Your Most Burning Money Questions — Answered!

The Panel: 

Punya Sandhu, 27 Financial Consultant

Samvit Durga, 29 Chartered Accountant

Upasna Punj, 27 Risk Advisory Manager

Kunal Sharma, 28 Financial Planner

How do I stick to a financial goal?

PUNYA: “Start an auto-debit system linked to your salary account, with a fixed amount going towards savings each month. Better still, ask your company’s HR to split your salary between a checking and savings account. However, it’s important to be practical about the sum you want to save. The remaining amount must be enough to meet your expenses each month.”

Why do I need a financial counsellor?

UPASNA: “A counsellor will make you 100% aware of how investments function and help you put your money in the right place. They’ll also help you understand the various options available in the market, and the pros and cons of each."

How do I steer clear of credit card debt?

PUNYA: “Simplify your spending: stick to a budget, and mark off purchases and targets you’re saving for, as you achieve them. A credit card is the easiest way to end up in a debt crisis, as you tend to spend a whole lot of money, swipe after swipe, without even realising it. A good idea is to ask your bank to revise your credit limit to a lower amount that you can manage.”

What are the different kind of investments I should make and what are the risks involved with each?

SAMVIT: “The rate of return is directly proportional to the risk and the time frame of the investment. Investing in a mix of low and high risk investments is your best bet. Investing in equity-linked plans or shares would reap higher dividends, but safer options are fixed deposits (FDs), public provident fund (PPF) and corporate bonds.”

What are mutual funds and how are they different from fixed deposits?

UPASNA: “Mutual funds are a form of structured and low-risk investments. It allows a group of investors to pool in their money together with a pre-defined objective. While FDs assure you of a fixed yield at the end of a particular tenure, the yield in case of mutual funds is only indicative.”

How often do I have to file returns? What’s the best way to save taxes?

KUNAL: “Annually. The last date for filing your Income Tax returns, for the previous year, is July 31st. Investments under Section 80C (PPF, LIC, tax saving FDs, etc.) are the safest, and can get you a rebate of upto `1 lakh per year. So, you won’t be paying tax on `1 lakh of your income (per annum) and will be saving at the same time.”

Retirement plans aren’t for me right now... are they?

SAMVIT: “Retirement plans enable you to be able to afford the same (or higher) standard of clothes, jewellery and make-up even when you are 80! Dividends on equity investments can give you a regular income tomorrow, provided you start today.”

Do several smaller investments reap higher results than one big one?

KUNAL: “When it comes to market-linked instruments, putting all your investments in one place is never a good idea. The solution— diversify! If your risk level is low, invest in a combination that gives you financial flexibility. Spread your funds between PPF and FDs, with different maturity dates.”