Here's an investment guide for people in their late 20s and early 30s
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Here's an investment guide for people in their late 20s and early 30s

Most youth do save, and some up to a fourth of their income. But what a majority of them falter at is investing- investing intelligent.

BT Online   
  • November 26, 2016  
  • |  
  • UPDATED   10:19 IST
Here's an investment guide for people in their late 20s and early 30s

Most youth do save, and some up to a fourth of their income. But what a majority of them falter at is investing- investing intelligent.
 
MONEY TODAY presents a step-by-step primer for young investors.
 
What Loan?

There are good and bad loans. Good loans are used to build assets such as a house. Bad loans don't create assets and are used to buy home theatre, PDA, etc. Debt service ratio (monthly loan payment as percentage of monthly take-home income) indicates your repayment ability without stretching your resources

  •  Home loan: can invest up to 40-45% of your income
  • Auto/personal loan: should not be more than 20-25% of income
  • Credit card repayment: no more than10-15% of income
  • Total debt servicing not more than 40-45% of pay

 
Retirement Planning Now?
 
Plans to holiday and travel after an active career needs to be well funded. Power of compounding helps you amass a huge retirement corpus; the earlier to start, the bigger it gets

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  • Contribute into pension plans that are market-linked to cushion against post retirement blues.
  • Park 7-10% of income to start an SIP in equity mutual fund as equities tend to beat other asset classes over the long term.
 
Buying Stocks?
 
A high-risk and high-return investment. There are options like IPOs (initial public offer), mutual funds and direct equity Start safe with a mutual fund; you can do so with a SIP (systematic investment plan) and then look at other investing options
  •  Bonds and deposits are fixed return in nature, best avoidable for those under 30
  • SIPs into any well-performing fund scheme is a good way to safe and discplined stock investing