So, you’ve just bagged your first job. It certainly is a thrilling experience to begin earning. Your parents might already be telling you to start saving for a rainy day. But, when you are in your 20s, you want to live life to the fullest, splurge on luxuries and think about financial goals later. Do you know why the Indians in America were less affected by the 2008 recession than all other groups? They were the people who had had the vision to save as much as possible.While it might sound a little preachy but the ideal time to start saving is in your 20s. Want to know why? Here are the main reasons.
1. The Magic of Compounding
Compounding is your best friend when it comes to investments. This is what helps your money grow. Reinvesting the return will increase your capital and bring you more. And, this can help exponentially grow your corpus with each compounding cycle. This is why when you start in your 20s, as compared to say your 40s, you’ve given compounding 20 extra years. The best part is that you don’t even need to start off with a huge capital. If you choose to invest in an SIP, you can start off with as little as ₹500 a month, leaving you enough of your salary to fulfill your immediate desires. Also, with the availability of SIP investment calculators online, you can make well-informed choices too.
2. Time to Understand the Market
The financial markets need knowledge and discipline for you to make a success of your investments. And, building your knowledge base and your discipline does take time. When you start off early, before you have the added responsibility of taking care of a family with kids, you get much more time to learn how the market works. Also, over time, when you consistently invest, you create greater discipline about finances and get into a saving habit, which is always a good thing.
3. Lower Investment
Given that you are only in your 20s and possibly have another 40 years before you need to worry about retirement, you can invest smaller amounts and end up with a larger corpus than if you were to start your investments later in life. Life is uncertain and the unexpected does occur for everyone. So, as Ben Franklin famously said, “By failing to prepare, you are preparing to fail.”
If you are in your 20s, you certainly will have many dreams and aspirations. Why not make the best use of your youth and the tools available today, such as the SIP investment calculator, and start working on translating your dreams into reality today?