Bank savings account, fixed deposit or debt fund - the better option?

I am 29 years old. I returned to India after ten years after a failed marriage. I did not claim any alimony.  I have saved up Rs 10 lakh. I have rent-free accommodation in my parents' house. But I won't inherit the house due to my siblings. Should I start a business or should I look for a job and invest this amount? I am a hotel management graduate from Australia and want to start a cloud kitchen.


We need to re-start building your life. And the good news is that you have everything that you need. You need cash flows, and for that you have a qualification that will get you a good job. You need a backup, and for that you have Rs 10 lakh. Put the money in a fixed deposit (FD) or debt mutual fund till you find your feet. You have a house to stay in. Over time you will need money to buy your own home. Take up  a job, save all you can, for starting your own business in a couple of years, or earlier, when you feel more confident.


I am 30 years old and an only child. I am single. My salary is Rs 50,000 of which I save Rs 20,000. I am an executive assistant and live with my parents. I am debt-free but have no investments. My father has rental income of Rs 60,000. He also has Rs 3 crore in the bank, obtained by selling our ancestral property in Mangalore. Where should I invest?


As a family, you have adequate financial security. Monthly cash flows are not a problem. Therefore, you should use your corpus wisely so that it multiplies over the years. And then you can use the profits from this investment to start a new business venture, or do something charitable with your father in Mangalore, like starting an NGO. The options are numerous once you have your massive backup of financial security.


Which is a better option—bank savings account that gives a 7 per cent rate of interest, fixed deposit or debt fund?


The savings bank rate and the debt fund rate of return are variable and market-driven. However, you can withdraw money from them at a moment’s notice. With a fixed deposit, you have a fixed rate of return for a certain period. If you decide to break your FD, you will lose a little bit. You will either get a reduced rate of interest or will have to pay a penalty for premature foreclosure.


My spouse and I are 41 and 51 respectively. We have zero debt. Our income is Rs 75,000. We pay EMIs worth Rs 50,000. Our child is in the 10th grade. What should our investment strategy be? 


Your EMIs are way too high. I hope you are in a position to reduce them. If this is for a home loan, I understand that you have very limited choices. If you wish to build assets, then focus on just one investment strategy—equity markets. Consult your adviser. If you don’t have one, start putting your monthly surpluses in a focused fund and a multi-cap fund. Continue for as long as you can without missing out on a single month's investment.


I am 42 years old. My salary is Rs 90,000. I want to take a break from work for one year to write a book. My monthly living expense is Rs 30,000. I have no debt and no loans, but I have nothing saved for retirement either. Can I afford a break, and how soon?


The formula is straightforward. It would help if you had Rs 3.6 lakh to take care of your expenses for a year. Add another Rs 1.8 lakh for another six months for contingency expenses. Save up about Rs 5.4 lakh and then take a break. May I also offer you a better idea? Why don't you start working diligently every evening and on every weekend and get your book underway?



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