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Best way to Invest Money in Your 20s

Feb 18, 2019 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

When it is about financial stability in the future, it is best to start young and lay a foundation for a stable future, financially.

investment guide

If you are in your 20s, you are in the best phase of life. Perhaps you recently graduated, now have a job and are gradually moving upwards and so is the financial responsibility. At the same time, these responsibilities cannot be compared to the tasks that adults have such as paying a mortgage or taking care of your spouse, children and more. But, you will still find it difficult to save and invest wisely.

So how and where to get started? Use these investing tips and start saving from, today!

Create a Budget

Sounds tedious? Yes, but it’s not impossible. Budgeting is one of the best ways to keep track of your daily spending. If you haven’t developed this habit, it’s never too late. Every month make an effort to prepare a budget, keeping in mind the important factors such as monthly expenses, bills, household expenses and any other debt you have to pay. This will help you immensely in building your savings and thereby building a wealth corpus.

A Misconception

Investing in mutual funds, bonds, stocks and more works well to create wealth but it is not the solution to every problem. For instance, Karan, a 24 year, working with a popular media house wants to give investments a thought to overcome his overspending habit. Investing early will surely help him build wealth, but he needs to consider all other aspects of his financial stability. You can’t keep investing in various tools and drown yourself in debt if you have an overspending habit.

Financial advisors suggest that young professionals should spend less time worrying about what is the next hot stock and rather use this time thinking about vital spending habits, savings, debts, and budgeting. So, keep your spending under control and this will offer a chance to set you up for life.

Set Your Goals

If you’re in your 20’s and working on building a financially stable future, then you should treat money as a tool and not a solution to pay off debts and other lifestyle habits. A great way is to make smart choices while spending, saving and investing money.

Divide your goals into short-term and long-term and choose investments accordingly. For instance, for short-term goals, you can use tools such as savings, mutual funds, Fixed Deposits, and more.

For long-term goals such as retirement, even though it is a long way, consider investing in a Unit Linked Insurance Plan, popular known as ULIP.

What is ULIP investment? It is a financial product that offers investment cover as well as insurance. Its features are similar to mutual funds but ULIP is an investment product with insurance benefits.

ULIP investment is a smart option to choose in your 20’s. How does ULIP investment work?  As a policyholder, you will pay a certain premium on a monthly or annual basis. This depends on the ULIP you choose. A small amount from this is allocated for administrative and mortality charges of the insurance policy. And, the balance premium can be invested into various investment tool such as equity fund, balanced fund, debt fund depending on your risk appetite.

Why should you invest in ULIP? At the maturity of the premium, you will be eligible to receive the present-day value of the fund along with other benefits. In uncertain moments like death, your nominee will receive the sum assured as per your plan. While selecting a ULIP, choose a plan considering your requirements and risk appetite such as Aegon Life’s iMaximize Insurance plan which will help you attain your financial goals.

The Bottom-Line

As young professionals you will have too many goals to save for like a new car, new home, or countless travel trips along with saving for the future. So, start investing at least a percent of your income and gradually ramp up the amount. By the time you reach your 30’s and 40’s, you will be saving 10 and 20 percent of your income. Don’t let the fear of missing on the best things lead to overspending, debt and shunning away from investments. Start early and someday you will not need a credit card to fulfil your dreams.

II/Feb 2019/4840


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