Quora Answer: Where Would You Invest $100,000 at Age 30?

The following is my answer to a Quora question: “Where would you invest $100,000 at age 30?”

That would depend entirely on a person’s objectives.  At this stage of life, the average working adult who has managed to accumulate that amount of savings needs to protect his earning capacity.  Whilst a lot of people will talk about various forms of investment, all that is useless if you lose your earning capacity.

The very first plan that one should buy is a health plan.  A hospitalisation plan is the one plan that everyone has an opportunity to claim.  It cannot be that you never fall sick.  And at this age, the mortality charges are negligible.  In tandem with getting a hospitalisation plan, one should get a personal accident plan.  This affords reasonable coverage in the event of an injury.  Like the hospitalisation plan, get it when you young, before there are any injuries or medical problems that become pre-existing conditions.  Too many people regret after they have to go for treatment without any coverage and then discover, when they want to buy a plan, they have a pre-existing condition and there is an exception that is not covered for the rest of their life.

Whole life plans are the third category of insurance plans and address three main things: death benefit, total and permanent disability benefit and critical illness pay out.  Some plans address two or all of these, and some plans are very specific, such as critical illness plans.  These plans are normally a part of estate planning.  If at 30, a person is planning to settle down, then they are transitioning from the wealth protection to the wealth preservation phase of life.  This means anticipating having children and the cost of raising and educating them.  That is legacy planning.

All of these plans will not even take a tenth of the $100,000, but what it has done is set aside enough buffer that medical costs, and a possible future inability to earn are partially addressed.  Then, and only then, is there a foundation for investments.

In terms of investments, either tie the funds up with an investment-linked plan or a mutual fund.  They both have their benefits, but they are relatively safe since the risks are spread across several markets between debt and equity securities.  A properly managed investment of this nature should give about 6.5% per annum.