Different Investment Strategies For Different Life Stages
Earning money is important and, it is also necessary for concern about the investments and the financial future. Never depend on a single income. Make investments to create a second source. We all know that spending habits are different at every stage of life. For example: when an old car has more risk of accident or damage so like a car to a human being, as we grow older and the chances of risk increase day by day or year by year.
We know as time passes, we change, and so do our lives. Similarly, our investment ought to changes as well. So, here are the factors that impact investment decisions:
- Your income matters, mean until you won’t get the money, you will not be able to invest.
- Of course, age matters because, at a younger age soaring risk of spending.
- You must save your money from the 1st day of earning.
- Should aware of Market trends and economic factors.
So it’s valuable to know where we should invest to gain financial benefits or in such a manner that it may earn return along with growth.
Strategies to consider
Everyone has its own choices or perspective and certain conditions also but everybody is concerned about the money and the investments. So, it a very personal choice for every individual. But here some key points that help to make decisions very quickly.
- The best idea is to hire a financial advisor and, it allows you to offload your money worries. It will help in checking your investments and help to spot your financial problems.
- Investment earnings can be taxable, tax-deferred, or tax-free. You should be aware of the taxable status of your investments and take that into account when setting up and reviewing an investment strategy.
- To provide liquidity for emergencies, you may want to have a cash reserve in a money market fund, a traditional savings account, or a certificate of deposit (CD), no matter what your life stage.
- Also, if you can tolerate even a little risk, you may want to have some portion of your portfolio in stocks to help protect your savings from being devalued due to inflation.
Investment Strategies at different life stages
When you are Bachelor: This is the initial stage, a person is around 20 years and graduates from the college who have just started earning their first investment decisions when we enter the workplace. During this phase of life, an individual can invest around 60%-70% of his/her income at this stage, only has fewer responsibilities. Due to the young age, the risk appetite of a person is also large at this stage of life. During this life-stage, the most suitable instruments include equity funds, equities, real estate, and IPOs (Initial Public Offerings).
Post Marriage: It’s the middle stage means after marriage, an investment objective and financial responsibility both change the individual. You must check your new investment contributions and allocations, taking into account your combined income and expenses. At this life stage, the outlay in one’s life typically increases. In this phase, the management and plan for the future also increase that leads result in saving. Due to an increase in responsibility and people generally invest 40%-50% of their income. Ideal investment options during this phase of life include hybrid funds, fixed deposits, national savings certificate (NSC), unit-linked investment plans (ULIPs), etc.
Parents: At this stage of life, the number of dependants in a person’s life increases. So do expenses and the need to plan for future prices. This life phase also increases the requirement of liquidity in an individual’s life so that the person can meet sudden cash requirements due to emergencies. This stage also makes people significantly risk-averse. At this life stage, a person should generally invest 30%-35% of his income in instruments like debt funds especially, liquid funds, fixed deposits, public provident funds, pension plans, recurring deposits, etc.
Retirement: This is the last stage that is now is to ensure your goal and savings last as long as needed and provide you with enough cash flow to fund your lifestyle. At this stage, an individual generally invests around 10%-15% of his/her income and should ideally invest in potential low risk/high liquidity. But if you have a limited income then, it is prudent to have a proper retirement plan in place where you understand how you wish to manage your cash flows. However, if you are the one who continues with your practice, then you should also have a proper retirement .
Planning of investments early in life is as necessary as making investments. Life-stage investing is an appropriate way that helps people secure their present as well as their future. By disciplining yourself to save a relevant portion of your income regularly so that you can meet your investment goals. Establishing a relationship with a trusted financial advisor can go a long way toward helping you practice smart financial management over your entire lifetime.