The 40s are supposed to be the best decade of one’s life. You are settled into your career, you have assets to your name and important milestones already crossed out. But you are on the cusp of entering the most momentous phase, where you are closer to retirement, and you need to do some important things to be prepared. These are:
#1 Repay debt.
By the time you’re 40, you’ve bought a house, a car and have a couple of credit cards to your name. You probably bought your house on loan. Repaying EMIs every month is an easy option – the EMI is auto debited from your account – but it leaves the loan unpaid for years, and you end up paying a lot of interest on the principal, too. Instead, aim to repay your unpaid loans in full as soon as you can, via periodic prepayments. Debt cuts into your income, and must be done away with as soon as possible.
#2 Buy life insurance.
In your 40s, you are thinking of your own retirement, children’s higher education, their future wedding, investing in a larger property, and so on. But what happens to these important milestones in your absence? Safeguard your family’s interests with a good Unit Linked Insurance Plan (ULIP). It offers both life insurance and exposure to the markets, so that the money you invest over the years can grow into a sizeable future corpus. The best ULIP plans in India pay the full benefits of the policy immediately to the nominee in case of the unfortunate demise of the policy holder.
#3 Get a family vehicle.
In the wake of the Coronavirus and all the disaster it has wrought on the world, it pays to be safe and keep your loved ones protected. Every person needs to be circumspect about using public transport or mingling with crowds – the only way to ensure safe travel is to buy a car for the family. You can use it for shopping excursions, road trips with your spouse, or family holidays to nearby destinations.
#4 Take a foreign trip with your family.
Speaking of family holidays, another item to cross off your list in this decade is a long foreign trip with your loved ones. It will be one of the most wonderful holidays ever, what with exploring a new country, eating local food, checking out the nightlife and returning with lifelong memories. You will need to plan your finances well, accounting for visa costs, spending money, foreign exchange, etc.
#5 Aim at having substantial savings for the next decade.
You will soon be in your 50s, and you need to think about retirement, paying for your children’s education and weddings, etc. All of these need a lot of money, so it is prudent to set up a retirement savings fund today. Apart from that, you can invest in a PPF account, monetise assets that you currently don’t use (rent out your vacation home, hire out your car on weekdays) to get income for the future.