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Most commercial banks offer interest rate between 2.7% and 3% below Rs 1 lakh balance in savings accounts

Work-earn-spend, Work-earn-spend- repeat. If this is the pattern of your earning and spending, it’s time to break this chain. You work to earn and spend what you earn but you aspire to earn more, spend more and live better to fulfil your aspiration it’s just not important that you save but put your savings to better use and invest it.

Where to invest?

The answer to this question will depend upon what do you want your money to do for you? Whether you want it to crawl, walk or run – not literally but financially! This will decide the kind of investment you need to make. (i)Conservative- When the investor is protective about the capital rather than getting a higher return, they will settle for lower return as long as it is assured. (ii)Moderate- These are the middle-path investor. They can tolerate fluctuation to an extent but stable return is also important. (iii)Aggressive- They are risk takers, more the risk higher the return. They put their capital for long term and are willing to face ups and down in short and medium term because they are eyeing the long term targets.

How to decide your risk appetite?

This will depend on two factors – your financial goals and liabilities. If you are taking care of a family. If you have some debts to pay off or some pending loans, these are your liabilities. You want to achieve certain financial targets like saving for buying a house or a car or higher education, these are your goals. Once you figure out your risk profile, it will be easier for you to decide whether your money should crawl, walk or run. Mohit Gang , founder, Moneyfront says- ‘Investment is a marathon. The field on which you run will decide your pace. If you have to climb a mountain then crawling would be a good idea and if its a flat track then you can pick up pace.’

Slow & Steady wins the race

Crawl – You want your money to crawl that means you are a conservative investor. You don’t mind slow growth of your money as long as you get a steady return. If your risk appetite is low, then a fixed income investment will be right for you. The fixed income instrument gives return on a fixed schedule. Bank fixed deposit or post office saving schemes are good way of earning return on a fixed timeline. The interest will be in the range of 4-7%, depending upon the tenure of the scheme. Debt funds and corporate deposits of reputed companies are also a good option for conservative investors, though corporate bonds carry a shade higher risk.

Faster than crawl but slower than a run?

Walk- If you choose the ‘walk’ option for your money that means you want it to do more than just crawl but less than running. Your risk appetite is moderate wherein you are willing to part with your capital for some time but in return you want appreciation. For this category, opening a Public Provident Fund (PPF) account could be a good idea. PPF is an account opened in specified banks that matures in 15 years. An investor can deposit between Rs 500 and Rs 1.5 lakh annually in that account. Interest is earned yearly on compounding basis. The full tenure is 15 years and premature withdrawal is allowed only on specific grounds.

Run for growth but only if you have time!

When you pick up the pace you need to be ready for the risks too. It may take you faster but there could be speed breakers. But if you want to earn inflation adjusted return then ‘run’ but prepare for risk which means there could be phases of low or negative returns too. The key is sticking to the investment for long-term so that low phases can be averaged out.Equity Mutual funds is a run category of investment. You invest in stocks but not in individual stocks but in funds which invests in equity and equity related securities. These funds are looked after by asset management companies and they specialise in tracking stock market. Equity MF’s have given a return of 9-12% in the last 5 years. Poonam Rungta, CFP says- ‘Treat your investment like your daughter or son , who will give return after being nurtured for a certain period of time. Maturity comes with time and your investment will need some time to give you return’ Its important to invest whether you want it crawl, walk or run it is your decision but make your money work rather than you always working for money.