Eminently possible savings plans for the mid-twenty professionals
There is a huge mass of twenty something and educated manpower in the IT companies and the leading manufacturing companies. However, they often lack a will to save and, worse, do not even know how to save for the long-term. This article is an attempt to focus on some saving mechanisms for these professionals.
Introduction
Gone are the days when one can assure regular yearly increments and ever-increasing salary packages. Today, a well-known IT Indian multinational, which has been traditionally known for its contribution to social causes, has drastically reduced the salaries of its new recruits and has further imposed a qualifying examination at the end of the two year period.
This is the trend in Corporate India. Across the board, even in manufacturing companies, the tendency is to save money in manpower cost, by hook or crook and there are companies that give very little as yearly increments or none at all. The merit payments have also been reduced to a big extent, and the organizations keep on citing the global economic slowdown for their actions.
Be that as it may, the young need to focus on a) Savings for a thirty-year span b) Compulsory savings through Recurring & Fixed deposits c) Investing in outskirts of growing cities d) Reducing expenditures on wants and e) Pooling all resources for the tough times. Savings for a thirty-year span
It is now very clear that the Government of India wants to do away with all possible tax-saving schemes. However, they cannot touch and will possibly not touch the only long-term savings instrument called the Public Provident Fund (PPF). This is a long-term, fifteen year savings plan, and one can save up to a one hundred thousand and fifty thousand rupees, in this ideal scheme, and claim exemption under 80(C). Most high earning individuals, who earn even one crore per year, still prefer to save money in this scheme.
The biggest advantage is that the interest is totally exempt from income tax, at the entire period of fifteen years. Youngsters who are just twenty-five years old, with a take home salary of Rs.45,000, would do well to remember that this scheme can be extended to even thirty years in the same deposit, and when one is sixty years old, this corpus will be ideal corpus to put into fixed deposit schemes and enjoy a retired and peaceful life. Compulsory savings through Recurring& Fixed deposits
Even if one puts away Rs.50 every month in a good recurring deposit, with either Federal Bank or the Canara Bank, one can easily get Rs.8000 as maturity, and this will enable the family to meet the monthly expenses at that point in time. It should be remembered that every pie saved is worth its weight in gold, irrespective of what it is. For example, even today, Rs.8000 is good enough to travel by the Vande Bharat train and have a short holiday in the nearest hill station. It will at least meet over seventy percent expenses of the short holiday.
Well, the amount mentioned is the smallest amount and those who are young would do well to remember that the cost of good English-medium school and college education would raise manifold in the next twenty years. Similarly, a good Fixed deposit, at around eight percent in a good bank for ten years, would see the money grow rapidly. The young professionals should also note that savings with a fifteen year span is ideal for the education of children.
Investing in outskirts of growing cities
Vijayawada, Nellore, Coimbatore, Madurai, Kottayam, Mangalore, Mysore, Belgaum, Ranchi, Indore, Rajkot and at least twenty other such cities, throughout India, are the next growth centers. Land is available for around ten hundred thousand rupees at the moment in the outskirts, and one has to take a personal loan and immediately buy a good plot in the outskirts and fence it immediately. Such plots will automatically fetch a very good return at the end of five to seven years and it should be noted that the outskirts are very fast growing in these ideal big cities, that are becoming mini-metros in their own right. Reducing expenditures on wants
Just take a look the parents, all above sixty now, but the path they had taken to reach here. For example, in the early 1980s, a 1800 square foot of plot in a locality called Nanganallur, in South Chennai, was Rs.14000/- only. The monthly salary of the person concerned was just Rs.8000/-, and he had two children studying in the schools. Yet, his wife pledged her jewels and somehow paid the loan over a period of time. When his salary reached good levels, he constructed a house at a cost of five hundred thousand rupees, again a very high amount in the mid-eighties.
Today, after a prolonged struggle, his two children are highly educated. The house and the plot of land today costs three crore rupees. He lives on to narrate stories of several Diwali celebrations where the family expenditure was just one thousand rupees, with the greatest difficult. At the age of 69, he is a living example of what it takes to save money and come up the very hard way. It does pay to do away with expenditure on wants. For instance, the Rs.1000 spent on four tickets to see the latest movie in a shopping mall, is a big waste as the same movie would hit television within just six months. Pooling all resources for the tough times
If one's wife is also earning, at least eighty percent of her salary should be compulsory savings. It pays to make the children commute less and the wife to be as comfortable as possible. This is possible, if the family stays a little away from the city center, where the rents are very high. The money saved will come in very handy during the tough times. In any case, five hundred thousand rupees of which at least fifty percent should be gold in the bank lockers, will help the family see through the tough times. Today, a good number of IT professionals, who are 38 and above in age, realize that with the most advanced technologies, they may lose their job at any time, Hence, they have wisely quit their jobs and are into agriculture and the catering business, where the money is quite good.
In the future, agriculture is likely to stage a comeback. The young professionals would also do well to invest in agriculture, somewhere near their native places. Conclusion
The aforesaid ideas are just indicate and not exhaustive. The youngsters would do well to learn from their parents and other elders and take pragmatic steps to save for the future. They will surely reap the biggest benefits, in the future, if they plan their savings in a very pragmatic and systematic manner.
