4 ways and more to start on a methodical savings plan!

Do you have money put away for a rainy day? How will you manage if there's a family emergency? What about a down payment for a home, or a fund for higher education, or retirement? Do you have loans to repay?

In this era of recession, deflation, and job cuts, it is especially important for you to consider where your hard-earned money is going; financial security is the key in today's unpredictable world. And the first step towards gaining that security is to have a Saving Plan.

Still not convinced? Then ask yourself why you need to save. The answer's really very simple: so that your money can start earning money, and work towards reducing the effort you put in everyday.

START SAVING NOW: HERE'S HOW!

a) You might wonder how to begin saving if your income is already over-committed. Efficiency and discipline are the answers.

b) You need to first find out where your income is going. Maintain a diary for the month, noting down everything you spend on, to the last paisa. You will be
surprised at the amount of random purchases you make - from coffee breaks to grocery bills. These are the best places to start trimming.

c) Then, make a budget. This isn't as difficult as you think. All a budget does is create a plan for spending, by stating expenses and goals. Make sure to cover fixed and regular expenses such as mortgage or rent, utility payments, and car or loan/credit card payments. Then set limits on necessities like groceries and clothing, as well as nice-to-haves like entertainment and travel. It's also important at this stage to factor in a savings amount.

d) Now, your first priority is an emergency fund, if you don't already have one in place. And the easiest way to do this is to have the amount deducted from your salary every month and put into a Fixed or Recurring Deposit. Give yourself a pat on the back if you find yourself adding that little extra to your fund because you managed to save a little more this month. You might find it easier to stay within budget if you use cash or debit cards for the necessities and frills.

e) As your emergency fund accumulates, your next task is to find more money for savings and even investment. Begin by paying off your credit cards. If you spend a little time examining your monthly statements, you will be amazed to see how much money you're losing just by way of interest!

SAVING Vs. INVESTING

At this point, we need to address the differences between saving and investing.

Savings provide for emergencies and fund specific purchases in the near future (within two years). The primary goal is to store funds and keep them safe. However, you invest to increase net worth and work toward long-term goals. Also realise that investing involves risk, where you could lose some of your original investment. Only consider an investment plan when you have in place an emergency fund, insurance, control over credit use, and a retirement plan.

IN THE LONG RUN

Now, consider making a long-range savings and investment plan. When beginning to plan for investments, consider your goals, the amount of time you will be able to spend on nurturing these investments, how much you know about the funds, how much money you have to invest, whether you can tolerate risk, and handle loss. Remember that your ultimate goal is a financially secure future for you and your family.

If you look back over all that we've discussed so far, you will realise that we've told you how to begin saving money, in small, manageable chunks. The final objective might be to set aside enough for you to retire so that you don't have to work another day, but your immediate goal is to start the process and become habituated, so that saving becomes a way of life, and a chance to improve how you live....

India, China corporate sentiment falls in Q2: poll

WELLINGTON/BANGKOK (Reuters) - Business sentiment at Asia's top companies fell in the second quarter, hitting its lowest since the third quarter of 2010 as rising costs and growing doubts over the strength of the global economy weighed, a Reuters survey showed.

The Reuters Asia Corporate Sentiment Index fell to 71 from 80 in the first quarter of 2011, which was the highest level since Reuters began collecting data in June 2009. An index above 50 indicates a positive outlook.

The index was compiled between June 2-10 from a poll of 100 executives at Asia's top companies from a range of sectors including autos, financial, technology, resources and property.

Responses from Japan showed overall sentiment neutral. But many firms were wary over the lingering impact of March's earthquake, tsunami and subsequent nuclear crisis, with factors such as political instability, delays to reconstruction and power shortages cited as reasons for concern.

Global economic uncertainty was named as the biggest risk to the business outlook across Asia, followed by rising costs, including oil prices.

China and India remained the most optimistic countries in the Asia-Pacific region, however sentiment eased slightly in both countries.

The resources sector was the most upbeat on the back of high commodity prices, while sentiment was also positive in the financial and retail sectors, but weaker in the technology sector....

RBI may be near end of tightening cycle

MUMBAI (Reuters) - India's economy is beginning to show signs of slowing despite inflation that is racing well above the Reserve Bank of India's (RBI) comfort zone, putting policymakers in a tight spot over the extent of further interest rate increases.

Economists and traders expect another 50-75 basis points in rate hikes before the RBI pauses in its tightening cycle late this year.

Tuesday's wholesale price index inflation reading of 9.06 percent for May, well above expectations, adds to the likelihood that the RBI will raise rates at its mid-quarter review on Thursday.

The path afterwards is less clear as other indicators point to a weakening near-term outlook for the domestic economy and worsening global conditions, though strong monsoon rains could boost agricultural output and ease pressure on food prices.

Trends in industrial production, exports, imports and credit growth suggest the central bank must assess carefully the impact of its actions so far before tightening further.

FACTORY OUTPUT, EXPORTS, IMPORTS SUGGEST COOLING

* For graphic, click http://link.reuters.com/des99r

Weaker growth in industrial output, exports and import demand suggest Asia's third-largest economy is cooling.

Industrial output rose in April at its slowest annual pace in 3 months at just 6.3 percent, down from an 8.8 percent rise in March and far below the double-digit growth seen last year.

India's exports and imports are also beginning to slow, and worsening conditions in the United States and Europe could hurt orders in coming months, weighing on domestic growth.

