We all love colours and hence the Holi festival is so close to all our hearts. A life without colours would mean a Black & White life – which in essence would mean a life with no fun. Its very important to enjoy the life and with colours we express our love and affection.
Its equally important though that we make it a goal to be colourful throughout our life. Living just for today could mean a darker life ahead. So be futuristic in your thinkings. As you work hard and enjoy life, make sure that you save properly so that the future is as colourful as today. This is only possible if you save properly and invest properly.

There is a simple yet effective 80-20 rule to grow your future corpus. This means, you save 20% of your earnings and spend rest of the 80%. The savings of 20% now needs to be invested so that
you can create the corpus for your future goals. Now the question is how to invest this 20% and where to invest?

Lets start with a person who earns Rs. 25,000 a month and is 25 Years old. 20% of this would mean Rs. 5,000 savings per month. So in a year the person will be able to invest Rs. 60,000.


The first thing this person needs to do, is to buy a Life Insurance (Term) policy. Ideally one should purchase a policy 10X of yearly income. So taking the above example into consideration, he or she should opt for a policy worth Rs. 30 Lakhs whose yearly premium will come to around Rs. 6,000.

So that leaves us with Rs. 54,000 more to invest which is Rs. 4,500 Per Month.

Emergency Fund

One should create an emergency corpus of 6 months’ expenses. Taking the above example into consideration, one should look at creating a corpus of Rs. 1,20,000. To create this emergency
fund, one should open a Liquid Fund from any mutual fund house. Start a SIP of Rs. 1,500. Whenever one gets a raise or some extra cash, he or she should try and put that extra amount into
this emergency fund to grow the kitty. Liquid funds generally gives a return of close to 8%. So if you continue to invest regularly, your emergency fund will have a corpus of close to Rs. 1,20,000 within 5 years.

So now this person is left with Rs. 3,000 per month more to invest.

Equity Funds

Nothing gives better returns in the long term other than equities. This is the best method to grow your wealth. Taking the above example into consideration, the person should start SIP of Rs. 1,000 each into 3 separate categories of Funds, namely, Large Cap, Mid Cap/Small Cap & Equity Diversified/Multi Cap. The magic of compounding helps you to build a significant corpus over time. You should be patient though and should think long term (15 years or more) to make this money grow. Even with a conservative estimate of 12% CAGR, this above exampled person will have Rs. 15 Lakhs at the end of 15 years. Thats almost 3 times of the money invested!

So to have a colourful future for yourself and family make saving and investing a goal for yourself so that life remains colourful for ever.

Happy Holi!

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