Young, daring, energetic and in your 20s with loads of dreams for the future, travels to undertake and not many responsibilities…great! This is the right age to start investing. While starting with INR 20,000 may be difficult at the start of your career, you must make sure to invest 25% of your salary in good plans.
Here’s what we suggest – Time is on your side. Go for a Systematic Investment Plan and invest in some equity based funds. While the risk profile of such mutual funds is more, considering you are going to stay invested for over 10 years, you do stand to only gain from the market.
However, do not make the folly of locking up all your savings. Invest 20% through SIP and the remaining 5% must be used to first build an emergency fund equal to 3 months salary and then towards your life and health insurance.
As you hit the 30s, your income definitely increases but so do your responsibilities. It means you need to change your investment strategy from the younger years as your life goals have also changed. Here’s how to invest INR 20,000 in your 30s:
- A – INR 5000 a month through SIP for your kids’ higher education (10 year horizon)
- B – INR 3000 a month in equity for your retirement corpus (over 25 years horizon)
- C – INR 3000 a month in a debt fund for buying a new car (3 year horizon)
- D – INR 3000 a month in PPF for safe and assured returns.
- E – INR 3000 a month to be kept liquid as emergency fund.
- F – INR 3000 a month for life, health and accidental cover for yourself and your family.
Now that your children have grown and you are probably at the peak of your career, it is time to reap the benefits of your past investments. However, that does not mean you stop investing. This is your last chance at building that retirement corpus to take care of your golden days.
Change your approach from the 30s slightly by moving towards funds that are less invested in equity and more in debt funds. Instead of your child’s education, you may have to start investing for their marriage now. But do not compromise on building your retirement corpus, a larger chunk of your savings must go in that sector now.
This is the time to turn conservative as most of your responsibilities have been met and you are nearing retirement to enjoy your beautiful days with your spouse. Start moving your investment progressively towards debt funds as 50s is the age when your risk appetite generally goes down. However, if you are the daring types, there is no harm in investing a small portion in equity and letting your money grow even when you have stopped earning.
Financial planning is crucial to meet your life goals successfully. Dr. Celso at NaveMarg can guide you on your financial journey. Book an appointment now to get started early!