Monday, September 5, 2011

Why You Should Start Investing As Early As Possible

I have always asked youngsters to start investing as early as possible. I found that after getting a job most of the youngsters want to first enjoy their life and want to think about investments at a later stage. They want to have best of clothes, latest gadgets, speeding bikes and many more things. Actually there is nothing wrong in it. When someone starts earning he wants to have everything that once he dreamt of. Every youngsters goes through this phase but later on they realize their mistake. I don’t recommend you to invest all your monthly income and kill your desires. But if you invest just 1000-2000 rupees per month then it would be a good start. Later on as your awareness increases further investments can done.

Here are some of the main reasons why it’s important to start investing as early as possible.

1. India’s Growth Story : Presently we all know that India has a great growth story. But history tells us that a country’s growth story has never been everlasting. Returns in the next 10 years may or may not be same after 20 years. So it is better to invest now and reap maximum benefits than investing at a time when everybody is uncertain about the returns.

2. Disciplined Savings : Monthly Investment of some amount of your income at a young age will help you in developing a good habit of saving money.

3. Lower insurance premium : If you buy an insurance plan now then your yearly premium will be much less than what you will have to pay if same insurance plan is bought after 5 years. So its better to invest in insurance as early as possible.

4. Deal with rise in inflation : Inflation rate has jumped much more than what anybody would have asked for. With the rise of human population, increase in global warming, reduction of oil reserves etc. inflation related concern is here to stay. Investing early means having a plan to deal with the rise in inflation. The returns from your investment will provide financial support if inflation causes any problem.

5. Better returns : All financial advisors will advise you to invest regularly for a long term. Now consider two persons Alok and Manoj. Alok is 25 year old and Manoj is 30 year old. If they both invest 5000 rupees per month then at the retirement age ( i.e. 60 ) duration and amount of Alok’s investment will be much more than Manoj’s investment. Needless to say, Alok will have better returns than Manoj.

6. Better Home : If you start investing early you may buy your dream home much earlier than you would have thought. Also your investments will give you a power of choosing the best option instead of compromising on anything.

7. Nice Car : If you have a house then surely you would like to have a car. Again your early investments will be useful.

8. Child’s Education : Education fees is growing every year. Govt. colleges where students go for higher studies have also increased their fees considerably. Even for a man earning 50000 rupees per month it has become difficult to manage such large amounts at any point of time. Now imagine the situation after 15-20 years when your children decide to join an engineering or medical college.

9. Child Marriage : We all know that plenty of money is required for Indian marriages. These days there are various child plans available where you can invest for your child’s marriage or higher education. You can also invest in stocks, mutual funds, gold, real estate etc. but the main idea is investing as early as possible. 10. Retirement Solutions. Nowadays retirement planning is a growing concern among investors. There are many reasons for this. But early investments can give you an option of early and happy retirement.