How do you make up for lost time when you have started planning your finances, especially your investments, after a late start. The second part of a two part series
Edited Highlights
0:21 This video is the second part of a two part series on what you need to do to recover from a late start
0:27 The first video talked of the overall approach. This video discusses the action you need to take on the ground
1:37 Even before you start investing, ensure that you have insurance cover for all the major risks
2:01 After a late start, the last thing you need is savings being used up in an emergency
2:32 So, you need to buy life insurance
2:50 Then, you need to have health insurance
3:03 You also need home insurance and accident insurance
3:15 Get critical illness insurance too
3:27 Remember, no matter how good your investments, it will take just one emergency to wipe all of it away
3:52 Second step is about creating assets which will create future income or save money for you in the future
4:10 This involves opting for a pay structure that has enough retirement benefits such as provident fund, gratuity, superannuation fund
4:26 There could be National Pension Scheme subscription
4:33 Future assets could also get created through stock options or regular bonus
4:48 Equally important in the area of creating assets is buying homes
4:56 Try to buy a home early on so that you have retired home loan much before retirement
5:16 A late taking of home loan can adversely impact your savings for child's higher education and your retirement
5:45 Avoid using up future income through consumption loans and credit card debt
5:55 You can take home loan since its saves you rent in the future while education loans enhance your pay
6:22 Loans like personal loans and credit card EMIs besides roll over of credit card debt needs to be avoided
6:40 Remember, you are trying to balance your future requirements and current requirements
6:50 Since you have less time to save for your future needs, you need to ensure that your future income is not used by loans
7:02 Next part is having a good investment plan that recognises the fact that you have less time
7:12 Your investments need to take care of bunching up of requirements
7:47 Make priority list of your financial goals starting with the most immediate need
7:56 The nearer the requirement, less risk you take in your investments for the need
8:36 For periods upto 4 years opt for debt funds. For goals of 5 years away or a little further consider balanced funds
9:13 Ensure that you pay the lowest premiums for your insurance plans so that you have enough to invest after paying for protection
9:20 This means, for example, buying a term plan and that too online, to save on premiums
10:08 For longer term requirements you need to make investments in equity funds
10:14 Equity funds are great for requirements that are 8-10 years or more away
10:22 You can invest in systematic investment plans or SIPs in equity funds
10:48 Increase your regular SIP amount as your income grows
