Intellectual Thoughts !!!!!: Things you should not do to yr money.

Sunday, November 5, 2006

Things you should not do to yr money.

Earning money is not easy but some time we dont know how to save the hard earned money. As the saying goes Money saved is money earned. So here goes a list things u shld not do with yr money and messing up things when it comes to financial decisions.

Give the government more than necessary

By saying so i am not advising u to cheat. But we have so many options to reduce our tax burden and when we are legaly allowed why should not we take the benefit out of it. The prime factor of not taking the benefit is ignorance.

Look at the investments that fall under Section 80C of the Income Tax Act. If you invest in them, you get a deduction of up to Rs 1,00,000 on your income. This includes PPF,Medical Insurance, National saving Certificate.

If you are a bit agresive then look at Equity Linked Saving Schemes that have a tax benefit under Section 80C.

Do you have any dependents? Take a life insurance policy. The premium you pay here is eligible for a deduction under Section 80C.

Are you looking at buying a house? You get a tax benefit on the home loan for both interest and prinicipal repayment. Kids education do fall a part of the the tax benefit.

Spend it all

While all of us love to spend, there should be a limit on how much you spend. If you find you are saving nothing, it is worth it taking a good look at where your money is going.

Unnecessary expenditure should be avoided. Is your weakness hopping into cabs all the time? Or shopping? Or smoking? Or eating out a lot? or buying the latest gadgets ?

if you find yourself revolving on your credit, make an effort to find out where and why you are flashing your card so often and stop using it till you clear your dues.

Leave it all in the bank

A lot of people hv no clue on how to invest on their savings and they end up savings their money in the bank accounts because they don't know where to invest it.

You need to list down all your investment options.

You have the very safe ones which are backed by the government like RBI bonds (bonds by the Reserve Bank of India), NSC (National Savings Certificate is offered by post offices) and Public Provident Fund (offered by State Bank of India and other nationalised banks).

You can also consider bank fixed deposits and fixed deposits by other companies.Then, you have mutual funds . You can also invest directly invest in shares.

If you will need the money in the short term, you can try short-term bank deposits or even liquid funds. But there is no need to leave huge amounts in your bank account as the yield hardly takes care of the inflation.

Put it all into one investment

List down all the investments and then decide how long you want to block your money and how much of a risk you are willing to take. Then decide where to invest.

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