The Text Book Savings Profile

A common man at times does get carried away with the hunger and the green for profits. This single minded approach to try and mutiply money in the minimum possible time often results in debt and more of it. But, finance does lay down certain principles that if followed religiously do make savings easier and more systematic. The are known as the Rings of Investment -- The ground rules of an intelligent approach to gradual money building. No one knows where actually these principles were laid down but it is agreed that these have their foundation in the 13th century banking principles. This was round about when trade was beginning to pick up and people started seeing logic in having a centralized mechanism to channel money and savings.


An ideal savings profile would look somehwat like this:













Some Quick Rules of Investment and Saving:
1. Only invest money that you would not require in the short run
2. Always plan disbursement of your salary/income when you get it
3. Make rules regarding spending and saving and dont break them
4. Never take a loan to invest
5. Always keep cash reserves for emergency
6. Dont listen to friends and family members to invest. Always take the opinion of a Chartered Finacial Planner or a Professional
7. Don't float more than 25% of your income in EMIs
8. Always keeps financial commitments small so that you can meet them in the long run
9. Minimize the use of credit cards
10. Plan Investments, Savings and Expenses to minimize tax burden


The Rings of Investment will be discussed in the next post.