What should be the first investment from your first salary?

Getting the first salary is an emotional occasion in life. You have planned in advance where to spend the money. You have decided gifts for your parents. Your younger siblings have expectations from you. You have your own little dream to fulfil.

The first salary comes with high expectations from everyone around you. You think it is perhaps the fastest disappearing salary. However, you learn later in life how subsequent salaries are also quickly disappearing.

But before you decide and allocate your first salary, pause for a few moments and think about why you should consider insurance products.

Benefits of buying Insurance at an early age:

There are several benefits to buying an insurance policy at an early age:

• It costs less:

A healthy young person pays lesser premium than a person at an advanced stage for the similar amount of risk cover. Life insurance companies decide premium based on the risk profile of the person. A healthy young person enjoys a better health profile than a person in the middle age.
Buying a life insurance policy at the later stage in life is costly as the death year is nearer than at the young age. Secondly, most probably your health profile is weaker than what it was during the young age.

Life cover early in life is always advisable.

“Fun is like life insurance; the older you get, the more it costs.” Kin Hubbard

• It is very practical:

This may sound inhumane but the fact is young deaths are on the increase. No one would like such an event in their family. However, as per the Indian Heart Association, 25% of heart attacks are happening under the age 40. Job-related stress, irregular lifestyle, and our food habits are causing early deaths.

When a young person dies in the family, the family is the most helpless. Buying life insurance is hence a very practical investment you should do this age. As you progress in your career, your financial risk reduces. The utility of life insurance cover also reduces. The life insurance policies are most useful when a young earning member in the family dies.

“You don’t buy life insurance, because you are going to die, but because those you love, are going to live.” Anonymous

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• Builds a huge investment corpus:

Starting early with an insurance cum investments product like ULIP, helps in building corpus at a very young age. The more years you invest the impact on maturity proceeds is phenomenal.

Rs. 10,000 invested monthly for 15 years at 12% becomes appx.50 Lakhs

Rs. 10,000 invested monthly for 25 years at 12% becomes appx. 189 Lakhs

Rs. 10,000 invested monthly for 35 years at 12% becomes appx. 649 Lakhs

You can see the difference in the maturity proceeds of investment done for 10 years or more. This is the power of compounding and the benefit of starting early investments.

• Risk coverage against financial obligations:

This is a very important reason for having a life insurance at an early age. Young people had to borrow for various reasons. Education loan, home loan, vehicle loans are some of the loans people avail during their early career days. Adequate life insurance protects the loved one from repayment obligations if the borrower dies at an early age.

Now while you are allocating your first salary, you have a very important decision to make. Buy everything for your loved ones and make them happy. Or better, extend their happiness and buy your risk coverage policy which will protect them financially. This could be an important way to show your love for them.

It protects them in case of untoward incidence or it will create a huge corpus to take care of retirement. In either case, this would be considered a very smart decision.

Yes, don’t forget to help someone. Your first good deed should begin with your first salary.

The 1st salary comes with lots of expectations. The first salary will teach you an important lesson. This lesson is; how to live within your means and yet keeping everyone happy.

Share your first salary experience.