Got your offer letter? Excited for your first job? But wait! Do you have your Pan card and passport ready? Do you have a valid DEMAT account? Still wondering, why are they needed for joining for your first job?
There was a time when getting a job was just a means to meet family expenses or personal expenses and people were happy living a frugal lifestyle. With time things have evolved significantly and wealth generation has become a sought after goal.
So what’s it that is needed to build up your wealth? Can you start at it on the first day of work? Let’s find out.
1. Get your PAN card in place
There was a time when having a PAN was a privilege, but the time has changed, PAN is now a mandatory thing to have. So, what is PAN?
PAN or Permanent Account Number is a unique alphanumeric identification, which is allotted to every taxpayer. PAN is allotted by the Income Tax Department. Having a PAN is mandatory for receiving any sort of income from salary or any other sources. It acts as a tracking medium for all financial transactions to prevent tax manipulations.
2. Obtain your Passport for dream countries to visit
Passport is a very important document. Earlier it was very complicated process to obtain a passport, but the government has eased up the process in the last few years. A passport is the proof of citizenship too. For obtaining a passport, it is mandatory to obtain your clarification from the police department and hence several companies have made it mandatory to have a passport before joining the organization.
Considering the expansion of businesses and companies, there can be various opportunities to work on-site at some foreign locations. So, it is recommended to have a passport before you join your first job.
3. Open a DEMAT account- it’s also free at some places!
It is necessary to start investing your money right from the early days and a DEMAT account is necessary if you wish to invest money in the most tempting sector of investments – the equity markets. A DEMAT account is the door to the opportunities of investment which are provided by the equity market and hence it is recommended to have one. Almost all leading banks and brokers, provide you the facility to get a DEMAT account with the depositories.
Your parents must have taught you about savings, but considering the expenses of modern lifestyle, saving only is not going to suffice your needs. You need to plan and invest your money smartly. With saving your money adds up but with smart investment your money multiplies. You should make your savings work for you.
It is very important to manage your funds right from your first pay day to tackle with the ups and downs of life. Some of the important aspects of fund management which can help you in your financial wellbeing are
1. Cover any major expenses in advance:
Insurance is one of the most important investment, as it provides you with a security against misfortunes of life. Also, insurance plans help you to save your money from tax as they are exempted under section 80C of the income tax. Insurance can be of many types, but some of them which should be necessarily opted for include
• Life Insurance - Life insurance provide security against the loss of the life of insured. In case of any misfortunate happening, which leads to the loss of your life, it provides financial aid to your family or the nominee, by providing them the insured amount.
• Medical insurance - The costs for healthcare and medical treatments are very high nowadays. The hospitalization and treatment for any health issue can severely impact your financial balance. Thus, it is recommended to get a health insurance policy to be insured against any such situation.
• Critical Illness Cover - Medical insurance reimburse the costs incurred in the hospitalization and treatment but there are various critical diseases like cancer, stroke, cardiac attacks etc., the treatment costs for which can be several lakhs of rupees. Critical Illness cover provides a lumpsum amount which is the sum insured in case the insured person is diagnosed with any such critical disease which helps in the treatment costs as well as provides financial aid for the day to day expenses.
2. Contingency Fund- You can’t go without this
The modern world is full of challenges. Recession and unemployment are on the peak considering the economic conditions. Therefore, it is necessary to maintain contingency fund of minimum 6 months in order to meet your day to day expenses in any such unwanted conditions, which can otherwise severely impact your lifestyle. You can invest your money in any of the following to maintain contingency
• Liquid Funds - Mutual funds without any loc in period are known as liquid funds. You can invest in liquid funds as there is no lock in period to withdraw your money in case of any emergency. Liquid funds can provide better returns as compared to fixed deposits but are however risky too. It is necessary to understand that the performance of liquid funds depends on the stock market and thus your investment is at risk.
• Fixed Deposits - Fixed deposits are amongst the most secure form of managing contingency as they offer almost negligible risk, but the returns are also on the lower side. Almost all banks provide you with a facility to create a FD or fixed deposit for any surplus you have. You can withdraw the funds by Breaking your Fixed Deposit anytime with the accumulated interest.
3. Retirement Planning isn’t something you can ignore
It is very important to plan your retirement. The early you start the easier it is to, so you should start planning for it from your first pay day. You can invest a part of your investment in the following to have enough funds after your retirement to fulfill all your needs.
• Equity Funds - The risk bearing capacity is very high for young individuals, thus it is recommended to start investing in equity funds at an early age. Equity funds have high returns but are high on risk too. You can invest in equity funds right from your first working day, according to your risk appetite to get good returns.
• Debt Funds - If you don’t want to go for equity funds, you can opt for debt funds. They usually offer low returns compared to equity funds, but the amount of risk involved with debt funds is also very less comparatively.
• Hybrid Funds - They offer the mix of equity and debt funds. Therefore, the returns are also regulated. The returns with debt funds are neither as high as equity nor as low as debt. The risk involved is also very regulated.
There is a very simple formula which should be used right from the first day to manage your income. You should first plan your investments as per your income. You need to manage your expenses with the remaining amount. If you follow this strategy, there are negligible chances that you will have any financial trouble at any stage of your life.
All the Best!
Data is updated on 7th per month. It gets verified every quarter by independent auditor.
Data presented here is taken from company's inception
Importance given to satisfactory resolution as per prescribed TAT