Investing might sound like something for people in their 40s or 50s, but there are multiple reasons to start investing early. The truth is that the earlier you start, the better your chances of building real wealth. If you’re in your 20s, fresh out of college, or just starting your first job, now is the perfect time to begin. Wondering why investment is important?
We will give you 7 powerful reasons to start investing early!
Let’s begin!
Why Investment is Important
Investing isn’t just about earning profits and making money. It is also about securing your future!
Here is why you should start investing young and plan for investments through proper research:
- Wealth Creation: Investing young helps take benefits in long run. This generally involves outpacing inflation and building wealth.
- Achieving Financial Goals: Whether you want to buy your dream house, fund higher education, or plan for early retirement, investment plans help in fulfilling your long-term goals.
- Financial Discipline: Regular investments develop a habit of saving and financial discipline. This is the best thing an individual can learn at a young age.
Want to Grow Wealth? Here’s Why You Should Start Investing Early
7 Powerful Reasons to Start Investing Early
1. Power of Compounding – Time is Your Best Friend
Do you know how a mango tree grows? It takes years to establish itself and start bearing fruit. But to reach that point, you have to nurture it throughout these years. Early investment in safe investments with high returns in India is just like planting a mango tree.
Example: If you begin investing in SIP (Systematic Investment Plan) for just ₹500 every month at age 22, by the time you’re 40, you could potentially have ₹15 lakhs or more.
2. You Can Take Bigger Risks
When you’re young, you don’t have as many responsibilities. You’re not worrying about paying for kids’ school fees or their higher education. That means you can make bigger decisions with your money. What would that mean?
You could explore investment types such as stocks or mutual funds. These have the potential to give you higher returns in the long run.
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A 25-year-old can start looking at different investment types like stocks, mutual funds, ETFs, etc. With early investment, you can explore higher-risk investments because you have time to recover from losses and still grow your wealth.
3. Financial Freedom at a Young Age
Imagine having the freedom to quit your job and travel the world or start a business in your 30s. Does not that sound like a dream?
You must start investing young which can also give you the option to retire early or simply live life on your own terms. Now, how to start investing?
You could explore the best investment options.
You can plan for investment in a mix of mutual funds and real estate in your 20s. By the time you’re in your 40s, those investments could be generating enough passive income to cover your living expenses.
You could choose to work because you want to, not because you have to.
4. You Learn Valuable Money Lessons Early
Investing teaches you discipline, patience, and smart decision-making. When you start investing young, you make mistakes early and learn from them. By the time you’re older, you’ll be a pro at investment types.
Let’s say you invest in a stock and see it drop in value. Instead of panicking, you’ll learn that markets go up and down, and patience is key. This experience makes you smarter for bigger investments down the road. It’s important to ask yourself what is the best way to invest money to make it grow.
5. Beat Inflation
Inflation is like a hidden tax that erodes the value of your money. If you leave your money sitting in a savings account, inflation will undoubtedly erode its value. But if you start investing early, you can certainly beat inflation.
In 2024, a cup of coffee costs around ₹300. In 10 years, it might cost ₹500 due to inflation. If you’re just saving money in your bank account, its value is decreasing.
But if you start investing young, your money will grow in real terms. If you’re wondering how to invest money to make money, safe investments with high returns in India, such as PPF, NPS, and POMIS, are great ways to begin.
6. Build Good Financial Habits
When you start investing early, you also start developing great financial habits. You learn to budget, save, and plan for the future. These habits help you live a financially secure life.
Let’s say you set up an automat deduction system for investment of ₹2,000 in mutual funds from your salary each month. Over time, this becomes a habit, and before you know it, you have a sizable amount of savings.
For a beginner, finding safe investments with high returns in India like government bonds or fixed deposits could be a solid choice.
7. You Can Achieve Your Financial Goals Sooner
Whether it’s buying your first car, owning a house, or solo travelling, investment is important to reach these goals faster. Instead of relying solely on your salary, you can do early invesment.
If you start a Systematic Investment Plan (SIP) of just 1000 Rs per month in your 20s, you could potentially afford that dream vacation to Europe in your 30s. Investing accelerates your journey to achieving life’s milestones, especially when you explore the best investment options in India.
Safe Investments with High Returns in India
Looking for ways to invest young without taking too many risks?
Here are some safe investment options with high returns in India:
- Public Provident Fund (PPF): This government-backed scheme provides tax-free returns, making it a super safe choice for your savings. It currently offers 7.1 per interest.
- Post Office Monthly Income Scheme (POMIS): You can enjoy a steady monthly income with this low-risk option that’s easy to understand.
Know the five benefits of investing young in POMIS!
- Debt Mutual Funds: These funds invest in fixed-income securities and generally provide stable returns.
- Kisan Vikas Patra (KVP): This savings certificate doubles your investment in a fixed period, making it a reliable choice for long-term savings.
- Real Estate Investment Trusts (REITs): A way to invest in real estate without buying property directly. REITs can provide regular income and long-term capital appreciation.
- Gold ETFs: Investing in gold exchange-traded funds offers a way to gain exposure to gold without the risks associated with physical gold.
Best Investment Options in India- 2024
If you’re looking for the best investment opportunities, here’s what you should consider:
- Mutual Funds: These are great for diversifying your investments and have the potential for high returns.
- Stocks: Investing directly in equities can yield high returns, but remember, it comes with higher risk!
- Fixed Deposits (FDs): Safe and reliable, FDs offer guaranteed returns, even though they may be lower than other investment options.
- Gold: This traditional investment serves as a hedge against inflation and is always a favorite among investors.
- National Pension System (NPS): A great way to prepare for retirement, this option offers tax benefits and security for your future.
- Tax Free Bonds: Investing in tax-free bonds like NHAI or IRFC allows you to earn tax-exempt interest. These bonds provide a safe and a long-term option.
How to Start Investing
If you’re convinced but not sure how to start investing, don’t worry – it’s easier than you think. Start by learning the basics of why investment is important. You can open a free Demat account, research investment types, and begin with small, consistent contributions. Explore mutual funds, SIPs, and even safe investments with high returns in India like PPF or National Pension Scheme (NPS) if you prefer lower-risk options.
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Starting early gives you a head start, so stop delaying and take control of your financial future today.
Let these 7 reasons why you should start investing young motivate you, and remember – even small steps now can lead to big rewards in the future.
FAQs| Reasons to Start Investing Early
Starting early gives your money more time to give you returns. This can lead to bigger savings due to the power of compounding interest.
Public Provident Fund (PPF) is considered one of the safest options in India, offering 7.1 percent return as of 2024.
There’s no investment that’s 100% safe, but fixed deposits in banks, PPF, NPS are among the safest choices with guaranteed returns.
To aim for a 25% return, you can invest young in high-growth stocks or equity mutual funds. However, you must remember they come with higher risks.
The sooner you start investing, the more you can benefit from compounding returns. This can help you earn better returns than your saving accounts interest.
If you start investing early, you can benefit from compounding returns, allowing your money to grow significantly over time. This not only helps you build a substantial savings fund but also provides financial security for the future.
There’s no perfect age, but starting in your early 20s can give you a significant advantage in growing your wealth.
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.