Usually, one gets the first job at the age of 24 or 25. While time is on their side, and the responsibilities or an immediate need for money is not much. Investment and building resources can be started until one decides to get married or buy first house, or first car.
One should not start investing randomly in anything. One should have a clear understanding of what the money goals are and how the money can align with the financial goals.
Before investing, it’s important to break down the goals into short-term and long-term goals. If one wants very high returns within a short period, one needs to invest accordingly, but that can be risky.
The first thing to do is to build a liquidity margin of at least three months of expenses. Also, there may be many indulgences and things on which one may want to spend like a mobile/ laptop/ vacation etc. It would be a good idea to save up for all these too instead of buying these on loans.
A young person can look at equity investments with a long-term view, in a monthly mode. Beyond that one can also invest in appropriate debt options etc., as per the dictates of the particular individual.
According to experts, one must earmark 33 per cent to 40 per cent towards savings. The easiest to start to ensure a balanced asset allocation are public provident fund (PPF), and equity-linked saving scheme (ELSS). Both give tax benefits and both form part of different asset classes.
Compiled by Syed Muskan
