When we begin our first jobs in our early or mid-20s, the compensation we earn is not exceptionally high. From there, we must handle all of our monthly expenses, including rent, food, travel, etc. And the desire to spend more is brought on by the freedom that comes with having money in your pocket. Saving and investment are also the last things on our minds at this point in life.
However, there are several advantages to beginning investments early. And we’ll talk about everything in this blog.
Here are six reasons to get a head start on your investments.
- First, because the investment period is longer, a smaller investment amount may be possible.
Each of us has goals and ambitions that we wish to fulfill, such as getting our dream car or getting married somewhere exotic. For instance, let’s say you want to get married in 7 years and need to save Rs 20 lakh to do so. You choose to invest in equities mutual funds, and although these investments are not guaranteed, their average long-term returns are over 12%. So you will have to put Rs 15,000 into investments each month in order to save Rs 20 lakh in 7 years. Additionally, a total of Rs 12 lakh would be invested.
- Number 2: Investing early helps you develop better spending habits.
Early savings and investment habits will immediately enhance your spending habits. We’ll describe how.
If you wish to save a certain amount from your fixed salary, you must set spending limits by making a monthly budget for yourself. And creating a budget is the ideal approach to changing your spending patterns since it allows you to keep track of how much money you spend each month on things like food, utilities, rent, fun activities, etc. And after years of repetition, this easy task becomes second nature.
- Number 3: You get to gain from compounding.
The effect of compounding increases as you hold an investment for a more extended period of time the sooner you begin investing.
- Number 4: You can build up a more significant corpus by staying invested longer.
The corpus collected over the years will also be significantly more extensive because remaining invested for a longer period of time allows you to benefit from compounding longer. To build a sizable corpus without straining your finances or lowering your standard of living, it is always wise to start investing early and keep investing for a longer period of time.
- Number 5: Your capacity for taking risks is higher.
You have the opportunity to take more risks when you are young than when you are older. You don’t have to consider riskier investments as much at this age because you have fewer financial commitments. And even if something went wrong with your investments, you would still have plenty of time to fix it and go on.
- Number 6: It provides you with a chance to take charge of your future.
Choosing where to direct your money can be empowering. By investing, you give your cash a “task” to do: make you richer over time, as opposed to spending it or, worse, not knowing where it is going.