Positive demographic dividend, higher disposable incomes, and greater life aspirations are the best ways to describe today’s young India. Your first salary is that special moment that you will cherish for a lifetime. Many of us throw a party with friends to celebrate this moment or buy mementos and gifts to greet the moment. Therefore, the need for investment for the new generation or young India starts right from the time the first salary falls into the bank account. Your first salary becomes your stepping stone for a successful and bright financial future. Here is why the new generation must start investment right from the time they receive their first salary:
It’s ideal to adopt the 70:30 approach when you start your career very young
Most people in India start their careers very young. Therefore, the best way to start investing is by doing it using your first salary. Simply allocate 30% of your first salary towards starting a mutual fund SIP scheme. Remember, you are paying this money for your good future. Now, keep the remaining 70% for celebrating your first job with friends and for managing monthly expenses.
Don’t you want to repay your education loan?
Each one of us would love to repay our education loans, in case we have taken one, and our first salary would be the ideal starting point. However, you must note that an education loan could reduce the amount that you have allocated for SIP to lesser than 30%. That’s why starting your investments very young become crucial to balance your risks and expenses through good returns. Repayment of education loan has tax benefits under section 80E of the Income Tax Act. Thus, it would be a decent start towards freeing yourself from debt very young, which will enable you to save more for your future, especially when you get married and have a family.
Fighting the monster called inflation, which continues to wreak havoc
Worried about rising prices of food items and every important thing in your day-to-day life? Prompt investment is the only way for you to fight inflation, especially for funding your children’s education, marriage, and your retirement plans. When you start spreading your income into Equity, Debt, Gold, and Cash at an early age, the returns that you will derive from these investments will help you fight inflation more effectively, especially at crucial junctures of your life.
The importance of having a life and health insurance cover
In today’s world, stress has become a buzz word at the workplace. Falling ill, developing allergies and other stress-related health conditions such as diabetes and high cholesterol has become a common feature. Therefore, sudden hospitalisation can take away a major chunk of your salary. Thus, starting a health insurance plan when you are young would cover you from such emergencies while providing you with the benefit of lower insurance premium owing to your age. Health insurance will not only cover you, but will also cover your family while giving you income tax benefits under sec 80D. Similarly, investing in life insurance cover would help you secure your family’s financial future in case of an unfortunate event.
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Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.