CAR SALES EASE; INFLATION, BORROWING COSTS WEIGH

* For graphic, click http://link.reuters.com/xas99r

Passenger car sales growth has started to drop, suggesting high inflation and rising borrowing costs are beginning to hurt the consumer durables segment, potentially threatening the broader economy.

RISING BORROWING COSTS CRIMP BANK CREDIT

*For graphic, click http://link.reuters.com/xas99r

Rising interest rates are deterring consumers and companies from borrowing, slowing credit expansion in the economy.

A sustained contraction of bank credit could hinder growth, though bank credit continues to stay above the central bank's projection of 19 percent for the current fiscal year.

OIS CURVE INVERTS; SUGGESTS POSSIBLE SLOWDOWN

*For graphic, click http://link.reuters.com/zas99r

The inversion of the yield curve tends to be followed by a slowdown in the economy. India's OIS curve inverted for the first time in late May and the spread between the 1-year and 5-year rate is currently around -20 basis points, its highest in more than two and half years.

BANKS NET CASH IN DEFICIT; INFLATION STILL HIGH

*For graphic, click http://link.reuters.com/ces99r

Tight cash conditions have done little to help contain inflation. The daily net liquidity position of the banking system has been consistently above the central bank's comfort zone of plus/minus 1 percent of deposits, or 500 billion rupees ($11.2 billion).

($1 = 44.8 Rupees)...

Inflation accelerates, RBI rate hike seen

NEW DELHI (Reuters) - Inflation accelerated faster than expected in May, with higher manufacturing prices offsetting slower growth in fuel and food costs and adding pressure on the RBI to lift interest rates this week despite signs of economic slowdown.

The wholesale price index, India's main inflation gauge, rose an annual 9.06 percent in May, above the median forecast for an 8.70 percent rise in a Reuters poll and the April figure of 8.66 percent.

"The big surprise is mainly because of the sharp increase in manufacturing prices which implies that core inflation is picking up. This cements the case for a 25 basis points rate hike on Thursday," said Nomura economist Sonal Varma.

Headline inflation for March was revised up to 9.68 percent from an earlier reported 9.04 percent, continuing a recent trend of sharp upward revisions.

Annual manufacturing inflation in May was 7.27 percent, up from 6.18 percent in April, while annual fuel price inflation eased to 12.32 percent from 13.32 percent in April despite an increase in domestic gasoline prices in mid-May.

Sluggish investment, which was essentially flat in the March quarter on rising rates and slow government approvals of big projects after growing an annual 7.8 percent in the previous three months, has exacerbated tight industrial capacity.

Consumer demand, meanwhile, eased more slowly, growing at 8 percent in the March quarter from 8.6 percent on an annual basis in the previous quarter.

Fuel inflation has remained elevated as global hovers around $120 per barrel, which may prompt New Delhi to raise prices of diesel, cooking gas and kerosene, which would be politically unpopular in a country where nagging inflation has prompted protests and put the ruling Congress party on the defensive.

"The number is much higher than expected and a breach of the 9 percent mark without a diesel price revision and in a month when global commodity prices were softer highlights the underlying inflationary pressure in the economy," said Anubhuti Sahay, Economist with Standard Chartered Bank.

The benchmark 7.80 percent 2021 bond yield immediately rose 3 basis points to 8.33 percent after higher than expected inflation data.

The 5-year overnight indexed swap rate rose 4 basis points to 7.80 percent and the 1-year was 6 basis points higher at 8.02 percent after the data, dealers said.

The BSE Sensex trimmed gains to 0.22 percent from 0.4 percent before hand.

RATE HIKE SEEN

Despite most indicators showing signs of slowing growth, including worse-than-expected GDP growth of 7.8 percent in the March quarter, the Reserve Bank of India is expected to lift policy rates by 25 basis points on Thursday in what would be its tenth rate increase since March 2010.

"I think the RBI will probably look at the inflation issue more seriously," C. Rangarajan, the chairman of the Prime Minister's Economic Advisory Council, said on Tuesday.

However, weakening conditions globally and in Asia's third-largest economy may temper the RBI's recently hawkish policy stance in coming months.

On Tuesday, China reported consumer price inflation of 5.5 percent for May, its highest in nearly three years, and raised reserve requirements for banks in an effort to tame prices.

SIGNS OF SLOWDOWN

Recent indicators point to slowing growth in India.

The index of industrial output for April grew 6.3 percent, the slowest in 3 months with growth in the capital goods sector slowing to just over 14 percent in April.

Car sales rose 7 percent in May, the slowest in two years, and analysts expect a further decline as higher fuel prices, interest rates and vehicle costs crimp demand in the world's second-fastest growing vehicle market.

Credit growth has remained almost flat in the current financial year that started in April, with banks' loans growing only 0.3 percent since March end.

Policymakers have scaled back growth projections for the current fiscal year from 9 percent earlier to around 8.5 percent, with many private forecasts predicting growth below 8 percent as rising rates and sluggish investment take a toll.

RBI Governor Duvvuri Subbarao said early last month that some near-term growth should be sacrificed to tame high inflation, although global and domestic conditions have deteriorated since then.

Government officials have expressed concern that slowing growth will make it hard for India to meet its revenue targets for the year, which will in turn add make it harder to meet its goal of trimming the fiscal deficit....