You have just turned 18. You are receiving your pocket money on a monthly basis. Now you are independent to spend it as per your wish. Most probably the first thought that will cross your mind would be to go out and party with your friends. I am pretty sure that the thought of investing your money would have crossed your mind but you probably did not act on it.
You might think that you are still 18 and you still have a lot of time to think about investing. But that’s where you’re wrong. Most people wait until they are in their thirties, forties, or fifties to start saving and investing money. The trouble is by the time they realize they should be investing they’ve lost valuable years when their investments would have made them wealthier.
Although it is good to start investing at an early age so you can reap its benefits when you are older, if you did not start early, you still have a chance. It is never too late to start investing. The only thing that changes with age is the strategy you adopt while investing. We will be talking more about various investment strategies in our future blogs.
The following illustration would make it clear why starting early is beneficial:
Suppose you start at the age of 20 investing ₹5,000 per month at a return of 8% per annum compounded half-yearly. By the time you reach the age of 60, you will have accumulated a corpus of approximately ₹1.7 crores.
Now suppose if you start at the age of 30, investing ₹10,000 per month at a return rate of 8% per annum compounded half-yearly. By the time you reach the age of 60, you will have accumulated a corpus of approximately ₹1.45 crore.
It is pretty clear from the above example that starting 10 years early even with half the amount accumulated approximately ₹25 lakh more.
You need to have a far-sighted outlook on how you use your money. Instead of spending it all to fulfill your luxuries, you should plan for the future.
But when you are planning for the future there are a lot of factors to be considered and one of them is the amount of risk you take with your investments.
We will be talking about this in our next blog.
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