According to a famous proverb, 80% of the people in your social and professional circles shift every five years. While this notion may not hold for everyone, it does highlight something we all experience in our lives: change. Everything changes, from our priorities to how we handle circumstances. These shifts in our life have an impact on how we approach money and investing.
In this article, we divide life into stages and examine how you must approach investing in each phase and how to make the transition between them easier.
Bachelorhood
You are delighted at this point in your life since you have a job and are financially self-sufficient. You can spend your money in any way you want. However, these desires lead to you spending more than you make. You may avoid making this error by saving first and then spending. You must save at least 30% of your salary.
Midcap or smallcap Equity Funds are a suitable place to start investing at this point. This Mutual Fund Investment might be volatile in the short to medium term, but it yields massive returns in the long run.
After marriage
Expenses typically rise dramatically at this time. And you must be careful that even if your costs rise, you still save 40% of your income. You can take fewer risks than your bachelorhood because you need both progress and security at this point. As a result, increasing your Debt Funds allocation while reducing your riskier Equity allocation is a beneficial alternative.
Becoming parents
This happy experience gets accompanied by a greater sense of responsibility as well as an increase in expenses. Nonetheless, it is essential to maintain a 30% savings rate. Your objectives get divided into three categories: short-term, medium-term, and long-term. You can use Debt Funds for short-term goals such as travel or school tuition for your children.
A mix of Equity and Debt is excellent for medium-term goals like buying a car or saving for a down payment in the house. Finally, create a pure Equity portfolio for long-term purposes such as your children's schooling or retirement. Ensure to include ELSS funds in your portfolio
Retirement
Retirement is the fourth stage. You must have practically accomplished most of your obligations by the time you retire. As a result, duties are minimal at this moment. It is not the case with your expenses. You must keep your assets to a bare minimum to reduce risk. As a result, the amount you accumulate before retirement determines your return on investments, your sources of income, and the returns you desire to create.
Make sure to use the Mutual Funds apps when it comes to these schemes for easy investments.