You are a practicing doctor, Architect, lawyer,…… You had Rs. X lakhs cash in your hand. Can you deposit it in your account?

Does not matter…all questions have only one answer.

Ask your CA.

There is nothing else to do now. I know that many people think cash means black and bank balance means white. Wrong. Completely wrong.

I have cash at home – a lot of money by middle class standards – about Rs. 1.5L. What can I do?

Simple deposit into the account. This included money held by my mother (she feels safe holding cash), money held for a medical emergency (closed an account and the bank gave me 89k cash), I had withdrawn 2ok for expenses – I pay for taxi, grocery, etc. by cash, not always by Ola Money or Paytm,….so it is simple I can just put it ¬†back into the account – after all they came through the atm, and can go back to the atm.

What about professionals who have a lot of cash transactions? well they should ask their CA and then decide. Find out last year’s closing balance, see your monthly cash earnings, see your monthly cash expenses…see the gap. Is that all that is lying with you? then good? a little more wait? No. There is no queue for depositing money in the bank. Go and deposit.

Let us say you are a professional with an annual income of Rs.25L p.a. Now suddenly 9L got added to your kitty.

WHAT SHOULD YOU DO? 

Let us say you have deposited 3X in the bank. For a minute let us assume that you had kept this in cash for meeting some cash expenses. Obviously, you will withdraw it. For example I wish to keep about 1.5L in 3 locations to meet medical expenses. So for me it is just change of notes..from 1k and Rs. 500 to new 2k and new Rs. 500. DO I REALLY NEED THIS? MY answer is yes. A couple of days ago i struggled in a Kirana shop with a credit card..and then paid with a debit card – and I had 2 debit cards and one credit card. IAM NOT SURE what will work and what will not. Cash is king, and I will keep that kinda cash within reach – at home or I know a friend who will give me cash at 2am without asking why. Sorry Namo, in the hospitals of this country, cash works. Cards work, but sometimes it may not.

If it is cash kept for expenses, you will have to issue bearer cheques or a/c payee cheques for all the expenses, and all the 3x will be over.

What if it was money just over and above your needs? Simple put it in a LIQUID MUTUAL FUND – your bank pays you pathetic rate of interest. Yes it is convenient to keep it in the bank, but not profitable at all.

Once you put it in the liquid fund – GROWTH OPTION – it starts earning money. Let it grow. When you need it, you will be able to withdraw it in 2/3 days. It is important for that money to earn more than just 4% that your savings bank will pay you. Or zero percent if your money is in the current account.

After a few days decide – do you want to spend it? use it to repay home loan? use it to repay car loans, or equipment loans if you are a doctor…

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  1. Hi, very informative article.
    I am a prospective investor and was looking for profitable options to invest. I wanted your views about Peer to peer lending and is it a viable option to invest?

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