When you are in your 20s, investment is always a task to be accomplished. With your career just started, you might not be able to do financial planning due to financial and dependent constraints. Once you reach your 30s, you start realizing the need of investing but due to financial commitments like EMI of home/car loan, small children, day by day increasing expenses, you realize that investments will be a far-fetched dream.
Once you reach 40s, you start evaluating your current investments and know whether it is sufficient or not like the famous saying goes “Better late than sorry”. Better late than sorry as the famous saying goes. If you are women and in 40s, you will have a stable career, you must be almost through your home loan. In case of dependent parents, they will be turning into senior citizens and your children will be entering their teens.
How should you plan your further investments? Start with listing down your short term goals and long term goals. Also, keep in mind your dependent members and their financial needs.
• Dependent parents might need more of medical care
• Children entering teenage will need money for higher education in another 7-8 years
So, your short term and long term goals will automatically become:
Short term goals
• Have liquid cash of up to 6 months of your income
• Have adequate health insurance in place to meet the rising medical costs
• Have enough life insurance coverage so that your family will not suffer in a crisis situation
Long term goals
• Having a retirement plan in place
• Ensuring quality education for children by having a children education plan
• Buying a SIP plan or if you have one, continuing investing in it
Short term goals.
When you are in your 30s, the savings element is less, but as you proceed towards 40s, your income increases, you would be at the peak of your career and most of your obligations are paid off. But the long term financial goals become medium term and can come in near future for example in a decade or so. Before you make new investments, make sure that the existing ones are sufficient enough.
Appropriate health cover
Now, that your parents would be entering into 60s and health issues will be on rise as the age increases, an appropriate amount of sum assured should be taken. Even if you are covered under your employer’s group insurance policy, a separate health policy should be bought. Prefer buying a family floater plan because in individual plans, the sum assured can be used by a single person but a family floater plan can be used by all the members covered under the plan.
Adequate life cover
Life cover should be enough to take care of your children and parents. Prefer taking an additional rider like critical illness benefit or accidental death benefit with the existing cover. It will help your near and dear ones overcome the financial crisis which can occur due to sudden demise. An additional rider of 50 lacs will help you enhance your existing coverage and will give you peace of mind.
However, before opting for enhancements and additions, check the following points:
1. Claim settlement ratio
2. Existence of the insurance company (should be at least a decade old)
3. List of network hospitals (Health plan)
4. Plans offered by various insurance companies
5. Online discounts and deals offered by insurance companies
6. Knowing the terms and conditions of the company
Once the basic cover is enhanced, you can then look for making further investments. Like if you have opted for a SIP, continue investing in it and if not, start a SIP now. Plan your retirement by taking a retirement plan. If you have cash, you can also, invest in equities and commodity market.
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