How to Invest With Less Money or Within a Budget?

How to Invest With Less Money or Within a Budget?

While financial freedom excites every youngster when in your early 20’s, financial planning or wealth creation is generally found to be mundane at this age.

Rightfully so because your focus then is mostly on repayment of debts like educational loans, managing living expenses, discovering newfound city life, partying with friends, buying gifts for loved ones, latest gadgets and accessories, etc. The wish is to live life king-size with newfound financial independence.

Flashing of the plastic money shimmering in the wallet gives a different high to most at your age too. In the process, some of you tend to go overboard and spend beyond your actual income at times.

This is simply because living on a budget is not thrilling at all. Result? You land up making money mistakes and the consequences could be draining and long term. The wrong notion about financial freedom may lead you to this situation.

Financial freedom has different degrees to it; the most coveted one is when you have enough money to cover all your living expenses without you having to work for it anymore.

You are free to do what you feel like doing without worrying about earning money to meet your ends.

Naturally, other than those born with a silver spoon in their mouths and with large inheritances, most of us will mostly spend all our lives accumulating such kind of wealth, if at all.

However, the brighter side of the story is that you can still achieve a decent degree of financial freedom well ahead in life and feel liberated if you start saving and smart investing with small budget in your early 20s itself.

Yes, you do not need a huge income to have spare money to set aside for savings and investments aimed at wealth creation. Just start investing with little money as a habit every month to accumulate a decent fortune over a period of time.

How to Invest With Less Money or Within a Budget?:


1) Is it Possible to Invest with a Small Budget?:

This is possible because you have time on your side. Remember- ‘all investments are like little children; they grow better with time.’

Time has the power to help your money grow and compound itself to accumulate your much-desired corpus over periods of 7, 10, 15, 20, 30 years; in short, in the long run.

There are various investments for beginners that can help you build extraordinary wealth in future even if you start with disciplined small investment ideas in your early 20s.


But is it really important to Invest? I am so young!

Till about four to five years ago, young performers at the workplace could vouch for good job opportunities in the market and yearly salary increment as well.

However, over the past few years, the Indian economy is not doing well resulting in a crisis in the job market that has been made worse by the Covid-19 pandemic.

While youngsters are finding it difficult to get a suitable first opportunity for themselves, the youth in their 40s and above are losing their jobs and are being replaced by resources at a lesser cost.

To top it all, the past year and a half has been the havoc job loss in India contributed to by the ongoing pandemic. This has left the salaried class shaky in terms of career and income opportunities irrespective of their ages.

This makes financial planning and investments in your early 20s crucial to make sure your money works for you and help you tide over any unforeseen financial exigencies in life.

Just before beginning with the investment, ask yourself this 5 Questions for Personal Financial Planning

2) What should I do then? How to invest in 20s?:

There are options galore for investment for beginners. So start investing with small investment ideas/options having clarity of your financial goals. This will ensure your wealth accumulation simultaneously with an increase in your income.

However, before you do those, you need to put some checks and balances around few things –


Check #1:

Track your Credit Cards: Even before you prepare your monthly income vs. expenditure statement, you must take a look at the bunch of credit cards you use. Do you have an account on how much you spend on each one of them?

What are the payment cycles for your cards? Are your cards clear of their debts? Or have you fallen prey to revolving credit?

Are you aware that you pay interest rates as high as 40% on your cards in India?

No investment assures you that high returns ever. Thus paying off your credit card debts will ensure you have this valuable little money at hand to invest and make it work for you every month.


Mistake to avoid:

  • You do not need so many credit cards – it is just a feel-good thing. It is prudent to keep just one credit card for travel and the convenience of payment.
    • Ensure you set a reminder on your cell phone to clear your credit card dues on/ before time every month.
    • Auto debit mandates make payment of credit card and all other utility bills seamless and prevent any late fines/ interests.


Check #2:

Do I budget my expenses: While we agree that there is no thrill in living on a budget, we know that the benefits associated with making a budget outnumber an otherwise habit.

Thus make a list of your income and expenditures for a month. The difference will give you the amount of money saved. If your monthly “miscellaneous” expenses are as high as the sum of your loan repayments, rent and utility bills, groceries, medicines, etc., then you should definitely take a closer look at the former list to check for items you can live without to divert the amount into a fruitful investment for beginners.

Remember, if you are single with little financial responsibility at the moment, you should ideally follow a 50:30:20 rule.

Those who achieve financial freedom early in life have been seen to wrap up their complete living expenses within 50% of their monthly income.

You should ideally save/ invest at least 30% of the income and can look at spending the remaining 20% per your free will!


Mistake to avoid:

Most millennials have no concept of savings in their scheme of things. They spend their money on free will without a thought for tomorrow. By the middle of the month, their accounts run dry in many cases.

Credit cards and loans see them through the rest of the month. Hence they have no money to save/ invest for the future.


Check #3:

My Basic Needs: Smart investing with small budget is the key when on a budget. So if you are wondering how to invest in 20s, then you must first consider investing in a health insurance plan and a term life insurance plan before thinking about anything else.

This is because the younger and healthier you are, the cheaper these policies are in your pocket.

With age and deteriorating health, both these investments in insurance get expensive for the nature of the investment.

Going through the ongoing Covid-19 pandemic must have made it clear why having a health insurance cover is a must for both the young and old.

The unprecedented rise in health care costs makes health insurance a must-have irrespective of where you are in the country and even if you are covered to an extent by your current employer.

A 5 lakh cover will cost anything between INR 3000 and 7000 a year (comes to INR 8 to 19 per day) for a Gen-Z in their 20s (source policy

You must also consider taking a life term cover of at least 22 times of your annual income in your twenties as permitted by IRDA to protect your loved ones from any financial burden in the face of uncertainties like death, disease and disabilities.


Mistake to avoid:

Millennials and Gen-Z have this notion that they are too young to get health insurance and/ or life insurance coverage on themselves.

They do not think about it till such time they either get married or are required to shoulder serious family responsibilities due to the untimely demise of an earning parent(s).

Thus it is strongly advised that if you feel responsible towards your parents and/ or planning a family shortly, book your Insurance Planning appointment with Koppr today!

This would save you and your loved ones from financial distress in the face of any exigencies.


Check #4:

My financial goals: Planning any investment for beginners requires an understanding of the financial goals of the investor. So what are your financial goals?

Most youngsters are seen to invest in an off the shelf retirement plan as their first investment without putting much thought into it.

Remember if you are on a budget and wondering how to start investing with very little money for you to choose the best investments for low budget; you will need to consider various parameters that will help you determine your financial goals and make a financial plan best suited for you.

These parameters can range from your –

  • Age,
  • Life stage – single or married, with/without a child,
  • Financial dreams you wish to achieve in life,
  • Timeline you have to see your dream come true,
  • Investment capacity and
  • Risk appetite, etc.

Mistake to avoid:

Not having the ‘big picture’ of your life defined is one of the biggest mistakes youngsters make in their 20s, simply because ‘you will have to see the ball to hit it’ towards your destination.

A clear roadmap of life goals helps to plan the finances judiciously, even if the budget is small to start with. Achieving any milestone takes a lot of effort and focus.

To help you plan your finances and your financial goals/ needs, learn about easy financial planning. For further query and support, we will be happy to help you.


Check #5:

Create Emergency Fund: If you are reading this article you are definitely lucky to have survived the ongoing landscape-scale global crisis created by the Covid-19 CoronaVirus.

Goes without saying you have realised how uncertain life is.

So is work and career. Thus to mitigate unforeseen financial exigencies arising out of medical contingencies, job loss, etc., an emergency fund will surely come to the rescue, especially if you have education and/ or other loans on you.

You should ideally have about 6 months of salary in your contingency fund. To build this fund you would just need to siphon off a part of your monthly salary through an auto-debit mandate into a separate account for a chosen period of a few years.

Recurring deposits and FDs too are often used to build emergency funds to tide over future financial exigencies.


Mistake to avoid:

Youngsters in their 20s are generally in denial of any emergency/ exigency that they may face. It is as if for the rest of the world, but not them.

As a result, they would choose to spend more money in wining and dining out or splurging on upgrading the latest gizmos.


So whenever you have a strong urge to update your gadget or give in to impulse buying, because it is a ‘cool thing to do/have’, we urge you to Stop. Step back. Think. Act. i.e. Stop before making the final decision.

Step back and think whether you actually need the thing. What is at stake if you don’t own it? Can this purchase be deferred? Then Act judiciously and with maturity.

Having said that, it is natural that a youngster like you will still get influenced by friends when you see them splurging and spending money and partying in the name of enjoying life.

But if your objective is to achieve financial freedom earliest in life, you will need to act differently.

That will help you lay the foundation for a brighter financial future compared to others in your batch. Remember you will still have at least 20% of your income to spend the way you want!

Read our 5 top reasons on Why you should start investing in yours 20’s.


Earning Rs 30,000 Monthly? Here’s How to Invest & Plan Your Money with Rs 30,000 Monthly



3) How to start investment with small amount?:


1) Choose Risk for Return

There are various options for investment for beginners. Given you are in your 20s, you have time on your side.

Time is the most important ingredient that can help your money multiply manifold if you choose to invest in equity or equity-related instruments. These instruments are known as ‘high risk – high return’ vehicles that are known to build wealth over time as they are capable of beating inflation, unlike most of the other debt instruments.

The best thing widely appreciated about Gen-Z and late millennials is your risk-taking capacity and your desire for continued learning and application.

Whether in making a career choice or otherwise, your risk appetite is generally much higher than in earlier generations. Moreover, you would be mostly single with lesser financial responsibilities, maybe just wedded without a child at the moment.

Thus investments in equity and related investment options would make an ideal choice for you.

These investments can comprise direct equity/ stock/ shares, equity mutual funds, ETFs (exchange-traded funds), SIP in stocks and mutual funds compared to low earning debt instruments.

SIPs (systematic investment plan) in equity mutual funds can be your first best bet.


Let us take a look at a scenario to check how allocating a budget on mutual funds can help you in your wealth creation.


Scenario #1:

Recurring Deposit vs. SIP Say, you invest INR 2500 in a Recurring Deposit in a bank for 10 years, earning you a 5.5% ongoing interest rate.

