With majority of India’s population in the age bracket of 25-45 years, there is a lot of scope for young earners to earn a greater return by making prudent investment decisions. The path of savings and investments when pursued at an early age can help you have a brighter future, especially in the post retirement stage, where you do not want to depend on your children for financial assistance.
However, you cannot earn higher returns if you are not willing to take risk. Having a good exposure to equities can increase your chances of bloating your savings to a considerable extent. To begin with, exhausting the maximum limit in your PPF amount of Rs. 70,000 per annum is a good start. Then you can move onto investing in various Mutual Funds. Fixed maturity plans of various durations are a good option. Also, take some exposure to short-term funds for creating liquidity. You can also invest in gold exchange-traded funds, but not more than 10% of your total portfolio. The debt space can take the balance 30%.
Once you have managed to construct this sound portfolio, the next step will be to opt for a pure life insurance cover and a good health insurance plan. But, the value of the covers will depend on, how many dependents you have.
Remember, factor in inflation rate and not only the rate of return, when you decide the amount of corpus you want to build for your future. Otherwise they will not be much use of you saving, every penny, if you will be required to take a personal loan or a home loan in future to meet your expenses. So, if you do not want to trouble your finances by getting into a debt trap, plan, save and invest wisely. Try to save maximum of your take home salary in avenues where you get tax benefits and higher returns in future.