I am in my 20s, and just like every other person of my age, I never worried about my long-term finances or wasn’t well versed with how it would help me. Recently, I decided to take care of my finances and started investing in mutual funds. After a lot of research, I got convinced that this is the kind of thing that needs no waiting, and I dived right into it. So, what are the reasons that convinced me to start my investment journey with mutual funds? These reasons might help you as well to start your investment journey. Let’s get into them.
1. You can take high risks, tension-free
When you have a pool of money to hold your back, it gets a lot simpler to face challenges like beginning your own private company and pursuing your objectives. In the event that you incur a loss, you will have this financial backup that will assist you with getting out of the mess and recuperate rapidly, and therefore it is important to think about investing in your 20s. Consider you are in your 40s, would you consider investing in more volatile funds or invest all your money in one spot? You wouldn’t. In our 20s, we are less burdened with additional obligations, however, in our 40s, we have so much to take care of, from our child’s school expenses to the house rentals.
2. You will learn to manage your finances better
Investing is a ritual that helps you stay on track. One rule that I learned with investing is – invest first and then spend the rest. This helps you to track your finances better and prevent you from spending money unnecessarily. When you decide to save first in the form of an investment and then spend the rest, this pushes you to plan out a budget monthly. This planning soon turns into a habit, and then you won’t even need to plan a monthly budget to know where your money should go. You will be aware of how much and where it should go rather than having to struggle to chalk it out.
3. You can start small
This is one of the best reasons you need to start investing in your 20s. At this stage, you can start with any small amount as you have ample time left for your plan to grow and work for you. At this stage, you might or might not be working, and so you can start small. Whatever income you make, you can invest the same as there is no responsibility you need to deal with.
4. You can be your financial boss
When you start investing early, you don’t have to rely on your next paycheck to get through the month or count days till you receive your pay. Investing gives you the backbone to rely on if you decide to switch jobs or get your hands on something new. It is a fuel that helps you follow your passion or take a break if you need one. I have seen many people being stuck in a job simply because they want that financial security their paycheck gives them. Investment frees you from this burden. You may or may not want to shift your plans, but this pool of money will at least give you the financial freedom to make choices without any external help, which can be delayed if you start your investment journey a few years later.
5. You can plan your retirement early
Investing early definitely has many benefits that you can’t ignore, but this one lets you know how effective it is. Starting in your 20s will have you invested for a longer time, and 20-25 years down the line, you will have a large corpus to plan out early retirement. It is a plan before you even realise it as one because you’re letting your money grow rightly by staying invested for a longer time while also getting to experience the magic of compounding. Even though you would have never planned to retire early, there will always be an option open for you to choose if the situation arises.