If you want to accumulate wealth for your retirement and make proper investments then it is important that you know certain financial rules early in your life. You need to be aware about certain things about finances and money right when you are in your 20’s. Here are some of the things about money that you need to be aware early in your life.
1. Decent First Salary
Some people opt for any job and do not even negotiate as far their first salary is concerned. They need to understand that they must opt for jobs which can help them define their career goal. Only then they can reach the pinnacle of success. It is also important that just because it is your first job you must settle down for peanuts. You must negotiate. This will not only make you look more confident but you may also get the salary that you want.
2.Credit Scores are Important
It is imperative that you understand the significance of credit score in your financial life. You need to manage the loans and credit cards well. Make sure that you pay your credit card bills on time. It is also a good idea to have more accounts and cards.
3. Emergency Funds are a Must
You never know when an unexpected financial emergency can arise. Youngsters must always be geared up for these types of situations. In case you lose your job suddenly then you must be in a position to survive. You must have that financial cushion till you get your next job.
4. Beware of Debts
For certain emergencies or for buying a home etc. you may have to opt for a loan in the future. But before you get into a debt situation by taking a loan you must have proper planning about how you will repay that debt. In case you fail to do this you will find that the debt amount has increased into a mammoth figure which you just cannot manage.
5. Smart Investments
Smart investments are no different than any kind of investment available in the market. In fact, the only difference smart investments will have from others is that, these will be more manageable for you.
Understand that, if you are not an investment professional, you are probably doing something other than investing money which is more valuable and earns you a better income. So why invest this income somewhere, you will have to work equally hard or stress yourself out.
If you are not a professional investor, look for the following traits in the instruments you are investing:
The time you will need to give to manage the investments – Lower the better
Tax savings at the time of investment and withdrawal – Higher the better
Lock-in period; i.e. how soon can you withdraw after investing – Lower the better
Number of Investment Options; i.e. SIP mode, switch, Lump sum – More the merrier
6. You Have a Long Way to Go
Youngsters need to understand that their wealth cycle will keep changing. Today they may not have any responsibilities. But tomorrow they will have a family and will raise kids, which again needs good amount of money. For all this, they need to start investing money early.
You must know that you need to start investing and saving early in life. For this, you need to have a proper financial strategy. You must be willing to take calculated risks. You must have a vision and must know when to invest and where to invest. You must have contingency plans and must always avoid a condition where you are debt ridden. Even if you were to take a loan, you must have proper planning to repay the same in time. Learn to invest early and smartly and pile up money for your retirement years.
ULIP Plans as Smart Investments
ULIP policies are Unit Linked Insurance Plans offered by life insurance plans. These plans are not only tax efficient, but also offer returns like any other mutual fund in the same risk category, along with a lot many other useful features.
There are policies where all the investments that you make are invested in the funds of your preference. You also have the option to withdraw funds for any emergency requirements.
This is to protect your funds at maturity. These policies also give you the option to switch from one fund to another.
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