TomorrowMakers ™

Financial Planning

Why investing early is important

17 January 2017
Think it is too early to start investing? Here’s why you are wrong.
 

All of us realize the importance of investments, yet most of us are hesitant to start investing in the early stages of our professional lives. On our list of priorities, investments don’t make the cut too often. We stay more focused on paying bills, getting new appliances for our homes, buying the latest smartphone and so on. However, the most important fact that people don’t understand is that the smallest of investments can make a very large impact on your finances in the long run.

If you start investing early, the principle of compounding increases your returns over time. Imagine a snowball rolling down a snowy slope; at first its size is negligible and it is barely even visible. However, as it rolls down the slope, it collects more snow and becomes massive. This is how an investment works. An amount invested in the 20s would give you more returns than even double the same amount invested when you are 40.

Related: Short term investment options for high returns

By the time you reach your mid-30s, the amount of capital available for investments is significantly more than what is available when you start earning. This might tempt you to make a large investment. But the fact remains that you don’t have the experience necessary to make a safe bet on your investment. However, if you start investing from the time you start earning, you get a good knowledge of the market and would be able to make a more educated decision on where to invest for the best returns.

Though your monthly expenditure on unnecessary things bothers you, you don’t feel like there is a solution to it. A savings plan does achieve part of the purpose but since it is easily available to you, it ends up getting spent eventually. An investment guarantees that your finances are safe from binge-spending. This productive use of your money ensures a better quality of life in the future.

Related: Savings vs Investment [Infographic]

Investments can be tricky and we understand your hesitation to do all the research required before you start investing. Click here to read our Ebook. It will guide you through the process of investing and how to minimize risks associated with investments.

 
 
 

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