| Log In | Join | Analysis Home News Markets IPO Mutual Funds Tech Jobs Features Blogs Slideshows ET NOW ET Speed ET Wealth Fixed Deposits Insurance Art Loan Centre Credit Cards Tax Savers NRI Services Savings Centre Calculators Savings News Analysis Hi there, Login with your Facebook ID to see what your friends are reading on Times of India and Economic Times. SPOTLIGHT You are here: ET Home Personal Finance Savings Centre Analysis Platinum Sponsors Gold Sponsors Opinion New By Babar Zaidi, ET Bureau | 5 Aug, 2013, 10.12AM IST 120 comments | Post a Comment 84 36 Ads by Google LIC Life Insurance Plans LIC.TermInsuranceIndia.co.in - Invest Rs.543/Month & Get Rs. 1 Cr. Life Cover+Medical Benefit. Buy Now If you take these investment decisions early in life, they could transform your financial future. Eight smart money moves to make before the age of 30 READ MORE ON Term insurance policy | smart money | retirement savings | PPF | health insurance | financial goals | ET Wealth They told you in school that the early bird got the worm. In college, the sermon was, well begun is half done. Just when you thought you had had enough of these preachy one-liners, ET Wealth has decided to goad you into action. Our message is simple: the investment decisions you make in the first 5-6 years of your career have the potential to transform your financial future. We list out eight smart money moves that investors should make before they turn 30. There are obvious advantages of starting early. Most of us know that the longer we stay invested, the greater is the power of compounding. So, if you save Rs 5,000 a month in an option that earns 10% annually, your corpus at the end of 30 years would be a massive Rs 1.08 crore. Your principal investment of Rs 18 lakh grows six times. Now, here's the surprise. What you save in the first five years accounts for Rs 48 lakh (over 44%) of the corpus. The Rs 60,000 you put away in the first year alone grows to Rs 10.4 lakh, or 9.6% of the total amount. Miss these wonder years of compounding and your corpus would be much smaller at Rs 60 lakh. How many investors realise this simple arithmetic? Not many, according to a study by Ameriprise India. The financial planning company spoke to nearly 700 upwardly mobile investors across six major cities in India and found that most of them had frittered away the early bird advantage. The investors in Mumbai understood the benefits of early investing best, with more than 80% of the respondents having started before they turned 26. In Delhi, on the other hand, only one out of four respondents woke up to this fact, Share Share 2 Share More Personal Finance Indiatimes | The Times of India | The Economic Times | More Search for News, Stock Quotes & NAV's Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 1 of 9 11/08/2013 7:44 PM NSEL Controversy 24 cos owe the NSEL Rs 5,599 cr. Will they actually pay up? The list of cos is varied. While Mohan India has few assets, there are others which are very much real businesses in the commodities sector. Here are the scenarios which could play out in the weeks ahead. NSEL's pro-rata settlement formula worries brokers Government gives FMC power to ensure NSEL settles dues Most Read Most Shared Most Commented Eight smart money moves to make before the ag... MBA no longer a passport to a successful care... while in Hyderabad, only one in five did. Our cover story is intended as a wake-up call for Gen Y. If you have just started your career, you will find these tips invaluable. Whether it is buying pure protection cover early in life or signing up with a portfolio tracker to plug money leaks, these smart financial decisions will lay a solid foundation for a prosperous tomorrow. 1) Take a term insurance policy Buying a term plan tops the list of smart money moves. The earlier you buy life insurance, the lower is the premium. "It is best to lock in at a young age when you are hale and hearty," says T R Ramachandran, CEO and managing director, Aviva Life Insurance. Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 2 of 9 11/08/2013 7:44 PM News in Pics 1/20 Six ways to cope with job loss Amrit Kaur: Aged 80, she's India's newest bil... Step-by-step guide to file your income tax re... Little-known tax deductions you might have mi... 