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You Have a Couple of Lakhs. How to start making your money work for you?

Now that you have a lump sum, you're probably wondering what to do with it. Does it make sense to leave it in your RD or savings bank account or should you be making better use of it?

If you’re anything like the rest of us millennials, struggling to renounce your Peter Pan title and still making jokes on your attempts at adulting, two lakhs in savings is a big deal.

It's no easy task having to actually pay for food, shelter, internet, and electricity – all from your own pocket – while still trying to fund your big (elusive) dreams and actually making it to having savings which is in the lakhs. So, congratulations on being the wiser of your peers!

Now that you have a lump sum, you're probably wondering what to do with it. Does it make sense to leave it in your RD or savings bank account or should you be making better use of it?

Ask yourself these two questions to make the best possible decision:

1. Do I have any big spends in the coming five years? Have I planned my savings for them?

Imagine basking in the sun on the French Riviera with no care in the world or driving through rolling hills in your SUV with a bicycle strapped to the back of it or even your dream wedding or your favorite car. Dreams are more likely to come true when you plan for them — importantly, save for them.

If you haven’t planned your savings or saved for a big expense in the foreseeable future – like a trip abroad or buying a car – then use your two lakhs for that.

Simply place the money in a debt fund till the expense comes up. Your money will keep growing at a steady rate and you will likely end up with some extra bucks as well.

Now say you've been your most responsible self and have planned your savings to meet an upcoming big expense, ask yourself the next question.


We get that, 20—30 years down the line may seem a little too far-fetched or unpredictable, but money is money. If your long-term dreams change, all you need to do is point your savings in a new direction.

2. Have I thought about my long-term goals? Am I saving up for them?

Imagine being able to decide which creepers would look pretty on the archway to your sprawling mansion or being able to travel the world on a whim. Perhaps moving to a first world country is your priority or giving your kids a secure future. Whatever your long-term dreams, you should already be thinking of ways to make them happen.

We get that, 20—30 years down the line may seem a little too far-fetched or unpredictable, but money is money. If your long-term dreams change, all you need to do is point your savings in a new direction.

So, invest your two lakhs in a good equity mutual fund (ideal for long term goals and potential for more returns than a debt fund) and let it grow for six years or longer. It needs that minimum wait time. By the time you retire, boy are you going to be happy you did this!

This will give you a better idea of how soon things will start falling into place:



What about the risks that come with mutual funds?

First off, they are calculated risks – like the ones you take each time you try a new recipe, change jobs, or pick a hotel for a vacation. You do your research, pick a trusted source of information, and go through with it. Once you do your homework, you know you’re setting yourself up for success. Mutual funds work the same way.

Moreover, India is a developing nation. Investing in a growing economy, one that has shown a constant overall growth over the past couple of decades, is really a no-brainer. It’s important though that you stay invested for at least six years and bypass the lows in the graph. History and data speaks here!

Coming back to your two lakhs, if you've got your bases covered for your long-term goals as well as have already started saving for your retirement, congratulations! You are probably going to end up very comfortable, not to mention wealthy! Do what you please with your money!

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