- Power of Compounding
- Compounding means earning returns on your returns.
- The earlier you start, the longer your money stays invested and multiplies.
- Example:
- ₹5,000/month for 30 years at 12% = ₹1.76 crore
- ₹5,000/month for 20 years at 12% = ₹50 lakh
10 years early = ₹1.26 crore difference!
- Higher Risk-Taking Ability
- Young investors can afford to take more risk because they have time to recover from market volatility.
- This allows for higher-return investments like equity mutual funds.
- Cultivates Financial Discipline
- Regular investing builds a habit of saving and planning.
- It makes you more aware of budgeting, spending, and long-term goals.
- More Time for Goal-Based Planning
- Starting early gives you time to plan for multiple life goals:
- Buying a house
- Children’s education
- Retirement
- Smaller investments can achieve big goals if started early.
- Financial Independence at a Younger Age
- Early investments can help you retire early or take career breaks.
- You build a solid financial cushion and reduce dependence on others.
