When I had just started to feel comfortable in my career my inbox was regularly flooded with advice from well-meaning relatives and some experts on how I should start investing for future. Just the sheer amount of advice is mind-boggling. Now of course it is always good to feel secure about your future and creating a secondary revenue stream via your investments is just the thing to secure some wiggle room while planning your expenses. But is it the right time to start investing for you. Don’t follow the crowd and think for yourself. Are you ready for the uncertainties of today’s economic scenario? Have you made enough provisions so that you and your loved ones can maintain a comfortable lifestyle in case of an unexpected mishap. Here are some pointers you might want to consider before you take plunge into the investment market.
- Monthly Expenses: In the current economic climate no job is permanently secure. If unfortunately you lose your job for any reason, do you have enough resources to give you a comfortable cushion. First thing I would recommend is to make a monthly budget covering all essential expenses such as rent, utility bills, grocery, gas and some entertainment etc. Next thing on agenda is to have enough funds readily available in your savings account to cover for six months of your monthly household budget. This is your contingency fund and will be left untouched unless there is an emergency. In case you have to make a withdrawal from this, remember to top it up as soon as possible.This will give you enough time (hopefully) to find another job of your choice and not settle for the next job available. It also assists you to support your lifestyle.
- Insurance: If you have any dependents, you would want to make sure that they are well looked after, if(God Forbid) something happens to you. I would recommend a term insurance for the peace of mind. This is not something for tax benefits or as an investment option. Work out the amount that you feel is enough and if you are under 30 it is very easy to get a very good premium rate for term of 30 years.
Now you have secured your immediate needs and have bought some peace for your mind, it is time to start investing and creating a secondary revenue stream for your family.