After taking care of the household expenses, with whatever surplus is left, several youngsters face a dilemma between wanting to buy insurance (health or life), and investing or both. Financial planners and experts recommend getting sufficient insurance right at the start and not solely relying on the cover offered by the employer if any. But they also tend to stress the power of compounding, especially when time is on one’s side. Further, if you one has dependent parents, the need for insurance might seem all the more grave. So, how should you deal with such a situation? Have you given thought to all aspects of your financial situation before deciding on any investment option?
Early investing is always a good idea
Financial experts claim that you are on the right path if you consider investing early on your career. But before this, it is essential to secure your income and savings against any unforeseen events or emergencies that may throw you off your path to the financial journey. These situations include accidents, temporary or permanent disability, medical emergencies that can eat into your savings or corpus.
Some circumstances may also affect your ability even to earn. Take the COVID pandemic, for instance. Pay cuts and job losses have been ample and across industries throughout the world. In such unfortunate events, how do you plan to manage basic expenditures, let alone invest?
Insurance to your salvage
Insurance can help you in the face of these very eventualities. Life insurance is crucial at this stage if, as mentioned above, particularly if you have dependents – spouse, parents, sibling – whom you are providing for. However, a more relevant and essential solution would be insurance policies that can help you tackle unexpected demands and shortage of income.
The insurance covers you might need
A health insurance policy is most likely to cover you against hefty medical bills and expenses. A comprehensive motor insurance policy will help you cover any loss, damage to life, or property, that you or other involved parties are subject to in the event of a motor accident. A personal accident cover might also provide compensation in the case of a temporary loss of income caused due to accidents.
So, what’s the answer to your dilemma?
The insurance policies as mentioned above might help you deal with unexpected financial crises that may come your way of financial freedom. Remember, these circumstances might push you into a further debt trap and have long-term financial complications and repercussions, which might happen for reasons that are entirely beyond your control, such as the current COVID situation. It will bode you well first to incur the related expenses to protect yourself. You can then, without any worry, consider investments, and rest assured that your income is protected against these risks.
There’s no direct answer to choosing between being insured and investing for a financially secure future. All you can do is understand the importance of investing in your portfolio and choose the apt type of investment for your investment portfolio. So, what are you waiting for? Get right on financial planning and secure your future. Happy investing