Just as you progress from your first job to tying the knot and becoming a new parent to establishing yourself in the professional sphere, make sure your financial growth keeps pace and is as seamless as your own trajectory. Start by understanding your current responsibilities and its related monetary asks, and customise your investment strategy to complement it. This will help you build your net worth, finance future financial requirements with ease or even realise that elusive dream—retiring early!
Here’s a glimpse into the various stages of life and the ideal investment strategies to go with them.
When You Celebrate Singlehood And Watch Your Career Take Off
At an early stage in your career, around the time that you get your first job, you are usually free of financial responsibilities. The earlier you begin saving and investing, the better it is for you. By setting a budget for each month, and not relying on next month’s salary to pay off your credit card bill, you can easily cut down on unnecessary expenses and allocate a good amount of funds towards savings. On reaching a reasonable corpus, allocate part of these funds, towards investing while also maintaining a cash reserve for a financial emergency. Considering the fact that you have a number of employment years ahead of you to gain back on loses, consider investing in high-yielding and risky investments as well as long-term and safe instruments. Consider a mix of stocks and equity mutual funds and start a PPF account as well as a recurring deposit to inculcate the habit of saving.
When You’re Enjoying Married Life And Taking Your Responsibility By The Reigns
As one half of a married couple, you may experience higher responsibilities, be it providing for your household or paying all the bills, especially if your spouse isn’t employed. In such an instance, continue the process of saving and investing as per your monthly income, and after meeting your necessary expenses. You can consider investing your savings in a balanced mix of high-yielding and safe investment instruments. Choose debt mutual funds and a company FD for safety. If you struggle to save a particular amount each month, thanks to romantic getaways with your better half, set up automatic transfers to ensure you’re keeping the future in sight. Additionally, increase your contribution amount in EPF and review your expenses to cut back when you’re overindulging.
When You’re A Proud Parent And Looking To Secure Your Family
If you are planning on becoming a parent or already are one, expenses aren’t a stranger to your bank balance. You may have home loan EMIs to pay and also need to start saving for your child’s education and marriage. Despite growing expenses, it is essential you continue investing with the amount left from your income after meeting important needs. For this, it is important that you outline a budget for yourself considering your present situation. Consider investing in FDs that can be used to fund your child’s education in the future or in child plans too. It is also prudent to grow your cash reserve to fund urgent expenses related to healthcare. With an increased number of dependents, investing in high-risk instruments may not be an option anymore. However, you can choose to invest in debt and equity to gain from returns higher than a bank FD or a savings account. If you are unable to make a lump sum payment, choose to invest in SIPs, which ease the strain on your pocket. Additionally, invest in a comprehensive life insurance policy to protect your family in case of unforeseen circumstances and consider a pension plan to fund your retirement.
When You’re Enjoying Your Retirement And Pursuing Hobbies
The golden years of your life can be the most enjoyable if you have been religiously saving and investing. However, they also mark the end of your employment years. This means you will need to spend cautiously without exhausting your savings. If you can manage to invest with your savings, consider options like Senior Citizen FDs and Senior Citizen Savings Schemes. Now, it is also essential for you to factor in the liquidity of any investment instrument you are choosing as you will not have an alternate source of funds in case of financial emergencies. Additionally, refrain from availing credit or spending your pension funds on your child’s education or marriage, as they may still have time and years left to earn, but you don’t.
Keep these tips in mind to ensure that regardless of the stage of your life you’re at, financial worries are not on your radar. Don’t shy away from opting for professional advice to manage your resources and allocate them in a diversified portfolio for best results.
The writer is CEO, BankBazaar.
BankBazaar.com is a leading online marketplace in India that helps consumers compare and apply for credit card, personal loan, home loan, car loan, and insurance.