Investments help grow your wealth, ensuring your long-term financial security. By selecting the right investment channels, you can set up an additional source of income. It can fund your life goals like buying a house, paying children’s education costs, building retirement funds, and more.

However, to get the maximum returns from investments, it is essential to start early. Here’s how an early start accelerates your investment journey.

Reasons to begin investing at an early age

• Secured future

  When you first start earning, your liabilities are comparatively lesser, and the income you are left with is more. Thus, you can put aside a part of your income for future needs. Starting early is favourable because it gives you the flexibility to endure risks by investing in high-risk, high-reward financial instruments that help grow your money at a quicker rate. Later, you can realign your portfolio when with age, your dependents, life goals and financial responsibilities grow

• Investment appreciation with age:

  One other reason is understandably that, the earlier you start, the more you would be able to accumulate, and the better are your chances of reaching your financial goals. You can start your investment journey with small amounts and as your salary increases, you can simultaneously raise your investments as well. Increasing your investments gradually puts a lesser burden on your paycheck, and with such gradual increments put away over a long duration, your money grows

• Power of compounding:

  With compounding, your money works to make more money for you. You gain interest on the initial amount you invest. The interest then gets added to that amount, increasing your invested sum. The increased investment amount attracts an even higher interest amount. Over the years, with such increases, you earn significant profits

• Secured Retirement:

  Starting to plan for your retirement early in life increases your chances of financial stability in your golden years. Along with compounding, a long investment horizon also smoothens the effects of market fluctuations. Thus, the longer your retirement funds get to grow, the higher your funds will be, for the time when your paycheck stops

• Tax benefits:

  The beginning of your earning years also sets off your income tax liability. Hence, when your income starts, you need to implement tax-saving strategies. Timely investments in instruments offering tax benefits can reduce your tax burden. For example, ULIP premiums are eligible for deductions up to ₹ 1.5 lakh from your taxable income under Section 80C of the Income Tax Act, 1961

Conclusion

Managing money and taking charge of your finances by investing in the right instruments, early in life, helps to build wealth at a faster pace. With a sound financial status, you can also help your loved ones in achieving their goals and aspirations.

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