Are you keeping Too much in Saving Account ?
One day I was shocked when Frieda told me that she has INR 3.5 lacs in her savings bank account. My first reaction was Why are you losing money, she was bemused and said can you make sense ?
I replied “why you need so much money sitting in bank account and earning 3.5% p.a, while prices in India are increasing at 8-10 % every year” ( Yes I am talking about Inflation) So by parking your money at 3.5% your actually are on losing side.
So how much is enough ?
And what should I do with rest ?
Good Question but difficult to give one generic answer, it depends upon our comfort level. For me if I have next 15 days Expenditure in my bank account I am OK ( Being Risky guy and pretty sure that I won’t be fired from my current job 😀 ) But as thumb rule don’t keep more than 3 months expenditure in savings account if you have constant and predicable monthly cash flow. ( Your are salaried employed in plain terms)
Tricky one is other part What should I do with Extra balance, for Conservative and new Investors like Frieda its best to put money in Liquid Debt Funds, In simple terms it means putting your money in very good debt instruments which can earn you as much as 10 % p.a
Here is a list from Value research
All you need is a Demat account and you park your extra funds, there are various other options but its simple and very safe.
For adventurous lot there is always equity markets 🙂
Freida is very smart she took it head on and now she getting 7-8% on her money.
Its just small changes like these, puts Money at our Footsteps 🙂
PS: Again no intention to sell debt mutual funds here, this post is for informative purpose and I am not responsible for any gain/ loss you incur.