Essential Financial Planning Steps in your 40s

Nutan Gupta

20 Jun 2017

New Page 1

The value of the wine increases with time and so is the situation in a man’s life. He spends his youth in achieving his dreams, failing; rising and learning from his innumerable experiences. In his middle-age at around 40 years of age he becomes wise, learning from each phase and every mistake in his life. 40 is no more about himself but collectively about him and his family. And now is the time when he should be seriously thinking about his and his family’s future.

Financial planning is often prolonged until all the responsibilities of the family are met. Education fees of children, buying a house, medical bills of parents… all this seem to be a far bigger priority than saving in the correct financial plan. Retirement seems to be still very far and expert opinion from financial managers will be sought when one is ready for saving.

Not having a financial plan in place is a bad decision. 40 is the age when you should get your priorities set and begin saving for your different needs. We help you with simple tips to plan out your financial future in a secured manner in the ripe age of 40.

Do not delay the saving period any longer than 40. Time is crucial and ensure that all the aspects of your life are finely secured in your plan.

Planning for Emergency

At 40, you seem to be fit and fine and while you will always be young at heart, you cannot ignore the need for planning for an emergency and that emergency could be anything. Your financial plan should include a liquid fund that will take care of all your emergency needs, if such a situation arises.

Clearing Your Debts

A car loan, house loan, foreign trip loan…everything seems to be an immediate requirement at the young age of 20. 20 is all about spending and living in the moment. However, 40 is all about channelizing your income into savings and investments. Therefore, you should on a priority basis make an effort to reduce all your debt.

Reduce Non-Committed Expenses

At 40, your ideal goal should be achieving an increase in your savings. Therefore planning a budget is optimum to reduce your unnecessary luxury expenses. Ensure all your expenses are for your basic necessities.

Education Expenses

Saving for your child’s education is the most important goal in your financial planning. You want to give the best education to your kids so that they are able to fulfill their future dreams. In order to achieve all this, you need to start your preparation now. Make the right investments to meet your child’s education goals.

Retirement Planning

At 40s you still have to achieve a lot on the professional front and create milestones in your career. But 40 is perhaps the earliest and best age to start contributing towards your bright retired future. The returns you achieve should be able to beat the inflation rate to meet your old-age needs. Ideally every individual should take an informed decision on his retirement.

Life Insurance Plan

Securing the future of your loved ones in your absence is the best safety you could ensure for them. Invest in life insurance to make sure your family remains independent even without you. Go for insurance plans such as health insurance, disability insurance, home insurance, auto insurance, to get the right and maximum coverage plan in case of any unfortunate event.

Concisely speaking, financial planning in 40 is as much about your family as it is about yourself. Get a good plan that is derived post all the consideration of your expenses, goals and risk profile.

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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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Essential Financial Planning Steps in your 40s

Nutan Gupta

20 Jun 2017

New Page 1

The value of the wine increases with time and so is the situation in a man’s life. He spends his youth in achieving his dreams, failing; rising and learning from his innumerable experiences. In his middle-age at around 40 years of age he becomes wise, learning from each phase and every mistake in his life. 40 is no more about himself but collectively about him and his family. And now is the time when he should be seriously thinking about his and his family’s future.

Financial planning is often prolonged until all the responsibilities of the family are met. Education fees of children, buying a house, medical bills of parents… all this seem to be a far bigger priority than saving in the correct financial plan. Retirement seems to be still very far and expert opinion from financial managers will be sought when one is ready for saving.

Not having a financial plan in place is a bad decision. 40 is the age when you should get your priorities set and begin saving for your different needs. We help you with simple tips to plan out your financial future in a secured manner in the ripe age of 40.

Do not delay the saving period any longer than 40. Time is crucial and ensure that all the aspects of your life are finely secured in your plan.

Planning for Emergency

At 40, you seem to be fit and fine and while you will always be young at heart, you cannot ignore the need for planning for an emergency and that emergency could be anything. Your financial plan should include a liquid fund that will take care of all your emergency needs, if such a situation arises.

Clearing Your Debts

A car loan, house loan, foreign trip loan…everything seems to be an immediate requirement at the young age of 20. 20 is all about spending and living in the moment. However, 40 is all about channelizing your income into savings and investments. Therefore, you should on a priority basis make an effort to reduce all your debt.

Reduce Non-Committed Expenses

At 40, your ideal goal should be achieving an increase in your savings. Therefore planning a budget is optimum to reduce your unnecessary luxury expenses. Ensure all your expenses are for your basic necessities.

Education Expenses

Saving for your child’s education is the most important goal in your financial planning. You want to give the best education to your kids so that they are able to fulfill their future dreams. In order to achieve all this, you need to start your preparation now. Make the right investments to meet your child’s education goals.

Retirement Planning

At 40s you still have to achieve a lot on the professional front and create milestones in your career. But 40 is perhaps the earliest and best age to start contributing towards your bright retired future. The returns you achieve should be able to beat the inflation rate to meet your old-age needs. Ideally every individual should take an informed decision on his retirement.

Life Insurance Plan

Securing the future of your loved ones in your absence is the best safety you could ensure for them. Invest in life insurance to make sure your family remains independent even without you. Go for insurance plans such as health insurance, disability insurance, home insurance, auto insurance, to get the right and maximum coverage plan in case of any unfortunate event.

Concisely speaking, financial planning in 40 is as much about your family as it is about yourself. Get a good plan that is derived post all the consideration of your expenses, goals and risk profile.

Have Referral Code?