There can be many reasons for starting late with your investments. Maybe it’s because you were a big spender, a procrastinator, or experienced more than your fair share of setbacks in life. Whatever the reason, if you are finding yourself behind, you’re not alone. And the good news is it’s never too late to begin.
Given below are the tips which will help you through your investment journey:
- Set a date to start investing
Although you feel that you have started late, remember, the best time to invest is now. You need to invest whatever you can today and move steadily towards a secure tomorrow. The key lies in investing regularly and methodically and letting the magic of compounding work for you.
So, set a date, list down your goals and start investing towards them. Remember, your investment horizon is a key factor in picking investments. Having an idea about your investment horizon is extremely crucial as it will help you analyse how you can utilise your funds. Generally speaking, the more extended your timescale, the more risk you can stand to take.
- Crunch Some Numbers
Before making any investment decisions, make yourself aware of where your money will go, i.e. where you will actually invest. Do some investment related calculations like- risk factors, type of investments, their rate of returns and your period of investment.
You must have a clear idea about your monthly income and expenses and how much you need to invest to attain each of your goals.
For instance, if your investment objective is to save for your child’s education, it is essential to calculate the future value of the corpus required after adjusting for inflation. This will help in saving just the right amount, no more, no less. Similarly, if you are planning to invest for your retirement, first consider your current monthly expenses. Then assume an appropriate inflation rate to find out how much your expenses will be after retirement. This will provide you with the amount of inflated monthly expenses you would need during your golden years.
- Get Professional Help
Investment decisions taken due to lack of knowledge or ignorance can turn out to be wrong and can lead to losses. Getting professional advice can help you choose the right investments and build a suitable roadmap. This can be especially true if you are a beginner. For instance, your immediate need may be a health insurance plan and not a life insurance plan if you do not have financial dependents.
A financial adviser can guide you in managing your finances, whether it’s adjusting your debt obligations, or saving to purchase a house. The goal could even be putting money aside for a vacation, or maximising income after retirement or guaranteeing that your family is secured if something happens to you. The correct advice will enable you to accomplish your objectives quicker and more effectively.
- Consider Investments with Auto Switch Options
Going for investments with auto switch options has its own advantages. The option of switching funds gives you the freedom to monitor the performance of your investment and reallocate your units accordingly. For instance, if a particular fund in the portfolio is not working for you, you can transfer units to a different fund (partially or completely), which is known to yield better returns. One such investment option that offers the auto switching feature is unit-linked insurance plans (ULIP). Best ULIP plans give you the flexibility of free switching between funds to effectively manage the portfolio asset allocation.
Investing in a best ULIP plan means spreading your risk and your investment across different asset classes. This ensures that your returns are balanced, and the overall risk of your investments is reduced.
- Stop Worrying and Start Investing in Yourself
One of the main reasons you may be delaying investment is because you don’t think you have enough knowledge to invest. So, what is a better option?
Invest in ‘investment knowledge’. One step at a time. There is more information than ever about every investment option now. It is everywhere, news newspapers, internet, and even at cocktail parties.
Having weekly updates on overall market conditions could prove beneficial. It will help you to stay current and focused. Also, reading on a regular basis will keep investing on your mind, and will present new ideas. Additionally, the more you know, the higher risk you can take. Thus, investing in yourself will help improve the quality of your life and finances, defend your portfolio from unnecessary losses and most importantly, provide peace of mind around money.
- Set a Date to Repeat the Process
One of the biggest problems with achieving investment goals is keeping your eyes only on the prize. You may well have faithfully followed each of the above steps so far, but it won’t be enough unless you regularly review what you are trying to achieve, why, and how.
As your investment and income grow, you need to review your progress toward your long-term financial goals. After every few years (2-5 years), repeat the steps of finding and setting aside the money to invest, analyse your investment results and review your financial protection.
Conclusion:
Regardless of whether you begin late, it’s always possible to build secure investment plans by thinking about your future lifestyle, sources of income, and having a tad of investment discipline.
Yes, beginning investing late is harder than beginning in your 20s. In any case, it’s fundamental that you begin!