So total monthly investment would sum up to INR 3,00,000 in 10 years that will earn you a total interest of INR 1,00,048 at maturity. The total maturity amount would be INR 4, 00,048.


Refer to the table below.

RD vs. SIP Recurring Deposit SIP in Equity Mutual Fund
Instalment amount INR 2500 INR 2500
Term of investment 10 10
Term to maturity 10 10
Rate of interest/ Return 5.5% 10%
Total amount deposited INR 3,00,000 INR 3,00,000
Total interest/ return earned INR 1,00,048 INR 2,16,000
Maturity Amount INR 4,00,048 INR 5,16,000


On the other hand, if you invest the same amount of money for the same term to maturity in an equity-based mutual fund as an investment for beginners, your total yield would stand at INR 5,16,000 at maturity.

Return considered is at a modest 10% where on average the return varies between 10% – 12% compounded annually.

The good thing about any SIP is that irrespective of the market fluctuations, the law of average gets applied to your investments to get you above-average returns from the market.

This surely makes SIP a much better choice of investment for beginners.


2) Choose Long Term

Given the fact that you are in your early 20s, it is natural that your financial goals like children’s education, purchasing a second home or an expensive car, a luxury vacation and retirement are more than a decade(s) away.

In fact most of the times it is seen that the goals are not very clear among youngsters of your generation.

In this scenario, if you want to know how to start investing with very little money, we would strongly advise you to think long term as none of the aforesaid financial goals are likely to surface before 7 to 10 years and beyond.

The advantage in this is that your money will get enough time to work for you in generating wealth/ corpus to your satisfaction while you can pay attention to your career development, nurturing hobbies, among other things.

You just have to ensure that you never give up on your habit of saving and investing a budget on mutual funds. Yes, SIPs in mutual funds and ETFs are excellent ways to generate wealth for those with limited knowledge of stocks and other equity investments.

You have a diversified portfolio managed by dedicated fund managers that helps you minimise your risk even though you are exposed to equity-related investments; only because you have chosen to invest for the long term.

Refer to the table below.


Scenario #2:

Say you are 20 years old today. A SIP of INR 2500 in an Equity Mutual Fund for 7 years at the rate of a 10% return yields a return of INR 3, 05,000.

However a SIP for 10 years gets you a return of INR 5,16,000; and the same fund, if kept in the fund for 20 years without further feed, maturity amounts to INR 13,98,000, against an INR 3,00,000 investment.

And, say if you feed your same SIP for 20 years at the same rate, and leave it in the fund for 30 years from today, your corpus stands at a whopping INR 51,82,000 against an investment if INR 6,00,000 only. Such is the power of compounding!

Isn’t this magic unfolded!

SIP in Equity Mutual Fund SIP in Equity Mutual Fund SIP in Equity Mutual Fund SIP in Equity Mutual Fund
Age Age 25 years Age 30 years Age 40 years Age 50 years
Instalment amount INR 2500 INR 2500 2500 2500
Term of investment 7 10 10 20
Term to maturity 7 10 20 30
Rate of interest/ Return 10% 10% 10% 10%
Total amount deposited INR 2,10,000 INR 3,00,000 INR 3,00,000 INR 6,00,000
Total return earned INR 95,000 INR 2,16,000 INR 10,98,000 INR 45,82,000
Maturity Amount INR 3,05,000 INR 5,16,000 INR 13,98,000 INR 51,82,000


Best part of such investment for beginners and others in general is that it provides you with the liquidity to withdraw money against units as required without having to break your investment.

With investments in multiple SIPs, you are sure to get enough support to fulfil your goals or wealth creation for various long term financial goals in life. SIPs in ETFs to yield good returns.

And did I also tell you that you can start a SIP with only INR 500 a month! Isn’t that a great opportunity to start investing today!

As your income increases or you get incentives and annual performance bonuses, you can also start buying a few stocks of companies that are fundamentally strong; as they too are known to accumulate wealth over long periods of time to help you live your long term financial dreams.

Remember equity investments yield the best return in the long term.

However, you should not invest and forget about these investments. Rather you must keep a track of your investments and consult with your financial advisor from time to time to review your portfolio as the market fluctuates between high and low.

Sometimes you may need to reallocate your funds between stocks, funds and bonds to maintain and safe keep your returns.

You can learn more about financial planning and ways to monitor your investments download Koppr app on Playstore


Learn more about the power of compounding


3) Tax saved is money made:

In case you are a risk-averse person and/ or have some financial goals to achieve within 10 years, then there are various debt and equity-related instruments to invest your money in.

It is wise to choose instruments that will also help you save on your annual tax burden. A few of such investment for beginners is –

  • Bank fix deposits – it earns you an exemption amount invested U/S 80C if the term is 5 years.
  • Public Provident Fund – it can be maintained with a minimum annual investment of INR 500. It has maturity after 15 years but there is liquidity after 7 years. Principal invested is tax-efficient U/S 80C and gets you about 7.1% tax-free interest.
  • Equity Linked Savings Schemes (ELSS) – a tax-efficient mutual fund option with maturity in 10 years. It has a lock-in for 3 years as it is tax-efficient U/S 80C.
  • Debt mutual funds and bonds – they generally get you better returns than bank FDs and perform best when the equity market falters. This is because the debt and equity market are inversely related.


All these make it obvious that there is no foolproof method to wealth creation. However, in order to build wealth in the long run, you need to be disciplined and keep investing/ saving regularly, even if the amount is small to start with.

You also need to have basic knowledge of financial planning and financial instruments to enable smart investing with small budget on a regular basis once you have a solid action plan.

This knowledge will support you to consult with your financial advisors and engage in knowledgeable discussions around your investments so that over a period of time you will be in a position to manage and monitor your investments independently. No need to get any formal degree in financial planning for that.

However, to enhance your knowledge of financial planning, you can just spend some time on the Koppr app and do a quick online course on Relationships and Finances to kick start your journey towards building wealth right from your 20s.

Find latest banking and finance news including stock news insurance news, personal finance and more only on Koppr App. Download Now!


Escape the World of Being Broke in Your 20’s & Become Extraordinary with these 4 Steps

Escape the World of Being Broke in Your 20’s & Become Extraordinary with these 4 Steps

Wealth creation is usually not on your priority list when you are in your twenties. More focus lies on career building, exploring new restaurants, enjoying party life and paying off the student debt etc.

The twenties are the time when you ‘make many mistakes and learn’. These could be financial mistakes also. The most common mistakes are spending beyond your means, living off your credit cards and not tracking your money. When you are in your twenties, living within a budget is no fun.

But it’s surely better than finding yourself in a financially stressed situation later in your life.

As you are in the early days of your career, you may think your income would not be sufficient to save for the long future. You have debts to pay off and you need to take care of living expenses which would leave you with little money to save.

But, do you know the twenties are the perfect time for you to build wealth? Because you have time by your side.

Time has all the power to grow money. No matter how little you save, you can build a significant corpus for the long-term when you start investing it in your twenties.

Saving in your twenties inculcates the disciplined saving habit in you which sets your finances on track for the future years. Time helps your money grow with compounding effects.

Escape the World of Being Broke in Your 20’s & Become Extraordinary with these 4 Steps:

Before we move ahead to know how to get extraordinary in building wealth in your twenties, let’s first understand the common mistakes that millennials make during their young age.


1) Common mistakes that you make in the 20’s:

1. Spend more on lifestyle upgrades

What most of us look up to in our twenties is keeping up with the people around us. We feel everyone else is having a good life, spending more on lifestyle.

Not creating a budget and spending plan is one of the biggest that you make in your twenties.

What to do?

Have a clear money budget for the month and track it properly. You can have a clear idea of your spending habits. This is how you will figure out where you can save. You can also use any money apps to keep a track of your spending as well!

2. Excessive use of credit cards

Credit cards surely provide financial flexibility and are a valuable tool if used wisely. In your twenties, you would prefer a credit card for every expense and shopping as it comes in handy, easy access to money.

Not using credit cards wisely and piling up debt due to this is one of the biggest mistakes that you make in your twenties.

Did you know? Credit cards have the highest ever interest for not paying on time!

What to do?

Limit your credit card usage to a maximum of 50% of your monthly income so that you can easily repay it on time.


3. Not having adequate insurance

When you are young and healthy, it is quite common to go without life insurance and health insurance coverage. Many millennials and Gen Z buy insurance only for the purpose of saving tax instead of understanding the product completely.

Not having adequate insurance coverage, both life and health insurance is one of the biggest mistakes that you make in your 20’s.

What to do?

It is important to know that any health emergencies can make a dent in your pocket and deplete your savings.

If you are financially responsible for anyone or plan to have a family in the recent future, opt for a life insurance plan immediately.

Not having adequate life insurance coverage can leave your family financially disturbed.

Book your Insurance Planning Appointment with Koppr today!


4. Starting a family without any financial plan

Many people get married and start a family without any proper financial plan, which is one of the major financial mistakes that they make in their early life.

Wedding, pregnancy and raising a child requires proper planning on a financial front.

What to do?

Download the Financial Planning Guide from Koppr today. If you have any queries, do feel free to reach out to us.


5. Not setting financial goals

Achieving any milestone in your life takes a lot of time and effort, which requires you to have a clear roadmap for the same.

Not identifying and setting up a financial goal may you leave clueless about your future. If you have to buy your dream car, home or for your later years of life, it is important to be focused today.

Not having a clear goal is a major mistake that you can make in your early earning life.

What to do ?

Plan your finances by choosing your Priority and Life Goals.


6. Not creating an emergency fund

Unforeseen emergencies can pop up anytime during your life. It could be any medical emergency or losing a job, etc. As soon as you start earning, it is important to set aside money for emergency purposes.

However, most people do not understand the importance of creating an emergency fund. This mistake of not creating an emergency fund can land you in debt traps and financial distress.

What to do?

Keep a minimum of 6 times your monthly expenses as your emergency fund.

It is a natural human tendency to get influenced by peers.

All you see at that age is people around you of the same age spending more money and focusing more on career and relationships.

If you want to become extraordinary and build wealth for your future, you need to choose your own path. All you need to have is a strong foundation to start building wealth when you are young.

You can be an extraordinary investor just with these four crucial steps.


Here is the The Ultimate Beginner’s Guide to Invest & Grow Your Money in 20’s. Read Now!


