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Guide to Financial Investments through Different Stages of Life

Guide to Financial Investments through Different Stages of Life

financial planning at different stages of life

For attaining financial stability, your investment choices will change as per the different stages of life. Today we will give you a breakdown of different life stages and investment plans suited best for each phase.

So What Are Different Life Stages?

  • Not Married
  • Married
  • Married with Children
  • Retirement

What Are the Factors Which Influence Investments?

  • Age: At a young age, you may be capable of taking more risks, and thus, this is the right time to plan for finances and investments the best. At a young age, you may share fewer responsibilities, you will have a better amount to invest than in later stages of life.
  • Income: How much do you draw in a month? Investments of monetary nature need a surplus of cash, and without drawing an income, you will not be able to sustain investments or invest at all.
  • Savings: When you start earning money, you must also begin building up savings funds. Remember, you should always have a good amount of funds as savings for immediate cash needs. To achieve a healthy savings amount, you should plan your budget and investments accordingly.
  • Market Trends: Investments are mostly affected by market trends. Depending on the demand for investment in the market, currently, an investment’s worth will be evaluated. You must read and research the markets before you begin with investments.

Read About: Best Saving Schemes in India

Life Stages and Investments

Bellow mentioned different life stages and things to consider before investing monetarily.

  1. When You Are Unmarried

If you are unmarried, then keep the following factors in mind to plan your investments.

  • Fewer Financial Dependents: If you are unmarried, you do not have a spouse or children to support. Thus, there are fewer people who would the financially dependent on you. Thus you can spend the maximum of your income on yourself in form of healthy investments.
  • Age: When you are young, you have fewer responsibilities, thus you can invest with moderate to high market risks.
  • How Much to Invest: You can invest at least 60 per cent to 70 per cent of your income.
  • Investing for Long-term: You can choose safe long-term investments of 10 years to 15+years.
  • Right Investments: At this life stage, you can invest in bonds, mutual funds, unit-linked insurance plans, life insurance, stocks, and public provident fund.

Read About: How to Meet Your Financial Goals by Investing in Mutual Funds?

  1. When You Get Married

If married, you will have to carefully proceed with your investment strategy and plans.

  • Financial Dependents: You will have to look after yourself, earlier dependents such as parents, siblings if any, but now you have to also look after your spouse.
  • Greater Amount of Expenses: With additional members in the family, there would be some amount of increase in expenses.
  • Investments of Medium-risk: You need to alter your investment strategy to suit your new life. Find investments, which come with medium risks and give medium returns.
  • How Much to Invest: Since you are married and have additional financial responsibilities, you can invest 30 per cent to 50 per cent of your income.
  • Monetary Liquidity for Expenses: You will have to increase financial liquidity to override any financial emergencies.
  • Right Investments: Some of the investment options suited for this stage of life are health insurance, mutual funds, equities, real estate, and debt instruments.
  1. When You Become a Parent

The parental stage is joyful, but when children come into your life, you need to restructure your investment plans accordingly.

  • More Financial Dependents: With the addition of a child or children, your financial obligations increase because now you have to take care of your children too.
  • More Expenses and Lesser Savings: Once you enter parenthood, your expenses to care for kids and their education coupled with other monetary responsibilities, will add to expenses, which may mean lower savings.
  • Low Returns and Low-risk Investments: You may have to pick less risky investments, but these will also give you lower returns.
  • How Much to Invest: You can invest 30 per cent of your income after reviewing how much you will require to meet financial commitments.
  • Right Investments: The right investments at this stage of life would be health insurance, life insurance, child plans, pension plans, unit-linked insurance plans, gold, and recurring deposits.
  1. When You Get to Retirement

Now that you have wisely invested all through your life, the retirement phase of life should not be much of a worry.

  • Enjoy Returns on Investments: The returns from investing judiciously all these years will now help you manage finances easily. This is the time you earn rewards of smart investments done in earlier stages of life.
  • Liquid Funds to Pay for Expenses: You will require more liquid funds to pay for daily expenses.
  • How Much to Invest: You can invest about 20 per cent of your income or savings.
  • Investment for Short-term: In your retirement years, you may probably invest in short-term investments than those for the long-term.
  • Right Investments: Some of the right investments in this stage of life are fixed deposits and senior citizen savings schemes etc.

We hope that our complete guide to ideal investments through different stages of life will help you plan your investments wisely.

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