You may not be able to keep working and earning forever. Retirement (not to mention other possible contingencies) is an impending reality, and the sooner you start planning your finances, the better it is. Further, we also have life milestones like buying a home, children’s education/wedding and aspirational goals to finance.
Before talking about investment plans, let us have a few investment strategies in place to execute them.
Assuming that you will work till age 60, you have 30 years of investment tenure ahead of you. If you haven’t started investing yet, it is high time. Even if it is something as small as Rs.1,000 per month, it can contribute to building a robust investment portfolio as long as you invest consistently.
Before that, your priority is to close all your debts first – primarily expensive debts like credit card dues and personal loans. What is the point of earning returns from investments when you spend even more on repaying hefty interest?
Now, there is another thing that is as important as investing – having an emergency fund. Most investments have a long lock-in period. Even ELSS, offering the shortest lock-in period of three years!
Don’t forget to park some amount in liquid schemes regularly while you invest in your long-term goals. Ideally, it should be at least 3-6 months’ salary or depending on your other obligations and regularity of income.
Also Read: Is this the time to invest in small and mid-cap funds?
Steps to choose the best investment plans for a 30-year-old
Make your investments goal-based: For this, the first step is to list down your investment goals (short-term and long-term), which will bring in some clarity; this helps you allocate your monthly investment amount accordingly.
Understand the difference between saving and investing and saving means to keep your money safe – like keeping the money in a piggy bank or a savings account. It doesn’t consider inflation. On the other hand, investing is making your money work for you and beat inflation while at it.
Assess your risk profile: Schemes with better return potential also belong to the category of ‘riskier’ investments as there are chances of incurring losses. At 30, an investor can afford to venture into risky investments like equities, and with age, risk appetite goes down.
Sample: Rahul’s monthly take-home salary is Rs.60,000, and after all his expenses and liabilities, he manages to save Rs.20,000 every month
| Tenure | Defining Goals | Schemes | Risk |
| Long-term (5-15 years) | Retirement, buying a house, children’s milestones like college or wedding | ELSS or tax saving mutual fund is known to deliver high returns (12%-14%) in the last five years. | High |
| Short-term (1-3 years) | Buying a car, a family vacation, buying a high-end mobile phone or appliance | Debt funds like short duration funds and dynamic bond funds deliver 8%-10% returns, which is way more than the 4% offered by a savings account. | Moderately low or low |
| Emergency fund | In case of job loss, if you plan to start a business, medical emergency | Liquid fund
Recurring deposit |
Low |
| Having an adequate insurance cover | Do you have sufficient life insurance and medical cover? The earlier you buy, cheaper it would be. | Term insurance
Health insurance |
This exercise should make it easy to make the best investment plan for investors who have hit 30.
For any clarifications/feedback on the topic, please contact the writer at vidushi.kala@cleartax.in
