Mumbai: PGIM India Mutual Fund released its compendium, ‘Renew Recharge But Never Retire,’ on June 24, 2024. It compiles 50 hobbies/gigs that can be monetised, helping one pursue financial independence in later life. According to a recent study published in ‘The Lancet’ by Mutual Fund PGIM India, people will live more than six years longer on average in 2021 than they did in 1990. The study indicates that India’s life expectancy has improved by eight years in the last three decades.
Longer life expectancies demand more thoughtful preparation to guarantee a safe and comfortable transition after the post-employment phase. This becomes a crucial factor for the younger generation, which wants to retire early. Prudent investing is just as important as saving in an effective financial plan to beat inflation and protect the value of your investments.
You can protect yourself from rising expenses by carefully planning your finances for each stage of your life. However, simply saving money will not be enough; you must ensure it grows over time by putting it to good use. Let’s take a look at how you can boost your financial savings for different life stages:
Savings during your 20s and 30s:
Individuals in their 20s and 30s are just starting in their new professions, getting married or becoming a new parent. This stage also indicates that young adults are positioned for financial progress, however, with relatively low incomes to moderate incomes. On the positive side, they stand to gain a great deal from early financial planning because they will have a longer investment horizon and can afford to take on greater risk when making investments.
Understanding the principles of personal finance is crucial since they will come in handy later. Stocks, mutual funds, and exchange-traded funds (ETFs) are a few investment options with substantial returns that they can explore. Also, starting early in mutual funds and stocks lets one take a higher risk to clock that double-digit growth for the investment portfolio.
Financial protection is the base of any financial plan and essential for a secure financial future. Protect your family with term life insurance in case of untimely death. Consider a family floater health plan for hospitalisation coverage, which can again in addition to your already corporate health insurance plan. It’s important to remember that insurance should be seen as pure risk coverage, not as an investment, in line with sound financial planning principles.
The 50:30:20 rule, which states that a person should spend 50% of their income on needs, 30% on wants and desires, and the remaining 20% on savings and investments, is one strategy to consider while investing. This guarantees decent savings and financial progress during their early professional years.
Savings during 40s and 50s
When middle age arrives, this is the best time from financial expansion to sustainable and accumulated wealth. At this point, avoiding debt as much as possible is important, and saving should take precedence. Although saving 35–50% of one’s salary is seen to be desirable, there are a number of other criteria that come into play.
Investing in balanced funds along with stocks should help moderate equity risk. One should start investing in large-cap funds that invest in well-established companies’ stocks. These companies are reliable, trustworthy, and financially sound. If someone already has a portfolio, go over it again to allocate to various asset classes and lower the proportion of riskier investments.
Savings during 50s and 60s
In your 50s and 60s, keep shifting your retirement investments toward debt. Having a passive source of income is beneficial. The Senior Citizens’ Savings Scheme (SCSS) and the Post Office Monthly Income Scheme (POMIS) are two investment alternatives. Mutual funds, fixed deposits, and RBI floating-rate savings bonds are a few other options for making passive income.
As per the PGIM India Mutual Fund, learning new skills that continue to keep you active not only counteracts this decline but also provides a sense of accomplishment and purpose. “Research shows that retirement may lead to a decrease in mental stimulation, which can impact your cognitive health and affect your physical health. The simplest way to generate a source of income during your later life is to utilise your skills, experience and contacts in the field where you have spent most of your working career. Alternatively, you can work on building a passion/skill which you already pursue as a hobby and monetise it,” says Ajit Menon, CEO, of PGIM India Mutual Fund.
By carefully planning your finances for each stage of your life, you can protect yourself from rising expenses. However, simply saving money will not be enough; you must ensure it grows over time by putting it to good use. Learn the ways you can boost your savings at different life stages. Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
