Stages of Investing: Stage II
This is the fifth in the series of Financial literacy series. Previous ones here: 1, 2, 3 and 4.
Your age plays an important role in your investment decisions. How? We covered the Stage I investors in the last post. Here we take a look at the financial status, needs and choice of investment for the Stage II investors. I mean the people who are in the age bracket of 30-45
If you are in this stage, you might be a young professional or employee or businessman
Overview
- May be married with or without kids
- Probably in debts – (for e.g. home loan, vehicle loan, personal loan)
- Earn a moderate income
- Has a high expenditure
- Not much of accumulated wealth
- Need tax planning
Your Financial Status
- High expenditure through installment repayments for house, car etc.
- Worried about protecting dependants in case of death or prolonged illness or disability
- Need to save for children for their education, marriage etc.
- Need to support elderly parents
- Need for planning a comfortable retirement phase
- Maximum Insurance Protection required due to
High debt, high expenditure phase –Family’s dependency on your income - Low accumulated wealth
- Need for planning retirement
Financial Needs :
- Short & Intermediated term. Housing & insurance needs.
- Consumer finance needs, children education and related expenses
Ability to Invest :
· Limited due to higher spending. Cash flow requirments are also limited.
· Financial planning needs are highest as this state is ideal for disciplining spending & saving regularly
Choice Of Investments :
· Medium to long term investments. Ability to take risks.
· Fixed income, insurance & Equity products.
· Long term insurance policies like disability income and death benefit protection i.e. a need for temporary (Term) or Whole Life Insurance products, and long-term disability products
Does it tell you something about your financial planning roadmap?
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