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Thursday, November 29, 2012


 “A penny saved is a penny earned.” Benjamin Franklin.

 You don't become rich from what you earn; you become rich from your savings and investments. Every Rupee saved or invested becomes your best servant, it continuously works day and night to give you passive income in the shape of interest, rent dividend, etc. Therefore, start saving soon and ploughing back the revenue generated from your savings/investments to enjoy the compounding effects which is the greatest wonders of the world.

 If you deposit Rs 5000 p.m. for 30 years, it will grow to Rs. 90, 95,093 & may give you more than 67,000 p.m. for the whole life if invested in fixed deposit at the same rate. The beauty of the scheme is that your legal heirs will inherit the original Rs. 90, 95,093 and give your soul tons of blessings.
 Many will ask," How can I save from my small income which is barely sufficient to meet my necessities?
Your necessities are your creation. You may curtail them. But your income is not in your hands. You can't increase it at your sweet will. A part-time sweeper of our Majahaulia branch was saving so much that many full-time employees used to borrow from him.
 When you look downstairs, you will find that many persons are managing themselves well with much lesser income. Therefore, stop making the fuss about your small income and start saving 25% of your income from the very beginning. Make up your mind firmly to make both ends meet with 75% of your income. Gradually you will accumulate enormous wealth. Then you will be in a position to enjoy lavishly with 75% of all your active and passive income.
Many persons commit the mistake of treating their car, motorcycle or freeze purchase as savings. But they are not savings; they are expenditure since their value becomes zero with the passage of time. Hence plan to buy these comforts of life within 75% of your income.
You may reserve 25% of your income for consumer durables, and use the remaining 50% for other expenses.
  Your habit of saving will also take care of your mental health and will help keep depression away since most of our worries are due to our financial problems. We often wonder what will happen if our job is gone or if we are no more. These thoughts make us depressed.
Allocation of your savings into different assets such as in fixed deposit, insurance, mutual funds, equities, etc. is also important, but this is a very tricky task. It will be better to take help of a financial planner for this task.
 However, one may keep his six months income in saving funds or fixed deposits so that he can live up to six months with his present lifestyle even if his source of income stops abruptly. One may also get insurance cover worth ten or twelve times of his annual income so that his family members could enjoy the same lifestyle even after his unfortunate demise. You may allocate according to other requirements which may differ from person to person.

Many employers such as banks etc., offer their employees easy loans since they quickly recover the instalments of the loan from their salary. Please don't fall prey to easy loans for consumption purposes if you cannot pay instalments from seventy percent of your income.
Every rupee borrowed becomes your master and sucks your blood in the guise of interest even when you are sleeping. But loans may be availed for productive purposes where capital appreciation is more than the interest paid. 
Persons with great desires have small pockets. Therefore, practice to manage your wishes within seventy-five percent of your income.
 None, not even Kings, and Emperors could fulfill all their wishes.

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