- Open a recurring account in a bank To imbibe a savings habit, necessary for long-term wealth creation, you can open a recurring account. A recurring account is one where you need to deposit a fixed amount of money every month, which earns a nominal rate of interest.
- Set up a systematic investment plan in mutual fund Another prudent way to invest your first salary is to set up a systematic investment plan (SIP) in a mutual fund. SIPs in mutual funds not only help you be disciplined with your finances but also help you accumulate a corpus for future life goals.
- Buy insurance An essential component of a sound financial plan, investing your first salary on buying insurance can prove to be a sound move in the long run. You can opt for term insurance, which provides a large cover at an affordable premium along with health insurance.
While you can physically go and deposit the money into the recurring account every month, it’s better to give standing instructions to your bank whereby the amount will be auto-debited from your account on a fixed date. Note that the interest earned from a recurring account is added to your annual income and taxed accordingly.
Returns from a recurring deposit aren’t high. On the other hand, mutual funds can offer inflation-indexed returns in the long run, if you stay invested for the long-term. Nothing is more satisfying than to start securing your future with your first salary. Even a modest SIP of Rs. 2000 every month for a period of 15 years in a fund offering annualised returns of 12% will help you amass a corpus of over Rs. 10 lakhs.
To sum up
While you can always invest your first salary in throwing parties to your friends, it’s best to use it in something that will hold you in good financial stead. Use your first salary in securing your future and make sure to use subsequent ones in consolidating it. If required, seek the help of a professional to start your journey on the right track.
Explore Various Mutual Funds here.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
Are Savings Enough for Retirement?
Financial discipline and life aspirations determine whether your savings are going to be enough for retirement.
5 Benefits of Health Insurance that Makes it a Must Have Cover
Here are the 5 benefits of health insurance that makes it a must to cover
When Should You Withdraw Money from a Mutual Fund?
In case of a sudden change in fund strategy or an underperformance scheme for more than 3-4 years, it makes sense to withdraw money.
How To Apply For Personal Loan
Applying for a personal loan has become extremely easy these days. With the increase in applicants, banks and other financial institutions have made the process very simple.