Benefits of Early Investing:In today’s era, children want to become self-reliant as soon as possible. Especially in metro cities, youth become earning members from an early age. In a way, their awareness is also increasing. But is the same awareness also in case of investment and savings? Do these youth think about their retirement or non-working years as soon as they start a job? Generally in many cases the answer will be no. Because for a few years after starting to earn, they spend more on fulfilling their immediate needs and hobbies. Therefore, financial planning for retirement lags behind in their priority. But by making this mistake, they lag behind those who started investing on time in taking advantage of the power of compounding.
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Do not lag behind in achieving your goals
Financial advisors also keep advising that as soon as possible, start financial planning by thinking about the future (Early Investing) and remain disciplined in your planning by maintaining consistent investments. The more delay or carelessness you have in planning your investment, the more you will lag behind in achieving your financial targets. Starting investment at an early age means more time to achieve financial goals. And by investing in the long term, you get the benefit of compounding (Magic of Compounding).You also get full benefit. If you want to choose a safe investment option then mutual fund SIP is better for you. Whereas Small Savings Scheme is better for those who do not want to take any market risk.
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understand with example
We can understand this with an example. Suppose 3 friends X, Y and Z started a job together. X started financial planning at the age of 25, while Y started investing at the age of 30 and Z at the age of 35. All three started the same SIP in the same mutual fund scheme. Since there was only one scheme, all three considered the expected return to be 12 percent per annum. Retirement age fixed at 55 years. In such a situation, X, Y and Z have got 30 years, 25 years and 20 years to invest.
Investor
Monthly SIP: Rs 5000
Duration: 30 years
Estimated Returns: 12% per annum
Total investment: Rs 18 lakh
Fund after 30 years: Rs 1,76,49,569 (1.8 crore)
Profit: Rs 1,58,49,569 (1.6 crore)
Investor Y: 25 year goal
Monthly SIP: Rs 5000
Duration: 25 years
Estimated Returns: 12% per annum
Total investment: Rs 15 lakh
Fund after 30 years: Rs 94,88,175 (Rs 95 lakh)
Profit: Rs 79,88,175 (about Rs 80 lakh)
Investor Z: 20 year goal
Monthly SIP: Rs 5000
Duration: 20 years
Estimated Returns: 12% per annum
Total investment: Rs 12 lakh
Fund after 30 years: Rs 49,95,740 (about Rs 50 lakh)
Profit: Rs 37,95,740 (about Rs 38 lakh)
SIP Portfolio: Has the return of your SIP portfolio deteriorated? Take measures to avoid negative compounding
What was the result?
-In the first case, 30 years time was given for investment and instead of total investment of Rs 18 lakh, the total fund became Rs 1.8 crore. That means there was a profit of about Rs 1.6 crore.
-In the second case, the time given for investment was 25 years and instead of the total investment of Rs 15 lakh, the total fund was Rs 95 lakh and the profit was around Rs 80 lakh.
-In the third case, the time given for investment was 20 years and instead of the total investment of Rs 12 lakh, the total fund was around Rs 50 lakh and the profit was only around Rs 38 lakh.
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how much difference is visible
You can decide yourself whether you would like to get Rs 1.80 crore by investing Rs 18 lakh, Rs 95 lakh instead of Rs 15 lakh or just Rs 50 lakh instead of Rs 12 lakh. If investor This is the power of compounding. Similarly, if investor
