In my earlier post, I talked about Money Automation Technique.
The idea of money automation is making your money work hard for you in the automated system. So I am going to try this technique to make my money work for me.
Fixed deposit is the first technique to make you’re earning automated.
You might have met people whose life seems amazing. They spend a good amount of money on their luxurious lifestyle.
By looking at them you might have thought, why you don’t have such life? Why are you so unlucky?
The amazing part is, they are not working hard like you do. Still, they enjoy their life at fullest.
The reason for their luxurious life is, they have something in the backup that feeding their money requirement.
In most of the cases, they have got the fund from the sale of Real Estate (Home or Land) of their father or grandfather. Half of the Indian population relies on real estate earning source.
The money they get from the sale of the property is now laying in the Fixed deposit which feeding them.
Creating Fixed deposit is the first thing people do when they get fund from existing assets.
This works best when you get large fund from an unexpected source, but for people who don’t have such source may not get the benefit of this.
Working on a day to day job will not make the fortune in your lifetime. You need some smart ways to make your money work hard for you.
Let’s see how fixed deposit investment technique works.
Most of you might be working for some company in 9 to 5 jobs. The time that you are spending in the day to day life is going to give you the capital in terms of salary at the end of each month.
Now, the first step is setting a Fixed Deposit (FD) Goal.
In my recommendation, the person who is earning between Rs.15,000 to Rs.20,000 a month must set a goal of creating FD of Rs.2,00,000.
People who are earning between Rs.25000 to Rs.30,000 a month must keep the goal of creating FD of Rs.5,00,000 at the initial stage.
You have to follow certain rules while working on it.
– You can’t borrow money from others.
– Can’t take a loan.
– Can’t sell existing property or assets?
In simple words, you can’t generate money from existing sources. It should be fresh money you will earn from your hard work.
You are only allowed to gain new knowledge, upgrade yourself to earn as much as from it.
The individual who is having regular earning source and not has any dependant person on you can invest 30% to 40% of his earning into FD.
Here is how much you will earn if you reach the Goal.
FD Investment – Avg Interest Rate – Automated Profit
FD of Rs. 3,00,000 – 6% – Rs. 1500 / Month
FD of Rs. 5,00,000 – 6% – Rs. 2500 / Month
FD of Rs. 10,00,000 – 6% – Rs. 5000 / Month
You can invest more as per you earning capability.
The money you will be receiving from the FD as Interest is the net income that you will be adding in your monthly earning. Remember once you start receiving the interest, It will stay the same for long period of time.
You don’t need to do anything to earn that interest. Bank will work hard for your interest return. By doing this you have made your first investment automated.
Some might say the amount that you receive from FD is Taxable and I completely agree to this. But you have many other options to save the Tax by using another investment sources. We will cover this point in the upcoming post.
Also, Do not choose the co-operative or small banks. Their long-term sustainability is doubtful. Always keep your hard earned money in the top banks.
Banks like SBI, ICICI, HDFC, KOTAK are some of the banks recommended.
While working on your FD Goal some might face the challenge to reach the goal in short period of time. The simple solution for this is breaking down the goal in small chunks.
You can begin the investment automation with the small amount of Rs.3000 or Rs.5000. No need to wait for the large investment. Each small step will reduce the distance between your goal and you.
Keep finding the better way to increase your monthly income. Try to see the opportunity that is available near you which will add some extra penny to your pocket.
Ok, so the numbers are looking pretty good for now, right?
Now let’s see the best part of this money automation technique.
Assume you are getting Rs.1500 every month from your FD interest.
You can use this money without having any hesitation to spend.
Buy whatever you want, spend anywhere you want, buy an electronic gadget or go out to eat or watch a movie.
Some might prefer to spend this money in every alternate month. In that case, you will be having the double amount to spend.
I would suggest, don’t bet this interest to buy anything expensive for which you have to convert the buying amount into EMI. I have seen people have a tendency to spend first and pay later. They think they have some backup source to pay the EMI.
Instead of that keep the FD interest in saving account until it reaches the product price. If you really want to bet something for EMI then use your salary for that. It will increase your need for a high salary and you will be motivated to get more.
Use the automated money for leisure and enjoying your daily life. You should be free to use this money on your terms. Avoid creating any liability and generate unwanted burden.
And most important part is, don’t forget to share your smiley pictures on Facebook and Twitter after spending that money.
The money spending becomes fun when you earn from something without doing hard work.
I already started implementing this technique to make my money automated. Let me know your thoughts or any suggestion to make earning money automated in the comment box.
If your share idea is practical then I will implement that on myself and if that works, I will write a post about it to educate others.
We will discuss other money automation technique like Mutual fund, real estate, and share market investment in the upcoming post.
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