In this article, you will learn how to invest your money in your late teens or twenties. This topic is a question most people want the answer to. Questions like, ‘I am a student, and this is my pocket money, so what I can save and how do I invest it, and how do I think about my investment?’ You will find clarity to these questions through the solutions mentioned in this article. The earlier your start is investing, the more benefits you will get.
Loans
First & foremost, you should ideally not take a loan, or if you do, then it should be very less. Whenever you are taking a loan, you get bound in a way. For example, you may plan to buy a house early on. It is good that you want to buy a house. But remember, when doing so, you are bound in a way.
Now it is understandable in the case of a student loan. Maybe there may be a point that your parents can take this loan. It is still recommended that if you ever take an education loan, then take it in your name and not in your parent’s name. The good thing is that the interest rate on education loans is very less. But there are a few loans which you should not take for sure.
You should avoid taking loans such as a personal loan or car loan. If you want to purchase a bike, purchase the one that has the least EMI. You should find a fine, wise investment professional who will reduce and eliminate your loans in your twenties.
Insurance
Insurance is very important because insurance is essentially how you are preventing or planning for something unforeseen. Anything can happen; such is life. So there are 2 types of insurance: life insurance and health insurance. In life insurance, you should opt for a term plan, don’t get caught in the confusion that it is an endowment plan, a maturity plan. You will not be able to take a large cover and the least premium possible for all this.
When should you start investing?
When you are in your twenties, the best thing is that usually, you are not earning much. It is a starting salary, so most of your tax liabilities are very low. You are not paying much tax; many people are below the tax slab, which means that the in-hand income you get is the highest in terms of percentage. Which means you have the full potential to invest as much money as you can.
What is the right investment ratio?
Whatever you get n-hand in a month, invest at least 20 percent of it. The best part of the twenties is that no one expects you to be rich; no one expects you to have loads of money. So why don’t you use that to your advantage? Invest minimum 20 percent of your income.
