Hello Guys, I remember the day i got a job and started earning my own money. I was 25 years old and just got a couple of thousands in my bank account. Today this post is dedicated to all those beginners who wants to know that investment or planning to do with the first earning of yours.
0. PLANNING YOUR EXPENSE.
Yes, I have started the point from zero, because investment journey or savings journey should start with planning at first. So, first thing you have to calculate is what your need and wants are. What you urgently need is your “NEED” and what you want to have is what you “WANT”. So, first draw a line between the two. Then cut out the amount which you want to save or invest for your family and future.
- SECURING YOUR FAMILY’S FUTURE.
FIRST step in saving/investment is keeping your family’s future safe. You can do this by purchasing a good term plan for yourself. This is essential if your family’s future is fully dependent on your life. Look into monthly term insurance plan that you can afford to give regularly without having to compromise your needs. It is better to cover your family with 10 times your annual income. This ensures that in case of any unexpected situation, they can hold themselves up after you are gone. It sounds painful but it is very much practical thinking and this has worked for many.
2. COVERING YOUR FAMILY’S HEALTH EXPENSES.
We live in a society where every family has 2 or 3 elderly people prone to health issues. Your monthly income is unable to handle these expenses for long. So, here comes the need to buy a health insurance plan to cater you and your family’s regular medical expenses. For newly wedded couples with just an elderly father and mother, you can adjust with plans which can cover two people. Assume 5 lakhs each for the elderly ones as young couples are less prone to hospitalization. But if you have more than two elderly persons, you must go for individual plans. Alternatively, consider plans that can cover couples. In this way, you can save extra premium and bifurcate medical insurance based on young and elderly ones.
3.SAVING MONTHLY IN FIXED INCOME INSTURMENTS.
We all know how our father did savings in their times. They would first buy life insurance. Then any extra money would go to recurring deposits. When these RD got matured, they were again put into Fixed Deposits for longer duration. When these Fixed Deposits matured, they were renewed again and again till eternity. But now our young generation has little patience to do so. The reason is the affordability of investment into riskier options with higher returns. Fixed Deposit and Recurring deposit are still the best savings choice for beginners. They will not only create your habit of saving but also keep you motivated to learn new investment ideas. These ideas can help you invest your growing savings. Now a days, banks offer Recurring Deposits with Flexi payment options. This way you can invest amounts as per your potential. It is highly recommended you start your savings with one Recurring Deposit. When it gets matured, convert them into Fixed Deposits. Keep doing this. Continue until you achieve a sense of security that is enough for you to survive any job cut. This includes recessions or epidemics in the future.
4. INVESTING IN EQUITY MARKET.
Assuming that you have mastered you way into making a corpus of savings that would save you from any recession or any mishap that would come into your way of easy life. Now, you should try to dive into equity investments starting from mutual funds preferably ELSS tax saving ones which would again help you in guiding a regular investment as these ELSS investment would be locked for 3 years tenure. If your regularly invest certain amount in SIP ( Systematic Investment Plan ) in ELSS fund you can certainly see your investment growing at the pace your equity market if growing and would build you a corpus which is eventually beat inflation. Another form of equity investmnent can be done by acquiring stock in your demat accounts but it is not recommended if you are not from a finance background or don’t have a good understanding on financials of Companies you are looking to invest. For Stock market I would recommend research and invest as per your risk appetite.
5. INVESTING IN LAND AND GOLD.
If i were born in 70’s and i were about to write this post then this portion would be written in point 1. But the scenario has changed since then and this has become a less sought investment option in youngsters because of less liquidity in both these options. Land has become dearer and gold has become a burden for storage and handling. Still if someone is interested in Gold as an investment then they must go for digital gold as it has good liquidity and gives more or less the taste of actual gold. On the other hand, investing in Land is somewhat riskier due to frauds and lack of property documentation and streamlining in this segment. If one is sure and has good amount of expertise in land and its dealings, these type of investment can make you rich in less time provided you consider the location and importance of the land in coming future.
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