Right Time to Start Investing
Every father says to their children that every penny invested today will be the income of the future. So, what does it mean?
To know the power of investing we must first understand the wonder of the financial world i.e. “The Power of Compounding”. To take things in perspective, let’s take an example.
Rohit was 40 years old when he invested for the first time. He started investing ?1000 every month at a 12% rate of interest compounded annually for 20 years.
How much do you think that he will be getting at the end of the tenure?
He will be getting ?8,65,000 before taxes by investing just a mere ?2,40,000 over the course of just 20 years.
What if start investing at the age of 20, how much he will be getting?
He will get a huge amount of ?92,05,000 before taxes by investing just ?4,80,000 over the course of only 40 years.
Now just imagine what if started investing even early and more than ?1,000. Just calculate yourself and you won’t believe your eyes.
Once a man asked Billionaire Warren Buffet about how did he become so rich. He replied, “With the power of compounding and patience.”
So back to our question, what is the right age to start investing? Simple answer, whenever you have money. I am not talking about killing your desires and then do the investment, I am just telling you that it is never too early nor too late to start investing. It is better to invest your money than to keep it safe in the piggy bank.
We have talked about the benefits of investing but we have not talked about the disadvantages of not investing.
There is a money eater monster in the world of finance, which is called “Inflation”. So, what is Inflation?
Inflation is the devaluation of money over a period of time.
Have you ever been to the market and saw something which was of ?X and you lacked money at that time but you start saving and saved ?X to buy it, but when you went to the market again to buy it, its price had increased?
Well, it was not the shopkeeper who was the culprit for this sin, it was the Inflation. Similarly, if you just save your money and do not invest it properly then it will eat your money too. And believe me, nobody wants to see their money being eaten away. So, to counter this monster, your money needs to have the shield of Investing and the sword of compounding.
As Albert Einstein famously said, “Compound interest is the most powerful force in the universe, Compound interest is the 8th wonder of the world. He who understands it earns it; he who doesn't, pay it.”
So, it is up to you, you want to see your money grow or being eaten away.