Why it is important to start investing early?


Investing early is important to fulfill long term financial goals. This article outlines why it is important to invest early and what are the advantages. Every investor who is starting to invest during the early days will have more chances of making a big fortune over time.

Introduction

When I was young, I was under a misconception that investing is a topic of interest for those who earn more or someone of not this age. But my ideology was built on the basis of limited exposure and knowledge which I had during that time. Keeping the advantages in mind it is always advisable to start investing early.

The person who invests well in advance in their life will reap more returns comparatively than someone who invests in the latter days of his life or career. Early investments produce better results as the investment compounds by time. Advantages of early investors are detailed below

Time

To be a good investor one should first learn how to invest their time fruitfully. Time is the most important commodity in the world that no one has control over. As an individual, a person will have more control over how they spend their time, but that is not true always as things change after marriage. One should spend enough time with his/her spouse and kids to lead a valuable family life. By limiting the time one spends on entertainment activities and following a disciplined approach any person with average intelligence can master the art of investing. As early as one learns about the different investment options, he will be able to plan and create his avenues as per his financial goals. Spending time in learning key fundamental analysis helps to screen and pick the high-value stocks. There is always an option to leave your investments decisions to your fund manager but that won't promise maximum returns.

Energy

During the young ages, most of the people will have a very good drive to be successful. The energy possessed by the young population is enormous which can even beat the experienced people in different ways. There is always headhunting for smart young people in the market who are looking forward to a job, investment and loans. When young one can work longer hours in a stretch without having any deviation that cannot be the case always when compared to their elder counterparts. One can try doing what they want to do at an early age as they won't have a lot of burden on them, even a failure won't hit harder during young ages. Testing the ground before doing anything big will help a young investor to be cautious in everything they do in the future.

Opportunity

Anyone who is starting to invest at an early age will soon learn the nuances of money handling. By starting early one will be able to come across more ups and downs of the market that is not an advantage for a late investor. Even someone with limited experience can start as a passive investor by investing in mutual funds or SIP. Setting up a specific amount of money every month for investing will help an individual to learn and adopt financial discipline. By consistently investing in index funds during the bull and bear market always beats the market itself in returns. Periodic investments are more beneficial than one-off investments. Compounding is the most important phenomenon when it comes to investing. Even though interest rates, type of investment and inflation are the factors affect compounding, it is directly proportional to the time period. The longer the period of investment higher the returns due to the compounding effect.

Risk

A young investor can go with their gut feeling and take risks and don't always need to be relying on the calculative risk-taking approaches. It is natural that the risk appetite will be more at a young age. There are gifted people who will have a supporting family to help take risks based on their appetite even after a certain age but it is not the case with everyone. Even with supporting the family behind an adult investor will have more responsibility to not to put their closed one in stake by choosing risky investment choices.

Conclusion

Even though investing while young is a good idea theoretically. By considering the amount of money one might earn is less during a young age one should not think he can't make fortunes with the least amount of money they earn. Investments in stocks do not require huge money even 100 rupees can buy a small-cap stock. Persistence is more important than the amount of money one invest. There are opportunities to learn better with loaded information over the internet. It is also a good idea to buy courses than randomly watching youtube videos that will increase the focus which in turn increases productivity.


Comments

Author: DR.N.V. Srinivasa Rao04 Dec 2019 Member Level: Platinum   Points : 5

A fact of life is well written by the author. One indeed has to start investing when he is in his early ages. The day he starts earning he should think of investing or saving. But by the time we know this fact we will be in our middle ages. This will happen in most of the cases.

A young person can take more risk than an aged person. He is having a lot of time to earn even if he loses something. But an aged person doesn't have scope to earn and hence he should be careful in investing. So you should plan your savings strategy or your investing strategy wisely from your very young age.

Even life insurance policies also should be taken at an early age so that the premium amount will be less and we will get higher returns. If we delay the same we have to pay a higher amount for the same maturity value.

We need not invest very high amounts. We can do it with whatever small amount we can afford. In 1980, I started an RD in the post office with Rs.50/- per month.

Author: Umesh08 Dec 2019 Member Level: Platinum   Points : 7

A good article on early savings and investment. This is not an easy thing to do as the attractions of modern life will drain a person out of his earnings and he will find that he enjoyed the life but does not have any savings or investments for his future or the rainy days.

People who are wiser out of the lot know this and start saving and investing earlier. They will see to their routine requirements in their life and restrict themselves in spending money in unnecessary indulgences. Controlling on oneself and avoiding mindless expenditure is the key to early saving and investing. Then comes the idea of keeping that investment to grow and not to touch it until there is an emergency requirement. So only saving will not do much good but investing it for a longer period is what actually matters. Time is the essence of all our actions and early investment will always yield good dividends. Some people realise late that they have not saved money for eventualities. It becomes very difficult for them to save now because one thing is that they have become habitual of 'spending more' and other is that the later they invest less will be their returns.

The youngsters feel that this life is only for once and so enjoy it and do not bother for the future. This is a wrong notion as there is no limit to the enjoyment. Living within one's means and saving for the future is also an enjoyment. It makes us strong and ready to fight with the eventualities in our life.

Author: Varghese10 Dec 2019 Member Level: Diamond   Points : 6

Good explanation by the author about investing at a young age as it helps the youngster to take the risk, manage time, money and energy, find better opportunities and invest in the proper area as he/she wishes. There are many fortunate youngsters who are able to get a good job as they finish their college, save money from their salary and even enjoy the young age or bachelor/spinster terms.

There are many others who are actually loaded with responsibilities of the family, loans, medicals, bills, education etc and it becomes difficult to save from the little amount they get. As they try to complete a task, the other is lined up and year passes. By the time he/she feels like they will be able to save, comes the family time, the time to settle down in life.

I liked the conclusion that the author made that it is not necessary to invest a huge or big amount but even a small amount of 100 rupees can buy a small-cap stock. Persistence is more important than the amount of money one invest. I hope this motivates many to invest from the least he has they will fetch them good returns in the long run.



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