2) Four Steps to Start Building Wealth Now:

3) Step 1: Make risk your friend:

Be it a career or your financial life, the twenties are the age to let yourself free to take some risks.

Some of you would have just started your career and are single or some of you would have just got married and started a family. As you would have little or no responsibility on your side, it’s a perfect time to take risks and explore what the world has to offer for you.

When it comes to your personal finance, investing in your twenties gives you the benefit of time and compounding which allows you to take risk as the downturn if any can be covered over the long term.

It would be ideal to allocate a significant amount of your savings towards high-risk and high-return potential investment products like equity mutual funds, stocks and exchange-traded funds etc. instead of investing in low-risk conventional investment options.

Let’s take examples to understand how taking a risk in your twenties helps you in building wealth over the years.

Scenario 1:

Let’s say you are investing INR 3,000 per month in a bank recurring deposit for 10 years. Let’s assume the recurring deposit offers you an interest rate of 5.5% p.a.

Your total investment into a recurring deposit account would be INR 3,60,000 over 10 years and you would be earning a total interest of INR. 1,20,000 on your investment.

That means the total value of your investment or the maturity amount of your recurring deposit would be INR 4,80,000.


Scenario 2:

Let’s say you are investing INR 3,000 per month in an equity mutual fund through a systematic investment plan route for the next 10 years.

That means, your total investment would be INR 3,60,000 over 10 years. Let’s assume, with many market cycles equity funds deliver a return of 12% CAGR, you would be earning a total of INR 3,37,017.

That means, your total earnings would stand at INR 6,97,017.

Let’s say you continue to invest in a systematic investment plan for 20 years, you would invest INR. 7,20,000 and your total investment value would be INR 29, 97,444 at the end of 20 years assuming the fund continues to deliver the same rate of return.


4) Step 2: Invest for a long haul:

When you are in your twenties, your goals may not be very clear to you. You may be sure about certain goals such as buying an expensive car when you are thirty or you are sure to go on a luxury trip in the next five years.

Certain long-term goals like when would you exactly need money for your children’s higher education (especially when you are single or newly married), when would you want to retire, etc.

Millennials today may also be facing uncertainty in the job market. However, this should not stop your habit of investing.

The best way to invest in your twenties is to invest for the long haul, which is for your goals that are decades ahead.

In this investment strategy, you may miss out on excessive gains, but you would be able to earn modest gains without being affected by any short-term fluctuations in the market.

It is important to understand that the market always fluctuates between good and bad. When you constantly track the market and accordingly buy/sell, then you are most likely to be hit badly by the market downturn.

If you are investing for the long haul, you will be able to ride out a down market more effectively. This does not mean; you should invest and forget for decades.

Constant review and pruning your portfolio is also important alongside keeping your long haul investing strategy.

For example, you have invested in a stock that was doing good and had good potential for the future. But fundamentals of some stocks can turn out to be weak. Irrespective of the market condition, it is important to get out of such stocks and revise your portfolio.

However, while you are investing it is important to choose the right type of stock, mutual fund or any investment product with a thorough understanding of the specific investment option.

You can do your own research or seek expert advice while investing.


5) Step 3: Learn to live within your means

To successfully live within your means of attaining financial freedom, you need to have financially responsible behavior.

To start with, you must know what your means are. You need to understand the income flow and then list out your expenses, both fixed and variable expenses. This means you need to create a clear budget and spending plan.

You need to also effectively follow your plan and stick to it. To grow serious wealth, you need to resist the urge to spend more and learn to live within your means. Do not blow your income on lifestyle upgrades.

You can choose a 50-20-30 plan for your monthly budget. This means, 50% for your fixed expenses such as house rent, grocery and other essentials and utility bills, etc.

Keep 20% of your income for variable expenses which could be for shopping online, entertainment and dining, etc. The remaining 30% of your income must be strictly utilized for savings and investments.

Adhering to this budget plan can help you save significant money and build wealth over the long run.

Enroll for our Mutual Funds course for FREE and see how you can build a wealth effectively.

Here are few good practices for you to live within your means:

1) Use a credit card wisely

A credit card is the most convenient form of interest-free credit available. If you use it wisely, you can enjoy its benefits without getting trapped in debt.

Do not rely on a credit card for all your living expenses and use it whenever it is necessary and beneficial.

Time your credit card purchases and pay your bills well within the due date.

Know a host of discounts, rewards and cashback available for your credit card to take the benefit whenever possible.
Using a credit card wisely and managing the repayment well can help you live a financially peaceful life.


Check this video out to Know why You should Own a Credit Card



2) Resist yourself from spending on materialistic things

Spending too much on expensive materialistic things early in your life holds you back from becoming a wealthy person in your 30’s or 40’s. Hence resist the urge to spend on expensive things.

For example, purchasing an expensive bike might be first on your list as soon as you start earning. Instead of going with the urge, if you wait and save for the same to buy after some years would be a financially great move.


3) Set aside an emergency fund

Setting aside money for emergencies will create an emergency fund. With this, in any unforeseen circumstances, your budget is not disturbed and the savings are not depleted.

This emergency money will allow you to pay your emergency health bills or help you live for a few months in case you lose a job, without hampering your existing savings and the monthly budget.


4) Boost your income

If you aim towards wealth creation and becoming rich, you need to focus on the opportunities to boost your income which will help you save more.

Better paying career opportunities, passive income-earning opportunities and focus more on the professional skills that can earn you extra money.

Having multiple streams of income can help you maximize your savings. There are various opportunities out there to boost your income. You just need to explore them.


Learn How you can do your Financial Planning Efficiently



5) Get your budget on track

Getting your budget on track helps you hold back yourself from overspending. Having a far-sighted vision and long-term approach is what you need to have in your twenties to have control over your spending urges.

Debt management plays an important role in your financial planning. When you have debts to pay off, concentrate first on high-interest debts. Let debt payment be part of your budget.


6) Step 4: Learn about financial planning:

Financial planning differs from one person to another, depending on their annual income, expenses, risk-taking ability, return expectation, financial goals and financial obligations, etc. the first job is always special.

The thrill of newly attained financial freedom, weekends with friends, dining, partying and managing everything in a new city gives you no time for financial planning in your twenties.

Many may even feel setting aside money and saving for the future is tough. Some may think it is too early to save. But the fact is that the twenties are the best time to save.

And, financial planning must start as soon as you start earning. You miss out on the ‘time and compounding’ advantage that you get for early life savings. Also, keep yourself updated with Financial News by downloading the Koppr App.

For example, let’s assume you are 23 and you think you cannot save money with only INR 1,000 left after all the expenses.

Now, let’s see how much that INR 1,000 if invested monthly can benefit you over the long term. Let’s assume you are investing INR 1,000 monthly into an equity mutual fund via a systematic investment plan route.

If you continue this investing till you reach 50 years of age, you would invest a total of INR 3,24,000.

If the fund gives you an average return of 12% CAGR, your investment would value around INR 24,37,000. Isn’t that a good corpus? such is the magic of time!

That means to create wealth over the long run, all you need to do is invest regularly (irrespective of how small or big the amount is) and smartly in the right type of investment option.

To do so, you need to have basic personal finance and financial planning knowledge for long-term investment success.

Having a basic idea of investment options, the importance of financial planning and how different investment products work help you in making a smart and an informed investment choice.

It is also important to continually upgrade your financial knowledge. That does not mean you need to obtain a degree in financial planning.

You can just take a quick online course of Koppr on early financial planning to boost your financial literacy. Instead of spending on lifestyle upgrade, spend on continual mind upgrade by learning new things.


Bottom Line

There are no foolproof methods or steps for becoming wealthy.

However, realizing the importance of savings, proper financial planning and having a solid plan of action for your financial future can ensure the best start in your twenties to become wealthy in future.

Got a finance related questions? Download the Koppr App and get expert answers to your questions

The Ultimate Beginner’s Guide to Invest & Grow Your Money in 20’s

The Ultimate Beginner’s Guide to Invest & Grow Your Money in 20’s

The twenties is the time when you start experiencing financial independence. You are on your path to chase your dreams. This is the time when you start understanding the importance of various vital things in your life such as career, relationship and money.

When it comes to money, steps that you take in your 20s matter the most in attaining future goals. Investing in the twenties, no matter how small, plays a crucial role in building a sound financial future.

Smart money decisions and discipline can help you achieve financial success in your life.

The benefits of investing early in your 20s are many. Two main benefits of investing early are the power of time and the magic of compounding effect on your investment.

It is important to develop good saving and spending habits in your 20s to grow your money.


6 Steps to grow your money in your 20’s:


To start investing, here is a simple investment guide for beginners or some vital tips for amateur investors


1) Create Budget and Regular Review:

Budgeting helps you have control over your finances. Based on the cash inflows and income, you can categorize your expenses for the month and create a spending plan.

Actionable: List out fixed expenses such as rent, utilities and loan payments, etc. List out your variable expenses such as gas, clothing, groceries and entertainment, etc which may change month on month. When you have a clear plan, you can prioritize your expenses, plan your savings with leftover money and adjust your spending habits, if necessary.

Takeaway: It is also important to have a regular review of your budget plan to stay on track.


2) Identify and Set Financial Goals:

As a career and personal achievements are the centers of attention in your 20s, financial goals may seem like the last thing to focus on. However, these are the most important goals to be set in the early ages of your career to lead a happier and stress-free life later.

Actionable: First thing is to identify and then categorize your financial goals based on the time horizon. Your short-term goals can be saving for an emergency fund, saving to pay off your student debts or for a wedding. Medium-term goals would be purchasing a car or going on a luxury vacation. Long-term goals would be owning a house and planning for retirement, etc.

Takeaway: Achieving financial goals needs a lot of planning. Luck or magic has no role in achieving your financial goals. Identifying and setting up financial goals helps in establishing a concrete plan for future financial independence.


3) Set Aside an Emergency Fund:

Life is uncertain and unpredictable. Unpleasant surprises like medical emergencies can crop up anytime, which may either pile up your debt or eat away your existing savings if you are not well prepared.

Actionable: Next on the list as an investment guide for beginners is to set aside at least six months of your income as an emergency fund.

Takeaway: Along with availing of insurance protection, both life, and health, it is important to have an emergency fund to meet immediate requirements.


