Any salaried individual, wants to make sure that their hard-earned money saved and invested in the right avenues. They have a fixed monthly income unlike businessmen or a self-employed individual. For salaries employees, managing their finances and investing in the right options is often one of the main challenges. It is important for such individuals to choose options that would enrich their present lifestyle while setting aside a decent amount of savings for their future.
Following are some useful financial tips for salaried employees:
Table of Contents
Financial Goal Planning
For a salaried employee, it is always recommended that they form a financial plan to understand their requirements. This will help them to break down their salary amount and gain a clear picture of the investments that they wish to make and in the correct places. The best way to understand your investment is to decide your financial goals. Short term goals can be of 1 to 3 years, medium goals can be of 4 to 7 years and long-term goals could be of 8 years or more. It is recommended that you set short-term goals to fund purchases that are required immediately. Medium financial goals are set to facilitate funds for expenses that might occur within the horizon of 4 to 7 years. Long term goals might include goals such as accumulating a retirement fund, or buying a house for which the individual may need to plan for a longer duration.
Fixed Deposit
Fixed deposit is always beneficial for salaried employees as it will help them at the time of emergencies. The process involves investing money for a fixed period and you earn an interest set to it. After the maturity of the fixed deposit, you get the amount that you had deposited along with the interest earned on it. The benefit of it is that if your total income is below 2.5 lakhs, you can use the Form 15G/15H so that your TDS does not get deducted. You can also get higher interest rates on long-term fixed deposits. Banks and other corporate companies provide different interest rates. Some provide 5-7% and some companies like Bajaj Finance provide 8%-9.10% interest rate on fixed deposits. You can also choose the time of payment for your fixed deposit to be of 12 months or 60 months.
Real Estate Investment
As a long-term investment option, it is recommended that you definitely include investment in real estate into your financial portfolio. Investing in a house or land is always beneficial as the price of property always goes up as the market and other sectors grow. If not selling the property then renting it out can also be a good source of side income for salaried employees, who have a fixed salary throughout. This investment in return will give impressive results if invested and sold at the right time seeing the growth of the market and a good price.
Tax Savings
There are two basic tax-saving components: Unit Linked Insurance Plan (ULIP) and Provident Fund (PPF). In ULIP, which is offered by a life insurance company, some part of your instalment goes into government bonds, equity investments, and other linked markets. The other part goes for covering the risk of life. This lock-in period is of 5 years after that you receive your money according to the market value of your investments. The PPF is operated directly by the government where the funds are generated by the public itself. Generally, the interest rate is between 8-9% and lock-in period is of 15 years.
Salaried employees have the option of investing in short-term investments with immediate returns, however, investing in long-term plans can be very beneficial for salaried employees after retirement.
