The Rite Plan

Is it important to have Goals oriented Savings?

A friend of mine is earning a lakh a month, and when I asked him, how much is he saving per month, his reply was close to 30k per month. While saving 30% of monthly income is a good savings rate, when I asked him if he has assigned any of the goals to his savings, he went bonkers. Even, as per World Bank Data Gross Domestic Savings for Indians in the year 2014 was 29%. But savings without goals is like doing multiple graduations in various courses without knowing the purpose. Remember those good old movies, where our Hero used to keep money in different kitchen utensils for different purposes – Behan ki shaadi, Naya Ghar, etc. etc. There are many benefits of assigning goals to your savings be it in any asset class – Gold, Equity, Debt. In fact one can select asset class depending on the goals. If Goal is for short term like 1 year or so, one can look at fixed income instruments like FD’s or Debt Mutual Funds. And if Goal if for longer d…

Emergency Fund – A Friend in Need



My friend lost a job. I know he will get his job eventually, but the good thing is that he was saving for his rainy days. And for the time period he will not be working, he can meet his needs from that fund. Life is extremely uncertain. One day it gives us all the happiness in world and one day we are in deep trouble. To keep us emotionally strong in testing waters, Emergency fund is extremely important. Let’s understand its true purpose. If we have saved for emergencies/contingencies in life, then there is no need for us to fret about our monthly expenditure, which will be there in whatever situation we are in. Now the next question arises. How much of emergency fund is enough? We are in some situation, and we don’t know for how long that situation will continue. Normally one should have 6 months expenses for this fund. And if your house expenses are variable in nature, you can always target for 6 months’ salary. This gives us enough buffer and we …