In this day and age, a primary focus for financial planning is investments. It is especially useful for people in their 20s as you can develop an investment habit as well as start strategising for your future at an early life stage.
What are investment plans?
Investment plans are a form of financial savings and planning. They are diverse means of setting aside money that works for you instead of you working for it. Investment plans come in many forms to help you allocate your assets and reap short and long-term financial gains from them.
Investment plans provide a nest egg and help grow your net worth. You can choose investment plans based on your risk appetite. You need to determine if you want to invest as a one-time lump sum amount or in regular instalments. Based on the type of investment plan you choose and your investment frequency, you can develop a habit of always preparing yourself for financial crunches.
What are some investment plans for first-timers?
First-time investors in their 20s face a significant challenge in choosing the right investment plans to grow their wealth. To make the process simpler, here are some investment plans to consider that guarantee returns:
1. ULIPs –
These are two-fold investment plans wherein you can choose a life insurance policy that offers unit-linked insurance plans. Basically, you can avail of life insurance benefits as well as invest in the market based on your risk appetite. The premiums you pay towards your insurance plan are used to invest in equities, debts, or mixed schemes, as per your preference. Your insurance provider pays you the profits at regular intervals.
2. Equity shares –
These are direct investments in the stock market wherein you can choose plans as per your risk appetite and capital gains. You can invest in buying shares of growing companies and reap the profits as per the highs and lows of the company stocks.
3. Mutual funds –
These are indirect stock options wherein you can invest your money in both equity and debt funds. Mutual Funds enable you to make your investments through an intermediary who assesses the markets and makes smart suggestions. Based on your risk appetite, you can choose to diversify your portfolio.
4. Equity investments in National Schemes –
These are investment plans that the government of India offers to simplify your finances. You can choose plans that best fit your needs such as Sukanya Samriddhi to ensure the future of female children, Kisan Patra that aids the finances of those in the agricultural industry, provident funds for national and employee benefits, savings plans, etc.
Choosing the right investment plan is necessary to ensure the growth of your net worth over time.
Savings plans that work
Apart from investment plans, another mighty means of financial planning is savings plans. These days, you can avail of savings plans through insurance, government schemes, and even private banking systems. Here are some common savings plans that you can convert into investment plans:
- Money back insurance plans – These are a form of insurance-based savings wherein at regular intervals, your insurance provider refunds part of your premiums. In the event of your unfortunate demise, your beneficiaries still receive the sum assured as a death benefit regardless of the withdrawals.
- Sukanya Samriddhi Yojna – An insurance plan that helps your female child plan for the future. Parents pay the premium and as the insurance plan matures, your child receives a lump sum amount to invest in future education, wedding, or other financial commitments.
- Endowment plans – These are savings plans with an insurance component that guarantees a return on investment. These insurance plans are available for shorter time frames. When the plan matures, you receive the maturity benefit in a lump sum amount with added bonuses, if you are a participating investor.
- Provident Funds – These are savings plans that require regular, preset investments. The funds grow at a specified rate and you can withdraw your profits. Provident funds are available to employees in the government as well as private sectors.
- National Pension System – These savings plans help prepare for your golden years. You need to invest a specified amount based on your age and the returns you want to receive. When you reach retirement age, the pension plans provide regular income to help sustain your finances.
- Fixed Deposits – These are savings plans wherein you invest a specified amount for a specified period of time at a specified rate of return. When your FD matures, you can withdraw the entire amount and plan your finances further with a lump sum amount.
Savings plans are also a form of investment plans which help you grow your finances by taking minimum calculated risks.
Conclusion
Investment plans and savings plans are the means to develop a financial nest egg for tough times. People in their 20s have huge responsibilities and must plan their finances carefully. It is the time to take risks and stabilise yourself before the burden of life stages catch up.
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