4) Insure Adequately:

With the change in lifestyle patterns and the rising rate of inflation, adequate life insurance, and health insurance coverage is paramount for anyone before planning finances.

Planning for health emergencies and other contingencies in life is extremely important to stay on track to achieve other milestones and long-term goals in life.

Adequate protection guarantees that the family is financially secured and ensures the standard of living is not compromised in any unfortunate circumstances.


5) Plan your Investments

Once you outline your goals, you can decide on where to invest your savings depending on how far you are from achieving the particular goal.

Actionable: You can set aside some amount of your monthly savings in recurring deposits or fixed deposit or debt mutual funds to meet your short-term goals. You could consider investing in some hybrid mutual funds to meet your medium-term goals.

Takeaway: Considering your young age, you can consider investing a larger portion into riskier and potentially high-return asset classes like equity mutual funds and direct equity for your long-term goals such as retirement.


6) Track your Progress

Tracking the progress of your investment portfolio is the key to successful financial planning.

Actionable: As you are investing early, you need to keep revising your financial plan depending on your life phases. Also, as your income increases and your family responsibilities increase, you would need to save more. Your goals will change with time and many goals may get added.

Takeaway: Hence, it is important to monitor your investments, track the performance, look for new investment opportunities and review your financial planning from time to time.

Before moving towards financial mistakes you should avoid, Ask yourself this 5 Questions before Financial Planning


7) Investing mistakes to avoid in your 20’s:


Investing early, in your 20s, no matter how small, is extremely important to create significant wealth to secure your future dreams as it leaves you with a wider investment horizon.

The most common mistake that everyone in this age makes is investing too conservatively, which is just saving aside the extra money in safer investment options like fixed deposits or just keeping it in the bank account.

Taking the right, bold and wise investment decision is equally important. Taking a considerable amount of risk as you are investing easy can-do wonders to your investment portfolio in your later years.

As you have the advantage of the time by your side, you can afford to ride out market downturns and invest aggressively.

There are many investment options available in the market for investing beginners. Depending on your goal and time horizon to reach your goals, you can consider investing in a suitable financial product.

Though you don’t have to invest in all of the investment options available, you can diversify your investments into some of the good options available and suitable for your needs.

Let’s take a look at the potential investment options available for investing in your 20s.


5 MONEY TRAPS To AVOID In Your 20’s | Money Mistakes To Avoid In Your 20’s



8) Potential Investment Options to Consider During your 20s:

Where you invest your money should be based on your goals, the return that you are expecting, and when you need the money.

Looking for different investments option but don’t know where to start from? Download Koppr App and start asking questions on different investment topics and get answers from our experts.


A) For short-term goals

Short-term goals can be something that you need to reach in the near future such as buying an expensive gadget, wedding expenses, or setting aside money to pay off your student debt, etc.

To achieve such goals you need to have money in liquid form. Apart from keeping money idle in your savings account, you can invest in some of the short-term investments that can yield you considerable return in a short term.

Investing in some of these fixed-income instruments not only gives you liquidity to achieve short-term goals but also adds stability to your investment portfolio.

Some of the most common investment options as an investment guide for beginners are:


i) Recurring Deposits

Recurring deposits allow you to set aside a small amount each month. You have to deposit a fixed amount of money each month to your recurring deposit account for a chosen tenure.

You can earn interest at the rate applicable for that tenure, which may vary from bank to bank.

Current Rate of Interest:
Currently, the rate is 5% to 7% p.a. (1 year to 5 years and above). You can start RD with as low as INR 100.


ii) Bank Fixed Deposits

A bank fixed deposit account or term deposit allows you to deposit a lump sum amount for a chosen tenure and earn interest at the applicable rate of interest. Tenure may vary from 7 days to 5 years and more.

Current Rate of Interest:
Currently, the rate varies between 5% to 7.5% p.a. depending on the tenure chosen and the financial institute.

Term deposits are offered by Public and Private sector banks, small finance banks and NBFCs (Non-Banking Financial Companies).

You can start a term deposit with a minimum of INR 5,000.


iii) Post Office Time Deposits

Post office term deposit works the same way as bank term deposits. You can earn interest at the rate applicable for the tenure chosen by you.

You have multiple lock-in periods ranging from 1 to 5 years to choose from.

Current Rate of Interest:
Currently, the rate of interest ranges from 5.50% to 6.70% (1 to 5 years).


iv) Short-Term Debt Mutual Funds

Unlike traditional investment avenues like fixed deposits and recurring deposits, debt mutual funds are market-driven and can also offer stability, liquidity and a relatively higher return on your investment.

Mutual funds are an ideal investment tool for investing beginners irrespective of the risk appetite and time horizon to achieve various goals. There are a variety of funds available to suit your requirement.

For example, if you have an extra corpus which you may need to use in the next one or two months, you can park that money in liquid funds.

Rate of return:
The return may vary between 6% to 9% annualised return depending on the fund chosen and market conditions. You can consider low duration debt funds for 3 to 9 months away goals.

Money market funds can be best suited for something that you need to achieve in the next 12 months. The return may vary between 5% to 8% annualised rate depending on the market conditions and the fund chosen.

You can consider investing in short duration mutual funds for a one to three years period.

If you are busy to plan your finance, then here is the article which will tell you why you should Hire a Certified Financial Planner


Let’s take a look at the performance of the short duration mutual funds.


Short Duration Funds 1 Year Return 3 Year Return
Axis Short Term Fund-Direct (G) 7.90% 9.40%
Edelweiss Bank & PSU Debt – Regular (G) 7.70% 10.60%
Tata Short Term Bond Fund – Direct (G) 7.50% 6.90%
IDFC Bond Fund -STP – Direct (G) 7.10% 9.10%
Axis Short Term Fund – Regular (G) 7.10% 8.60%

( Source: Mutual Funds India: Mutual Fund Investment, Mutual Fund Calculator, Types of Mutual Funds, Top/Best Performing Mutual Funds in India – Moneycontrol)


B) For Medium Term Goals

Medium-term goals range from three years to five years. This could be saving for your children’s school fees if you are married or down payment to your first dream home.

You may not be looking for high-return investment options here. Though you can take some degree of risk, stability would also matter to remain the best for your medium-term goals.

As an investment guide for beginners, here are some investment options to consider.


i) Monthly Income Schemes

India Post offers monthly income schemes which disburse monthly income and is locked in for five years. The investment can start with a minimum of INR 1,500 to a maximum of INR 4.5 lakhs.

Current Rate of Interest:
Post office MIPs currently offer an interest rate of 6.6% p.a. Interest rates are revised from time to time.

These schemes are government-backed thus provide sovereign guarantee and steady return.

You can invest your yearly bonuses earned (corpus) into monthly income plans and then reinvest the interest earned monthly into high-return investment options like equity mutual funds and into direct equities in order to achieve your long-term goals.

For example:
Let’s say you are 25 and you have a corpus of INR 2 lakhs earned as incentive and bonus and you decide to invest that in the Post Office Monthly Income Scheme as you would need the money by the end of 5 years.

You would be getting paid interest of INR 1,100 every month for next year. Let’s assume you invest that 1,000 in an equity mutual fund through a systematic investment plan route.

You would be investing a total of INR 60,000 over the next 5 years. Let’s assume the equity fund gives a return of 12% CAGR, your total investment value would stand at around INR 82,000 at the end of 5 years.


ii) 5 years National Savings Certificate

National Savings Certificate (NSC) is a government-backed fixed income bearing scheme.

Current Rate of Interest:
Currently, the rate of interest is 6.8% p.a., subject to change from time to time. Interest in NSC is compounded on an annual basis.

NSC is a low risk and tax-efficient investment option that is suitable for small and medium-income investors. You can open an NSC account at a Post Office near to you.

Investing in the National Savings Scheme also gives you tax benefits under Section 80C of the Income Tax Act, 1961.

You can start a National Savings Certificate investment as low as INR 1,000.

For example:
Let’s say you invest INR 50,000 in NSC, you would receive INR.69,475 at the end of 5 years on maturity at a 6.8% p.a. interest rate.


iii) Medium Duration Debt Funds

Medium duration debt funds invest in debt instruments for medium-term time frames, say between 3 to 5 years. The degree of risk in these funds ranges from low to medium depending on the fund chosen and the instruments in which it invests.

Though returns are not guaranteed, they are reasonable for a medium-term tenure.

Medium Duration Debt Funds 1 Year Return 3 Year Return 5 Year Return
HDFC Medium Term Debt Fund – D (G) 10.90% 9.40% 8.80%
ICICI Pru Medium Term Bond (G) 10.50% 8.70% 8.10%
Axis Strategic Bond Fund – D (G) 9.80% 9.00% 9.00%
ICICI Pru Bond Fund (G) 7.30% 9.30% 8.10%
Nippon Income Fund – Direct (G) 5.30% 10.30% 8.90%

(Source: Mutual Funds India: Mutual Fund Investment, Mutual Fund Calculator, Types of Mutual Funds, Top/Best Performing Mutual Funds in India – Moneycontrol)


iv) Hybrid Funds

Hybrid funds invest in a combination of two or more asset classes. Apart from equity-debt combinations, part of the corpus sometimes is invested in gold and real estate too.

Hence, hybrid funds provide the best diversification to your investment portfolio.

The risk in this investment may range from Conservative to moderate to moderately high depending on the asset allocation of the fund chosen.

Let’s take a look at some of the best performing funds in the category:


Hybrid Funds 1 Year Return 3 Year Return 5 Year Return
DSP Equity & Bond Fund-Regular (G) 50.10% 12.80% 14.10%
SBI Equity Hybrid Fund – Direct (G) 46.80% 13.10% 14.20%
CR Equity Hybrid Fund -DP – (G) 45.60% 14.60% 15.80%
CR Income Saver Fund -D (G) 20.40% 11.70% 10.50%
SBI Equity Hybrid Fund – Regular (G) 45.80% 12.30% 13.30%

(Source: Mutual Funds India: Mutual Fund Investment, Mutual Fund Calculator, Types of Mutual Funds, Top/Best Performing Mutual Funds in India – Moneycontrol)


C) For Long-Term Goals

For the long-term goals that are many years ahead such as retirement, you can consider investing in high risk-high return investment options as that can provide you inflation-adjusted returns.

