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,
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.
Interest on Fixed Deposit is the amount paid based on the principal amount. Here is an example, how the calculation is done.
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:-
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.
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:
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:
One can calculate two CAGRs on two different investment to decide which investment gives better CAGR and take hs decision.
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.
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