SMART INVESTING TIPS BEFORE TURNING 30

SMART INVESTING TIPS BEFORE TURNING 30

1. TAKE A TERM INSURANCE POLICY

·         Buying a term plan tops the list of smart money moves.

·         The earlier you buy life insurance, the lower is the premium.

·         It is best to lock in at a young age when you are hale and hearty.

·         While you pay the same price, your insurance term will be lesser.

·         More importantly, a person who buys late is taking a big risk till he gets protection.

·         If he develops a medical condition later in life, he may have to shell out a significantly higher premium.

·         If the problem is severe, he may be denied the cover altogether.

Keep in mind

·         Buy a cover big enough to generate a monthly income for your family, cover major expenses, and settle outstanding loans, when you are not around.

·         The policy should cover you at least till the age of 60 or 65.

·         Don’t take a short-term cover of 10-15 years, which ends when you are still in your 40s.

·         You need insurance most at this stage of life and a fresh policy will cost you a bomb.

·         Don’t try to lower the premium by hiding your lifestyle habits or medical condition in the form.

·         It may increase the premium marginally, but your nominee’s claim won’t be rejected after your demise.

2.TAKE ADEQUATE HEALTH INSURANCE

·         Health insurance is also cheap when you are young and costlier when you are old.

·         Moreover, you will be saved from the rule about pre-existing diseases and 3-4 year waiting period.

·         Delay in buying the policy may land you with medical conditions that crop up in late 30s and 40s.

·         A basic indemnity plan, which reimburses hospitalisation expenses, should be your first policy.

·         The cover can be enhanced by taking riders or policies to cover critical illnesses and surgical procedures.

·         However, these should be seen as additions to, and not replacements for, the basic indemnity plan.

Keep in mind

·         Don’t depend only on your employer’s group health plan as they do not provide adequate coverage.

·         Besides, if you lose your job or switch jobs, you may be rendered uninsured for a certain period.

·         Self-employed professionals also need to insure themselves against loss of income due to hospitalisation.

·         They can supplement the base cover with a fixed benefit policy, which pays them a certain amount for the period that they are out of action.

3. AUTOMATE INVESTMENTS AND GO ONLINE

·         Get past the paucity of time, as being an excuse for not investing, by automating your investments.

·         Start a monthly Systematic Investment Plan in your mutual funds and give an auto mandate to your bank.

·         It also takes emotions out of investing and enforces a savings discipline an investor may lack.

·         Investors should opt for SIPs at the start of the month, as it induces financial discipline.

·         Another smart move is to sign up with 4-5 mutual fund houses for the online investment facility.

Keep in mind

·         You might have to visit the branch office once for submitting the application form, along with other documents, but the one-time effort will make fund investing easy forever.

4. MONITOR FINANCES WITH AN EXPENSE TRACKER

·         Sign up with a monetary management portal to plug discretionary spending leaks which could impinge on other, more crucial, long-term goals.

·         These websites aggregate all your finances, from savings bank accounts and credit cards to loan payments and mutual fund Systematic Investment Plans.

Keep in mind

·         They also help in alerting you when a payment is due or when you have overspent under a certain head.

5. SET UP A CONTINGENCY FUND

·         It’s always good to be prepared for an emergency by keeping some money for accessing at short notice..

·         The contingency fund will come in handy for unforeseen expenses like a medical emergency or job loss.

·         Its size depends on your financial situation, and should ordinarily be at least 3-6 months’ living expenses.

·         However, if your job is secure and you have enough savings, it could be even 1-2 months’ expenses.

·         The money need not idle in a savings bank account, and could be in a liquid fund or a short-term debt fund.

·         There are also flexi deposit accounts in banks, where any sum above a specified limit flows into a fixed deposit to earn higher interest, while remaining available to you whenever you need it.

Keep in mind

·         Check if the debt fund levies an exit load when the money is withdrawn within 6-12 months.

6. START SAVING AND INVESTING FOR GOALS IN ADVANCE

·         The earlier you start, the more the time available for your investments to grow.

Keep in mind

·         While saving for your various goals, ensure that an adequate term insurance plan is in place.

7. SEEK HELP OF EXPERTS

·         Get a trustworthy professional to make a financial plan for you.

·         Objective financial advice isn’t free, but works out cheaper than the ‘free’ advice doled out by bank executives and so-called wealth managers of brokerage houses.

·         A financial advisor will try to understand your needs and evolve a strategy to achieve the goals after assessing your risk appetite and saving potential, by taking some days, or even weeks.

Keep in mind

·         Stay clear of salesmen who are out to sell you anything that will earn them an attractive commission.

·         Instead, a better option is to go through reputed financial newspapers for unbiased advice aimed to empower readers and let them take their own decisions.