What should be your investment strategy in your 30s?
If you are in your 30s, the chances are that you have already started investing. However, do not fret if you are yet to begin, because it is never too late to start.
Financial planning varies as our responsibilities grow, and it is necessary to have an investment strategy that allows us to maintain our ideal lifestyle despite increasing commitments. At the 30s, you will start migrating to a moderately conservative investment plan which provides for managing expenses that could come with additional responsibilities such as marriage, children, and more.
In today’s age, where several alternatives could be classified as best investment options, it is critical to chart out and identify what are the best investments to make in your 30s that will facilitate your future goals in life.
Here are some investment options you could consider:
- Direct Equity
Investing in equity is a high risk given the volatility of stock markets, but the rewards more than compensate the risk undertaken if invested wisely, which is why they are considered as attractive investment avenues.
Investing in equity offers considerable inflation-adjusted returns and is one of the best investment options to gain from long term positions. Depending on the funds available, a portion of the investments could be diversified across different sectors to manage the risk and invested in 5-year, 3-year, or 1-year buckets. If investing for the first time, you could seek counsel from a trusted financial advisor before investing.
- Sign up for a PPF account
A Public Provident Fund (PPF) account is often considered as one of the best investment options because they are backed by the sovereign and are safe investments. Given the long tenure of the investment (15 years), PPF is a good investment avenue in your 30s to park funds in a safe manner that will compound tax-free interest year on year. Another advantage of the PPF also is that an investor can deposit as low as just Rs.500 every year to their PPF with a maximum of Rs.1.5 lakh.
- Invest in Debt Funds
Debt Funds are one of the best investments in your 30s as they offer steady returns. Debt funds invest in fixed income instruments such as corporate bonds, treasury bills, and other money market instruments that are not as volatile as stocks.
If you’re having trouble choosing the right Mutual Fund, you can head over to the Mutual Fund portal, wherein you can select your risk profile and the categories you want to invest in, and the portal offers goal-based solutions.
Want to know more about Mutual Funds? These facts should help you!
- Invest more in Equity Funds
If you are not comfortable investing in stocks directly, equity funds can be the closest substitute to it. Equity funds are defined as those funds which have more than 65% of assets in equities and equity-related instruments. They are professionally managed by a fund manager and allocating funds to equity funds could offer reasonable higher returns to compound your wealth in your 30s.
Given that there are several equity fund houses and fund managers, it is imperative that you analyse historical trends and investment patterns of such equity funds and choose what is aligned with your overall investment strategy before investing.
- Invest In National Pension Scheme (NPS)
National Pension Scheme (NPS) is another best investment to make in your 30s. NPS is a government-sponsored long-term retirement scheme managed by the Pension Fund Regulatory and Development Authority (PFRDA). The amount invested in NPS is tax-deductible under section 80 CCD in addition to the 1.5 lakh tax exemption under Section 80C of the Income Tax Act, 1961. The annual minimum amount to invest in NPS has been brought down to as low as Rs. 1,000.
- Get a good insurance plan
Most employers today offer some variant of Health Insurance However, regardless of whether or not your employer offers this, you should have a good insurance plan in hand. Assess what your employer is offering and decide if you need any further coverage to add on to it. If you do, apply for an insurance plan at the earliest as insurance premiums become costlier with age. Premium paid on insurance policies is also exempt from taxes to the extent of Rs. 25,000 under section 80D of the Income Tax Act, 1961. Investing in insurance is a prudent investment in your 30s to safeguard yourself from any unforeseen medical expenditures in the future.
The alternatives mentioned above are some of the best investments for 30 somethings with varying risks and returns. However, it is imperative to balance these investments in line with your investment strategy by diversifying your portfolio. A good plan is to invest in some high-risk options in your portfolio but at the same time balance it with safer or low-risk options which will give you returns. These low-risk investments will ensure that there is sufficient liquidity to manage your day-to-day expenses while investing for a better future.
Now that you have a headstart on the best investment options, you can sit and chart out an investment strategy that works for you. So get down to it, spend some time figuring just how much you can set aside for investing and strategically plan your investments to maximise returns.
Ready to start investing? Log into your HDFC Bank NetBanking Account to get started.
* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.