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Tax-Saving Investment Tips for Indians Aged 25 to 55

Who doesn’t want a bank balance of 2 crores, a large SUV, and family vacations to Europe and Australia every year?

Sounds like a dream, right?

Well, it need not be limited to just a dream. In this article, we will see some age-specific investment instruments that help you save smart and regularly to achieve all your financial dreams.

Firstly, let’s divide the major milestones (from the time you start earning to your retirement) of your life into two phases so we can prioritize financial goals:

  • Young Adult to Householder
  • Family Man to Retiree

Young Adult to Householder (age 25 – 35)

The right time to start investing is at 25, when one has started earning. Since a young investor has fewer financial obligations, s/he can afford to take financial risks. For quick returns, a major chunk of money can be parked in equity funds and the rest in debt funds.

Owing to its convenient nature, Systematic Investment Plans (SIP) have become a popular investment option among young Indians. By investing as little as INR 500 a month, they can fulfill short- or long-term financial goals. Let us see how much one can earn over varying periods (interest fixed at 12%).

Scenario 1 – Two-year SIP Scheme

  • Amount invested – INR 10,000/month = INR 2,40,000 in 2 years
  • Future value – INR 2,70,000 (approximately)
  • Total profit – INR 30,000

Scenario 2 – Ten-year SIP Scheme

  • Amount invested – INR 10,000/month = INR 12,00,000 in 10 years
  • Future value – INR 23,00,000 (approximately)
  • Total profit – INR 11,00,000

Clearly, the longer you keep your money invested in an SIP scheme, the better will be your returns. Start early, invest regularly, and let the power of compounding do its magic.

There is another lesser-known instrument in the market, called ULIP, which is superior to mutual funds in many ways. Some benefits include no tax burdens, higher returns than mutual funds over the long run, lower fund management charges, and death cover for the insured. The OneInsure Research Desk strongly suggests you opt for ULIPs if you fall in this age range.

Suggested Reading – 5 Reasons Why ULIPs Are Superior to Mutual Funds

Family Man to Retiree (age 35 – 55)

If one continues with investments in SIP, by the time s/he turns 35, one will have a good amount of savings that may be utilized for expenses incurred on marriage, delivery of the child, and the child's upbringing. However, from here on, financial responsibilities are bound to increase and one can no longer invest only in SIPs because of their risky nature. Investments need to be diversified at this stage and higher priority needs to be given to debt instruments like Guaranteed Income plans, FDs, and so on.

Earning potential at this stage is sure to increase as one grows professionally. By investing in the right investment options, one’s family’s future needs can be taken care of while simultaneously saving for retirement. Guaranteed money-back plans and health plans are some wise options for this age group of investors.

Money-Back Plans (Retirement Plans)

Money-back plans, besides providing retirement benefits and tax reliefs, offer regular returns to fulfill short-term financial responsibilities before your retirement. As the name suggests, money-back plans pay the policyholder a portion of their investments along with accrued bonuses at regular intervals while a lump sum is paid on maturity. This way, one can pay for their children’s education and other important milestones. Money-back plans also offer death benefit to secure the family members’ financial independence in case the policyholder meets an untimely end.

Health Insurance Plans

Even though not a typical investment plan, a health insurance policy is like a shield for your investment plans. Today, medical expenses during a single instance of hospitalization can run into several lakhs. Without an adequate health plan in place, one is bound to break into one’s investments. With a health insurance plan, this can be easily avoided. Moreover, health plans provide tax benefits under Section 80(D) as well.


With a strong financial portfolio, retirement dreams are achievable. If one has chosen to continue with SIP or ULIP, by this age, a huge corpus will have been made. And of course, your money-back plans or FDs will also mature close to retirement age.

Don’t forget that healthcare expenses at this phase of life tend to increase and can be too much to bear, especially when your income has ceased. A health plan is thus essential at this stage as well.

Invest early and smartly according to your risk appetite while you are earning and be rewarded in your sunset years. Call 86559-86559 for investment advice from experts in the field.


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