How To Invest In Each Stage Of Your Life
Investing is like planting a tree. The better you take care of it and nurture it, the better it will grow into a beautiful tree that gives fruit, fresh air, and shade, all of which are beneficial. If however, you fail to water the plant regularly or provide good quality manure at different stages of its life, then the tree will ultimately cease to grow and will yield no result.
Similarly, investing needs to be carried out at every stage of our lives. We need to carefully select and curate the best investment plans according to each stage of our life to ensure that we have enough to live our lives without depending on anyone else. Hence, the sooner you start investing, the better it will be in the long run. Hence, it is right to say that investment can begin right from the time you start earning a pocket money and not necessarily wait for a high paying job because of every penny matters.
Before looking at the different stages of life where you can get started on your investment, here is a look at some of the factors that will determine your investment decisions.
- Your Age – It is good to start young because when you are young, you are ready to take more risks and have fewer responsibilities and as you grow older the converse happens.
- Your Income – You earning capacity is a major deciding factor to analyze how much to invest where.
- Your Savings – Apart from investments, you need to ensure you have savings to meet unexpected life events, which you might not be able to meet with the investments.
- Market Trend – Your will find answers to When, Where, and How Much to invest in the market, as investments change with market trends.
Investing in Different Stages of the Life Cycle
- You are single and you have a steady job
- You have lesser financial dependencies. Therefore, invest maximum in moderate to high-risk plans.
- Invest in long-term plans now.
- Save a maximum portion of your income to create a cash reserve.
- Pitch in some parts of your income towards your retirement fund by making regular contributions.
- Think of bonds, insurances, mutual funds, stocks, and retirement fund.
- You get married
- You now have more financial dependents, hence greater expenses. Therefore, you could cut down on the percentage of the amount that you invested earlier.
- Plan new investment schemes with the help of the combined income and cater to the additional new expenses.
- Invest in medium risk proposals.
- Ensure you have the adequate financial liquidity to meet financial emergencies.
- It is a good time to set aside some fund for buying a home without touching your retirement savings to meet down payments, deposits, moving costs, etc.
- Think of insurances, real estate, mutual funds, and equities.
- You have a baby
- The number of financial dependents increases, which leaves with you more expenses but lesser savings.
- Invest at least 30 percent of your income.
- Build a bigger cash reserve.
- Invest in low-risk investment plans.
- Think of life insurance, health insurance, child plans, education fund, pension plans, commodities, and fixed/recurring deposits.
- Your children are now independent
- Financial dependents reduce. Hence, increase your cash reserve.
- Increase your contribution to your retirement savings.
- Review the different investment plans and insurance schemes to accommodate your current needs.
- You Retire
- Analyze the different options from where you can draw an income to continue living.
- Maintain liquid cash to meet expenses.
- Check if there are means by which you can reallocate some portions of your investments in better proposals and at the same time draw income to combat inflation and help you sustain the remaining years.
- Invest in short-term plans.
- Think of senior citizen saving plans.
You might find this full review on investments a bit overboard. However, if you have not started your investment plans yet, do not let that thought depress you rather pick up from your current state and start investing now.