Unlike in the case of Government jobs where pension is available to the employees at the time of retirement, people working in private companies do not have such benefits unless they plan for it on their own. With today’s scenario being where most people have some form of debt eating away at their salary not many can save money should these people first pay off their debt and then start saving or try to save simultaneously.

Pay off vs simultaneously investing and paying debt

To answer this question, we need to look at 2 sets of people

1.       People with too much debt and living from paycheck to paycheck

Debt has become a part and parcel of life and with the cost of commodities and the need of people increasing dramatically. Taking a personal loan to go on a vacation or for marriage, home loans to purchase a house, car loans and even the monthly credit card bill/s has become a part of the monthly expense. Most people do not have enough money to save and are living from pay check to pay check.

Such people will not have enough money each month to save or get into savings schemes such as PPF, SIP etc. it is best for such people to first pay of their debt before starting to save as the debt is already straining them financially and trying to save money for retirement will make it very difficult for them each month. They need to pay off the debt as soon as possible to start saving.

2.       Who have minimum debt and have enough disposable income to start saving

When you have very less debt or have no debt at all it is best to start saving very early. For example, if you want to make Rs.1 crore when you retire you need to have spend Rs.2000 each month starting at the age of 25 with an interest of 12%. On the other hand, if you start at the age of 45 you will have to dish out Rs.21000 each month to get to the same Rs.1 crore at the time of retirement. This is the reason why it is best to start saving early as the compounded value at the time of maturity will be high.

Some of the options for investing include

a)      Public Provident Fund (PPF)

A PPF is a great way to start investing as the money invested is tax free under section 80c, the interest income is also tax free and the money obtained at the time of maturity is also tax free. The interest rate right now is 7.6% and no other investment option provides all these features except for EPF.

b)      Systematic Investment Plan (SIP)

Investing in SIP is a good way to have a disciplined investment where the market risk can be negated and invest for a longer period. The returns gained is high and the investment is diversified. One thing to keep in mind though is the how you want to spread the portfolio.


Investing for the future at a very early age is a very good thing but if your finances are already stretched due to debt then it is best to first pay off the debt and then go for saving. One needs to remember the problem of inflation where the money in hand today will not have the same value 15 years later.