The moment young bright minds pass-out from colleges and universities they have a ready bucket list for the first salary and then the second and then the third and then probably for the entire year! They want to experience the joy of independence and what better a way to do so than spending your own hard earned money which smells of your worth in every bit! While flying high in the euphoria one seldom thinks about investment planning. Savings in early 20s is like going on date at 80 – RARE but WONDERFUL 🙂 Exactly so you get my point.
Saving For Contingencies
There are multiple reasons to start saving early, for eg: what if something goes wrong? Death and taxes are the only constants of life, so what if it happens early? An accident, an ailment some disability or some other eventuality? You must have already written me off assuming I am a pessimistic but my beloved, please hear me out. You are single for only a little time; sooner or later there will be a wife and then children and then old and ailing parents or siblings or near and dear ones. Each one will demand time and attention. In some cases you will have to foot the medical bills and in some you will have to fly and spend on emergencies.
More the Merrier
Fear is not the only reason to start saving. Look at the flip side, if you start saving young, you can buy a car early, a house early and travel the world early. If this does not interest you then how about owning all the latest gadgets, and big label clothes, shoes and accessories. Humans and its needs are never ending so therefore saving some money is never a bad choice. Trust me on this one! and for all you know, your creative mind could toast out some interesting business idea and you might just want to start a small business! Hurray! Imagine the luxury of having deep pockets at that time; instead of queuing up outside VC offices you can spend the time in expanding your business idea! Don’t I make sense now?
So here the top 5 things which you must consider for investment:
1. Systematic Investment Plan (SIPs)
It’s the basic investment that all youngsters should opt as soon as they get a job. SIP in Mutual Funds teaches you the importance of savings. SIPs are mutual fund based saving plans in which you can invest on a recurring basis (monthly being the most popular practice). Should you want to right off the inflation or rupee cost effect, there’s nothing better and more convenient option for you than SIPs.
2. Recurring Deposits
RDs are another form of fixed deposit with monthly investment available with all the banks. It is absolutely safe and the risk free rate of return is quite attractive for those who do not want to take risk by investing in Equities or Mutual Funds. In an RD, you can make monthly contribution towards your RD account and earn interest on a pro rata basis. The minimum duration of RDs is six month and maximum duration is 10 years. It’s an ideal way to save money for those who have regular income.
3. Life Insurance Policy
Dozens of LI policies are available in the market which you can buy from. They don’t only safeguard the future of your family members, but also provide you excellent returns on maturity. A life insurance policy is the best way to plan your after-retirement life. You can opt for a smaller sum assured when your earnings are limited and gradually increase it.
Also Read: 5 Easy Steps of Financial Planning
4. Health Insurance
Your body is the most precious asset you have got. However, diseases don’t come invited, which is why you should pick a good health insurance policy. With the increasing cost of health care treatments in today’s time, it’s always good if you have a policy that can pay off your medical bills and keep the financial burden at bay. The earlier you buy a health insurance plan, the better it is for you.
It’s not an investment, but trading will surely prompt you to keep abreast with what’s happening in the market. Open a Demat account for as little as Rs. 500 and start trading. Don’t put excessive money at stake. Trading will develop you into a financially literate person and give you an idea of how things work in the market.
So, choose your favorite investment mode and start preparing for the future. Remember, no one can plan during a storm and escape it, he has to start preparations well-in-advance.
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