My Life, My Decisions

**Saving** is income not spent, or deferred consumption. Experts suggest, that for every individual saving is necessary.
Savings come handy during rainy days or bad times. It also helps in your retirement planning.
It is said that saving must start from the day, one starts earning. But, the general belief is, earlier the better.

Methods of saving include putting money aside , for example,

- Fixed Deposit
- Recurring Deposit
- Public Provident Fund(PPF)
- Share/Stock Market
- Mutual Fund
- National Pension Scheme
- etc.

**MyLifeMyDecisions** in partnership with various Banks and financial institutions are facilitating the users/customers to invest/save
in various schemes being offered by these institutions. The presentation below gives an idea about the future values your investment/savings will generate.

Fixed-Deposit:

Interest on Fixed Deposit is the amount paid based on the principal amount. Here is an example, how the calculation is done.

Compound-Interest:

Compound interest arises when interest is added to the principal so that from that moment on, the interest that has been added also itself earns interest. This addition of interest to the principal is called compounding. The following formula gives you the total amount one will get if compounding is done:-

Where

- A = Final Amount that will be received
- P = Principal Amount (i.e. initial investment)
- r = Annual nominal interest rate (as a decimal i.e. if interest is paid at 5.5% pa, then it will be 0.055) (it should not be in percentage)
- n = number of times the interest is compounded per year (i.e. for monthly compounding n will be 12, for half year compounding it will be 2 and for quarter it will be 4
- t = number of years

Recurring Deposit:

Recurring Deposit is another method of saving in the bank or post office.The amount the depositor decides has to be deposited in the bank or post office on a monthly basis for the tenure , he/she decides. One can calculate the amount he has deposited over the tenure and the final amount that will be available on maturity.

Annuity:

An annuity is an agreement between an individual and the financial institution where a one time/ lump sum payment or series of payments(regular instalments) are paid by the individual and in return obtain regular disbursements beginning either immediately or at the time of maturity. Example:

- When we invest in a mutual fund per month through SIP (Systematic Investment Plan).
- When we put money in our PPF (Public Provident Fund) account each year.
- When Money is put in Recurring Deposit Schemes or any other such schemes.
- Future value= Amount per instalment * (1+r) * [(1+r) ^n - 1]/ r.

Similarly , other such investments/savings can be calculated. The formula is same only you have to enter the amount and the tenure

CAGR - Compound Annual Growth Rate

This is very useful instrument. In this , one can calculate how the money is growing on yearly basis (in a geometric progression). This provides a constant rate of return over the tenure. The compounded annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.It is:

- Used to calculate the annual Return provided by an Investment.
- Tool to compare investments

Share Market

Mutual Funds

**Mutual Funds **is a safe option of investing money in Shares.In Mutual Funds investment , the responsibiltiy of suitale investment
is passed on to Professionals , who are supposed to have expertise in these types of Investments.
**Professional Managers** choose and monitor the investments. Being qualified professionals,they use this money to create a portfolio.
That portfolio could consist of stocks, bonds, money market instruments or a combination of those.

NPS --National Pension Scheme

Govt. of India has started a new Pension scheme under the Pension Fund Regulatory and Development Authority (PFRDA) to provide National
Pension Scheme (NPS) related services to corporates and individuals.

The details may be seen in PFRDA website.

You may contact us with any query.

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