The transition from your twenties to thirties is usually marked by several significant changes, including finding a stable workplace, building your career, getting married, planning a family and caring for the elders in your respective families. Therefore, the aforementioned period entails a drastic increase in your financial responsibilities which necessitates adequate financial planning and investment planning.
Since life is filled with uncertainties and challenges, you must begin formulating your financial goals in your twenties, research different investment avenues, and select the ones best suited to your financial goals.
One of the best investment instruments for your savings is a life insurance policy. There are several types of life insurance policies available for you to choose from, including ones that offer the dual benefits of insurance and investment. For instance, companies like Tata AIA life insurance offer comprehensive life insurance plans that help you safeguard your family’s future and invest your savings in a safe manner. Furthermore, Tata AIA also offers a wide range of tax-saving investment policies to enable subscribers to receive a tax benefit on their insurance investments.
There are several important lessons pertaining to money that you should remember whilst planning and managing your personal finances. Some of the aforementioned lessons have been discussed below.
- Start planning and investing early
There is no such thing as too early a time to determine your financial goals and start your investment planning. Beginning your financial investments at an early age allows you to draw maximum benefits from the compounding of your investments. For instance, if you begin investing in a tax-saving investment at, say, age 25, you can build a substantial corpus of money by the age of 60 which can help you in your retirement planning
- Carefully manage your expenditures
The present consumerist culture prevents people from saving and investing. Therefore, it is important to monitor your regular as well as occasional expenses so that you can identify and eliminate unnecessary expenditures in time. Furthermore, you should be careful about falling into the vicious circle of debt.
- Maintain a contingency fund
You should make it a habit to allocate a significant percentage of your income to a contingency fund that can be of significant value in the event of any illness, accident, or unemployment. Having a contingency fund can safeguard you against emergency situations without affecting your planned investments.
- Prioritise tax-saving investments
Whilst selecting an investment option, you must pay due attention to tax-saving investments since they offer a range of benefits, including financial discipline, insurance, market-linked investment, and tax benefits. Furthermore, purchasing a life insurance policy in your twenties provides you a life cover at a low amount of premium.
- Be aware of your investments
One of the most important money-related lessons is to keep yourself informed and aware of the present situation of your investments. For instance, if you have invested in a market-linked tax saving investment plan, you should keep checking the market value of your portfolio.
- Consider a retirement plan from an early age
You should start investing in retirement plans and annuity schemes in your twenties. Remember that the earlier you begin your investment, the higher will be the ultimate return that you receive and the lower will be the amount of premium.
You must have clarity on your financial goals and personal finances to be able to select the appropriate investment plan. Furthermore, you should start investing in a life insurance policy and other tax-saving investment instruments from an early age to protect your family against uncertain events and maximise the return on your savings.