Long-term investments need proper planning. However, it’s not a one-time process, and you need to reassess your investments from time to time as needs and preferences change with your age.
Following are some of the tips that you may observe to manage your investments as per your age slabs:
In your 20s
Invest in yourself: Health is wealth. Instead of wasting money by visiting pubs, join a gym, eat healthily and teach a healthy lifestyle to keep diseases away.
Develop saving habits: It’s always better to start saving early so that you may begin investing for your future needs. If you follow a healthy lifestyle, your wasteful expenses will get automatically reduced, and you will save more.
Emergency fund: Once you start earning, your financial obligations also begin. So, you should build an emergency fund so that you may fulfill your financial commitments even if there is a disruption in your earnings.
Invest aggressively: With a long earning career ahead, you may afford to take short-term risks and invest in equities for higher long-term gains.
In your 30s
Insurance cover: To secure the life of dependents financially, especially after marriage, you should take adequate life insurance cover. You should also take health insurance cover and cover other insurable assets to minimize liabilities to protect your investments.
Child education: One of the fixed financial goals of your life would be child education. So, you should start investing early to accumulate the fund.
Manage EMIs: You may have to take loans to acquire assets like home, car, etc. However, you have to ensure that the cash outgo on equated monthly installments (EMIs) should not exceed 50 percent of your monthly income.
Investments: Keeping EMIs within a manageable level is essential to ensure that you may continue to save and invest. With around 30 years of earning career left, you may continue to take short-term risks for higher long-term returns.
In your 40s
Financial goals: Evaluate your financial goals and assess which goals have been achieved and are yet to be achieved. Prioritize the goals that are yet to be completed and make investment plans accordingly.
Prepare for retirement: Retirement is one of the financial goals that can’t be avoided. With many other goals already achieved, it’s time to concentrate more on retirement planning. Allocate a significant part of your savings to build a retirement corpus.
Investment: Gradually increase the proportion of debt in your investment portfolio. It will reduce the market risk due to lower equity exposure and will give stability to your portfolio.
Borrowings: It’s time to repay the loans and avoid taking new loans. Even if you need to borrow, ensure that you avoid expensive debts.
In your 50s
Health: With age comes diseases. Along with adequate health insurance cover, build a separate fund for health emergencies.
Stable portfolio: It’s time to give priority to stability over return. To avoid fluctuations in the value of capital invested, start shifting your investments from equity to debt depending on market situations.
Loan: Repay all your loans and avoid big purchases that require fresh borrowings or making payments through EMI mode.
Retirement fund: Manage your finances well to ensure that you don’t have to liquidate your retirement funds and maximize your retirement corpus.