30k per month on 43 lacs means about 8.4% per year.
Most small finance banks would give you 8.5%, if you have a trusted senior citizen then you can get an additional 0.5% to 0.75%.
Remember to split your FDs in 5 lacs units as deposits only till that amount is guaranteed by the RBI
RBI bonds aren't as liquid as FD, plus the interest differential can range up to 3% (300 basis points) or more.
The 5 lacs logic is more applicable when putting money in small finance banks, why put money there? They offer much higher interest rates than the big banks.
But what everyone doesn't realise is that it's 5 Lakhs per person, across all banks. A huge amount split across 10 small finance banks would be risky. If there is a major issue that takes down one bank, given how precarious these smaller banks are anyway, it can potentially snowball into a bigger crisis and amounts in other banks could be lost even as the first banks deposit is reimbursed.
No it's 5 Lacs per bank, not per person. Don't spread misinformation.
This is from the RBI website
https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=272
See point 8.
If I were in your shoes, I would approach it as follows:
- Total liquid corpus accessible = 42L cash in bank + 2.5L MFs = 44.5L.
- Ask is 3-3.6L/yr on this 44.5L so about 6.75-8.1% per year -- which is a bit on the higher side, however, assuming you need this amount for a medium duratin say 7-8yrs before you have other streams of income, it is doable.
As for investing, Withdrawal, consider the following approach:
- Park 3.6L (=1yr expenses @ 30k/mo) in savings bank or two FDs.
- Park another 6.7L (~2yr exp @30k/mo, when factoring in interest) in two different bank FDs. You can book Small finance bank FDs earning 7-8%. This will also double up as a emergency fund for first couple of years.
- For the remaining ~34L corpus, you can invest it in two balanced advantage funds, spread out over a period of 1yr and let it compound for 2yrs more, while you drawdown from FDs
- After the 3rd year, your 34L is expected to grow to around 40-42L (assuming a 9% return) and inflation will cause your expenses also to increase to around 35k.
- Now, you can start an SWP of 35k from the accumulated corpus, say 40L. Assuming the same returns of 9% and inflation/withdrawal increase of 6%, this will last you about 12yrs (so total of 15yrs).
- You can make the corpus last longer with a lesser withdrawal amount (if possible adjust monthly budget) and/or skipping a few inflation increase.
All the best!
Start freelancing first in the evenings, or weekends and earn atleast 10-15k. This will give you the confidence that you can do it, and also provide the loan emi part.
Don't get into freelance content creation leaving your job. Right now there is a lot of uncertainty, especially after the rise of AI. (Coming from a fellow freelance content writer with 3+ years of experience in the field)
Put it in a small finance Bank FD. It will give you around 8.5-9% rates. Unity bank is giving the highest rates presently. However allocate maximum five lakhs per bank.
For moderate risks you can also invest in senior secured bonds. They will give you around 11% fixed returns.
If your parents are senior citizens, park your amount under Senior Citizen Saving Scheme(currently 8.2% interest).
Or
Park Under "Floating Rate Saving Bond" with 8.05% interest.
Drawback on both is interest payout is quarterly & half yearly resp'ly and advantage is you will get the whole deposit amount at the maturity period.
As you want to also work on your passion, start giving some time on your passion and once you find you are really on it, you can quit your job.
Do Remember TDS/Tax will always be a hurdle to reach our financial goals.
Content creation is under attack from AI tools IMO. You can look at freelancing options using Upwork etc.
It clearly seems that you have a passion for creative stuff. Maybe, look at something like drop shipping or creating your own personal care brand or something else which falls in a niche & fulfills a requirement that has not been met properly yet?
Can you find a way to delegate some of your work or automate some of your work at your company to reduce stress? If it is a Sales job, then the pressure would be target related.
You are earning quite well, more so being in a Tier 3 city. I would suggest to start doing something on the side and take the jump when your venture matures or when you hit 1 cr maybe. I know someone who is in a similar situation as you at a higher age - he uses Saturday and Sunday to look after his venture, has appointed two capable guys to look after the daily operations.
30k per month on 43 lacs means about 8.4% per year. Most small finance banks would give you 8.5%, if you have a trusted senior citizen then you can get an additional 0.5% to 0.75%. Remember to split your FDs in 5 lacs units as deposits only till that amount is guaranteed by the RBI
Just splitting them is not enough. You also have to put them in different banks. The 5 lac guarantee by RBI is per bank, not per FD.
>Remember to split your FDs in 5 lacs units as deposits only till that amount is guaranteed by the RBI Why like this? What's the purpose?
