Download Article Title: How to Make Your Savings into Investments Author

Article Title: How to Make Your Savings into Investments
Author: Taresh Bhatia CFP
Total words: 1007
Author: Taresh Bhatia, is a CERTIFIED FINANCIAL PLANNER CM.
Taresh Bhatia is the Chief Financial Planner at Advantage Financial Planners LLP
where he provides fee-only financial planning advice. He has helped over 274 families
plan and organize their financial life so as to move positively towards their financial
goals.
Taresh is an expert on financial advice and has over 26+ years of industry experience.
He makes you do more with your money and is professionally qualified to do so. His
advice financially empowers you with systematic savings and Goal tracking.
Among his qualifications, he is a CFPCM-CERTIFIED FINANCIAL PLANNER and
an MBA from IMI, New Delhi.
Taresh is the Founder and a Partner in M/s. Advantage Financial Planner LLP, a firm
registered with SEBI as “Investment Advisor” (RIA). He is also a member of The
Financial Planners’ Guild, India (FPGI), an association of Practicing Certified
Financial Planners.
His contacts are :Taresh Bhatia Mobile: +919810144683. OFFICE: +911244502200
Summary: Have you wondered that do you work for money or does your money
(ever) work for you? Can money work for you? Did you start saving and thought
that you have "invested" your money? Can this really work? Can you save money
and let your money work for you, for your lifetime? What do you really need to
start doing? Let's explore how savings are different from investments.
How to Make Your Savings into Investments - By Taresh Bhatia CFP
Income, less expenses, is saving. When Mrs. Rekha Sharma, called
her financial planner to discuss the future of her children's education and
marriage, she informed him that she saves enough for her own retirement and
wanted to understand how is her saving different from investment
Her financial planner explained to Mrs. Sharma that saving put to get returns,
more than inflation, is investment. With inflation taken at 7 % today, her
household expenses of Rs. 10,000/- per month, would become Rs. 38,600/- per
month, 20 year from now and at her age 60, she would need Rs. 77.5 lakhs, if
she wanted to have this monthly expense, increasing with inflation, coming to
her every month from her age 60 till her age 80. This would need her to
invest Rs. 7,840/- per month, from her current age 40 till her age 60. It was
assumed further that the investment, before she retires, should give her returns
of 12 % and after she retires, should be invested to give 9 % return.
Investor Details
Your Present age(Years)
Retire age
Your Expected Lfie Expectancy
Monthly Expense today
Annual Rate of Inflation
Annual return you expect on your retirement
corpus-Pre retirement
Annual return you expect on your retirement
corpus-Postretirement
Monthly Expense in the 1st month of
Retirement
Sum required in retirement to continue with
present lifestyle: Rs. Retirement corpus
Monthly Saving required today to reach
Retirement Corpus
(*): Terms and conditions apply
Please consult a financial planner on the right
use of this calculator
Input
40
60
80
10,000
7%
12%
9%
38,697
77,55,920
7,840
Now, Rekha understood that what ever she is saving in her savings account for
her own retirement, would not even get her half way through, as the current
saving account return is only 5% and only if she starts "investing" the very
same amount in a better return alternative, that, she could get around 12 %.
She now understood that saving is not the same as investing and how she can
get her money to work better for her. She realized the importance of things
getting expensive, called as "inflation" and how this big silent monster eats
away her savings. She understood, the giant "investment", which could "kill"
the monster-inflation and bring joy and happiness to her and her family.
While she realized that her saving account getting her 5% return, is really with
no risk and her financial advisor asking her to look for returns of 12 % over 20
years period was, in her opinion, was asking for too much risk, as she
understood it initially. So, she started reading about risk versus return and
what all investment opportunities were there to think and hence plan for her
financial goals.
Saving for specific time bound goals with certain risk, is investment, Said
Rekha to her colleagues at work. Working in a media house and looking well
after her two children, Rekha learnt about the risk return of fixed deposits,
PPF, pension plans, mutual funds and gold etc. and how each instrument could
get her nearer to her goals. Goals, that need her savings to be regularly, like
monthly, be invested and how she should have transparent, clear, no charge,
investments. Investments which were in her own name and she
could monitor them on regular intervals and if any investment was not up to
the mark, could be stopped easily and perhaps redeemed to her bank account,
without much hassle. This brought her more confidence and defined
outlook towards her investment ideology.
10 years later, Rekha understood the important parameters of monitoring,
control and risk return opportunities. Such avenues also brought her
transparent and controlled investment, constantly linked to each goal and
now her saving could be called as investment and without fears, many of her
friends started taking her advice of planning their financially secured future.
Her control over her finances and her achievements brought her more
confidence to take greater risk and face newer challenges in career. Career,
which was not a job any longer, as she knew, that after working for 20 years
and with her past 10 years of investments, was leading her to a better, well
planned financial life, wherein she could look for changing her job, if that job
didn't offer her the kind of money she wanted for her future goals. Goals, those
were made on certain timelines and were well structured and planned well
with her, with her financial planner. A financial planner, who never sold her
any product centric investments, but always gave her unbiased opinion. He
gave her ideas like taking pure insurance and adequate insurance on her own
life and do only insurance (not investment linked) from an insurance company.
Even her health insurance, critical illness covers and accident coverage's were
adequately planned. She had the right amount of (6 months
expenses) contingency fund in place. Her investments were tuned to get
returns which were tax efficient. Investments, which were now giving her
more than the inflation and tuned to her risk appetite. She also made
her will as she realized her house, car, bank locker and also loans, needed her
written explicit approvals and her nominees know well what is to be done,
should anything happens to her.
With these colors filled in her life, Rekha realized on that on women's day,
and Holi just around, she had filled her life with adequate colors. Colors to
bring her joy, happiness and satisfaction, guaranteed for life. Life, which
otherwise meant, black and white images, could also be colored well with
these colors of life, also. True happiness.