Stepping into your 30s is a crucial step for any individual. By now, you ought to have figured out your career prospects. You should have a steady income as well. A big change in life, such as wedding or kids, may have already happened. Or it may be around the corner. Your early 30s is an ideal time for you to take stock of your finances. You can now build a solid investment plan to secure your future. Here is how to go about it:

Review Your Insurance Cover:

Your responsibilities may have increased by the time you hit your 30s. Your spouse and kids now depend on you. So, it is time to adjust your insurance cover. What was adequate when you were single may not be adequate now. At this age, you may be able to get some good deals on term insurance policies online. The more you delay buying your life insurance, the heftier your premium becomes. Also, go over your health insurance policy once again. Ensure that you and your family have enough financial protection.

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Protect Yourself Against Emergencies:

Life is uncertain. A job loss or any other unpleasant life event may derail your financial plans. Thus, it is wise to enhance your emergency fund at this stage. You should have started building an emergency fund in your 20s. Investing in a bank fixed deposit (FD) or a mutual fund would have been perfect. If you have not done so yet, begin now. It is best to keep things simple by investing in a five-year FD. This will take care of six to nine months of your living expenses and liabilities. You can earn an interest of 7.15–8% on such an FD. You can also link it to your savings account. Then you can make a withdrawal in case of an emergency.

Additional Read : Pros and Cons of Fixed Deposit


Build A Balanced Investment Portfolio:

As you advance in age, your financial needs, ambitions, and risk profile change. Your investment portfolio should reflect these changes. At 30, you need to think of your home loan, children’s education, tax planning, and you’re your retirement plan. Your asset allocation at this stage should be 75% in equities and 25% in debt.

You might have invested in a systematic investment plan (SIP) in your 20s. You can now invest more in SIPs. Link them to your financial goals. Perhaps you wish to buy property or fund your children’s education. You can also include short- or medium-term goals. These include milestone birthday or anniversary celebrations. Or, you could plan an exotic vacation with your family. It is prudent to use a SIP calculator. You will know exactly how much you need to save each month to meet your financial goals. But do pick the right equity fund as per your risk appetite.

The 30s are also the time when you need to make an effective tax-saving plan. The Public Provident Fund (PPF) remains a popular tax-saving avenue. It is used for long-term investments. Equity-linked savings schemes (ELSS) may also prove to be tax-efficient. They carry the benefit of capital appreciation as well.

Finally, it is time to look at retirement plans. The earlier you start allocating funds towards retirement, the better. This increases your chances of leading a good second innings. Consider products such as the National Pension Scheme (NPS). This has mostly delivered inflation-adjusted returns. NPS also provides tax benefits under Section 80C.

It is of utmost importance to set your financial goals and invest as per your plans. Here’s a handy guide of which investment option suits different goals.

The Bottom Line:

Taking control of your finances in your early 30s puts you in the driver’s seat. This can ensure lifelong financial security.

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