Financial Planning: Points to Make You Rich in the New Decade
Determine your long-term financial objectives.
As we enter the new decade, it’s critical to determine your long-term financial objectives correctly. Whether in college, working, or nearing retirement, you must carefully define your goals. For example, today’s college students will begin working in the next decade, so they should prioritize repaying their university loans, building a contingency fund, saving money for the future, purchasing a life insurance policy, and focusing on buying a car or house.
Similarly, adults amid their careers should set goals like paying off their mortgage promptly, maintaining proper insurance, and saving for their children’s future. Those planning to retire should concentrate on their financial goals of being debt-free and retiring with enough money to maintain their standard of living when their income sources run out.
Consider inflation when investing.
The average inflation rate in the last decade was lower than the last decade’s rate. Moderate inflation is predicted to stay slightly lower in the next decade than this decade. As a result, rates on fixed-income instruments like PPFs and bank FDs are expected to fall. The stock market is likely to become more stable and robust in the next years. As a result, you should consider the influence of inflation on your investment returns while making decisions. Diversify your portfolio appropriately and invest only according to your risk appetite. You can invest in PPFs, NPSs, mutual funds, sovereign gold bonds, ETFs, and other securities.
The emergency fund is critical in restoring your confidence in the face of adversity. So, whether you’re young, in the middle of your career, or retired, keep an emergency fund of at least six months’ worth of costs to deal with any financial difficulties. As your living expenses and obligations change in the future, keep adding to your emergency fund.
Adjust your insurance policies as needed.
It would help if you started or raised your critical insurance coverage depending on your age and career level. If you want to begin working in the next decade, you should purchase a life and health insurance policy with enough risk coverage. If you currently have these policies, you should make minor adjustments. Medical inflation is the biggest compared to other types of inflation, so it’s critical to be well insured to avoid high hospitalization costs. Similarly, it would help if you were prepared to protect financially dependent family members by purchasing a life insurance policy at least 10 to 20 times your current yearly salary.
Should you rent or purchase a home? Make your decision.
Because the land bank is limited, housing will be a major difficulty in the coming decade, and with a growing population, property demand is likely to skyrocket. So, decide immediately if you prefer to live in a leased property or own one. Make it a goal in either case and begin channeling your money and investment returns to meet your deadline.
Make plans for your children’s schooling.
Higher education expenditures have risen dramatically in the last decade, and this trend is unlikely to continue in the next. So, as early as possible in your work, prepare to save enough money for your child’s education so that you don’t have to take out a loan later on. To that aim, create a separate financial goal and explore recurring investments in vehicles like PPFs, SSYs, and SIPs.