Taking Charge of Your Money: Importance of Early Investment and How to Start Anytime

Imagine yourself having control over your money rather than just stressing about it. Sounds relieving, right? That is where the concept of financial literacy comes in. We need to learn to manage money rather than earn it spend it, we need to invest money for it to multiply to enable us to live better lives. The importance of early investment also plays a key role in this journey toward financial independence.

But here’s the sad truth: most of us were never taught this in school. We spent years studying equations that we may never use, while we were not taught how to invest, budget, or plan for the future. There should be financial education as an essential aspect of school learning, just as math and science are. After all, the ability to understand money is one of the most valuable life skills that every person as an adult needs.

Why is no one teaching us this in school? Honestly speaking, this is a huge failure in the education system.

What if schools introduced a class on financial literacy?

• Students would learn the real facts about banks, loans, and interest.
• There would be fewer cases of young people being caught into debt traps.
• More people would begin investments early to secure their future.

The good news? There is no such thing as being too old to learn. Investing is open to all regardless of age, occupation or financial status. No one is too old or too young to invest. Let us see how one can begin.

The Benefits of Early Investing

Why everyone says “start investing early” all the time? It’s not just fancy talk about money but it’s a way of letting time do the heavy lifting for you.

The Power of Compound Interest

Compound interest is usually referred to as the “eighth wonder of the world”. Why? This is because your money not only earns interest, but it earns interest on your interest. The sooner you begin, the more time your money has to grow.

For example:

• If you invest ₹5,000 a month, beginning at age 25, and earning 12% annually by the time you’re 55, you’d accumulate approximately ₹1.54 crore.

• The return would be approximately ₹50 lakhs if you begin at 35 with the same monthly investment.

This is the magic of compounding—time compounds your efforts.

Higher Potential Returns

• Investing early also enables you to:
• Take advantage of market growth in the long run.
• Recover from market downturns (which are unavoidable).
• Create a strong wealth base that will help in attaining the targets of a home, traveling or retirement.

Achieving Financial Security

Rather than depend on a paycheck or a savings account, which will barely beat inflation, investing means that your money has an opportunity to work for you and provide long term financial security.

Countering the investing Myths

Let’s clear the air and address some of the most common investing myths:

Myth 1: I will need a lot of money to begin investing.

Absolutely not! With the availability of options such as mutual funds, SIPs and the existence of apps that support fractional investing, you can invest as much as ₹500 per month.

Myth 2: “Investing is too risky.”

All investments have a risk factor, but the biggest risk is taking no action and letting inflation eat up the money you have. Investing in a variety of assets (stocks, bonds, real estate, etc.) will reduce risk, while your money will not stop growing.

Myth 3: “It is too late for me to begin.”

It’s never too late. Even if you start late, you can still build wealth by:

• Modifying investment strategies based on your age at the moment.
• Consistent investments and long-term goals.

Getting Started with Investing

Are you ready to take control of your money? Here’s how you can begin:

Assess Your Personal Finances

Before diving into investing:

• Calculate your income, what you spend and what you already have saved.
• Pay off high-interest outstanding debts (credit card bills for example) so that there is no pressure on finances.
• Build an emergency fund (3 to 6 month of living expense).

Set Clear Investment Goals

Ask yourself:

• What am I investing for? (Retirement, home, education, etc.)
• What is the duration for which I can keep my money invested for? (Short-term vs. long-term)
• What is the amount of risk that I am willing to take?

Understand Different Types of Investments

Nifty 50—Be associated with a company and earn higher returns.

Bonds—The borrowings from the firms or government with steady but not so profitable rates.

Mutual Funds—Collection of money that is invested by professionals in a combination of stocks and bonds.

Fixed Deposits – There are assured low-risk savings, but these have lower rates of growth compared to the others. Choose the Right Investment Platform.

Investment strategy for various phases of life

Your investment journey will be different according to the stage of life you are in. Here’s how you should approach investing at different levels:

Youngster (20s to Early 30s)

Purpose: Growth and building habits

• Know the high growth investment opportunities such as stocks, or equity mutual funds.
• Start little with SIPs.
• Build the emergency fund first then slowly build the investments.

Middle Aged Professional (30s to 50s)

Aim: Balance between Growth and Stability

• Wide variety of stocks, bonds, as well as retirement accounts (EPF, PPF, NPS).
• Plan for future for example homeownership, education of children and retirement.
• An annual review and tweaking of your Portfolio.

Retirees (in their 50s and above)

Focus: The Persistence of wealth and constant income.

• Consider Government bonds, Fixed deposits or dividend paying stocks when moving your assets into the lower risk industries.
• Do not risk all the savings in investing.
• Secure healthcare for yourself and income by opting for safer methods of investments.
  

Managing your finances is not about getting rich quick but rather about creating a healthy future for yourself by wise choices right now. Whether you are 22 or 52, it is never too early or too late to invest.

Set goals and create habits in your life that will ensure that the money works towards you.

I used to think that investing was too complex for me. But the possibilities with small steps, curiosity, and consistency, I found it’s not only possible, but empowering.

Remember, investing is a continuous process and you need to be educated at all times.

The more you learn, the more your decisions will become confident and informed.

Also Read | Guide to Personal Finance for Beginners and Financial Freedom .