Accumulate Capital

Whilst planning for retirement and children’s education form a major crux of financial planning one could have other future capital investment needs like buying a second home, planning for a child’s marriage, having your own business or simply maximizing one’s net worth. Most people tend to tackle these other needs by depositing money in the bank and occasionally doing something with the accumulated capital. This is not the most efficient way of utilizing disposable income as money lying in the bank is subject to interest rate fluctuations and inflation and hence does not achieve the goal. While it is imperative to have at least three months salary in the bank for liquidity requirements – anything in excess of that could be better utilized.

Therefore PMI recommends directing a part of this excess income into a structured savings vehicle on a regular basis.