Beginners' Problem

We had rules from the last three weeks, and we all must be having questions; well rules are fine, but now what ??? Where shall I put my money ? Which STOCKS ? and what are the other stuff, small savings, mutual funds, gold and what not ?

The major problem currently for those who are starting to SAVE and a little bit of investing is which STOCK to buy ? And very few are looking at other avenues of parking the money. ( Yes parking is the better word to use for certain investments as they will keep them safe) And that's why all Investment Planners talk about these jargons like asset classes, asset allocations.....yes all those things are very important once you have a lac or two in savings...but when you start off, at that time it's better to stick to vibeindia.com's 3 rules and follow KISS (Keep It Simple Stupid!) for rest of the matters.

Simplest thing to do with your Rs. 3000 a month i.e. 10% of your salary is, to find whether all your TAX Rebate avenues which give you 8% returns or more are exhausted or not ? Oops!!! These again are jargons as something related to TAX came... right ??? So first lets look what all these means.

The person who is earning Rs. 400,000 may have a TAX Liability of around Rs. 60,000, so in turn now your After Tax Salary (ATS) is 340,000 only. Its every individual's duty to reduce his/her payout to the Government...else government will take it from you before you see that amount.

We have a good government, which provides quite some rebates to us. And we must take benefit of them. How ? We must match the returns too. And that's the simplest thing we can do.

Easiest Way, if you want to save for your later life i.e. after 15 years, open a PPF account and start putting your Rs. 3000 every month and forget the rest. It will earn you 8% returns and all are TAX FREE plus you can claim 15% rebate ie for 36000 you will be saving in the year you will reduce your TAX Liability by 5400 and that can buy you a smart gadget...

A fancy way is to put 10000 into an ELSS(Equity Linked Saving Schemes) - they are equity mutual fund by way of investing Rs. 1000 for ten months and put the rest 26000 in the PPF. Really at least these savings must be done by someone who wants to keep life simple and sweet...

But new age professionals do not prefer this plain vanilla... so for them... I presume this TAX Rebate and so called SMALL SAVINGs are not that much exciting for them we will venture into a tora-tora ride... concentrating only on EQUITY and EQUITY related instruments...

But if you love KISS, then at least do either of the things mentioned above...


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