Again, I write this post from my personal experience and can surely say most of you would really connect with the points I have to mention here. Firstly, you don’t really realize that you should have started saving or investing somewhere until you really need some funds.
Our first thought is that we don’t earn enough to start investing the money and eventually it’s like 3 or 4 years post you start working that you end up doing some investment.
There are several reasons for which you need to save. Accept it or not but bad times can come for anyone and they surely come without any prior notice, so it is always good to have some backup just in case. Then when you start saving or investing you can have a bit of cushion or freedom to actually fulfill and live your dreams and yes you have some less amount to spend and believe it or not you wont ever earn enough and it will always be less.
You can have tons of goals, and when you initially start earning these goals are mostly short terms like a foreign trip with you buddies or say buying an expensive bike or something. For these short term goals rather than taking a loan and paying tons of interest for no reason ( like i did for my bike ) better thing is to start investing if you have say 2 or 3 years time in which you want to complete this.
There are tons of options of investment like share market, mutual funds, public provident fund (PPF), recurring deposits in which you can start investment with as low as even Rs 500 per month. I started investing after three years of working and in less than 6 months i realized the potential money I could have saved till date.
Shares/IPO can give great returns but mind you they are very risky and it is better advised to really get to know the math behind all of it. Mutual funds again are volatile but at young age you can take some risk and invest in funds that have high returns. Recurring deposits are for the people who want to play safe, with fixed return of around 6.5%, your money is definitely going to grow but it is never going to be highly profitable and satisfying.
For long term goals Mutual Funds and PPF’s are the best option. With PPF you have a locking period of 15 years initially and it has fixed return of around 7.5 to 8%. You can invest anything between 500 and 1,50,000 per year. The biggest benefit is that all the returns and investment made in this scheme are totally tax free. You can check the approximate return based on your investment here.
With SIP you can make fixed monthly investments into Mutual funds and with continued contribution one can get huge returns in 15 or 20 years. For comparing the approximate return on these different ways of investment you can visit Scripbox or Upwardly.
The only thing to take away from this article is that, it is always better to start early and with low contribution rather then late and with more.The way and scheme to invest should totally be your decision based upon your goals, analysis and the amount you are comfortable in investing with.