Let's Talk Money: You've Worked Hard for It, Now Make It Work for You
5 min read

Let's Talk Money: You've Worked Hard for It, Now Make It Work for You

Let's Talk Money: You've Worked Hard for It, Now Make It Work for You

We worry about investment the way we worry about our weight.Instead of dieting or investing being a habit, we only think of them as a remedial measures when our weight or oue bank balance goes too hight or too low.

Build the Money box

Our money worries usually centre around finding the best ROI.But there is a lot more to financial fitness than just investments.we need a system and not a single-shot solution.
The idea of the money box is centered around creating three different buckets/accounts- Income account, Spend-It account and Invest-it account(names speak for themselves) that allows you to streamline your cashflow.


The rules for the money box to work are -

  • As the salary hits your Income account you move the monthly expenditure to Spend-it account within 30mins or a day at max.
  • Leftovers are moved to Invest-it account.
  • use the Income account for all the money inflow.
  • start setting up emergency fund from the Invest-it account.A FD,Flexi-FD's or short term debt mutual funds are some good options.
  • Rule of caution never ever transfer the money from Invest-it account to Spend-It account.
  • Money corpus is not build overnight,start saving maybe with 1 per cent and then gradually increase it over time.
  • getting used to the system takes time, but once set in motion bears good fruit.

It is okay if...

  • you have the three acount system in place that seperates your income, spending and savings.
  • your saving is at least 15-20 per cent of your take home income.
  • your spending is within 40 per cent of your take home income.
  • your emergency funds should cover atleast 6 months living cost.
  • your emergency fund sits in ultra short term or conservative hybrid mutual funds.

Building up the protection

The building blocks for setting up a protection are a good Health Insurance and a Term plan. Most of us view insurance as an investment instead of life cover which defeats the whole purpose of insurance.


  • Never consider the work cover provided by employer as sufficent, if you lose job you lose out on the insurance too.
  • Never buy a ULIP or a traditional plan that every RM and agent tries to lure you in.
  • When buying a health insurance always check its performance on the metric of Price, benefits, and claim.

It is okay if...

  • you have a work cover as well as a family floater, for small towns 3 to 7 lacs, 15 lacs for metro cities.
  • you have a pure term insurance plan bought online to remove agent comission cost.
  • you should have atleast eight to 10 times the annual take home incone as sum assured on the term plan.

Understanding the jargons of investing

Often people tend to resist investment because of the lack of knowlege or a tendency to keep the liquid money for emergency.

A lot of people invest but fall prey to inefficiency, low returns & high cost due to lack of understanding investments.Unfortunately the financial sector is built in a way to keep the things difficult for a retail investor.The less you understand the more chance that you can be cheated.

Lets demistify the jargons

What are the investment asset classes?

Debt - A financial product based on borrowing.

Equity – Ownership of a business that bring along the risk directly ( stocks ) or indirectly ( Mutual Funds)

Real Assets – Includes all tangible investments like gold, real estate.

What are the different types of funds?

Mutual Funds - A mutual fund is an investment vehicle formed when an asset management company (AMC) or fund house pools investments from several individuals and institutional investors with common investment objectives. A fund manager, who is a finance professional, manages the pooled investment. The fund manager purchases securities such as stocks and bonds that are in line with the investment mandate.

Debt Funds - Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills. Gilt fund, monthly income plans (MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs) are some of the investment options in debt funds. Apart from these categories, debt funds include various funds investing in short term, medium term and long term bonds.

Liquid Funds - Liquid funds are debt funds that invest in instruments such as certificates of deposit, treasury bills, commercial papers, and other debt securities that mature within 91 days. Liquid funds do not come with a lock-in period. The redemption of liquid funds is processed within 24 hours on business days. Liquid funds possess the lowest interest risk among all classes of debt funds as they mostly invest in fixed-income securities that mature soon.

Ultra Short Funds - Ultra-short-term funds can be likened to be close cousins of liquid funds. These funds offer more liquidity than any other class of funds with long investment horizons.These funds invest in bonds that have an average maturity of about nine months. They buy debt papers that mature in a week to eighteen months.

Gold Funds - Gold funds are open-ended funds which invest in units of a Gold Exchange Traded Fund (ETF). The primary aim of gold funds is to create wealth by making use of the potential of gold as a commodity. It is suitable for investors who have a desire to take exposure to gold. It is convenient to invest in gold via gold funds instead of holding the commodity sensibly.

Putting it all together

Each product you buy must fight for its place in your money box.

  • When calculating returns always try to benchmark it with the bank FD.
  • Stay away from products that give you returns in absolute numbers – Rs 1 lakh will become Rs 5 lakhs.
  • Mutual funds have two types of taxes that are short term capital and long term capital gains. Short term capital gain is charged when the equity is sold off within one year and charged with a 15% tax. Long term tax is charged for 10%.
  • Always diversify the investment to reduce the risk.
  • When Investing in equity and debt follow a thumb rule - 100 subtracted by your age, Eg 100 – 30 ( if your age is 30 ) then invest 70 % in equity and 30% in debt.

Redo the box

The fill it,shut it,forget it approach needs a once-in-a-year audit. your situation may change or the product may get better ir worse.Once a year is enought to clean your mminey box.

Money box killer

  • spending too much.
  • investing in products without knowledge.


  • Always invest in the product according to your financial goals.
  • Market is for those who stay invested for a longer duration, patience is the key.
  • Early the start bigger the return corpus.
  • At age forty, you should have three times your annual income as your retirement corpus already.
  • At age retirement, you should at-least have eight times your annual salary as corpus.