You have attained the 30 year milestone. You are now 30 years old. You feel that you have achieved a lot in life.
Yes….a lot of money goes on financing your costly lifestyle. But you are paying back, your home loan EMIs in time. Your children’s school bills are paid….
So what are you doing wrong?
You choose to invest in any tax saving instrument because its tax time. You don’t care if the tax saving instrument, is compatible to your financial goals. You invest your money in ELSS (Equity Linked Saving Schemes), without a care to find out what it is. Yes, ELSS is a very good tax saving instrument. But it’s not for everyone. ELSS has more than 80% invested in equity. This means high returns at high risk.
If you are an investor who is risk averse (Does not like to take risks), you must invest in safe financial instruments to save tax. You can invest in PPF and the 5 year tax saving FD, to save tax.
Remember: Invest in tax saving instruments which are compatible to your needs.
You buy life insurance. Job Done… Not quite…You need to buy sufficient life insurance, so that your family can lead the same lifestyle they currently lead, even in your absence. If you have loans to repay, make sure that your life insurance plan covers it. In your absence your family would not be in any difficulty.
The cheapest among all life insurance plans is the term life insurance plan. It’s pure risk cover. It provides maximum coverage for a minimum premium. If you survive the term of the plan, you get nothing,
If you (policyholder) die within the term of the plan, your family gets money (sum assured), depending on the premium you pay.
Married or not, this in one insurance plan, you cannot miss. If you are married, make sure to avail a family floater health plan. This plan covers your and family’s medical expenses in a medical emergency. Technology has advanced Medicare, but increased its costs. A medical emergency can blow away your savings.
If you are 30 and married, most of your money goes on family expenses. So what do you do?
You earn…You spend… If something remains you save or invest.
What you need to do
You earn…You save or invest….then you spend.
If you are unmarried you can invest in so called risky instruments, like equity mutual funds and stocks.
Did you avail a personal loan to go on a foreign holiday? To buy a costly laptop which you didn’t really need?
This is a serious mistake. Personal loan is unsecured (you don’t need to give any collateral). Banks charge you a high rate of interest for a personal loan. You could struggle with repayments.
Keep credit card debt to a bare minimum. Use your credit cards, only for an emergency. Try availing a home loan, which is considered a good loan. Its helps you buy a home …a roof over your head…. You can also earn rental income from your home.
So enjoy your 30 year milestone, but pay heed to this advice.
Under : Financial Planning