#AskUsAnything: Planning Insurance in your 20s; Investing for college students; Analyzing beginner’s portfolio

#AskUsAnything is our series where we answer questions about investing and personal finance. Probably they popped up in your head too, but you didn’t know whom to ask.

I am a 26 yo unmarried woman working in the private sector. I do not have any underlying health issues and I also have a healthy lifestyle. My employer already offers good health insurance coverage. Do I really need to get my own?

Aanchal Sharma, Delhi.

While it’s great that you have a healthy lifestyle, a part of any prevention strategy requires you to plan for the worst. Yes, people under 35 are less likely to need insurance, but there’s an obvious benefit we miss out on – the insurance companies will price your risk lower than a 45Y applicant for this very reason.

Also, the chances of developing a lifestyle-related illness increase as you near your 30s. And although the insurance companies cannot deny you a cover, the premium might be on the higher side considering the risk factor.

Employer-sponsored policies are good as additional/ supplementary cover but should never be considered your primary health cover. It’s only valid till you are employed with them.

It means if you are thinking of career change, switching jobs, taking a sabbatical, or even retiring, the terms might change. In order to migrate the policy, you would need to give at least 90days notice. Your employer may also revise the coverage or benefits of the policy at any moment. Hence, getting a health insurance cover of your own is always a good idea.

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I am a 20 yo college student juggling internship and college. I want to start investing in mutual funds, but internships are more like short stints so I’m not sure if I should begin investing so early.

Neerav Pattanaik, Bhubaneswar

The thumb rule of investing is, Invest early, invest often, and invest for the long term. Just be sure that you are investing money that you wouldn’t need in the short term.

The path you have taken is commendable and leaves you with a lot of opportunities to grow your money. For starters, educate yourself on personal finance and identify your investment goals. Are you saving up for Masters or a trip? How much of your income are you willing to invest in the long-term? Know that the advantage you have as a young investor is Time.

You can start with equity mutual funds which are your safest bet in investing compared to stocks that are volatile in nature, and give you higher returns than traditional options like FD & RD. You can start a SIP with as low as Rs. 500 to automate your investments, which is a great way to learn the discipline.

Another option is to invest a lump sum as and when you have the chunk ready.

I work as a freelance journalist. I’m 30 and I started investing only 6 months ago. My portfolio is worth 80k now (mostly Mutual Funds.) I have not seen any great returns nor has there been much fall, yet. Do I need to revise my portfolio?

Binoy Sengupta, Bangalore

First of all, do not change your portfolio in haste or compare it to someone else’s. You are fairly new to the investing game and a stable portfolio is not a bad sign. As long as your goals are clear and allocations within your risk appetite, it’s all good.

First-time investors are generally advised to start with Index funds or ELSS. The former is relatively less-risky and the latter helps save tax. The returns might not seem significant in the short term such as 6 months in your case. Many people are lured into small and mid-cap equity mutual funds because of their 1-3 years of continuous high returns. But they are extremely volatile for a beginner’s risk appetite.

Investors should keep in mind that staying invested is the only thing that matters in markets. There can be long periods of ‘no action’ and then there will be instances of ‘market highs’. Chasing returns and trying to stay ahead of the game does not work in markets.