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SUBSCRIBE More from The Economic Times Amrit Kaur: Aged 80, she's India's newest billionaire 02 Aug 2013 Home loan payoff or investment - Which is a smarter move? 01 Aug 2013 More from the web Do the Hard Work Today for an Easier Tomorrow It's All About Data Recovery Why Chinas New Bullet Trains Wont Eat Up Airline Profits The Financialist We did some number crunching and found that if the cover is till the age of 60, the total cost of buying the plan at the age of 25 or 35 or 45 is roughly the same. A 30-year-old would pay Rs 3.18 lakh over 30 years for a cover of Rs 1 crore. If he waits for 15 years and buys at 45, his total premium outgo would be Rs 3.39 lakh (see graphic). While you pay the same price, your insurance term will be lesser. More importantly, a person who buys late is taking a big risk till he gets protection. If he develops a medical condition later in life, he may have to shell out a significantly higher premium. If the problem is severe, he may be denied the cover altogether. Keep a few things in mind when you go shopping for a term plan. First, the insurance cover should be big enough to generate a monthly income for your family, cover major expenses, and settle outstanding loans. Understanding this need, Delhi-based Pradeep Khullar (see picture) bought a term cover of Rs 1.25 crore last year. Secondly, the policy should cover you at least till the age of 60. Don't take a short-term cover of 10-15 years, which ends when you are in your 40s. You need insurance most at this stage of life and a fresh policy will cost you a bomb. Lastly, don't try to lower the premium by mis-stating facts in the form. If you smoke, drink or suffer from a medical condition, don't hide it. It may bump up the premium by a few hundred rupees, but your nominee's claim won't be rejected because of mis-statement of facts. Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 3 of 9 11/08/2013 7:44 PM Top 5 stocks that can give good returns in a weak market 29 Jul 2013 The $7 trillion problem that could sink Asia 05 Aug 2013 Men are better long-term savers uSwitch New Tool Offers Free Way to Optimize Your Retirement Portfolio Compare 429 Credit Cards - Apply for the Best Credit Cards LIC Offer 1.45Cr Pension www.PolicyBazaar.com/Pension-Plan - Compare Different L I Cs Plans You can save upto 55% On Premium. Ads by Google PREVIOUS STORY Fixed maturity plans launches gather steam as rates rise NEXT STORY Want to build a strong core portfolio? Some options you can consider NEWEST OLDEST RECOMMENDED (15) MOST DISCUSSED AGREE DISAGREE LOGGED IN COMMENTSNEW! Nothing can compensate steady income you can make from your employment. Nobody talked about these products 20 years ago. Yet, our parents brought us to write thesis after thesis on these prudent investment. Follow time tested methods followed by our parents, earn well, spend wisely, grow children inteligently Rest will follow automatically. Agree (0) Disagree (0) Recommend (0) Offensive Term plan can buy online. Which is also cheaper. Agree (0) Disagree (0) Recommend (0) Offensive The article completely ignores inflation which is the basics of any investment. It appears the author/s think that any investment is safe in the long term. In reality it is not so. An amount of Rs.1.00 crore today will be just Rs.4.00 lakhs in value after 30 years at 7% inflation. In this context kindly apply this inflation theory to the term insurance taken at the age of 30 for 30 years. If the person dies around say at 56-59 yrs then what his family gets Agree (0) Disagree (0) Recommend (0) Offensive Recommended by READ MORE ON Term insurance policy | smart money | retirement savings | PPF | health insurance | financial goals | ET Wealth Follow Economic Times Analysis Section, For The Latest News! Readers' opinions (120) Have something to say? Post your comment Comments are moderated and will be allowed if they are about the topic and not abusive. Characters remaining (1500) 1 Hour ago Sundar (Chennai) 1 Day ago Ankit (Ahmedabad) 1 Day ago S R Nayak (Mangalore) Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 4 of 9 11/08/2013 7:44 PM will have value of just Rs.4.00akhs Actually, Rs 1 crore will be Rs 13 lakh in 30 years, assuming a 7% yearly inflation. Also, as you age, the return decreases because of inflation. BUT you also build up larger assets. Your family won't need as much money at 60 yrs as it will if you die at 40! Agree (0) Disagree (0) Recommend (0) Offensive Thank you Vipin. Your assessment is bang on target. If the policyholder dies at 59-60, he does not need to replace an income at all (assuming he would have retired at 60). Nayak, the article does talk about inflation when it underlines the need to save for higher education of children. Perhaps you are correct. We should have covered it in greater detail. But that would not have changed the advice given in the article. Agree (1) Disagree (0) Recommend (0) Offensive Thanks for the information you are sharing with the real knowledge you have. Agree (0) Disagree (0) Recommend (0) Offensive excellent article which summarises the good moves of financial planning applicable to anyone who has just started his career.Though nowadays people are more aware of benefits of investing at an early age,still there is a long way to go.Many thanks to et wealth team for this informative and useful article,specially the expense tracker mentioned in the article is one of the things that everyone should try Agree (0) Disagree (0) Recommend (0) Offensive So considering any one who is just following a few steps of Babar