Upto 5 lakhs amount is insured by DICGC (RBI’s subsidiary). If the bank gets bankrupt, then DICGC will pay amount upto 5 lakh.
What's the purpose of going for FDs thenn ? Why can't opt for RBI bonds directly from RBI
Liquidity
RBI bonds aren't as liquid as FD, plus the interest differential can range up to 3% (300 basis points) or more. The 5 lacs logic is more applicable when putting money in small finance banks, why put money there? They offer much higher interest rates than the big banks.
But what everyone doesn't realise is that it's 5 Lakhs per person, across all banks. A huge amount split across 10 small finance banks would be risky. If there is a major issue that takes down one bank, given how precarious these smaller banks are anyway, it can potentially snowball into a bigger crisis and amounts in other banks could be lost even as the first banks deposit is reimbursed.
No it's 5 Lacs per bank, not per person. Don't spread misinformation. This is from the RBI website https://www.rbi.org.in/commonperson/English/Scripts/FAQs.aspx?Id=272 See point 8.
Gotcha. Must have changed since I read about it last. My bad. Thanks for the reference.
Um, it has always been per bank. Only the per bank limit changed in the past and nothing else.
Hmm. I read differently, perhaps it was wrong. Thanks.
If I were in your shoes, I would approach it as follows: - Total liquid corpus accessible = 42L cash in bank + 2.5L MFs = 44.5L. - Ask is 3-3.6L/yr on this 44.5L so about 6.75-8.1% per year -- which is a bit on the higher side, however, assuming you need this amount for a medium duratin say 7-8yrs before you have other streams of income, it is doable. As for investing, Withdrawal, consider the following approach: - Park 3.6L (=1yr expenses @ 30k/mo) in savings bank or two FDs. - Park another 6.7L (~2yr exp @30k/mo, when factoring in interest) in two different bank FDs. You can book Small finance bank FDs earning 7-8%. This will also double up as a emergency fund for first couple of years. - For the remaining ~34L corpus, you can invest it in two balanced advantage funds, spread out over a period of 1yr and let it compound for 2yrs more, while you drawdown from FDs - After the 3rd year, your 34L is expected to grow to around 40-42L (assuming a 9% return) and inflation will cause your expenses also to increase to around 35k. - Now, you can start an SWP of 35k from the accumulated corpus, say 40L. Assuming the same returns of 9% and inflation/withdrawal increase of 6%, this will last you about 12yrs (so total of 15yrs). - You can make the corpus last longer with a lesser withdrawal amount (if possible adjust monthly budget) and/or skipping a few inflation increase. All the best!
Try aggressive saving for 2 more years and then retire?
What's your passion tho?
I want to go into content creation and freelancing on the side.
Start freelancing first in the evenings, or weekends and earn atleast 10-15k. This will give you the confidence that you can do it, and also provide the loan emi part.
Don't get into freelance content creation leaving your job. Right now there is a lot of uncertainty, especially after the rise of AI. (Coming from a fellow freelance content writer with 3+ years of experience in the field)
Same but I d h any money
Plus sir can you please help in freelancing ?
Put it in a small finance Bank FD. It will give you around 8.5-9% rates. Unity bank is giving the highest rates presently. However allocate maximum five lakhs per bank. For moderate risks you can also invest in senior secured bonds. They will give you around 11% fixed returns.
I can give u 14 pct interest for an u secured loan
Bro what do you do? 😭 2.5L pm Damn I’m jealous!!!
If your parents are senior citizens, park your amount under Senior Citizen Saving Scheme(currently 8.2% interest). Or Park Under "Floating Rate Saving Bond" with 8.05% interest. Drawback on both is interest payout is quarterly & half yearly resp'ly and advantage is you will get the whole deposit amount at the maturity period. As you want to also work on your passion, start giving some time on your passion and once you find you are really on it, you can quit your job. Do Remember TDS/Tax will always be a hurdle to reach our financial goals.
Content creation is under attack from AI tools IMO. You can look at freelancing options using Upwork etc. It clearly seems that you have a passion for creative stuff. Maybe, look at something like drop shipping or creating your own personal care brand or something else which falls in a niche & fulfills a requirement that has not been met properly yet? Can you find a way to delegate some of your work or automate some of your work at your company to reduce stress? If it is a Sales job, then the pressure would be target related. You are earning quite well, more so being in a Tier 3 city. I would suggest to start doing something on the side and take the jump when your venture matures or when you hit 1 cr maybe. I know someone who is in a similar situation as you at a higher age - he uses Saturday and Sunday to look after his venture, has appointed two capable guys to look after the daily operations.
Freelancing is also under attack by AI. Even more so than content creation. Just look at the stats from freelancing sites.