Adopting healthy financial decisions early in life will secure your future. Check out these smart money moves you must make while in your late 20’s.
It’s always wise to start saving early in life. Careers usually begin around the age of 25 after completion of higher education. However, it’s a common urge to splurge and fulfil desires of the student age once the monthly salary begins. It is absolutely fine to have your share of fun, but it’s equally important to be prudent and wise with your finances. In fact, it’s extremely judicious to make a few smart money moves before you turn 30. Hence, adopting healthy financial decisions early in life will secure your future. There are a few smart money moves you must make while in your late 20’s. Have a look.
Invest In A Term Plan:
A Term Plan provides financial support and secures a family in the event of an unfortunate demise of the policyholder. Most breadwinners of the family tend to ignore term insurance as there is no maturity benefit at the end of the policy period. But a term plan comes with a sum assured in case of the income generators absence. Besides, if you buy a term plan when you are young, the premium will be much lower compared to buying the same plan in your 40’s or 50’s. Also, choose an adequate cover that will generate a sufficient monthly income and fulfil all needs. You should also choose to go for a plan until the age of 60. If you choose for a shorter duration for say 10-15 years, then the policy will lapse when you are 45 or 50 and you have to pay a higher premium to buy the same plan again. By this age, you may also be exposed to some medical conditions that may enhance the premium.
Health Plan Is A Must Have:
When you are in your 20s, you tend to take your health lightly as you believe that you are young and nothing wrong can happen to you. Hence, you tend to avoid investing in a Health Plan. In most cases, people rely solely on the health coverage provided by your employer. However, this may not be the best approach towards your health cover. Health coverage provided by the office is never adequate and once unemployed, you are medically uninsured. Again, the benefit of opting a health plan at a young age will cost less but cover more comprehensively. Evaluating your family’s medical history-if any, you can also insure yourself against critical illnesses. Self-employed professionals can also opt for a health plan that provides for the loss of income due to hospitalisation.
Open a PPF account:
Public Provident Fund is one of the best and most reliable savings tool for retirement. You can invest as low as Rs 500 to Rs 1.5 Lakh per year. It has a 15-year lock-in period that will keep your finances safe for retirement while growing in volume by the compounding interest benefit. Besides, it also gives you tax benefit under Section 80C. Also, interests and withdrawals on PPF are tax free. PPF interest rates keep fluctuating depending on the average bond yield in the previous year but have never been volatile. Invest in PPF early in life to secure your retirement financially.
Invest In SIP:
Systematic Investment Plans (SIPs) are beneficial for those who do not have a sound understanding of financial markets. Investors are freed from the stress of speculating in volatile markets as SIPs do it for you, investing in more units when the price is low and less in units when the price is high. Investing in SIP early in life will help you in creating wealth that will prove to be beneficial in future. Also, SIP’s inculcate in you financial discipline towards savings as the deductions are automated and need to be met regularly.
Invest In A Short-term Debt Fund For Meeting Contingencies:
Usually, you rely on your bank account savings to meet any short-term financial contingencies such as loss of a job or a medical condition. But instead of adopting a traditional approach and earning just 4 percent interest on a savings account, you can invest wisely in a short-term debt or liquid fund to meet such contingencies. You can also invest in flexi deposit accounts to earn higher interest and withdraw as per convenience.
Hence, the trick of the trade is to start investing wisely being young to reap the rewards later on.