If you are a new salaried professional, the world is your oyster. You feel empowered, free and driven with an innate desire to self-indulge and lead a life you had always aspired. However, amidst all that excitement, the instinct to save and invest takes a back seat. Learning to manage personal finances while you are still young can reap immense benefits in the later phase of life.
There are more than one ways to save and manage one’s finances. But how does one gets started? To begin with, as opposed to general assumption, you don’t really have to be a financial expert to work out a clever investment strategy. You also don’t have to compromise on your lifestyle or curtail your spending in an attempt to save up. In short “don’t be possessed by the idea of saving”, instead inculcate the habit of smart spending and try learning about safe and popular investment ideas such as:
Equity-linked Saving Schemes
Economic times, India’s leading financial and business daily has credited five stars ratings to ELSS funds as the best tax- saving investment strategy. Before we get into the discussion regarding the technicalities of this highly rated investment plan, its relevant to understand what ELSS funds is all about. Equity-linked saving schemes or ELSS are equity mutual funds which has a majority of the corpuses invested in equities.
Such a scheme usually has a lock period of 3 years. Some regard it as a “High Risk” at the same time “High Reward” investment plan. As a young professional, you are at the least risk stage of your life; therefore investing in an ELSS fund can be a sound idea. Moreover, the market risk is very similar to any other diversified funds.
The best way to invest is ELSS fund is to make a Systematic Investment Plan or SIP, which will provide a protection from market fluctuation. By the end of 3 years, ELLS funds can offer returns which can be as high as 17. 8%.
Unit Linked Insurance Plan (ULIP)
ULIP or Unit Linked Insurance Plan is a highly scalable investment plan. Featuring second in the list, there are several benefits of ULIP including the flexibility to select high, medium and low risk investment option. In order words, you can select a policy depending upon your appetite for taking risks. ULIP is a great investment option for young working professionals because they are affordable and ideal for individuals who are newbie in the investment market and can give you return up to 9.8%, past three years.
Health Insurance Plans
Although health insurance policy does not directly qualify as a financial investment strategy, it is definitely an investment towards personal well-being. While, most employers provide a group health insurance policy to their employees, it is always advised to take up an Individual health plan. Besides obvious advantages like cashless treatment, hospitalization and medical care, health insurance policy helps save tax under the section 80 D of the Income Tax Act. Tax deductions are also a great away to swell your saving and finances. But does a young person, healthy and fit needs an individual health insurance plan? HDFC ERGO, health insurance in India urge young professionals to take up individual plans to avoid unwarranted expenses arising due to a medical emergency.
Employee Provident Fund (EPF)
EPF or Employee Provident Fund is your savings for the future. Although the government has made EPF optional for employees who get salary below a threshold, EPF are great saving options for salaried persons.
A young person has an appetite for taking risk and if he or she can set timelines for investment, the prospects of securing one’s future is certain. Savings and investments done in a disciplined and systematic manner can help you achieve your financial goal within no time.