5 Financial Priorities When You Turn 40

Sumit Kati

10 Jul 2017

Whether it’s your 20’s, 30’s or your 40’s, every decade brings its own set of experiences and expectations. However, it can be said that there is something sweet about your 40’s. You are more or less settled in your life, where you have a fair idea of what your future will be like.

This decade also signals the approach of your retirement, and hence, you cannot afford to make any financial mistakes as opposed to your carefree 20’s where new things were considered adventurous and worth a try.

Following are the five priorities that any 40-something should abide by :



1.Make Sure You Are Insured
There is a big difference between being insured just for namesake and being adequately insured while taking your lifestyle into consideration. Don’t delay in buying the right insurance policy[Keywords are added in Bold in the article. Please make sure to add keywords in the article and make them bold from the next time. ] as there is a hike in premium rates as your age progresses. 
Term insurance is a great way of getting a high-risk cover as well as keeping your savings intact. A comprehensive health cover is a must as well in the face of ever-rising healthcare prices. 

2.Get Your Family Involved 
Many don’t realise it, but it makes a world of difference when our family members are in sync with our financial goals. Whether it’s your parents or spouse, by aligning your financial plan with them, you can save more as opposed to going at it alone. Even a minuscule amount at present can add up to great savings for the future. 

3.Learn Something New
Just because you are in your 40’s doesn’t mean that you have to settle down completely. Mix up that routine by practising a skill that you’ve always wanted to master. This also prevents the eventual complacency that comes with getting used to your regular work.
A well-learned skill can translate to a new side venture which will lead to you earning and eventually saving more money for your retirement corpus. 

4.Wipe Off Your Debt
Without you even knowing it, being in debt takes away a huge chunk of your future savings. Thus paying off all your high-interest debt (other than long term home loan) is the first step towards being financially sound. 
Start using portions of your bonuses or even tax refunds to pay off your high-interest credit card bills and other accrued debt, or else you will end up losing a huge chunk of savings in interest payments. 
It also makes sense to start organising your expenses. By now most of your bills should be on auto pay which makes your expenses streamlined and easier to keep track of. It also saves valuable time. 

5.The Retirement Goal
There is no better time than your 40’s to seriously start building up your retirement savings. Create a retirement fund and keep a portion of your income dedicated towards its growth. You can also invest in Public Provident Fund and National Pension Schemes by the government for better returns. 

In a nutshell


As the saying goes, ‘It’s better late than never,’ take control and manage your finances well in your 40s so that they take care of you when you need them later. A better plan would be to have an organised approach by  getting a financial planner/portfolio manager to draw up a retirement portfolio for you.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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5 Financial Priorities When You Turn 40

Sumit Kati

10 Jul 2017

Whether it’s your 20’s, 30’s or your 40’s, every decade brings its own set of experiences and expectations. However, it can be said that there is something sweet about your 40’s. You are more or less settled in your life, where you have a fair idea of what your future will be like.

This decade also signals the approach of your retirement, and hence, you cannot afford to make any financial mistakes as opposed to your carefree 20’s where new things were considered adventurous and worth a try.

Following are the five priorities that any 40-something should abide by :



1.Make Sure You Are Insured
There is a big difference between being insured just for namesake and being adequately insured while taking your lifestyle into consideration. Don’t delay in buying the right insurance policy[Keywords are added in Bold in the article. Please make sure to add keywords in the article and make them bold from the next time. ] as there is a hike in premium rates as your age progresses. 
Term insurance is a great way of getting a high-risk cover as well as keeping your savings intact. A comprehensive health cover is a must as well in the face of ever-rising healthcare prices. 

2.Get Your Family Involved 
Many don’t realise it, but it makes a world of difference when our family members are in sync with our financial goals. Whether it’s your parents or spouse, by aligning your financial plan with them, you can save more as opposed to going at it alone. Even a minuscule amount at present can add up to great savings for the future. 

3.Learn Something New
Just because you are in your 40’s doesn’t mean that you have to settle down completely. Mix up that routine by practising a skill that you’ve always wanted to master. This also prevents the eventual complacency that comes with getting used to your regular work.
A well-learned skill can translate to a new side venture which will lead to you earning and eventually saving more money for your retirement corpus. 

4.Wipe Off Your Debt
Without you even knowing it, being in debt takes away a huge chunk of your future savings. Thus paying off all your high-interest debt (other than long term home loan) is the first step towards being financially sound. 
Start using portions of your bonuses or even tax refunds to pay off your high-interest credit card bills and other accrued debt, or else you will end up losing a huge chunk of savings in interest payments. 
It also makes sense to start organising your expenses. By now most of your bills should be on auto pay which makes your expenses streamlined and easier to keep track of. It also saves valuable time. 

5.The Retirement Goal
There is no better time than your 40’s to seriously start building up your retirement savings. Create a retirement fund and keep a portion of your income dedicated towards its growth. You can also invest in Public Provident Fund and National Pension Schemes by the government for better returns. 

In a nutshell


As the saying goes, ‘It’s better late than never,’ take control and manage your finances well in your 40s so that they take care of you when you need them later. A better plan would be to have an organised approach by  getting a financial planner/portfolio manager to draw up a retirement portfolio for you.

Have Referral Code?