THIS IS AN ARTICLE …..
– By Gaurav Rajput, Director Marketing, Aviva Life Insurance
Warren Buffet famously shared, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Indeed, what he said is true. In order to enjoy the benefits of a rich future, it is essential to start investing in the present, especially when it comes to your financial future. If you start investing early, you can build a significant corpus to lead a better life in future. Also, it will help you avoid the ‘additional costs’ that a delay can cause. Therefore, financial planners advice that people should start saving/investing as soon as they get their first paycheck.
Unfortunately, the young urban population, who has just started working and is beginning to enjoy the benefits of all those hard years of study, does not give much thought to planning for the future. Investment and savings seem like distant concerns, and not something that would affect their life immediately. What they don’t realize is that procrastination in formulating and implementing a proper financial plan can result in financial burden in the later stages of life.
Let’s take into consideration various factors that affect our lives today and analyze what the cost of postponement of financial planning would mean in each case:
Education: Keeping in mind the current inflation rates, it is estimated that an MBA that costs Rs. 400,000 today will cost Rs. 20,00,000 in 15 years time. How many parents will be financially ready to bear this cost when required for their child without dipping into retirement funds? According to Aviva Young Scholar Insights, a survey conducted across 12 cities in India, it was found that investment for a child’s education is the topmost priority for 72% of Indian parents. 81% of parents also admitted that they have no clue on how to go about meeting the cost of child’s future education. It then becomes even more important for young parents to start saving early so that the expense for their child’s education doesn’t become a burden later. Apart from saving in conventional methods like a savings bank account, parents can choose child insurance policies to protect their children’s future. Investment in child insurance policy ensures that the child’s education is unhindered, even in case the parents are no longer around. It not only creates a corpus keeping the rising cost of education in mind but also insures the life of the parent. There are also child plans from other investment options like mutual funds which aim at creating a corpus.
Retirement: Due to lack of a formal social security system in India, retirement is another top area of concern for 45% people in India. Majority of people think that their savings are enough to lead a comfortable life after retirement. However, with no regular source of income, rising inflation and the cost of unexpected critical illness, savings alone cannot meet all needs. To be financially secure, one needs to start planning early, and save as much as possible in the initial years. This is because in the early years, there is neither pressure to support a growing family, nor high medical expenses, hence saving is easy. There are plenty of investment options available in the market like pension and retirement plans by insurance companies and mutual fund schemes that can help people reach their estimated retirement corpus. A combination of different investment options in the portfolio can help one attain his/her retirement goals.
Health and stress related issues: According to World Health Organization (WHO) figures, over 50 million people in India are suffering from diabetes. India also ranks high on the list of countries where heart related issues are a major concern among citizens. With the majority of population under the age of 35, these are indeed worrying figures. Taking into considering the highly stressful lives being led by youngsters, it is imperative that one plans well in advance for any unforeseen event in the future. A term plan is a must in any financial portfolio as it helps reduce the stress of the later years where one would have assured their family a comfortable future, in case they are not around. Almost all private insurers in the country today have launched online term plans, which are easy to understand and invest in, given the simple nature of the products and cost benefits they offer. The buying procedure is virtually as simple as applying for a credit card. Most of these products also have the option of riders which helps you customize your policy based on your needs.
Considering the rising cost of medical expenses, one should also buy a health plan and a critical illness cover, for a complete health insurance portfolio especially for the earning member of the family. While the health plan will cover a certain portion of the hospitalization expenses, the critical illness plan will provide protection against critical illnesses, and will help tide over any additional expenses that may not be covered by the other policy.
Thus, judicious and proactive financial planning will make sure that you have enough resources with you in the future, to fulfill your child’s aspirations, take care of your family and retirement needs. Start planning without any further delay so that you can build a better future for yourself. Remember, while the key to successful planning for future is to start early, it is never too late to get started.
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