Avoid Financial Mistakes
Introduction: After understanding the importance of investing and the financial steps that should be taken, it is important for you to avoid financial mistakes. But it is very important to avoid some mistakes in your 30s. These mistakes should be avoided to make your retirement life more comfortable.
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Let us find out what those mistakes are:
Not Starting SIP:
SIP is the most effective and easiest way to double or triple your investment in a short period of time. This is an investment that should start from the age of 25 when the person starts earning. SIP, when started early and continued to be invested over time, can result in significant savings.
One more thing, if you invest directly in the stock market, you may incur losses. But this possibility is less in mutual funds. SIP (Mutual Fund) allows one to be more disciplined while investing. If you want to start a SIP, you should know that there are different types of funds to choose from, such as small cap, large-cap, mid-cap, debt funds, money market funds etc.
Not Having a PPF Account:
PPF account is a low-risk tax saving option, which earns fixed interest over time. The interest rate on PPF account is currently 7.1 percent and is adjusted annually. Apart from this, you will get tax benefits on your PPF account. This means that your investment, interest and maturity amount will remain tax free. This is one of the most important benefits of PPF.
Not Having Term Insurance:
Term insurance is a type of life insurance that provides financial strength to your family upon your death. Pure life insurance, which pays out to your nominee only after your death, is what you should look for. The advantage of buying term insurance at a young age is that you can get a larger amount of coverage at a lower premium. The longer you wait to buy term insurance, the higher the premium will be, depending on your age and health condition.
Not Having Health Insurance:
Health insurance will help you while you are alive. You will need financial support in case of illness, whereas term insurance is a product meant for after your passing away. In case of serious medical condition, hospital expenses can drain your savings faster than you would like. This should be one of the decisions you make.
Investing Unnecessarily:
Many young people invest in products or assets that they do not fully understand. They often do not ask the right questions from their agent, which results in them having to spend more for that product. For example, buying direct mutual funds can help you save 1-2 percent per year in agent commissions.
