Planning savings to secure your future needs is something that has been discussed and written about often. So, our basic focus on investment planning was not to secure your needs but to secure your future desires. Here is what we covered.
Pre-thirty age group
In the pre-thirty age group we had asked you to prepare for taking risks. That is the age where your risk appetite is high and you can really take a pot shot at getting rich quickly. If you are both watchful and lucky you can make a quick buck in the stock market. We say watchful, because you must be knowing three things prior to investment. What to buy, when to buy and most importantly when to sell.
Knowing the fact that a stock value is just a meaningless number unless you have sold the stock and realised your profits is very important. The idle way is to sell off the share if the stock price has moved by 20% to 25% either way in six months or less. You must book profits or losses and take a limited risk on your investment. Getting greedy and holding on to fast rising scrips or being hopeful or sentimental about fast sinking stocks can be a recipe for disaster. Another thing we had discussed was the type of stocks you need to buy when young. We asked you to latch on to affordable high gain shares that could be a little risky in your twenties. And as you have gained some profits, and are closer to the thirties, you move on to high priced but moderate risk blue chip shares.
As you grow into your forties
As you get into the age group of 30-45 you slowly migrate from high-risk stocks to long term fixed assets. Here too you take risks to reduce the length of the property acquisition curve. While in the early thirties you should not book the large dream house a 3 or 4-bedroom home that you would want to retire in. Rather you should look for a suitable pad for you and your spouse. Only buy it at a spot where you can get a good appreciation 5 to 10 years later. There are two advantages if you do this. The first is that your instalment burden for a small flat is lesser when you are in your thirties. Secondly you add a capital appreciation to lessen the burden of instalments when you finally invest in your dream house.
After a couple of years start looking out for your dream property. Even then ensure that you are buying into a property that appreciates in less than 10 years. Never be in a rush or get pushed into buying property. Take your time and ask yourself the big question? Will this appreciate? Gone are the days of the past when you owned one house and stayed lifelong in your home. This is the age of change. Every five years the pattern of housing is changing. The secured gated complexes that house condominiums of today with clubs, gyms and swimming pools will be ‘ oh so yesterday’ in times to come. Smart homes will take over in the coming decade and homes with helipads having flying taxis and drone delivery in the next decade. Would you want to get stuck in one home for the next three decades?
The home run into your sixties
Investment always do not pay off big. Even if they do they need to be diversified. So, while you take risks in the early years to get rich, you start covering your risks from the age of 45 with more solid investments. Among these solid investments are equity funds, mutual funds, pension plans and a slew of post retirement plans and travel plans.
As you move from the age of 45 to 60 slowly your income increases and your expenses tend to taper off. This is the time when you can save for security and safety that takes care of your old age. At times people whose children are abroad or away also invest in old age homes. Investment in old age homes is increasing because it not only gives you a home but a community to live with. As your children grow up and move out you and your spouse become lonely. Instead of staying in a palatial home alone, many people opt to go to old age homes where they get common shared service and suitable company.