Best Investment Options for Salaried Person
Every salaried employee waits for that one moment in a month where he receives a text message saying ‘your account number with end number xxxx has been credited with an amount of Rs.xxxxx – salary credit’. It is one of the most anticipated moments for which he toils hard an entire month. Much to his anxiety, 10 days after having received the SMS, the wait starts for the next month.
Salaried Employee
As a salaried employee, you must know that you have a pattern of how income and expenditure are structured. For instance, there are expenses which are already pre-planned. As soon as the message comes, you spend it outright on the pre-planned cause.
This is just a basic structure. Apart from that, 25-30% of your income is directed towards payment of tax and rest 35-40% goes towards payment of rent, kids’ school fees, maintenance or EMIs.
The expenditure in today’s time is so much that it takes away a major chunk of your salary. Furthermore, the structure of income and expenditure is quite lopsided.
There is an excessive strain on income, and that is because of rising expenses – from household ones to credit related purchase. It is important to know that at best an average salaried employee is only able to save 10-20% of his total income.
After the accumulation of your savings, slowly and steadily you work your way towards investment. When it comes to investment, it is important that you invest in a right manner.
There are various Non-Risky Investment options which you can look into to prevent your savings from being spent. Here are a few options that as a salaried employee you can resort to:
Fixed Deposit
As mentioned above, you have tried hard to save 10-20% of your income. Moreover, now after saving for a long time, you have a decent amount of money to invest. One of the best avenues to invest in is the fixed deposit. It is one of the safest forms of investment.
There are various Non-Banking Financial Companies (NBFCs) and other lenders who are providing an attractive rate of interest on fixed deposit.
Just by investing in a fixed deposit, you can earn returns of more than 7% on its maturity. However, as an investor, you must know that long term fixed deposits are more beneficial than short-term ones.
Furthermore, various NBFCs have introduced various facilities such as Balance Transfer and Flexi deposit which make this investment option much more lucrative.
Unit Linked Insurance Plan
An insurance plan offered by Life Insurance Company. How a Unit Linked Insurance Plan (ULIP) works is that some amount of the premium you pay goes towards investment in market-linked investments, government bonds and equity, while the other goes towards covering risk.
The major reason why this investment is most favourable is that it provides you death benefits along with maturity benefit. A ULIP has a lock-in period of about 5 years. Once the period is completed, you can withdraw the money.
Public Provident Fund
An investment option provided by the government of India. It is floated by the government to generate funds from the public. A PPF is quite similar to other investments wherein you open an account and keep investing at regular intervals.
The most attractive part about a PPF is that the rate of interest is above 8%. The major drawback here is the lock-in period which is 15 years, and also there is no death benefit.
All these investment options are subject to rebates in income tax except fixed deposit. However, the safety of fixed deposit and the attractive rates of interest offered on FD by the NBFCs is what makes them a go-to-option.
To conclude, we can say that as a salaried employee it is essential that you work on reducing your tax component without impacting your savings component. All these Non Risky Investment options are of great help when it comes to savings and reducing the tax burden.
Category: Investment Planning
