Table of Contents
- No SIP
- Ignoring the benefits of PPF
- Not having life insurance
- No health insurance
- Ignore the power of compounding
- Making wrong investing choices
- Just saving & Not focus on Investing
- Withdrawing from provident fund
- Ignoring Small savings
- Beware of debts
- Not paying heed to time value of money
Financial Mistakes are the worst kind of mistake because People earn money so that they can afford the lifestyle they want to have. So, it comes as pretty obvious for a person earning well to spend as he wants. This thing might not have any such impact on a person’s future if he is still in his 20s. However, once you venture into your 30s, well, after 35 to be precise, it’s important to have a well thought plan for retirement and other future plans too. But, most of the times individuals don’t realize this until it’s too late. We shall discuss some of the most common mistakes individuals tend to do in their 30s which might cost them more than the lavish lifestyle they are living, later in their life.
No SIP
Systematic investment plan is one of the best investment options available if you are looking for long term investment. Choose the different funds in which you wish to invest your money and start investing. Years later, you’ll be able to make great deal of gain from your SIP investment.Due to Rupee cost averaging SIP gives protection against market movement. However, many people don’t realize this and decide to invest in it later on thinking that there’s still enough time to start thinking about the future. With SIPs, the longer the investment tenure, the better returns you’ll be able to fetch.
Ignoring the benefits of PPF
If there’s any plan that is best suited for retirees, it’s Public provident fund. Not only it is less risky in nature but also one can claim tax deduction under section 80C of income tax act. The interest, which is 8.7 %, is tax free in nature. In addition to these benefits, the corpus that is built up by the end of maturity period is also tax free in nature. You can choose the purpose for your PPF i.e., whether you want the corpus built in lump sum or you want it in the form of monthly income after retirement. It comes with a maturity period of 15 years which can be extended for 5 years as many times as an investor wants. However, people tend to think that this investment has a long way to go and ignore its benefits.
Not having life insurance
Future is completely uncertain for us. So, if there’s only one bread winner in the family, then he must well in advance make plans for his dependents. Plans refers to taking insurance cover so that in case that person is no more, the dependents will still be able to get financial support to sustain their lives for some time. People ignore it until some responsibility actually falls on their shoulder to do something.
No health insurance
Having a health insurance is just as important as having a life insurance. With the number of diseases that are spreading, the cost of treatment too has reached heights. Most of the times, at the time of need, its difficult for a person to manage money when he is ill. That is why, it is considered ideal to invest in health insurance in order to avoid the huge hospital bills that might come your way.
Ignore the power of compounding
Starting with investment at a young age helps build you a good corpus due to the effect of compounding. While many may not understand it, but compounding plays an important role in providing more gains from your already invested money in the market.
Making wrong investing choices
Nothing haunts us more than our regrets. People who are investing for the first time in market, tend to make mistakes which might cost them quite too much in their future. Therefore, seek the advice of a trusted financial advisor before making investment.
Just saving & Not focus on Investing
Investment and saving are two different terms but have been highly misunderstood as one. While saving simply means putting a part of your income aside and letting it sit idle, investing means putting a part of your income in the financial market, taking risks in order to get better returns. The interest earned on savings account is very less when you compare it with other investment options available out there.
Withdrawing from provident fund
While working in organized sector, the employer usually gives PF benefits to its employees. However, when a person changes his employer, he tends to encash the corpus accumulated in his PF account with the previous employer, because they suggest so. Don’t do that if you don’t need it. Keep your money in your EPF account and have it transferred with the one that you’ll open with your new employer.
Ignoring Small savings
Every big thing starts with something small somewhere. So, before taking the big leap of faith in the investment market, start with the small savings first. Like, grabbing the offers that come along your way while paying your utility bills, going ahead with inexpensive options etc. These small things slowly prep us for the future in case any financial crunch situation arrives.
Beware of debts
Say, you want to purchase a car but you don’t have enough money with you at the moment. So, you will obviously take loan for the purpose. However, always try to pay the loan off as soon as its possible. Also, try not to burden yourself with another loan before paying first on off. Otherwise, you’ll get stuck in the never ending cycle of debt payment.
Not paying heed to time value of money
The price at which you can afford a particular thing today, after few years, the situation won’t be the same. The value of money is only decreasing with time and that is happening due to inflation. So, one must always invest by keeping in mind the time value of money otherwise the gains made won’t harbor as much profit as it ought to.