- Posted by: Brighter Mind
- Category: Power of Compounding
Why should you start investing early?
Investing is the most important part of financial life. It offers various perks to us such as financial freedom, retirement corpus, and wealth creation. But many of us are not aware of the right time to start investing.
The answer to this dilemma is starting early. When you start investing in younger stage of your life, it rewards you more. There are several benefits to help you understand why you should start investing as soon as possible.
- Improve your spending habit
When you start investing, you develop a more disciplined approach of spending habit. It allows you to focus on budgeting and cutting unnecessary expenses. This enables you to save more portion of your earned money. Investing is not possible for the one who is having poor spending habit. Hence, regular investing teaches the habit of responsible spending.
- Benefit of power of compounding
The earlier you start investing, the more benefit of power of compounding you will enjoy. This is because you will allow time to your investment to grow. Many investors have understood this power and have taken advantage of its potential gains.
Let’s understand this with the simple example. Suppose Harsh invested the amount of Rs.10Lakhs into the equity for 10 years which is expected to grow at 12% per annum. After the tenure, Harsh would have accumulated the corpus of Rs.31Lakhs.
On the other, Shivansh invested Rs.5 Lakhs for 25 years into the same instrument. So after 8 years, Shivansh would have generated the corpus of Rs85 Lakhs.
This means Shivansh has generated Rs54 Lakhs extra even by investing half of what Harsh has invested. The major difference made in their investments was due to time of investments.
Hence to get the benefit of compounding you should start your investments as soon as possible.
- Be one step ahead of others
There is a saying that early bird gets the worm. In investing it is nothing different. The earlier you start investing, the better your financial position will be in the future.
On the contrary, if you chose to invest later in life, the compounding benefit would be minimal and you will be behind the others.
Also, there will some emergency situations in the future when you will need urgent money to meet such expenses. By investing in early phase, you will be in better place as it will help to get you through these tough times.
- Allows you to take risks
When you are young, you can take more risks as compared to the later stage of your life. At this time, there are no dependents and you have less financial responsibilities. Hence you can take certain amount of risks by investing in the riskier products. And even if your investments go wrong, you would have plenty of time to recover it.
Those who invest in later part of life are often cautious on how they invest their money. Also, the financial liabilities are more during later stage which limits the risk taking ability up to an extent.
- Improved quality of life
Those who start investing early manage to have higher retirement corpus as compared to others. Due to this you can lead improved quality life and need not have to change your standard of living.
Early investments will help you to reduce the risk of making reckless choices and adjust your post retirement life. Also, as you will have surplus money, you will not have to borrow money for any medical emergencies as well.
So the bottom line is that the earlier you start investments, the more wealth you can generate. Remember that wealth creation is the long term process and you have to allow time to see the exorbitant returns, but the time is worth spending.
So if you haven’t started your investments, start it today. SEBI Registered Investment Advisor ” Brighter Mind ” is here to help you maximise your returns and generate the real wealth for you over a long term. We will manage your equity investments and will guide you during every market cycle so as to optimise returns at minimal risks.
Fill up the below form and start today!