There is a common misconception that investing is something for 40s or retirement. This concept of thinking is misleading the youth, it is mistake. Maybe you have heard a proverb- the earlier the better.
- Be a step ahead of others.
Stitch on time saves nine is an idiom worth adhering to. The earlier you begin investing, the better your personal financial situation will be down the line. Comparing to others who are late in investing, overtime you will be able to afford things that they can’t.
So look at mutual fund, stock or just compound interest.
- More opportunity.
At 20s you don’t have a mortgage to cover, a spouse to please, or children to take care for. In lots of ways you have much opportunity at this age than 30s, 40s or 50s. You can easily invest money in mutual fund which is a professionally managed investment fund that pools money from many investors to purchase securities
- Your 20’s offer more than a time to explore.
It offers the chance to set you up for life. Though investing in your 20’s maybe sound boring, the starting young is easily the best way to get ahead.
- Money management skill.
Till young age you rely on your family to fund expenses. So after first job, the job allows you to spend money as your wish without giving account of money to anyone. This freedom can lead towards luxury, but if you start investing you learn most important thing- Money management’s skills.
- Diversified portfolio.
Investing at a young age allows you time to build a more diversified portfolio which can help you in managing the risk.
Short term results are less predictable than the longer term ones as they are more influenced by the concept of volatility. For example stock market shows a high level volatility. In this case the high level of volatility doesn’t impact much on overall return as the long term one allows the ups of the stock market to compensate the downs.
In India mutual fund is the best option.
- High risk capacity.
At young age you can afford to take on a higher level of risk compared to retirement. If you start investing at early age you have a diversified investment portfolio which helps finding the balance between risks and returns. Mutual fund is less influenced by the market risks.
- Less responsibilities.
At this age you are free of financial responsibilities or affected less by it. Don’t wait until when everything appears too complicated.
- Knowledge and experience.
If you start at 20s till 30s you will have learnt strategy of investment.
- More efficiency.
The young person has the technical skills to research and invest, choosing the best option for his investment.
- Time benefit.
The best one is time advantage is on your side. You have decades in hand to grow older. Due to power of compounding your investment grow with time, keeping you secure later on.
- Secure future.
If you are early investor, in future you can afford the thing which won’t be affordable for your friend who is ten times wealthy than you now days.
- Earning Valuation.
The best way to value your earnings is to save more. There isn’t any benefit of earnings without savings.
- Purchase Power.
Debt free purchase through goal based investing. If you invest 8000 each month from your 20s and with 12% average return rate you can easily reach 5 lakhs targets by the age of 24, which is early for buying your own car without car loan companies’ help.
Early bird gets the worm isn’t false. If you ask someone older what he will do if he gets time machine, surely he answers you ‘I go back in 20s and start investing instead of buying skinny jeans which I shouldn’t wear and never pick up cigarette in summer after graduation. Don’t think much just start, money is matter for life, but for investment wish matters more.
If you are older than 20s don’t repent for not investing early as there is a proverb, “The best time to plant a tree was 20 years ago. The second best time is now”.