Till the time you are in 40s, you would have quite a few investments in your kitty. These investments will include the basic income protection plans like having a life insurance, a health plan and a contingency fund for emergencies. However, once you reach 40s, your long term goals start coming near like higher education of your children would be less than a decade away, your retirement will be 2 decades away and most of your financial obligation like EMI on home and car loan will be repaid off. At this point, you will have a well rewarding career and financial obligations which are little far away.
At this point in time, remember to do the below mentioned enhancement to your basic cover before taking a plunge for making more investments.
Enhance your life cover
Life cover should be adequate enough to meet the inflating cost of living. If you are the sole earning member of the family with dependents (spouse/children/parents), take insurance for a sum insured of Rs.1 crore and add accidental death rider to it. This gives enough fund availability to your family in unforeseen situations.
Enhance your health cover
You might be covered by the group insurance policy provided by the employer. Ensure that the cover is sufficient enough for your entire family. Apart from this, you should buy a family floater health plan instead of individual health plans. This is because the sum assured of the family floater plan can be used by any of the family member at the time of medical emergencies.
While buying a rider and enhancing your health plan, remember to:
1. Read the terms and conditions of the enhancements
2. Provide accurate details about your health history and eating habits
3. Surf the internet regarding the company’s reputation
4. Know the network hospitals of the health insurance service provider
5. Compare health and life insurance plans available online
Once you have taken care of the basic protection and ensured that the health and life cover is adequate, make investments in building the corpus fund which will be required at the time of retirement.
Plan for your retirement
Though retirement is still 2 decades away, but investing in your 40s is an appropriate time to put money in an annuity plan. Like the saying goes better late than sorry, plan your retirement carefully and start with buying a pension/annuity plan. This plan is divided into two phase, one is the accumulation phase, in which you have to invest money through regular premiums. Other is the annuity phase in which you will enjoy the fixed income feature of an annuity plan at regular intervals.
Plan your child’s education
Your child will be entering his teens and in another 5-6 years, he will need funds for higher education. You must have already taken a child education plan for this, but reevaluate the funds which will be received. Education costs are very high these days and can end up creating a big hole in your pocket.
It might be the case that you already have a Systematic Investment Plan. If you don’t, then you should buy one. A systematic investment plan helps to multiply the investment over a period of time. Also, you can enter as well as exit the fund whenever you want.
Invest directly in Stocks
If you have extra cash in hand, invest in the stock market directly. However, trading is dependent on timing the market, which is quite a tough job. You can buy stock of companies and sell them after a point of time wherein you can make some good profits too.
Investing in metals/property
You can buy Gold bonds which are readily available in the market. Also, money can be invested in gold coins sold by jewelry shops and banks. Investment in gold can be used in the future for purpose like marriage of children.
You can also invest in property if you have some cash. Since, most of your loans will be repaid, a plot of land or apartment or a shop will seem to be an investment worth for the future.
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