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When should you start Investing?


No need for any calculations or lengthy discussion here. The simple answer to this question is – As early as possible! The habit of saving and investing should start at an early stage in your life. If possible, investing habit should start right from your college days.


There are many reasons as explained below –

1. Delaying to plan for the future would mean investing more lately to keep up with what you’ve missed

Our working life would stop at the age of 55 or 60. Suppose you want to have Rs 50 lakhs when you are 55. If at 25, you set apart Rs 3,500 every month (assuming a return of 8 percent), you would be on your way to achieving this goal. But if you are late by 10 years, (that is if you start at the age of 35) you would have to invest as much as Rs 8,500 every month to achieve this goal.

2. When you start early, it allows you to take more risks and aim high returns.

We read in one of our previous posts that risk and return are directly related. You can aim for higher return only when if you are willing to take higher risks. In your early years of life, you can afford to take risks because, there is enough time on your side to build back any set back you may face In your investing process. When you start late, on one side you will be compelled to take more risks to generate higher return within a limited time and on the other hand, you’ll be stuck up with your inability to take high risks due to restriction of time and increase in responsibilities.

3.  If you fail to plan NOW, you plan to fail LATER.

If you move aimlessly today, it would be difficult to get back on track. That’s a common logic that can be applied in any activity of your life but, it‘s more so in the case of your finances. For example, you have not taken medical insurance. You thought that’s not required at a young age and hence, you kept ignoring it. One fine day, as you are jump starting your investing life, putting finances in order, you met with an accident that required some heavy expenditure. Since you don’t have insurance, your entire plan goes off the rail and you have to start from the scratch again.

4. With age, comes responsibilities.

A person of 25 years may not have many responsibilities as that of a 38 year old. The reason is simple – as you grow up in age, you get married, you’ll have children, your parents would retire and by the time you’re 40 or 45, it’s your turn to support your parents and family. You will not be able to commit more money at a later stage of life, due to responsibilities that come automatically on your shoulders. Not having enough money may not be an issue when you start investing early. Even small sums put aside regularly can build a handsome corpus over a period thanks to the power of compounding. It’s always better to maximize savings in your early working years.

‘Maximizing savings’ in the initial years doesn’t mean that you should live the life of a miser.  You must spend money for pleasures- but in a self disciplined way. Investing from early on could give you regular, handsome sums at various stages of your life. It merely postpones your spending. Begin investing now, and you might have more money in your hands in your thirties, when you may want to spend on something substantial- For example, a new flat/villa for your family. The main reason that average Indians cannot afford to buy a home in their thirties is because they do not start investing early.

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