Again starting from 0 Savings

[makwheelie]

So, during COVID, like many others I lost many things and we got hit financially pretty bad. My job was also not that well so we lost all of our savings. Somehow managed to survive through everything.

After a long time, managed to land a new job in 2023 and started saving money little by little. Paid off 90% of our debt just last month.

Now I don't know how to restart my savings from scratch in a better way. I am almost 38 years old. Should I go for mutual funds or FD or anything else ? My knowledge in stock market is very limited. How do I make best use of the money I have started saving ?

 

[susejlx]

@makwheelie I'm 34 and just started as well. Invest half your salary into mutual funds. Pick broad based ones like nifty 50, midcap or small cap. Just 3 are enough.

First make sure you have 1 yr of monthly expenses saved in the bank FD. Then only start this. Take medical insurance as well. My mother didn't have any and she got cancer and it would have wiped off all our savings if she hadn't got some reimbursement from the office.

 

[estherlion]

@susejlx 1 year of monthly expenses can be kept in a liquid fund instead of FD. Check PPFAS liquid fund.

 

[susejlx]

@estherlion No use for those in 15-30% slab. Tax at slab rate itself. FD would be quicker to break.

 

[jessesdmf]

@susejlx Not sure about which one is better after considering taxes, but ppfas liquid fund gives you next day redemption.

https://amc.ppfas.com/schemes/parag-parikh-liquid-fund/transaction-timelines/

 

[frnelsonsantos]

@makwheelie Starting from zero savings, here are a few steps.

Build an emergency fund: Minimum 6 months of your needs, ideally 12 months.

Build a good savings in savings account: Build one so that you can take care of your expenses or have a good pool of money.

Investment: this is a broad part. You can have various investments. I would suggest, since starting from 0, would be start investing in mutual funds through SIP. Start with index funds, equity and small+mid cap(maybe flexicap from parag parekh). Then move to buying stocks but that would be secondary.

Points to note:

Keep your savings account in a high interest bank. Same goes for emergency fund. Also would strongly suggest to enable sweep FD for both and set limit for that amount which you know would not be utilized. What sweep fd will do is that if you have 10L lying in savings and enable sweep fd, and tell bank that if any amount exceeds 2L, create an FD for amount above 2L. So an FD of 8L will be created which is liquid and no penalty if broken.

Percentage of allocation should change. Means greater percentage of amount should go for creating emergency fund, once done then max percentage should go for savings. Once that done then focus on mutual fund/stocks investment.

Would strongly suggest maintaining an excel sheet of monthly expenses which contains needs, wants and investments. If you want I can share my sheet. Have been maintaining every month for 5 years.

Pro tip: never ever tell your salary/savings/investments to your friends/family. Just tell you live paycheck to paycheck or whatever.

Good luck!

 

[jtphins54]

@frnelsonsantos not OP but can u share this sheet with me

 

[prsfan84]

@frnelsonsantos I would love that sheet too!

 

[athiest123]

@frnelsonsantos Mee to brother

 

[amrose]

@makwheelie Happens to the best of us, brother!

 

[jazzman87]

@makwheelie First build an emergency fund equal to 8-12 months of ur expenses. Once u achieve it put that corpus in one FD to slowly earn interest as capital shud be protected for emergency fund.

Then start saving in MFs via SIP every month about 10-15k in equity funds