5 Things To Buy In Your 20s

Posted by amrina alshaikh on April 22nd, 2021

The 20s are the best decade of your life. You are young, healthy, financially independent and eager to explore the world and all that it offers. While you revel in the freedom to buy what you want and make yourself as happy and fulfilled as possible, the personal finance habits of the 20s set the tone for your future years.

That is not to say that you must not spend on recreation and enjoy your life – far from it. But your spending must be tempered with caution and done with a view to invest in your own future. You can buy an expensive phone, party every weekend and have frequent shopping escapades by all means – but there are far more significant things you can buy to settle your future finances and create wealth for yourself and your loved ones.

We present the 5 most important things to buy in your 20s:

#1 A term insurance plan.

The 20s are the ideal time to start charting out your financial goalposts for the decade. But it is also a time when you work to safeguard your family members that are dependent on your income, or future dependents once you get married and start a family. You already have a regular income from your job – why not start with a good term insurance plan? Buying term insurance in your 20s has a cost-saving benefit: you are charged a lower premium than older age groups or for buying the plan online. Term insurance plans have the lowest premiums across all insurance products in India, and their sum assured is a handsome amount. In your unfortunate absence while the plan is still active, your family members get the sum assured and continue to live their lives the way they are accustomed to, without compromises or financial pressure.

#2 A house of your own.

You might be daunted at the prospect of buying a house this early in your life, but there are advantages to doing so. You can invest in a small house as your first home, after taking a home loan. The loan gives you not just a permanent shelter (till you decide to sell the house for a bigger one) but also tax benefits every year. If you live alone or with your partner in a rented accommodation, you pay a monthly rent and utility bills for the house – this is money that is lost annually because it is not refundable. Why not pay an EMI every month on a home loan instead, and take possession of your dream home? You and your married partner can take a joint loan if both of you are employed – this distributes the loan burden instead of piling it on one person.

#3 A diverse investments portfolio.

The sooner you start investing your money in suitable instruments, the longer you get to stay invested. A longer time horizon lets you explore a variety of investment options, adjust your market exposure for higher gains, and minimise risk in equities. Instead of having just one or two options in your portfolio, such as bank FD and a couple of mutual funds, diversify your portfolio to get the most advantage from short and long term instruments. You can invest in the following: ULIPs, SIPs, tax saving 5-year bank FDs, bank RDs, liquid funds, ELSS, PPF, large- and mid-cap funds and retirement plans. Also aim to save a fixed amount from your monthly income in a separate savings account – you can periodically invest this sum for higher gains.

#4 A vehicle.

Though we are all coming to terms with living with the COVID-19 menace and resuming our work lives, the threat is not gone. It is up to each individual to practice social distancing, maintain hand and personal hygiene, and wear masks when outdoors. Travelling or mingling with crowds is out of the question. Buying your own car to travel to work, or take short road trips with your spouse and friends, is a good way to keep yourself and your loved ones safe. Your own car also gives you a lot of mobility and freedom to move about without hindrance.

#5 A foreign holiday every year.

Travel broadens your horizons, and gives you a peek into other cultures. Visiting different countries, trying local cuisines and customs, meeting new people and learning new things – they are all part of developing your mind and getting valuable life experiences. Get all your travelling done when you are young and relatively unattached – the 20s are the best time to do so. Gift yourself a good travel package every year – it need not be a long holiday or even an expensive one – for memorable trips you will cherish forever.

What are the goalposts in your financial roadmap? Get started with help from the points mentioned above.