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In today’s world, it has become crucial to start investing for the future. A financial goal is necessary to live an independent life even after retirement. The financial goal differs for various people, as one might dream of buying a house, while others would like to provide quality education for children, save for their marriage, or even buy a car. All this requires finance, and it is possible to arrange it at the right time through investment.
POWER OF INVESTING EARLY
“I made my first investment at the age of eleven. I was wasting my life up until then.”
– WARREN BUFFET
As said by the father of the stock market, start investing at an early age, and it will amaze you with the power of the compounding effect. Investing earlier will help one become independent at a young age, allowing one to plan for retirement.
The investment value can rise or fall over time, and it’s possible to lose some or all of the money invested. But investors who hold on for the long term tend to come out ahead. Investing earlier can be a helpful strategy young people can use to meet their financial goals.
The golden rule is to invest early, invest for the long haul, and invest regularly.
It will test your patience level, but never give up because you reap what you sow.
START THE INVESTING JOURNEY
There are multiple investment options available out there in the market. But options make us dubious about the right one to pick up. Here are some investment products to choose from according to your financial goal and risk level.
PUBLIC PROVIDENT FUND
The PPF is a tax-saving instrument in India. The main objective of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits.
Term: 15 years
Risk: A public provident fund scheme is ideal for individuals with a low-risk appetite. Since this plan is mandated by the government, it is backed up with a guaranteed return.
A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds.
Term: Many schemes available (according to your goal)
Risk: Mutual Fund Schemes are not guaranteed or assured return products.
The investment in Mutual Fund Units involves investment risks such as trading volumes, settlement risks, liquidity risks, and default risks, including the possible loss of principal.
In the context of stock market investments, equity refers to the shares in a company’s ownership. Equity gives a good return when invested in the long term. Equity shares are long-term financing sources for any company.
Term: The stock can be held or sold at your discretion.
Risk: The higher risk involved because the return isn’t guaranteed. The market is highly volatile at times.
A bond is a fixed-income investment that represents a loan made by an investor to a borrower, usually corporate or governmental.
Term: minimum is 5 years, and the maximum is up to the bond issuer.
Risk: appealing to investors who are averse to risk. A fixed return is guaranteed.
There are many other products that you can invest in to get good returns in the long term.
Note: The higher the risk, the higher the return.
QUICK PORTFOLIO RULE
The combined investment in various securities makes a portfolio. It is good to combine many investment products to be on the safe side. As said, it is better to have the eggs in a separate basket than to risk breaking them into one.
Investing early with a proper plan for multiple products will help achieve the financial goal. Whatever the goals are, it is possible to achieve them through planning, patience, and discipline.