However, when you are planning for your finances, it is important to plan your taxes along. The tax efficiency of any investment option also needs to be evaluated to make the right investment choices for you.

As an investment guide for beginners, here are some potential investment options for your long-term goals.


i) Equity Mutual Funds:

Mutual funds are the ideal tools to invest in the equity market as you can have the benefit of professional management, diversification and a disciplined approach at the same time. The selection of funds is extremely important.

You can take a quick online free course of Koppr on mutual fund basics to learn how to invest in mutual funds for beginners.

As an investing beginner, systematic investment plans are the best way to invest in equity mutual funds as it allows you to set aside systematically on a monthly basis. You can with as low as INR 500 monthly.

Equity funds come in many types depending on the market capitalisation, tax benefit it offers and investing style etc. Some of the top-performing equity funds are:

Equity Mutual Funds 1 Year Return 3 Year Return 5 Year Return
Tata Large Cap Fund – Direct (G) 67.10% 12.20% 13.90%
UTI Flexi Cap Fund -Direct (G) 77.40% 17.10% 17.60%
Mirae Emerging Bluechip Fund -Direct (G) 84.60% 20.10% 22.50%
Tata Mid Cap Growth -Direct (G) 80.60% 16.10% 17.30%
JM Tax Gain Fund – Direct (G) 76.30% 13.50% 18.00%

(Source: Mutual Funds India: Mutual Fund Investment, Mutual Fund Calculator, Types of Mutual Funds, Top/Best Performing Mutual Funds in India – Moneycontrol)


ii) Direct Equity

Equity as an asset class over the long run is considered to provide the highest return. Considering the potential for high return, your early investment portfolio should have some corpus into direct equity for wealth creation in future.

You can take a quick online free course of Koppr on stock market basics to learn how to invest in stock markets for beginners.


iii) ULIP

Unit linked investment plans are the hybrid investment options that provide insurance benefits as well as investment elements.

Part of your premium is invested in the various market-linked funds in a proportion chosen by you. ULIPs come with a host of other benefits and are tailored to your specific needs.

ULIPs are one of the best tax-efficient investment plans that have a higher potential for wealth creation.


iv) Public Provident Fund

To add stability to your long-term investment portfolio, you can consider investing in a Public Provident Fund. PPF is government-backed and comes with a lock-in period of 15 years.

You can start with a minimum investment of INR 500 to a maximum of INR 1.5 lakhs. PPF is a tax-efficient long-term investment option that offers a fixed rate of interest (currently 7.1% p.a.).

Apart from these investment options, there are plenty such as retirement/pension plans, conventional saving schemes offered by insurance companies, gold ETFs and many more.

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Choosing the right mix of investments is as important as investing. As you invest in your 20s, you have the advantage of time and the power of compounding.

With the increasing income and change in life phases, it is important to refine your investment strategies more often as you need to keep reviewing your goals and changing needs.

As you progress, you can take help from experts such as Robo advisors. Boosting your financial literacy with time is a must. You can take an effective and quick online course of Koppr on early financial planning to start it right!

Start early and invest wisely!

What every Indian in their 20s should know about their money?

What every Indian in their 20s should know about their money?

It is an overwhelming experience when a fresher like you, just out of college receives the taste of financial freedom with your first pay packet. It is way more than the stipend or pocket money you were getting till a few days ago.

The feel is like you have the whole world in your hands and you no longer have to ask for pocket money from your parents or elders at home! In fact, your heart wants to spend the money – your own money in buying gifts and goodies for your home and loved ones with pride.

And yes, now the latest fashion in clothes, accessories, and gizmos seem to be must-haves and most of you would love to splurge on them and more.

This is but natural a tendency with all youngsters and is well deserved too.

I am sure you will also agree that while having a great time splurging money wherever and whenever you feel like is a great feeling of freedom and happiness, there are likely to be financial commitments that you would need to and should make at the same time.

This is because in a few years, by the time you are 30 years old, your life and life stages are likely to have changed. This would come with undeniable financial responsibilities of parent(s) and/or wife and child or both.

Suddenly you may feel financially burdened and stressed thinking about how you are expected to meet the expectation for all. Trust me this is a common problem with most youngsters – who feel that you have a ‘lot of time’ and things to do before you can think of saving or investing in your 20s.

Looking at responsibilities through the ‘rear mirror’ of your car is an unwise thing to do. They are actually closer than you think.

What every Indian in their 20s should know about their money?:


So what should I do?

Investment for beginners is a thing to learn and how to manage your money in your 20s is a skill to acquire, if you want to grow wealth in the long run, live a financially healthy life and fulfil all your dreams.

We have a specialized course on financial planning, (PS This is not just like any other course!)

This article will give you an overview and tips on –

  • how to manage money in your 20s
  • where to invest for beginners
  • investing in your 20s
  • making money in your 20s


1) When should I start to save/ invest my money?:

So what is the magic mantra for investment for beginners? It is quite simple you see.

Just Start early. Stay invested. Get better returns. No rocket science at all.

Yes, you must start early, even perhaps start from your first pay-check itself. You can start with small investment amounts of even Rs 500 a month/ year (depending on the nature of the investment tool you are considering) and later on increase the amount as your pay packet gets fatter.

This is because when you start investing in your 20s, even with very small amounts, it will still leave you with a much wider investment horizon. The longer the period for which you remain invested in a plan/ investment tool, the better will be your chance to diversify your investment between risk and income/ debt instruments to maximise wealth creation in the long run.

For example, when you are in your early 20s, your retirement is aeons away. However, if you start putting aside money in a reliable instrument, it will accrue a fortune for your golden years which otherwise will get stunted even if you delay it for say, 5 years.

One thing you much get clear at the onset. Saving money in a bank is not the same as investing money.

Saving money is more like hoarding money at a minimal interest rate like in a savings account that will not beat inflation. On the other hand exposure to equity and equity-related investments are capable of beating inflation and thus support wealth creation in the long run.

For example, say you are saving Rs 100 in a bank for an average interest rate of 2.75% to 3.5% in the bank savings account but retail inflation stands at 5.52% today. This means what you can buy at Rs 100 today, will cost you Rs. 105 tomorrow. But your bank will give you only Rs 103 approximately. Hence your money will be losing in its value lying only in the bank.

On the other hand, an investment in equity over a time horizon of 10 years and more is likely to get you about 10% compounded annually (and more) and thus beating inflation, leading to wealth creation.
Here are top 5 reasons why you should start investing in your 20s

2) What are your basic needs?:

If you are wondering how to manage money in your 20s; you must first make a checklist of your basic yet mandatory monthly expenditures. This is because a chunk of your money will go into that whether you like it or not.

They can include an EMI for your education loan that you need to set off.  If your city of work is away from your hometown, then you will have rent, conveyance, utilities, groceries, medicines and insurance at least, to account for.

This is likely to eat into approx. 50% of your salary. Let us take a closer look into these items and how you can optimise your expenses.

1) Education loan

Loans on your shoulders are never a good thing to have. So along with the EMIs, whenever you make an extra income as an incentive or bonus, you must use it to set off your loan to clear it off at the earliest.

Same for your credit card loans. Always try and pay off the credit card dues in full to avoid getting into the vicious cycle of interest accrued on the outstanding amount.

That will increase your disposable income to a large extent to consider discretionary expenses of your choice.


2) Rent

The largest chunk of your salary at hand is likely to go into rent and all associated utilities, monthly groceries, and medicines.

If you see that your hands are getting tight because of high rent, you may look at moving to a different locality where rent will be relatively less.

You can also look at sharing an apartment with someone else if you do not have frequent visitors from home. That will help to lessen the financial burden on you.


3) Health Insurance

Whether you are single or married, the investment for beginners must commence with a health insurance coverage of at least Rs. 5 lakhs if you are in a Tier I city. In case your parents are not covered as of date, then consider a family floater with the same amount of coverage to start with.
If you are married with children, then the family floater should be Rs. 10 lakhs.

Later on when your income increase further, you must look at adding top-ups for critical illnesses and hereditary illnesses if any to ensure maximum protection to yourself and your family in the face of any unforeseen medical exigencies.

I am sure you are aware of holes in people’s pockets that the rising costs of medical expenses create if these expenses are not planned well.

If you are looking to buy unbiased and best health insurance plans, feel free to reach out to us!

4) Term life insurance

It is prudent to buy a term life insurance cover of at least 22 times your annual salary (as estimated and approved in the regulatory guidelines of IRDA).

This will ensure your financial liabilities (if any) will be taken care of at a minimal cost in case life poses any uncertainty in the form of death, disease or disability. Any financial burden on the family will be prevented.

Yes, if you are 25 years old and want to buy Rs. 50 lakhs term insurance cover, it will cost you anything between approx. Rs. 5000 and Rs. 6000 a year (source online applications).

This comes to just about Rs. 16 a day which is perhaps a throw-away price for buying  ‘peace of mind’! Isn’t that a great bargain for what’s at stake?


3) Where to invest for beginners?:

Of the remaining 50% of the salary, you should aim at investing at least 30%. Remember all your investments should be well thought of and be based on various financial goals of your life. You are likely to have short term, medium-term and long term goals.
However if you do not have an education loan to repay and/ or are based out of your hometown for work, then you must aim to invest about 50% of our salary at hand. This will ensure your money is working for you to make you wealthy!

1) Long term goals:

These goals have an investment horizon of 10 years and above. They may include planning for retirement, children’s education, investment in real estate, a family vacation in a foreign country, wealth creation, etc.
The best investment for beginners in India is SIPs (Systematic Investment Plan) in equity and equity-based schemes. When you invest in these kinds of SIPs with a long term horizon of over 10 to 15 years and beyond, then you safely earn a return of over 10% compounded annually. It has been observed that a monthly SIP of Rs 3000 over 35 years can earn you a whopping 12% return and build a capital of Rs. 1.9 crores.

With the increase in your paycheques, you must look at increasing your contribution in SIPs. Not just equity and equity-related schemes; SIPs are available in debt-related and a combination of debt and equity schemes as well.

SIPs in Equity Linked Savings Schemes (ELSS) have a dual advantage of returns and tax benefits U/S 80C on your investments in the scheme as well. All ELSS have a lock-in period of 3 years for the tax benefits it offers.

