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3 Financial Planning Tips for Young Investors

By Finserv MARKETS - Sep 4,2019
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Financial Planning Tips For Young Investors

India has more than 50% of its population below the age of 25 along with more than 65% of its population below the age of 35. It is expected that by the year 2020, the average age of an Indian will be 29 years, compared to 37 years in China and 48 years in Japan. Within the next decade from 2020, India’s productive workforce, between the age group of 15 years plus and 64 years will be more than 99.5%, thus making India the biggest youth-centric country. With such a large population of youth, it is expected that India will have some of the best young investors across the globe. Presently, many young investors in India do not agree for a 9 am to 5 pm job and seek financial freedom at the earliest. While young investors defy the traditional adage that wisdom comes with age, they certainly follow some key learning for investments which enables them to blaze their own trail.

Investment instruments and the manner of investing for achieving high returns have evolved over the years, depending on economic factors, market conditions and people’s preferences. In India, Unit Linked Insurance Plans are emerging as the new investment vehicle of choice for all investors, including the youth, owing to their ability to act both as an insurance cover and an investment plan.

Here is a list of three key learnings for a young investor:

1.Plan investments:

As a young investor, you should plan your investments as per your medium-term and long-term goals. You should also review your savings at regular intervals, and try to transform them into an investible surplus. A young investor can plan investment in a unit linked insurance plan. One of the biggest advantages of an investment plan is that it is structured for goal-based planning. This means that you can systematically invest with the aim of fulfilling specific financial goals. The compulsory five year lock-in period ensures investor discipline, where you must make regular premium payments to keep the policy active, thus allowing for systematic creation of wealth for the desired financial goals.

2.Select the right investment portfolio:

As a young investor, you must make a judicious choice between debt and equity funds. While debt funds invest any shareholder’s money in fixed income securities such as bonds and treasury bills, equity funds invest an investor’s money into equity shares of different companies. You must understand that while debt funds are ideal for those investors who are not willing to take risks, equity funds are suitable for investors who want higher returns, and are willing to take considerable market risks. A debt fund is relatively safer as compared to an equity fund as the former is generally invested in rated and risk-free government and corporate bonds. On the other hand, equity funds are sensitive to economic factors like inflation, tax rates, currency fluctuations, and bank policies. As ULIP plans are also equipped with the option of fund switching, it provides you with an option of investing into either debt or equity funds, or a portfolio with a combination of both debt and equity funds. Switching of funds is completely dependent on your risk appetite, which simply means the magnitude of risks you are willing to take in any given market scenario. Many insurers advise investors that, over a long-term period, investors take more risks by investing in an equity fund at a younger age, and then shift to debt fund in the face of approaching maturity. This is often referred to as ‘Years to Maturity’ based portfolio management. So, a ULIP investment plan can be the ideal investment vehicle for a young investor.

3.Plan for risk coverage:

As a young investor, you should have adequate risk coverage for your family. Ideally, risk coverage for your financial dependents should be done even before you start making investments. It is precisely here that a unit linked insurance plan presents a unique opportunity for young investors. Because, with the arrival of ULIPs, the boundaries between investment and insurance products have now blurred. It is a mix of both instruments that allows you to earn market-linked returns along with the security of life insurance. The insurance company provides life cover with a part of the premium collected, while the balance is invested in equity or debt funds.


As a young investor, you can consider the ULIP Plans available on Finserv MARKETS. You can select from different high-quality investment plans such as Bajaj Allianz Future Gain and Bajaj Allianz Goal Assure. You can opt for a unit linked insurance plan based on your risk appetite, life circumstances, life goal and the time frame in which you want to achieve them. These plans offer a slew of benefits like high flexibility to meet your unique requirements along with the winning combination of both protection and wealth creation. Also read in detail about the ULIP tax benefits you can avail with investment plans available on Finserv MARKETS.

To know more on ULIP investments in depth, you can check out these blogs:

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