When you are in your twenty something or in your early thirties, you are prone to make financial errors due to miscellaneous reasons. But smart people either learn from mistakes committed by others or by exploring professional help. To help you fare better in making the right investment choices, here’s a brief guide to financial prosperity for your awareness –
Buying wrong tax saving instruments
Now that it is the time to declare your investments for tax relief, ensure you do not resort to wrong tax saving instruments. Your employer may be asking you to furnish your documents for tax-exemption, but do not rush over it unless you already have a well thought out plan. Young people, particularly of the age group 20-30 are known for committing this popular eleventh-hour mistake of purchasing an insurance policy which offers the benefit of both an endowment and market linked plan. However, the truth is, it does not fulfill either. In this pursuit of saving your taxes, you are made to pay high premiums for a period of at least 10 years. In fact if you decide to bail out half way, you lose both tax and policy benefits which is obviously detrimental to your personal finance.
Mixing investments and insurance
For the wellbeing of one’s personal finance, it is important to understand how life insurance should never be mixed with investment needs. Many Unit Linked Insurance Plans (ULIPs) offer both life cover and investment assurance for increased returns which one must always avoid. The challenge is ULIPs do not guarantee the security of your principal amount. It is very much subjected to market performance and that if the markets aren’t good, sum assured for any medical emergency of the policyholder will also result in a lower value. Imagine having to take a loan or a credit to escape that undesirable moment can lead you to financial disaster. To avoid such situation, a term cover is highly recommended while for investment needs, opting for Systematic Investment Plans (SIPs) or Mutual Funds (MFs) would be ideal. Now see how you are able to cover both your medical and financial needs at the same time.
Not having adequate risk coverage
Do you have adequate risk coverage? Good, if you do because in most of the cases, young people in their early and late twenties are pretty unsettled about this. Sometimes it could be due to lesser earning and sometimes it could simply be lack of interest or awareness. The biggest antidote for any kind of uncertainties of our lives, including our very living, is to have adequate risk coverage. But what is adequate? How much if you invest now, will adequately cover your future needs and requirements? Which are those financial avenues that offer adequate risk coverage even in the toughest of market scenario? If these are your questions, we have answers for all of them. Our professional solutions to all your financial concerns are available with a simple sign up for an insignificant amount to last you a lifetime. Sounds interesting? Let’s go- ArthaYantra
