Financial planning for young professionals should begin with adequate insurance and debt repayment before moving to investments, says Harsh Roongta. He advised a new pilot to first pay her loan EMIs and buy insurance. Only after securing these basics should she use any remaining surplus money to start investing.
Financial planning for young professionals should begin with adequate insurance and debt repayment before moving to investments, says Harsh Roongta. | Representative Picture
I was talking to Rohini, who had just got her commercial pilot licence and begun her first job with an airline. She wanted my advice on investing the monthly surplus from her salary. She had an education loan at 8 per cent interest, with eight years to run. Her surplus was what remained after the hefty equated monthly instalment (EMI). I told her there was an order to follow. First, pay the fixed EMI on the loan. Second, buy the right insurance. Third, use the balance to repay the loan faster. Investing comes after that.She was shocked. "I thought an investment adviser would tell me where to invest. Instead, you ask me to buy insurance, though you write against it in your columns. And you want me to repay my loan faster."