Long-term investments need proper planning.
Long-term investments need proper planning. However, it’s not a one-time process, and you need to reassess your investments occasionally as needs and preferences change with age.
Following are some of the tips that you may observe to manage your investments as per your age slabs:
In your 20s
Invest in yourself: Health is wealth. Instead of wasting money by visiting pubs, join a gym, eat healthily, and teach a healthy lifestyle to avoid diseases.
Develop saving habits: It’s always better to start saving early so that you may begin investing for your future needs. If you follow a healthy lifestyle, your wasteful expenses will get automatically reduced, and you will save more.
Emergency fund: Once you start earning, your financial obligations also begin. So, you should build an emergency fund to fulfill your financial commitments even if there is a disruption in your earnings.
Invest aggressively: With a long earning career ahead, you may afford to take short-term risks and invest in equities for higher long-term gains.
In your 30s
Insurance cover: To financially secure the life of dependents, especially after marriage, you should take adequate life insurance cover. You should also take health insurance coverage and cover other insurable assets to minimize liabilities to protect your investments.
Child education: One of the fixed financial goals of your life would be child education. So, you should start investing early to accumulate the fund.
Manage EMIs: You may have to take loans to acquire assets like a home, car, etc. However, you must ensure that the cash outgo on equated monthly installments (EMIs) should not exceed 50 percent of your monthly income.
Investments: Keeping EMIs within a manageable level is essential to ensure that you may continue to save and invest. With around 30 years of earning career left, you may take short-term risks for higher long-term returns.
In your 40s
Financial goals: Evaluate your financial goals and assess which goals have been achieved and which are yet to be achieved. Prioritize the dreams yet to be completed and make investment plans accordingly.
Prepare for retirement: Retirement is one of the financial goals that can’t be avoided. With many other goals already achieved, it’s time to concentrate on retirement planning. Allocate a significant part of your savings to build a retirement corpus.
Investment: Gradually increase the proportion of debt in your investment portfolio. It will reduce the market risk due to lower equity exposure and stabilize your portfolio.
Borrowings: It’s time to repay the loans and avoid taking new loans. Even if you need to borrow, ensure that you avoid expensive debts.
In your 50s
Health: With age comes diseases. Along with adequate health insurance coverage, build a separate fund for health emergencies.
Stable portfolio: It’s time to give priority to stability over return. To avoid fluctuations in the value of capital invested, shift your investments from equity to debt, depending on market situations.
Loan: Repay all your loans and avoid big purchases that require fresh borrowings or making payments through EMI mode.
Retirement fund: Manage your finances well to ensure you don’t have to liquidate your retirement funds and maximize your retirement corpus.
