan in order to take advantage of every bit of money you invest. It is time you change your investment preferences and grab new Investment Opportunities. FinanceShed has listed some thumb rules to follow as a part of your financial planning and generating new investment opportunities.
How Much You Should Save?
Initially, savings of 10% of your income was considered an ideal saving to fulfill your future plans and also for retirement savings. But, you can consider 10% as a starting point taking into consideration your employment status as well as your pay scale. When looking at the inflation rates it is impossible for an individual to just save 10% of your income and fulfill your desires for the future. Gone are those days, keeping in mind the current scenario, it is just to save at least 15 to 20% of your savings considering higher life expectancy rates and inflation rates.
The 20/4/10 Rule
When going for the purchase of new assets like buying a car or other vehicle you should strictly stick to the 20/4/10 rule. Here, 20 stands for the down payment of your asset. If you are buying a car, you must pay 20% of the value as a down payment. Higher payment is highly recommended but if you cannot pay a higher down payment you must try to pay at least 20% of it as a down payment. 4 stands for the tenure of loan taken as you cannot predict your future earnings, it is better not to take a loan for more than 4 years. 10 stands for your net payment from salary every month. You can also check these Money management tips to brighten your future.
Health and Life Insurance Cover
Time has changed and there are various advancements in the field of medicine that are sufficient enough to cure many life-threatening illnesses. But as advancements in technology have taken place price for maintenance has also increased. It is estimated that the healthcare inflation rate in India is about 15%. For this rate 3 to 5 lakh health cover is not sufficient, if possible, you should go for a super top-up policy of Rs 5 lakh-15 lakh. For a Life Insurance cover, it is sufficient if you invest 10 times of your income. But if you are starting at a younger age, try to buy insurance that is 20 times your annual income in order to have sufficient cover.
Also Read: Solid Ways To Become Financially Independent
You never know when you can need emergency funds as an emergency can happen anytime and needs immediate action. An emergency can be of any type say emergency related to health, employment insecurity, or any other inability creating fund crises. It is a general tendency to save 3 to 6 months of your household expenses handy so as to overcome such crises but setting aside 9 months fund is nowadays suggested keeping in mind economic uncertainties and inflation rates. Thus it is highly recommended to set aside 9 months of your household expenses as liquid cash or as a deposit.
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