If you take these investment decisions early in life,they could transform your financial future.
They told you in school that the early bird got the worm.In college,the sermon was,well begun is half done.
Our message is simple: the investment decisions you make in the first 5-6 years of your career have the potential to transform your financial future.We list out eight smart money moves that investors should make before they turn 30.There are obvious advantages of starting early.
Most of us know that the longer we stay invested,the greater is the power of compounding.So,if you save `5,000 a month in an option that earns 10% annually,your corpus at the end of 30 years would be a massive `1.08 crore.Your principal investment of `18 lakh grows six times.Now,here is the surprise.What you save in the first five years accounts for `48 lakh (over 44%) of the corpus.The `60,000 you put away in the first year alone grows to `10.4 lakh,or 9.6% of the total amount.Miss these wonder years of compounding and your corpus would be much smaller at `60 lakh.
Cover story is intended as a wake-up call for Gen Y.
1 TAKE A TERM INSURANCE POLICY
BUYING A TERM plan tops the list of smart money moves.
2 TAKE ADEQUATE HEALTH INSURANCE
HEALTH INSURANCE is also cheap when you are young and costlier when you are old.
A basic indemnity plan,which reimburses hospitalisation expenses,should be your first health insurance policy.
3 OPEN A PPF ACCOUNT FOR RETIREMENT SAVINGS
The investment gets you tax deduction under Section 80C.The interest it earns every year is tax-free,and so are the withdrawals.It has a 15-year lock-in period,which makes it an ideal tool for long-term goals such as retirement.You can invest a maximum `1 lakh in a financial fina year.There is also a minimum investment of at least `500 in a year.
4 AUTOMATE INVESTMENTS AND GO ONLINE
ONE OF the most common excuses for not investing is,I dont have the time. Days become weeks and weeks turn into months.Get past this stumbling block by automating your investments.For instance,you could start an SIP in a mutual fund and give an ECS mandate to your bank.On a designated day of the month,the money will be invested automatically.
Saving time and effort is just one of the many benefits of automating your investments.It also takes emotions out of investing and enforces a discipline an investor may lack.If the money has been earmarked for investment and is debited from your account,you will not use it for any other purpose.We recommend that investors opt for SIPs at the start of the month.
5 MONITOR FINANCES WITH AN EXPENSE TRACKER
Expense trackers help you plug leaks in your budget.
Gen Y is focusing on EMIs,but ignoring their SIPs.
6 SET UP A CONTINGENCY FUND
ITS ALWAYS good to be prepared for an emergency.This is why financial planners insist that you stash away some money that can be accessed at short notice.The contingency fund will come in handy if you are faced with unforeseen expenses,such as a medical emergency or losing your job.The size of this fund depends on your financial situation.Ordinarily,financial planners suggest that their clients put away at least 3-6 months living expenses for this purpose.
7 START SAVING FOR GOALS IN ADVANCE
8
SEEK HELP OF EXPERTS
CAN YOU trust your financial adviser It is very important to have a trustworthy source of objective advice.So,get a professional to make a financial plan for you.Objective financial advice is not free,but works out cheaper than the free advice doled out by bank executives and so-called wealth managers of brokerage houses.
They told you in school that the early bird got the worm.In college,the sermon was,well begun is half done.
Our message is simple: the investment decisions you make in the first 5-6 years of your career have the potential to transform your financial future.We list out eight smart money moves that investors should make before they turn 30.There are obvious advantages of starting early.
Most of us know that the longer we stay invested,the greater is the power of compounding.So,if you save `5,000 a month in an option that earns 10% annually,your corpus at the end of 30 years would be a massive `1.08 crore.Your principal investment of `18 lakh grows six times.Now,here is the surprise.What you save in the first five years accounts for `48 lakh (over 44%) of the corpus.The `60,000 you put away in the first year alone grows to `10.4 lakh,or 9.6% of the total amount.Miss these wonder years of compounding and your corpus would be much smaller at `60 lakh.
Cover story is intended as a wake-up call for Gen Y.
1 TAKE A TERM INSURANCE POLICY
BUYING A TERM plan tops the list of smart money moves.
2 TAKE ADEQUATE HEALTH INSURANCE
HEALTH INSURANCE is also cheap when you are young and costlier when you are old.
A basic indemnity plan,which reimburses hospitalisation expenses,should be your first health insurance policy.
3 OPEN A PPF ACCOUNT FOR RETIREMENT SAVINGS
The investment gets you tax deduction under Section 80C.The interest it earns every year is tax-free,and so are the withdrawals.It has a 15-year lock-in period,which makes it an ideal tool for long-term goals such as retirement.You can invest a maximum `1 lakh in a financial fina year.There is also a minimum investment of at least `500 in a year.
4 AUTOMATE INVESTMENTS AND GO ONLINE
ONE OF the most common excuses for not investing is,I dont have the time. Days become weeks and weeks turn into months.Get past this stumbling block by automating your investments.For instance,you could start an SIP in a mutual fund and give an ECS mandate to your bank.On a designated day of the month,the money will be invested automatically.
Saving time and effort is just one of the many benefits of automating your investments.It also takes emotions out of investing and enforces a discipline an investor may lack.If the money has been earmarked for investment and is debited from your account,you will not use it for any other purpose.We recommend that investors opt for SIPs at the start of the month.
5 MONITOR FINANCES WITH AN EXPENSE TRACKER
Expense trackers help you plug leaks in your budget.
Gen Y is focusing on EMIs,but ignoring their SIPs.
6 SET UP A CONTINGENCY FUND
ITS ALWAYS good to be prepared for an emergency.This is why financial planners insist that you stash away some money that can be accessed at short notice.The contingency fund will come in handy if you are faced with unforeseen expenses,such as a medical emergency or losing your job.The size of this fund depends on your financial situation.Ordinarily,financial planners suggest that their clients put away at least 3-6 months living expenses for this purpose.
7 START SAVING FOR GOALS IN ADVANCE
8
SEEK HELP OF EXPERTS
CAN YOU trust your financial adviser It is very important to have a trustworthy source of objective advice.So,get a professional to make a financial plan for you.Objective financial advice is not free,but works out cheaper than the free advice doled out by bank executives and so-called wealth managers of brokerage houses.
These are the easiest way through which young people can secure their future.It is right that money is must needed commodity so plan well to get the future benefits.
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William Martin
PPI Claims Made Simple