As important as it is to earn money, it is equally important to invest it in the right place. Every age has its own needs and responsibilities, hence the investment strategy should also change. SIP, EPF and NPS all three have their own benefits. If these are used with the right balance, future financial stress can be reduced to a great extent.
If you are at the beginning of your career, this is the time when you can take more risks. At this age, Equity SIP is considered to be the best option because the benefit of compounding is more in the long term. Let EPF operate as a safety net. NPS is not necessary now, but as the income increases, it can be added gradually.
Tax and stability both important in 30s
By the age of 30, responsibilities start increasing like home, family and future planning. It is very important to continue SIP at this stage, but it makes sense to add NPS as well. NPS is not only beneficial for retirement, but also provides additional tax savings. EPF remains a strong and safe part of your portfolio during this period.
Less risk, more safety in 40s
By the age of 40, you have created a good amount of capital. Now there is a need to keep it safe, at this stage it is important to strike a balance instead of investing too aggressively in equity SIP. Increasing stake in NPS and debt options protects against market fluctuations. The goal at this age is stable growth with less risk.
Income security is most important in 50s
By the time we reach the age of 50, retirement comes closer. Now stability and regular income are more important than growth. It is better to keep EPF and NPS in conservative mode. During this time, choose such options which can provide regular income while keeping the capital safe, so that there is no financial worry after retirement.
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Never ignore your emergency fund
It is very important to create a strong emergency fund before any investment. Always keep an amount equal to at least 6 to 9 months’ expenses in an easily accessible place. With this, there will be no need to lose your job suddenly or break your investment in case of medical emergency.
Right balance is the real strategy
SIP provides growth, EPF provides safety, and NPS provides retirement security along with tax savings. Only by combining these three can a strong financial future be created. Along with this, review the investment once a year and keep making small changes as per the need.