How do investing and saving differ from one another? Setting money aside to save is called saving. Investing, on the other hand, is saving a specific sum of money for a specific objective. Those of us with the correct intentions can all rescue. Money-related decisions, however, also shape who we are and our financial objectives. So, when it comes to investing, it’s always vital to take many aspects into account.
Spending is really simple in the capitalistic society of today. How you intend to spend it is the real question. We at The Money Club also believe in spending, but only after saving a sizable sum each month, despite how alluring the alternative may seem.
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You become more aware of your expenses, spending habits, and ability to save as you begin to save. It sure has a positive implication on your character as you start to value every rupee you earn. So here are some ways you can spend as little as Rs 1,000 in so many ways:
The best thing about investing is that you don’t need to wait until you have a sizable corpus to begin. However, most retail investing alternatives can be started with as little as Rs. 500 or Rs. 1000 every month, unlike large-ticket investments like buying real estate, etc.
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With as little as Rs. 500 each month, you can begin investing in mutual funds. When you put just Rs. 500/1000 in mutual funds, you can purchase a portion of a basket of expensive equities. Mutual funds make sure that you have the ability to invest even a modest amount in megabrands if you believe in them and wish to do so, even though the returns may be less than they would be with direct stock purchases. Additionally, systematic investment plans, or SIPs, are available through the majority of mutual fund schemes and are excellent for investing a certain sum on a monthly basis. You can invest in debt securities in addition to equity.
Even if you simply have a monthly budget of Rs 1000, we’ll share five strategies for you to start investing today.
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Public Provident Fund (PPF)
A low-risk, smart way to invest your money is a Public Provident Fund, or PPF. Currently, investing in PPF will yield a 7.1 percent annual interest rate. Under Section 80C of the Income Tax Act, 1961, it provides income tax exemption of up to Rs. 1.5 lakh annually and is supported by the Government of India. A 15-year lock-in term is present. Therefore, if you put $1,000 each month into a Public Provident Fund account, after 15 years you would have invested $8,000 and got $3.25457 in addition to tax advantages.
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Recurring Term Deposits
A Recurring Term Deposits is another smart way to invest money. It is a product most banks offer, which lets you deposit a certain amount each month and earn interest rates for deposit accounts. Currently, interest rates for recurring term deposits range from 3 to 9% annually. This is a useful method for instilling the habit of risk-free saving and investing.
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National Savings Certificate
A project of the Indian government, the National Savings Certificate (or NSC), offers total capital protection and interest that is guaranteed. Currently, an NSC has an interest rate of 6.80%. (for 5 years). Any public sector bank as well as three private banks will sell them to you (ICICI Bank, HDFC Bank, and Axis Bank).
According to Section 80C of the Income Tax Act of 1961, an NSC investment can be tax-exempt up to a total of Rs. 1.5 lakh. Therefore, if you put 1000 rupees into an NSC, it will increase to 1389.49 rupees after five years. You would have made a one-year investment of Rs. 12000, which would rise to Rs. 16674 over the course of five years.
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Another smart way to invest Rs 1000 every month is the chit fund. Chit fund investments are a monthly investing strategy that let you put your extra cash in a safe and convenient place. You can start your savings journey with a registered chit like The Money Club. Yes, you can invest as little as Rs 1,000 month on month in our chit plan where you can save, and earn an interest of 10%-15% annually or you can win the bid and receive the entire chit value in one shot.
Why Should You Save?
Existence is inextricably linked to saving. In order to have adequate food for the winter, squirrels are known to horde nuts in the fall. It is likely just as uninteresting as that when it comes to the psychology of saving.
John Maynard Keynes, an economist, once said that as people got wealthier, they started saving more money rather than spending it. Why is it so? Because, apart from the main reason to save; which is to protect yourself from unforeseen circumstances; you can also save to maximize your savings. Let us understand the various reasons one should save for:
Save for emergencies
We generally feel secure and hopeful when we hear the term “save.” You create a place of safety for yourself from life’s conceivable uncertainties when you save. Your future self is being protected. Everything revolves around amassing chips for a rainy day. You can weather any financial turmoil and be comfortable that you are thinking about long-term security when you save.
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Start Your Rainy Day Savings Fund Today by Joining The Money Club.
Save to convert your income into wealth
The first million is supposedly the toughest to earn. When you do, everything revolves around utilising compounding’s potential. Let’s imagine, for illustration, that you adhere to the 50/30/20 rule when it comes to saving, where you allocate 50% of your income to meet your needs, 30% to cover your wants and discretionary spending, and 20% to your savings account. The value of that 20% is far smaller than 20% of your million before you earn your first million. Compounding is all about the exponential increase in value of the additional 20%. It is about achieving exponential growth and harnessing it. So invest to leverage the potential of your savings.
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Save to instill a sense of discipline
Saving increases your mental toughness. Spending money is simple, and it’s simple to give in to our whims and fancies at our expense. But it is not easy or natural for us to withhold, resist, or limit. Therefore, it has to be developed. Only when you have self-control can you continue this habit. Additionally, it is advised to start saving early because doing so will offer your money more time and opportunity to develop. You now know the purpose of the piggy bank your parents gave you as a child.
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Save to earn dividends
Risk is a component you should take into account when trying to maximise your savings. The goal of mindful saving is to carefully maximise your investment returns. We are all aware of the volatility in the markets for stocks, gold, and cryptocurrencies. So you might think about making a chit fund investment.
It is essentially a fund that may be developed by investing a fixed sum every month of as little as Rs 1,000. In addition to receiving a 10%-15% interest rate on your money, this sort of investment also pays you regular dividends each month. You can even bid in an emergency and take the entire pot of money with no additional interest.
This provides Chit Funds an advantage because it can serve as both an investment and an emergency fund depending on your circumstances. Chit fund addresses the savings needs of people, is considered very safe and also offers loans at lower interest rates than moneylenders. Investing in The Money Club is a great way to begin your savings journey.
Therefore, keep in mind that you owe it to yourself to save and to manage your own finances carefully. Be careful and sustainable while you save!
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