So depending upon your goal and risk appetite you should be able to consciously choose schemes to help in making money in your 20s.
However, largely popular investment for beginners in India for long term investments have been Employee Provident Fund (EPF) and Public Provident Fund (PPF) schemes.

These two schemes will reap you the best interest rates among all known small savings schemes in the country. While EPF is a set of mandatory monthly deductions and contributions made by your employer from your salary, PPF is a voluntary account opened by individuals with various State Bank branches of India.

The best part about investments in PPF is that –


  • You can open and maintain the account with just Rs. 500 a year.
  • With the increase in your income, you can increase your contributions year on year.
  • The maximum you can contribute to your PPF account is RS. 150000 per year.
  • The lock-in period on the PPF scheme is 7 years; partial withdrawals are allowed post that.
  • All withdrawals from your PPF account are tax-free.
  • Your annual contribution into your PPF account is eligible for tax relief U/S 80C too.


2) Short / Medium-term goals:

To meet your short term and medium-term goals, there are an array of debt instruments like fixed deposits, bonds, debt/ income fund, liquid funds, etc. where you can invest your money.

In case you are a person who wants to play it safe and would want to secure a steady flow of money for yourself, you may want to invest your money in a debt instrument that would generate a monthly income for you for the chosen term.

Then Post Office Monthly Income Scheme (POMIS) is the right instrument for you.

You can invest a total of Rs. 4.5 lakhs in your POMIS account that will yield you a guaranteed interest of 6.6%.  Later on in life, you may invest another Rs. 4.5 lakhs in your wife’s name as well if you want.

The best part of this investment option is that there is no tax deducted at source on the monthly disbursements!


3) Build an Emergency Fund:

We, the lucky survivors of the Covid-19 pandemic can vouch about the fact that life is very uncertain. So is work. There is no guarantee in anything.

Thus siphoning of money into a new/ separate account to build an emergency fund would make a wise choice for all youngsters like you to seamlessly tide over the times of financial crisis that may arise in future.

To achieve this goal, you can choose from various tools like fixed deposits, recurring deposits, or even a separate savings account.

Learn all about Mutual Funds for FREE and get know know why it one of the best investment options

4) Any money left to spend for fun and on free will?:

Yes of course! You have managed your money so well that you still have 20% of your at hand salary to spend it the way you want to! You can spend this money on buying clothes, accessories, gadgets, eating out, gifts for your loved ones, weekend trips to nearby destinations, donations, etc. Isn’t that wonderful?

Just keep in mind that these discretionary expenses should not ideally overshoot 20% of your salary at hand. In case it does, try and trim it mindfully with a smile without hurting your own emotions or others.
However, if you do not have any loan on yourself and your workplace is in your hometown itself, then surely you may at times take the liberty to spend even 25% of your monthly at hand salary. And trust me it is okay to do that.

Shopping and spending time with friends after all are great stress busters!


Avoid these money mistakes if your objective is making money in your 20s

While there are many mistakes in life that are forgiven and forgotten too, mistakes around money matters are hard to cope with and recover from. This is because it is your hard-earned money.

Thus you need to be careful not to fall into matters of money in your days of young adulthood as you might take a lot of time to bounce back but the scar will remain.

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5) Here are the 5 common money mistakes to avoid in your 20s

1) Monthly expenses not budgeted:

Managing your money first time all by yourself in your 20s will be exciting but can prove to be a challenging affair as well. If your calculation goes wrong, remember you won’t have pocket money to fall back on.

Thus the 50:30:20 rule discussed here can be handy. It is wise to start with a detailed list of mandatory expenditures for the month to allocate/ reallocate money as required.

2) Rising Debts:

While it may look great to flash a bunch of credit cards in your wallet when you are young, it is strongly advised to keep just one credit card for your use as required.

That is because it is simply impossible to remember all transactions made on different credit cards and keep a track of multiple payment cycles.

Thus people, mostly youngsters like you fall into a trap of revolving credit with very high interest rates that can be as high as 40%. Keeping debts on loans and credit cards has never done well for anyone.

It will 

  • not only get you into a vicious cycle of revolving credit,
  • eat into your disposable income paying EMIs with high-interest rates,
  • also adversely affect your credit score which will require you to run from pillar to post to set it right when you need it
  • Take away your night’s sleep and make you stressed.


Thus make it a habit to settle your credit card bill in full, on or before the due date. A monthly reminder on your smartphone will help do the needful for you.

For other EMIs on loans, SIPs, etc. and monthly payment of phone bills among others, auto-debit mandates with your bank will save you from all late payments with extra charges.


Here is our comprehensive guide on Debt Management – How to Manage Your Debts Effectively


3) Saying ‘No’ to more income opportunities:

You are young and vibrant filled with energy and passion in your 20s.

That ensures making money in your 20s more viable with so many opportunities around. Other than your regular 9 to 5 job, you can make that extra money by investing prudently inequity and dividend-yielding schemes, as a freelancer in your specialised area(s), helping start-ups, giving tuitions, among other things.

These will not only keep you fruitfully engaged but boost your confidence and add to your disposable income as well. So don’t be complacent, go for more!


4) Shutting out personal needs/ wants:

Never play Uncle Scrooge on yourself and try to save every paisa. That will not help.

That is not the reason or objective of planning and making investments. When you see your friends and peers enjoying their life, it will only lead you to depression, stress and make you unhappy.

Remember it is good to spend money and treat yourself and your loved ones once in a while. It builds your morale, keeps you happy and motivated too. However, if you need to splurge on something really expensive compared to your pocket –

Stop. Step back and Think whether you REALLY need it NOW or it can wait for a LATER DATE. That will save you from regrets later on.


5) Do not be the soft target:

Are you the kind who can’t say no to friends when they ask you to settle bills during getting together? All the time? Every time? Beware of leeches/ parasites.

This is a very common feature in young people in their 20s. It is a great virtue to be warm, generous and kind-hearted, but it is also important to understand if you are being taken advantage of by your own people in your social circle.

Over a period of time, it is bound to make you feel bad instead of improving your mood. If that is the case, though it is a hard choice to make, you must look at making changes with whom you hang around.

This is the right thing to do in the absence of fairness and compassion within the group. There is no place of guilt in this action of yours as it is not good to feel financially lost because of some unworthy people. 

Though this article detailed options of investment for beginners and how to manage money in your 20s, it is your willingness and foresightedness that will ensure how efficiently and effectively you manage your money to ensure that you live and gift your loved ones financially happy, healthy and stress-free life.

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5 Reasons to Start Investing in Your 20’s

5 Reasons to Start Investing in Your 20’s

Investing wisely is the only way to achieve sound financial well-being in the future. But, the young millennials today have the mindset of ‘living in the moment’ which keeps them away from the world of investment.

The thought of investment or financial planning is in the least of the priorities list. Financial planning for beginners takes a back seat as the focus gets more on immediate need.

It is important to understand the fact that your hope and dreams can be achieved only by the right planning of your finances.

‘’I started investing at 11, but regret not starting earlier.’’ – Warren Buffet

Like one of the most successful investors Warren Buffet regrets, plenty of investors hold the similar regret of ‘not starting early’ in the later years of their life.

As seeds sown today help you bear fruits in the future, for your dreams to flourish you need to plan and invest today. For most young earners, the word ‘investment’ is meant for middle-aged people who are nearing their retirement.

But, the perfect time for investment is when you are in your twenties, years in which you can plan for all your major life events. Now is the time to understand the benefits of investing and be a visionary to plan for your future financial well-being.

Reasons to Start Investing in Your 20’s:


1) Here are five major reasons to start investing in your 20s:


1) You can Access the Power of Compounding

One of the main advantages of investing early is the power of compounding benefits to grow your investment. When given enough time and invested wisely, the power of compounding does wonders to your wealth creation process. Compounding means reinvesting your earnings and earning a return on both principals and reinvested money.

The power of compounding helps your investment grow at an increased rate. The compounding effect increases with an increased investment time horizon.

That means, the longer you stay invested or earlier you start investing, the greater will be the power of compounding on your investment.

Let’s understand the benefit of compounding effects over the long-term on your investment with an example:

Let’s say you would like to invest INR. 2,000 monthly in a large-cap equity fund (Systematic Investment Plan) for the next 30 years.

Let’s assume you are 25 years old saving with a vision to build a reasonable retirement corpus. Coming back to the investment, large-cap equity funds are considered to deliver good returns over the long run, say about the annualized return of 15% to 30%.

However, let’s assume your investment into a large-cap equity fund delivers an average annualized return of 12%, your total investment over 30 years, i.e. INR 7, 20,000 would deliver an estimated return of INR 63, 39,828.

That means, the total value of your investment at the end of 30 years would be INR 70, 59,828, which is nearly tenfold growth. Let’s say, if you make the same investment at the age of 35 years for the next 20 years, you would invest INR. 4, 80,000.

Let’s assume the investment delivers an annualized return of 12%, your estimated earnings would be INR 15, 18,296 and the total value of your investment at the end of 20 years would be INR 19, 98,296, which is fourfold growth.

Power of Compounding on Equity Mutual Fund SIP Investment:

Particulars Number of years of investment
30 years 20 years
Monthly Investment (in INR) 2,000 2,000
Number of Months 360 240
Total Investment (in INR) 7,20,000 4,80,000
Assumed annualised rate of return 12% 12%
Estimated total earnings (in INR) 63,39,828 15,18,296
Total value of investment (in INR) 70,59,828 19,98,296


That means, with the power of the compounding effect, investing INR 2, 40,000 over a 10 years period can make a huge difference of INR 50,61,530.

So, Invest early and let the magic of compounding power work in your favour.


Check out this video on Power of Compounding



2) You can Exploit the Power of Time

Time plays an important role in the potential success of your financial life. Time is money! There is a cost attached to the time not utilised wisely. When you are in the twenties, you have fewer responsibilities on your shoulder.

Bigger responsibilities like taking care of the family, elderly, and other household responsibilities are yet to set in. Hence, it is a perfect time for you to focus more on investment. As you have just started earning, you may not earn big, but you can invest a bigger portion of your earnings. Investment for beginners is not rocket science.

By devoting time and energy, you can gain the required knowledge on financial products and various investment options. As you understand and explore investment options, you can create an investment strategy for your long-term wealth creation.

