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29 September 2020 | 4 min read

Want To Start Investing: Here Is Your Guide

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When the world (and consumerism) has made out everything about instant gratification, it can be hard to invest your effort and time in something that will take years to bear fruits. Investment for beginners is just like that. You are fresh out of college and riding on the high of ‘living your life’ and doing your best to get a hang at adulting. Factoring in something as daunting (on the surface) as early investment doesn’t appeal to a lot of youngsters.

But if you just take out a couple of hours and learn all about the perks of start investing from your first job, you will automatically set yourself on a path to financial freedom. And that, my friends, is much more gratifying and rewarding than any impulsive thing you would do in your 20s.

Ready to learn more about the art of growing money? The simple trick is to start investing early. We walk you through all the reasons why you should do this.

All Expenses Are Fairly Low

Monthly expenses

When you start investing early, you have the benefit of time on your side. You are young and have little to no responsibility, thus your expenses are also less. This is why early investment is a good option. Even if you start with a small amount, say INR 1,000 – 5,000 initially, you will be saving and growing your money from your first pay cheque .

Financial Habits Get Reformed

Financial Habits

The sheer activity of investing and saving money helps in reforming your financial habits which can go for a toss if you end up overspending and not saving. You know, the financial rut one gets stuck in if they compound debt on their credit cards.

Learn From Your Experiences

Learn from experiences

There are myriad of investment options to choose from when you are starting out and when you do it at a young age, you are bound to be confused but with relevant investment tips from good advisers and companies, you learn from your own mistakes and make better investment decisions in the future.

Power of Compounding Works For You

Power of compounding

When you are young, you can make long-term investments that will set you on a path of massive wealth as all of it will get compounded and give huge returns. Say, investing in equity funds for 15-20 years is bound to give you excellent returns by the time you start a family and your kids go to school.

Financial Independence Comes Early

Above all, when you take the responsibility to invest your money from an early age, financial independence comes easily to you. This is the biggest benefit of starting early when it comes to investments.

Steps To Start Investing

Diverse portfolio for best returns

After being well-versed with the benefits of starting investment early, how do you go about it must be the question on your mind.

There is no specific one fund or investment option fits all approach and you will have to figure out what works best for you. But, your focus should be on the power of compounding. That’s right! This is one of the wonders that have made Warren Buffet and the likes of him billionaires and with time on your side, you can create a huge corpus for yourself if you invest in the right vehicles.

What is Compounding?

Compounding

Start small, but gradually keep increasing your investment amount. For instance, if you open a SIP with INR 10,000 today, make sure you increase the amount invested every year with hike in your salary. Even a 5% increase annually in the amount you invest in Mutual Fund will help in amassing a good amount till the time you retire or your kids go to college.

Your investment needs and options will depend on a lot of factors. From your risk appetite to the money you are putting aside but since you are starting early, you should focus on investing in ELSS based funds or a hybrid fund that is at least 75% equity and 25% debt. Equity is more prone to risk but yields higher returns in the long term. Above all, go for a diversified portfolio that includes both high and low-risk investment options. For saving money, you can opt for Fixed Deposit and Recurring Deposit but for compounding, Mutual Funds and stock markets are your best bet.

Remember, when it comes to investing, start early and don’t put all your eggs in one basket.

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