Zaidi invests Rs. 5000/- PM in insurance, Rs 5000/- PM in PPF , Rs.1000/- PM in SIPs, Rs.2000/- PM in contingency fund, and Rs 5000/- PM in Child plans (total is Rs. 18000/-) how is one expected to survive in a city of Bangalore, Mumbai. Is Mr. Zaidi targeting only the IITians and IIM graduates? If that is the case this article is perfect, else Mr Zaidi is far from the reality where entry level salary is hardly rs 25000/- to Rs. 30000/- PM. Agree (0) Disagree (0) Recommend (0) Offensive No Kumar, this article is not aimed at the super rich but common people like you and me. Believe me, term insurance at 25 will not cost you Rs 5,000 a month if you are below 30. It will cost just Rs 7,000 a year. Put just Rs 2,000 a month in PPF, Rs 1,000-2,000 a month in SIPs and buy health insurance for Rs 5,000 a year. Before you start SIPs, set up a contingency fund of Rs 25,000-30,000. These 3-4 measures alone will ensure a very prosperous tomorrow for you Kumar. Best of luck. Agree (0) Disagree (0) Recommend (0) Offensive 23 Hours ago Vipin (Agra) Replies To S R Nayak 18 Hours ago Babar (Delhi) Replies To Vipin 1 Day ago Imagine Rao (Doha) Replies To S R Nayak Bronze: 164 1 Day ago Ranjoy_b (Kolkata) Bronze: 152 1 Day ago Kumar (Bangalore) 1 Day ago Babar (Delhi) Replies To Kumar Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 5 of 9 11/08/2013 7:44 PM Very useful and informative article. for me it's now very late but for our coming and younger generation can think over it... Agree (0) Disagree (0) Recommend (0) Offensive It's too late for men like me to rewrite the financial course for ourselves,but certainly such articles are need of the our for our children.I for one, am,surely going to take the cue from the apt advises in this article for my son Agree (0) Disagree (0) Recommend (0) Offensive very informative thanks Agree (0) Disagree (0) Recommend (0) Offensive In this aspect Hyderabad lagging behind too far. All should know of it and consider. Agree (0) Disagree (0) Recommend (0) Offensive yep, basic Agree (0) Disagree (0) Recommend (0) Offensive Excellent article and good read.. Agree (0) Disagree (0) Recommend (0) Offensive good read Agree (0) Disagree (0) Recommend (0) Offensive GOD Agree (0) Disagree (0) Recommend (0) Offensive 2 Days ago Nuvendra (Mumbai) Bronze: 169 2 Days ago Chandra Sinha (Dhanbad) 2 Days ago Vivek Aggarwal (Delhi) Silver: 1020 23 Followers 2 Days ago Asr Prasad (Hyderabad) Gold: 14.1K 2 Days ago Nick (Pune) Bronze: 43 4 Followers 3 Days ago Perpetual Polyanna (Chennai) Silver: 2593 7 Followers 3 Days ago Saurabhsinha1982 (Gurgaon) Gold: 5256 26 Followers 4 Days ago APROUDINDIAN (INDIA) Gold: 13K 2 4 4 4 3 3 3 Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 6 of 9 11/08/2013 7:44 PM "Do not save what is left after spending, but spend what is left after saving" and if you are following this quote then you can never become bankrupt or in debt throughout your life for sure. ~ Warren Buffet Agree (1) Disagree (0) Recommend (0) Offensive THE PARADOX OF SAVING: WHEN YOU NEED TO SAVE EARLY, YOU DON'T HAVE THE MONEY; WHEN YOU DON'T NEED TO SAVE IN OLD AGE, YOU HAVE THE MONEY. Agree (5) Disagree (0) Recommend (2) Offensive Good article!!! Agree (0) Disagree (0) Recommend (0) Offensive Health insurance are better options as they help you fight major amount at time of major ailments and dieseases. Agree (1) Disagree (0) Recommend (0) Offensive Though term insurance is undoubtedly a better option but there isn't any clear cut idea about easy payment by private players and as far as LIC is concerned they have got huge premium amounts. Agree (1) Disagree (0) Recommend (0) Offensive Very well illustrated article. Cover fundamentals of financial planning well Agree (0) Disagree (0) Recommend (0) Offensive Very beautifully illustrated article. I would suggest each person who start his career should go through this article and apply accordingly. The power of compounding is a great thing. If you try you will enjoy. My advice is don't go behind the wants, only fulfill your needs then you will be surely happy. Agree (1) Disagree (0) Recommend (0) Offensive 3 Followers 4 Days ago Ganesh Sonawane (Pune) Silver: 2106 6 Followers 4 Days ago ThinkingCitizen Banerjee (INDIA) Gold: 5976 4 Days ago Archie (India) Silver: 727 30 Followers 4 Days ago Anshuman (New Delhi) Platinum: 30.2K 30 Followers 4 Days ago Anshuman (New Delhi) Platinum: 30.2K 2 Followers 4 Days ago Pratibha Chaurasia (Indore) Silver: 996 1 Follower 4 Days ago Pannagkamat (Bangalore) Silver: 626 6 Followers 4 Days ago RAJU P (Bangalore) Silver: 2958 2 2 2 4 3 2 2 5 2 2 5 2 3 2 4 Eight smart money moves to make before the age of 30 - The Economic Times http://economictimes.indiatimes.com/personal-finance/savings-centre/anal... 7 of 9 11/08/2013 7:44 PM Get a Quote Other Times Group news sites Times of India | 5|=|l-5 | | Mumbai Mirror Times Now | Indiatimes |
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