YOU are in your mid-career. Your income is high, but expenses are higher as your children are growing.

It is also the time when a lot of maintenance expenses kick in on a regular basis, such as painting your home, exchanging old durables for new ones and so on. That apart, it is also time to concentrate on your own retirement plans.

By now you should also have cleared off most of your major loans like your home loan. If your children are no longer dependent on you, you may consider closing term insurance policies and leaving only so much as your spouse would need.

Needs: Your immediate short term need is your child’s higher education or maybe your child’s marriage expenses. You need life, health and disability insurance if your family is dependent on you.

In the medium term, you need to plan your own retirement. It is the age of nuclear families and no one except yourself will be paying for your retired years. You need to build up a sufficiently large corpus to enable you to continue to live the lifestyle that you did while you were working. Moreover, with inflation and increasing medical costs, your retirement is not going to be a cheap affair.

Choice of investments

• Short term (less than 5 years): In the short term, you can invest in instruments that provide liquidity and carry low risk. Investing in equities is not a good option for the short term since returns in equities are highly volatile and you run the risk of losing your money. Instead, for the short term, liquid mutual funds, bank fixed deposits and short term bonds are a good option for you.
  
  
• Medium term (5-10 years): In the medium term, you may not require liquidity, but at the same time, you cannot afford to take big risks either. Hence, you can look at debt instruments that offer a slightly longer lock-in and hence come with higher returns too. For instance, National Savings Certificate (NSC), Kisan Vikas Patra (KVP), RBI bonds – all make for good investments as they provide returns of 8 per cent and have a lock-in of 6-8 years. You may also look at debt or even balanced mutual funds. If, however, you have not built up a sufficient corpus for your retirement, you would have to take the risk and invest in aggressive instruments such as equities.
  

You can consult an expert and make an informed decision about investing in equities.

Read:What could go wrong in your mid-life?

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