Simple financial planning in life phases

A simple note on financial planning according to life phases (or age).

Phase 1 (early 20s – early 30s)

  • Beginning phase of ones working / career life
  • The age where most people got married
  • Some people would bear a significant amount of financial commitment.
  • Be careful not to get in ‘consumer debt’ such as credit card debt.

Investment POV

This age group should be

  • to accept high risk investment
  • to invest in equity type unit trust
  • get your family and your own takaful (or insurance for non-Muslim) protection

Where most spend their income

  • Car
  • House
  • fashion
  • education loan

Phase 2 (early 30s – early 40s)

  • where personal income start to increase

Investment POV

  • still could accept a bit of high risk investment
  • Unit trust: should be more focused on ‘balanced’ portfolio or portfolio with 50% bond and 50% equity
  • Suggestion : it’s a good idea to buy real estate for additional income.
  • Takaful / insurance policy which more focused on ‘critical illness’ and start to save / invest on our children education funds. Nowadays, it’s not a good idea to expect government help and sponsorship from anyone.

Where most spend their income

  • your debt consolidation and or restructuring
  • upgrade your car? – i don’t recommend this
  • new house / house renovation
  • Hajj, Umrah, long distance vacation

Phase 3 (early 40s – early 50s)

Investment POV

  • investment might be less that previously, more of monitoring phase
  • get to know a bit or a lot on business world, I would like to continue working on my business after I retired from my day job. Maybe a different kind of business. Should be fun!

Phase 4 (from early 50s)

  • should focus more on charity
  • make sure you will are ready
  • settle your high value debt (don’t die leaving debt behind)
  • a high time to take up new hobbies




Categories: Personal Finance


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