Well, the budget, taxation, and investments for the year ending in March keep the brain busy these days. This is just another year and things happen the same way every year. This also is that time of the year when you have to postpone regular payments too as you get a reduced salary. You company deducts all the due taxes in these three months. And generally all the annual premiums also go this time around only. The problem is that the CA only finds in these months that unless you make this much of investment, you will lose that much of money as tax. So, we end up buying all the policies during this last quarter of the financial year. So, the bottomline is that these months are screwed ones and you cannot change this, at least this year.
But, is there any way we can plan a better next financial year?, yes we can. This is apart from the resolution that you take to save a certain amount of money every month from your salary. That set amount which is never saved keeps the false hopes alive and we again land in a crunch situation in which we are right now.
So, the need is to plan it differently. On that front, if you realize, the EMIs that we are bound to pay are hardly missed. In fact since this CIBIL score has come into picture, we have become more vigilant about our monthly equated installments. The point to be noticed is that if there could be a way to save money through a system akin to EMIs where we are forced to pay a certain amount, we could easily end up having a good corpus for the designated purpose, no matter what time of the year that is.
The less talked and discussed feature of Recurring Deposits is the key here. RD is like an EMI where a self-set amount is deducted from your bank account every month and is deposited in a different account. Over time, these accounts get matured and you have corpus for that designated need. Just liquidate the amount a day before the premium payment date and make the payment. This way the premium becomes much easier and smoother to manage.
The easier thing about RD is that it can be opened at the expense of a few clicks online. Almost every bank with online net banking offers to open an RD. You can refer to the documentation they have for ease of operation.
While the principal idea of building a corpus of a planned amount is met, the RD also adds some interest which is always sweet to have. Even if you could earn a small amount of 10000 as interest in an year, you can invest these 10k in another policy as every year, you will at least get 10000 as interest on your RD. The idea of keeping yourself free of any last month burden also has the benefit of additional advantage and you end up pocketing another small investment free of cost.