Personal Investment: Here’s What to Do with Your First Salary

For those who have recently embarked on their professional journey, it remains crucial to start planning their savings accordingly. 

This way, they stand to gain with the possibility of staying invested for a longer time horizon, which would help to tide over short-term volatility while achieving favourable returns in the long run. 

A few of the investment vehicles that a beginner can focus on include: direct equity, mutual funds, fixed deposits, recurring deposits, Public Provident Fund (PPF), Employee Provident Fund (EPF), and National Pension System (NPS).

Essentially, before taking the decision to invest in a particular investment tool, it is important to gain as much insight as possible and refrain from making any hasty decision. 

Start small and work your way up by setting aside a monthly budget: While the urge to spend money earned from the first salary at a first job may be strong, it is crucial to understand spending habits. As a first move, a monthly budget can be suitably created after taking stock of all the expenses. Ideally, try and save at least 20-30% of the salary. 

Avoid investing in the stock market at the first go: Being high-risk investments, stock markets call for gaining detailed insights before making that move and call for some amount of experience. Build strong financial security first, gain some solid footing and then possibly make a move in the stock markets. 

Set time-bound financial goals: Focus on short-, medium- and long-term financial goals. These financial goals will underscore the investment size, time horizon, risk appetite, investment vehicles, and liquidity requirements, among others. 

Focus on opting for an insurance policy: It remains important to set aside some amount for life and health insurance plans. The insurance cover will act as a safety cover to address any form of emergency situation that may arise. 

After the habit of savings is established and one has made considerable gains from various investment tools, an individual can look at high-risk investment options such as stock markets.