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Small sacrifices could add up to large savings over years
Published On , 15 Jan 2019 By ET Wealth
SMALL SACRIFICES COULD ADD UP TO LARGE SAVINGS OVER YEARS
postpone consumption, cut emis to save some money.
Everyone loves to save more money, enjoy some extra money, pay lower rate of interest on loans taken and earn a higher rate of return on investments. It may not be possible to enjoy all these at the same time, but with some smart planning one could achieve some of these. The youth of today could take the lead in tweaking their consumption habits a bit, postpone some of the immediate consumption, invest that money wisely to buy the same thing after a few months. This could offer a lower or zero interest outgo and at the same accrue some returns for the youngster.
How is that possible?
suppose a young person wants to buy a smartphone for Rs.12,000
Buying it on EMI at say 15% rate of interest, thus leading to a monthly outgo of nearly Rs.1,100
Total outgo at the end of the loan period will be nearly Rs.13,000
To let go off some small consumables, say sacrifice a coffee each week and a movie a month, to save Rs.1,000 each month
This Rs.1,000 could be invested in a liquid mutual fund scheme
If the fund can generate an annual return of 6.5%, the total corpus at the end of the year would be a little over Rs.12,400
This could entail a savings of nearly Rs.1,000 if the youngster had taken a loan
And an additional savings of Rs.400 by investing the money that was left by sacrificing that one coffee each week
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