Systematic investment plans are great investment options to explore the equity market and grow your money.

As you will have a longer time horizon for each of your financial goals such as buying a car, wedding, buying a house and retirement, etc. You can consider investing a major portion into ‘high risk, high return’ asset classes such as equity. As a young investor with a higher risk appetite, you can explore various investment options.

Choosing the investment wisely is more important to earn an inflation-beating return and accumulate a reasonable corpus for future goals.

Time value of money and inflation are two major elements to be considered while doing financial planning for beginners. We all know that the value of money decreases with time. A sustained high rate of inflation also brings down the value of your money and its purchasing power.

For example, if a mutual fund investment generates a post-tax annualised return of 15%, the real rate of return by the investment would only be 12.38% per annum after factoring in inflation at 5% per annum.

In simple terms, your investment selection should be depending on the amount that you need for your future goals.

Systematic investment plans can make a great investment for beginners as it allows you to set aside a fixed amount regularly every month and also allows you to benefit from volatility in the equity market.

SIPs will also increase the return potential over the long run to achieve your goals. There are other options also to consider such as exchange-traded funds (ETFs), direct equity, and REITs (Real Estate Investment Trust) to set aside your bonus money and diversify your investments.

Any of the investment options that carry high risks such as stocks or real estate, when you have long years ahead, you can recover from potential losses along with potential capital appreciation.

With time your small investments can also reap good benefits.


3) Helps you Avail Financial Security at Reduced Cost

When you are young and in sound health, you can avail yourself of life cover and health cover at a reduced cost.

Financial planning for beginners starts with insuring and availing financial security against unforeseen events in the future. Term insurance and health insurance are two main essential requirements to avail financial security.

When you start investing in your 20s, you can avail yourself of much higher life cover and comprehensive health insurance coverage at a reduced rate of premium. Let’s take an example to understand this benefit of investing.

Let’s say you are buying a life insurance coverage of INR 1 Cr at the age of 25 years costing you anywhere between INR 7,000 to 8,000 annually (INR 600 to INR 650 monthly).

The same policy for the coverage of INR 1 Cr may cost you anywhere between INR 11,000 to INR 12,000 when you buy at the age of 30. This works similarly for health insurance. Let’s say you are availing of INR 5 lakhs coverage for an annual premium of INR 6,000 (INR 500 monthly) when you are 25.

The same policy with similar coverage would cost you approximately INR 9,000 when you are 30. Hence, start investing in your 20s to avail financial protection at a reduced cost.


4) Helps you Build Corpus for Future Goals

As you start your career, you may have various dreams in your mind such as buying your favourite vehicle, a fancy vacation to your favourite destination or buying the latest smartphone.

If you are recently married, you may want to surprise your spouse with an expensive gift. Dreams are many! But you need to be financially well equipped to achieve those dreams.

Though there are credit cards and personal loan options available, making money in your 20s can save you from debt traps. Systematic savings regularly can help you accumulate wealth over some time to achieve each of your financial goals or dreams.

Financial planning for beginners hence plays an important role in shaping up a sound financial life.


5) Shields you against Financial Emergencies

Emergencies can pop up anytime unexpectedly such as the Covid-19 pandemic that we are facing right now.

Pandemic and many other events can lead to the economic downturn, loss of job, etc. leading to many financial difficulties. You can never be too secure as uncertainties pervade our life.

Making money in your 20s helps you shield yourself against such financial emergencies in the future.

Now that you understand the need to start investing in your 20s, you might wonder how to start, how to plan, or how much to invest as a beginner. Financial planning is a broad concept with various key elements to consider in the planning process. This involves insurance, paying off your debts, creating a budget, and then investing in the right products.

But financial planning lays down a strong foundation for your long-term financial independence and overall well-being. Here are a few important tips on financial planning for beginners. Let’s take a look!

Read our complete blog on why you Need to Know About Emergency Funds


2) Key tips on financial planning for beginners:

1) Identify and set your goals

Identifying and understanding the financial goals is an important aspect of investment for beginners. Once you have a clear vision of what you want in your life, it becomes easy to craft a plan to reach those goals in the order of your priority.

Once you set your goals, you can assess your ability to take risks while investing. With time, your goals may change, which needs to be considered in the ongoing financial planning process.


2) Create a budget and track your expenses smartly

The next step is to streamline by creating a budget and sticking to it. Having a monthly budget plan inculcates a financial discipline in you.

If you do not track your income and expenses, you will find yourself struggling for finance at the end of the month. You need to track your monthly expenses smartly so that you can set aside a major portion of your income for investments.

Tracking expenses does not mean cutting short on the necessary expenses and also some on the fun element. All you need to do is get organized and disciplined while managing your monthly income.

Additionally, you can look for ways to increase your monthly income or cash flows.


3) Craft a plan to get out of debt

Student loans, credit card outstanding, and personal loans can cost you heavily when you don’t manage them effectively. Even with a feasible budget, getting out of high-interest debts can be challenging.

To get free from these high-interest debts before you reach your 30s, you need to have a solid plan. For example, when you get your first hike in your job, divert your extra income towards your student loan instead of spending more on lifestyle.


4) Insure adequately

Investment for beginners should start with buying insurance. As soon as you start working, securing yourself and your family should be your priority.

Even financial advisors recommend insuring yourself adequately before you start with your financial planning. Adequate life cover and health cover are an important necessity.

Health emergencies can evade your entire savings. Hence, shield yourself before you plan. Availing insurance also provides you tax benefits under Section 80C and 80D of the Income Tax Act, 1961.


5) Create an emergency fund

Always have 6-8 months of your income as an emergency fund to deal with unforeseen circumstances. Having an emergency fund protects your investment.


6) Plan your taxes

Tax planning is also an important aspect of financial planning. Your investment choices should be in line with the tax efficiency.


7) Create your investment portfolio

Your investment strategy should be goal-based. As you have the advantage of time, you can allocate a higher portion of your money into equity mutual funds and equity keeping low exposure to safe investment options.

Create a well-diversified investment portfolio to manage the overall risk and to maximize the potential return.


8) Monitor and review your investments

Once you start investing, it’s important to keep a tab on those investments, review and revise whenever there is a new opportunity. Your income and expenditure keep changing with your age.

Hence, review and change your plans to keep them in line with your goals.

Financial planning for beginners not only requires time but also needs basic financial and investment knowledge.

The only way to get skilled to plan your investments is by increasing your financial literacy.


3) Boost your financial literacy!:

There are many ways to boost your financial literacy. Some of them are:

1) Make use of the digital platform

The digital platform is a good place to brush up on a few financial terms. You can get plenty of information online to understand any financial product or investment option. Investment for beginners can get easy with valuable information available on the net.

However, information available on the digital platform may not always be correct and up to date. Hence, you cannot solely base your investment decisions on that information.


2) Seek expert help

You can get an in-depth insight on any investment option or on building a diversified investment portfolio, seeking expert help can add great value.

A financial advisor can help in financial planning for beginners and guide them through the entire financial journey. However, these services come at a certain cost. Investment for beginners can get easy with the help of Robo advisors or virtual advisors who are relatively cheaper.

You need to evaluate if the advisory cost works well for you or not in the initial years of your career.

For any questions related to Finance, stock market, investment and tax planning. Join the Koppr Tribe to get answer from experts instantly. Download the Koppr App Now!


3) Newspapers and podcasts

Business newspapers and podcasts on financial planning for beginners can help you gain a lot of information to equip yourself with financial knowledge.

You can get tips and advice on a variety of personal finance aspects.


4) Enroll in a quick financial planning course online

If you need to gain in-depth insight and be serious about stepping up your financial literacy level, enrolling on short-term courses is the best option. These courses are specific.

You can choose the aspect (such as financial planning, investment basics, and equity research, etc.) in which you need deeper insight and then take up a short-term course to boost your knowledge.

Taking up these courses can help you over the long run in financial planning.

All that you need to do as a beginner is to devote time to understand the investment options available and then plan your investment depending on your financial goals and the need.

You can learn the basics of investing in no time. One of the best ways to learn on investment for beginners is through the courses of Koppr Academy. One such course on early financial planning is ‘How to Make More Money’.

This course helps in financial planning for beginners. You can learn the benefits of investing early, identify your goals, create a budget, efficiently save tax and make rational investment decisions to achieve financial

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Earning Rs 25,000? Here’s how to invest your salary wisely to get BEST returns!

Earning Rs 25,000? Here’s how to invest your salary wisely to get BEST returns!

The feel of the first paycheque in life is always thrilling and filled with anticipation as it is your first step to financial freedom. It is thrilling because you can now spend your own money the way you wish to, without having to ask anyone.

On the other hand, you are also filled with anticipation about how to invest your salary judiciously to ensure it helps you achieve your financial dreams and aspirations with élan. 

Thus gaining know-how on investment strategies for beginners becomes important.

Having said that you may be wondering ‘how much to invest if my salary is INR 25,000?’ What is the right plan(s) to invest in? What are the investment options available?

How much to invest in insurance, mutual funds, shares, or real estate among other available options? Also, how much to keep in savings account for meeting monthly expenses and/ or meeting exigencies? 

Most of the youngsters have a tendency to hit upon an investment in a retirement plan to start it, without putting much thought behind it as their first investment.

Earning Rs 25,000? Here’s how to invest your salary wisely to get BEST returns!:



However, before making your investment choices on where to invest your money and how much to invest.


1) Top #6 things to consider before investing:

You should ideally consider a few things in life like your:

1) Age –

Start investing as early as possible in life as investments/ products will cost much less when you are young.

Your investments will also get more time to maturity and the power of compounding (wherever applicable) will get enough time to show its magic in creating wealth for you.

2) Life stage –

At the time of planning your investments, whether you are married or single, with or without children, single and responsible for old parents, etc. will determine your financial goals and your investments options accordingly.

3) Financial dreams or goals you want to achieve in life –

You are likely to have various financial dreams viz. wealth creation, planning exotic vacations, children’s education,                 retirement planning, assets creation, etc. These dreams can be realised through investments in different asset classes.

4) Timeline you have to your chosen financial dream(s) –

Whether the financial goals are to mature in 2 years, 5 years or 10 years time or beyond that will also determine the investment tool(s) you need to put your money in to support your financial dreams.

