Shall I save my money in savings account , Fixed Deposits or invest somewhere.
This is a very common dilemma being faced by most of the individuals.Ideally one should have a certain percentage of their money in Savings Account and in Fixed deposits and some should be allotted for Investment in different instruments.
There is no thumb rule for how much money should be invested in which instrument but every individual can decided for himself based on his profile.Some of the instruments where one can invest his money are –
- Saving Account
- Fixed Deposits
- Mutual Funds
- Physical Gold / Gold ETF
Some of the above options are safer options but provide very low returns (eg. Savings Account ,Fixed Deposits). If we consider the example of Fixed deposit, Banks usually provide 7% – 9% interest which lowers down to 6-7% after the tax deduction.Considering the inflation rate this is not a good return on the money you have invested.But on the upside Fixed Deposits are safer option and can provide you with capital during tough times.
Whereas Mutual Funds and Stocks/Shares can provide greater returns but can erode your money as well.Every individual should assess his risk profile based on his Age,Income,risk taking ability and should try to invest in all types of options available for investing.
I will try to go into details on this topic in detail in later posts as well.