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When should you begin investing?

Updated on August 11, 2013

Many people, especially those in their twenties, think that they are too young to begin their investments. They say that they want to enjoy their lives and so, investments do not form a part of their agenda. But, this is a wrong notion because while they can spend and enjoy their lives, they should divert a part of what they earn towards investments.

It is unfortunate that elders are not imparting the right kind of financial literacy into the minds of young people. So, when these young people face problems in their lives, they are clueless as to how they can surmount those problems.

Age is not a criterion for saving. Those who start early will derive more benefits but, this does not mean that those who are past their prime age should not save. They should also learn about the various investment opportunities and park their surplus funds in the ones that are suitable for them.

Life can throw surprises and the money saved can be of immense help to come out of such shocks without any hassles. If you want to know when you should begin your investments, the answer is "NOW."

You may be a professional, an entrepreneur, a part-time employee or a trainee. But, whatever may be your occupation, you should save a portion of what you earn. You should choose those avenues that suit you. Unlike in earlier times, you have several options for saving money.

Let us look at some of the choices you have.

- Those who want to invest their money safely can opt for Recurring Deposits with banks. You can also choose The Systematic Investment Plans or SIPs. These options are easy as well as safe. If you have slightly bigger amounts, you can park them in fixed deposits.

- Share market investments can earn you very good returns but, they are risky also because of the volatility of the market. The same point holds good for Forex investments also. Especially, if you are past your prime age, you should never take big risks in the equity and Forex markets. But, there are ways to invest safely in these options also. The only point you should remember for making safe investments in these markets is that you should never lose more than you can afford. If you borrow money for investing in them, you are doing so at your peril.

- Mutual Funds can be a good option but, you should do your research carefully and choose those funds that can get you good returns. Nowadays, ETFs or Exchange Traded Funds are also becoming popular. You can choose the appropriate ones for earning a good income.

The reason for suggesting that you should begin your investments when you are young is that your risk-taking capabilities will be higher than those who are past their prime age. Further, the disposable income of young people will be more also because they may still be single. Even if they have been married, they may not have big families to support.
Another valid reason for suggesting that people should start investing at their young age is that young people will have more benefits because their investments will grow substantially, thanks to the concept of compound interest.
Young people should develop the habit of budgeting because this habit will help them to find out ways for making their investments. Even small steps like avoiding eating out, etc. will positively impact their finances. If they look for such ways and start investing their surplus funds wisely, they can amass wealth sooner than they have been led to believe.

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