3 Investment BucketsYou can divide your options into three categories according to your financial goals.
- For Short Term Goals and Emergency Savings – This is the category that is almost liquid and has near cash investments. It is advisable to have savings of up to 3 months of you salary if you are single and up to 4-6 months if you have a family. After you have saved the minimum, equivalent to 3 months’ salary, you can now start saving for short term goals, such as annual vacations, electronics and more. Given that the main purpose of this bucket is saving for an emergency, you need options that are high on liquidity. Therefore, they might not offer high returns. All the funds in such an investment vehicle must be accessible within 24 to 36 hours. Apart from opening a savings account solely for this purpose, you can also invest in national bonds. One can buy national bonds online or even from banks. The minimum investment is AED 100 and the bonds can be bought in multiples of 100. The holding period for such bonds is 3 months and they can be redeemed across the counter through money exchanges. You can also opt for E-saver accounts that offer higher interest rates than normal savings accounts.
- For Short to Medium Term Goals – This option will help to achieve short to medium term goals and will also help to save enough for the down payment of a car, home, land, settling a mortgage and more. You can allocate 10 to 20 percent of your monthly disposable income in this bucket. Some of the options in this category are gold coins and trading in stocks. NRIs can invest in the Indian stock markets as well as NRE/NRO fixed deposit accounts. You can also invest in Sukuks offered by various companies and banks.
- For Long-term Goals – This option focuses on saving for retirement, children’s education and marriage, and much more. Here, you can invest in an education savings plan, life insurance plans, such as whole life, ULIPs or plans with annuity benefits. You can also opt for Islamic funds.