Saving is harder than it sounds, and without the right instruments, it’s difficult to keep things on track. You may have created an expense tracking system and are maintaining spreadsheets for it. But it is also crucial to learn which saving tool would help achieve your financial goals. In this article, you will learn how to save money for your future in five effective ways.
Mutual Funds
A mutual fund is a popular investment tool wherein the company pools funds from multiple investors.
Mutual funds can offer diversification. However, they are still linked to the ups and downs in the market. This implies that your returns are not guaranteed. You are also expected to go through the challenge of understanding the market trends, or depending on fund managers.
Post Office Time Deposit Scheme
A Post Office Time Deposit scheme is a type of fixed deposit opportunity provided by India Post. It is a safe investment option that allows Indian citizens to earn good returns on their savings.
The returns can be fixed and modest in this case. However, this factor makes it difficult to keep up with inflation on a long-term basis. As there are restrictions on early withdrawals, this scheme becomes less liquid. This means that you will not be able to access your funds whenever you want.
Fixed Deposits
When the FD matures after the fixed timeframe, the deposited amount earns a certain return at the predetermined interest rate. The principal, along with the earned interest amount, is deposited into the investor’s bank account after the maturity period.
With an FD, however, your money is locked in. Moreover, the interest you earn on it is taxable. With a Fixed Deposit, you are not offered ample flexibility in case your financial needs change suddenly.
Bonds
A bond, also known as a fixed-income security, is an investment tool that the borrower issues, such as the government, a company, or a municipality, to raise funds.
Bonds tend to feature longer holding periods to deliver the desired results. In case the issuer defaults, there is ample risk to your funds. On the other hand, a scheme like Chit Funds delivers scheduled payouts to all members.
Chit Funds
Chit funds are traditional investment tools popular in India, where a group of people pool their money to use it as a savings and borrowing tool. Every participant contributes a certain sum into a common pot at regular intervals (usually every month). In every cycle, an auctioning process is conducted, wherein one member is selected to win a lump sum amount from the pooled money.
Although only one member will receive the funds at a time, the fund contributions continue until all the members have received their share. The selection of the pot money winner is done based on bidding or lottery. Every participant contributes a predetermined amount of funds. In the auction or lottery system, a person is selected based on who gets the best bids.
Some chit fund organisations may also use a reverse auction mechanism to make things more exciting. Furthermore, the chit funds are regulated by the Chit Funds Act of 1982. It ensures that chit fund companies maintain complete transparency and comply with the protocols and regulations of the act while practising a fair fund distribution without bias.
Why are Chit Funds the Best?
Here are the top three reasons a chit fund is the best way to save money for the future.
- It helps investors to develop a regular savings discipline, thanks to the non-negotiable characteristic of chit contributions (as opposed to voluntary savings).
- Even if you don’t win the pot money for a particular cycle, you will still earn significant dividends from auction discounts. Dividends help lower your net monthly contributions, thus increasing your overall savings.
- Since you can withdraw a lump-sum amount whenever needed, chit funds are the best for covering your urgent cash needs during emergencies, major purchases, debt clearance, or significant investments.
Why Should You Choose Margadarsi Chit Funds?
Margadarsi Chit Funds is a reliable investment opportunity with considerable returns. Our efficient chit plans allow investors to gain financial independence and stability, allowing them to plan for their short- and long-term investment goals with confidence. We provide straightforward and transparent procedures for investing and withdrawing funds while remaining compliant with the chit-fund laws and regulations.
Key Takeaways
To conclude, we hope the article helped you make smarter financial decisions to fulfil your goals. Of the above investment instruments, chit funds stand out as the best way to save money for future. That’s because they enable investors to enjoy savings and borrowing under the same platform by investing in a reputable chit fund company, like Margadarsi Chit Funds.