5) Investment capacity –

This is an important consideration for you when you define your financial liability as you must cut your coat always according to the available cloth.

Never make a commitment beyond your capacity; else it will be difficult to feed your investment till maturity/ term as the case may be.

With the increase in income in subsequent years, you will get time to increase your commitment to most of your existing investments.

6) Risk appetite –

Though you are young and have ample time to grow your wealth over a period of time with maximum exposure to equity and equity-related investment options; your attitude towards such investments or risk appetite may not support optimal equity exposure in your investments per your age.

Thus investment tools need to be suggested and chosen not just based on your need, but your risk appetite as well to ensure your peace of mind.

Keeping all of the above and more in mind, you must choose the investment options that will help support your financial objectives in the most efficient way.

There are certified financial planners/ advisors in the market as well, who are equipped with the knowledge and experience to guide you on how to invest your salary in the most prudent manner.

Discussed here are the various investment options for youngsters like you in the age group between 22 and 30 that are best suited to support your financial needs/ dreams based on various income levels.

Let us take a look at how to invest your salary along with the investment strategies for beginners if your earning is about Rs. 25,000 a month. 

2) Life stage: Single living with parents:

If this is your first job and you are single and, living with parents who are not totally financially dependent on you, the thumb rule says, that you should be able to save/ invest at least 50% of your annual salary in various investment vehicles suggested here.


1) Systematic Investment Plan (SIP):

A Systematic Investment Plan is a wonderful tool for wealth creation in the long run if your time investment horizon is about 10 years and more.

So consult a financial planner on how to invest your salary in a committed monthly amount in suitable equity (debt and balanced options are available too) based SIP(s).

You can start your first SIP even with a minimum of Rs. 500 commitment per month to yield a handsome return over a period of time.

The SIPs should be continued for the term and additional SIPs (when salary increases) to diversify the portfolio should be made to support your various long term financial goals that are expected to come up in future.

Today SIPs are possible even in stocks for long term investments. You may also look at starting a SIP in ELSS or Equity Linked Savings Schemes that not only yields good returns that beats inflation, it also helps you in saving tax as well u/s 80C.


Learn how Mutual Funds is the right investment for building the corpus you want to. Take this course for FREE!


2) Life insurance:

A term insurance policy with sum assured or life cover worth Rs 50 lakhs.

If you are below 30 years old and enjoy good health, then as per regulatory guidelines (by IRDA), you can get a life insurance cover in lieu of 22 times your average annual salary of the last 3 years.

So if your annual salary is say, Rs. 3 lakhs then you are entitled to 66 lakhs (3 lakhs x22) of sum assured or life insurance cover.

Since you are young, the cost of the insurance will also be low; hence you must take a term plan for at least Rs 50 lakhs to start with and should increase the cover as your annual compensation increases.

For example, when your income becomes Rs. 50,000 a month, then the ideal sum assured on your life should be at least Rs. 1 crore (6 lakhs x 22 = 1.32 crores) that you can keep revising based on your financial liabilities.  This will take care of any future liabilities (if any) at minimal cost in the face of any life uncertainty and will prevent any financial burden on your family.


3) Health insurance:

As per the thumb rule*, a Health Insurance coverage of at least 5 lakhs must be taken if you live in a Tier 1 city to take care of any medical emergency in life.  In case your dependent parents are not covered, then you can also consider a family floater of a similar amount to begin with. 

With the increase in your income, later on, you may also look at an additional top-up for critical illness for the whole family including you to protect you and your loved ones in the family against unforeseen critical and terminal illnesses. 


4) Public Provident Fund (PPF):

Public Provident Fund has a 15-year maturity with a 7 year lock-in period. The annual interest rate on PPF is 6.4% which is still the highest guaranteed return available on any debt instrument today for your age group.

You can look at opening and maintaining a PPF account with a minimum of Rs. 500 a year to keep the account active. The highest individual contribution can go up to Rs. 1,50 000 a year.

Later on, you may want to slowly increase your contribution into your PPF account as this instrument is tax-efficient as well as u/s 80C.

Moreover 7 years from the date of commencement of this instrument, your PPF account provides you liquidity in times of financial emergency through partial withdrawals.

So do keep nurturing this investment every year as all the withdrawals from your PPF account are tax-free in your hands by law.


3) Life stage: Married with a child:

If you are 30 years old or below and are married with a child and your earning is around Rs. 25,000 a month, you should be able to save at least 25% to 30% of your income to meet your future needs.

You must consult your financial planner/ advisor to guide you on how to invest your salary prudently in the above investment vehicles among other available options; in order to help you achieve your financial goals. 

The best thing about salaries is that they keep getting revised every year under normal circumstances.

With the increase in the annual income levels, you may get confused about how much to save and how much to spend or how to invest your salary and where to invest your money optimally without having to compromise on your wishes to buy luxuries for your loved ones at the same time. 

However, it will be good to remember the following points with regards to various investment options at the very onset of your career to decide wisely whenever and wherever required.


Take a loot at our course on How you can manage Relationships and Finances together efficiently


1) SIPs as retirement and wealth accumulation plan:

Early Investments in equity-based SIPs can serve as a great plan for building a big retirement or wealth accumulation corpus because the returns it is likely to generate over a span of 20 to 25 years or more than traditional investments. This is because –

    1. Compared to any retirement plan, the fund will be managed aggressively as they have better equity exposure than any traditional retirement plan. Thus the expected retirement corpus will be much more compared to a normal pension scheme where exposure to equity is much less; given the conservative nature of the plan and its objective to play safe with the investment strategies.
    2. Such SIPs have historically been effective in beating inflation at any point in time and been successful in building a big corpus to invest further as desired.
    3. Though, if you invest in a normal pension scheme, one-third of the corpus will be tax-free if you withdraw as a lump sum at vesting age. The remaining two-third is taxable if you withdraw without reinvesting it for annuity (pension) income thereafter. The returns you can expect from SIPs are likely to offset the loss you may have incurred in the tax-free return from the traditional pension plan.


2) Life insurance

Though you start with a 50 lakhs life cover on you, per the thumb rule, be watchful and revise the life insurance cover as and when you grow in your career and your salary increases.

It is important to keep in mind that with growth in your career come additional responsibilities that may even require you to travel for work.

It will also increase stress levels that add further uncertainties to life. Hence an adequate life cover would become critical to ensure that the lifestyle you have gifted your family with growing income levels, as the earning member is maintained in the face of any uncertainties posed by life.

Not to forget the higher education costs of your child too.


3) Health insurance

If you are married with a child. I.e. a young family of 40 years old or less, the coverage must be of at least 10 lakhs in a Tier 1 city.

Remember, medical Insurance becomes even more important as you grow not just in years, life stages, but in your career as well in the future.

Stress, hereditary, and lifestyle diseases generally and slowly surface as a fall-out of growth in career and additional responsibilities and increase of pressure at the workplace.

While all these make it important for you to take care of your health by maintaining a good exercise regime, proper diet, and sleep routine; it is also critical that you maintain a healthy medical insurance cover for self and your family at any point in time to mitigate any financial exigency arising out of untoward health condition(s).


4) Investments in debt instruments other than PPF:

In case you are a risk-averse person, you must try and have some exposure in debt instruments like fixed deposits and debt mutual funds as well aimed at getting you better returns compared to the savings account and allow you liquidity as well.


5) Other debt instruments like MIS:

If you are not a person with a great risk appetite and look for a steady flow of monthly inflow of money from your investments, then the best investment plan for monthly income is perhaps the Post Office Monthly Income Scheme (POMIS) that gets you an assured 6.6% interest on investments.

As an individual, you can invest up to Rs. 4.5 lakhs and a joint account would allow for an investment of Rs. 9 lakhs. If you are a resident Indian and have money to invest in safe vehicles, this instrument is a good avenue where the monthly disbursement is not subject to TDS (tax deducted at source).

Other monthly income schemes are available with Bank Fixed Deposits MIS, Mutual Fund Systematic Withdrawal Plans too. 

Read our complete blog on Debt Management – How to Manage Your Debts Effectively


4) Points to keep in mind:

When you plan your investments, it is best to keep the following in mind so that you can create a healthy investment portfolio.


1) Loans

One thing that you must avoid is to take personal loans for meeting small financial goals, like planning a vacation, buying an expensive consumer durable or a motorcycle or your first car when income increases, etc.

Rather you must use your older SIPs and/or FDs to support these purchases as required as and when you plan such investments.


Watch out YouTube video to Learn all about Loan




2) Build and Emergency fund

All of us struggling with the landscape scale pandemic like Covid-19, know how uncertain life and work is. There is no guarantee anywhere about anything in life.

This makes keeping aside a specified amount of money in a separate account on a monthly basis towards building an emergency fund definitely an act of wisdom for youngsters like you.

You must look at maintaining about a 3 to 6 months salary as an emergency fund for the future.

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To Wrap it Up:

Most of the structured organisations make deductions for Employee Provident Fund, National Pension Scheme from the salaries of the employees and also provide you a medical insurance coverage (floater) that covers your spouse and child as well.

Some organisations extend the medical insurance coverage to your parents too (at times employees need to pay the premium for the latter).

There is a decent amount of accidental insurance coverage in your life too given by the company as a part of their employee benefits.

In these situations, young employees like you feel the urge to reduce or withdraw their investments in life insurance, medical insurance and PF contributions.

This is a big mistake people make; given the uncertain environment, we operate in. Thus you must not only continue with your existing investments as detailed here, but you must also try and look at other avenues to invest further as your income increases.

Experts are of the opinion that once your income crosses Rs. 1, 00, 000 then you may look at investments in real estate if your family does not have their own home unless your objective is solely to get the tax benefits associated with home loans.

Experts also say that when your incomes cross the Rs 2,50,000 a month mark, you should ideally aim at investing 20% of your salary and more in various other asset classes like but not limited to, commodities, stocks/ equity, debt instruments including debt funds, bonds, liquid funds, various other insurance plans and real estate as well.

An investment portfolio strategically designed early in life is a sure shot way to achieve true financial freedom that ensures happiness and peace of mind to see your financial dreams come true.

So what are you waiting for? Start your research or connect with your financial advisor to rise and shine with your financial planning for the future today!

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