The joy of getting the first job cannot be compared to anything else. Completing college is a pleasant feeling to earn money by itself, and as soon as the first salary comes into account, people often approach buying something for the family or buying their favorite gadgets. Amidst this enthusiasm, investment, especially long term investment, will probably be the last thing to be considered. That is where we make mistakes, and later our lifestyle becomes something that depends only on the monthly salary. However, investing from the beginning of the career is a wise decision that will give you more capital and economic freedom in the long term. Let's look at some of the reasons why savings should be part of everyone's life plan:
Major impact of compounding
Perhaps you may have taken a nap in the compound interest class, but it is not difficult to understand that the longer the investment is, the higher the price. The time as a polynomic function is its polynomic degree. That is why compounding in savings brings rapid growth and benefits more in the long term. Instead of being more entangled, let's understand the benefits of compounding by example. Considering 60 years as the age of retirement, two people invest Rs. 1000 thousand per month. The 25-year-old first person has a time of 35 years for investment, while the second person is 35 years old and has just 30 years to invest. Both are getting an annual return of 12 percent. The first person will have Rs 64 lakh in the account till the age of retirement, while second person will have Rs 35 lakh. Who knew that the 5-year gap would change to a gap of Rs. 29 lakhs. Such an amount can change the standard of living of any person and their family.
In simple terms, compounding shows a big impact on any savings. Quicker and more investment gives better savings in the end. It provides security from the slowdown and the declining economy. Also, there are some other benefits of investing from the beginning of the career:
Improved mental health and body health:
Investing from the beginning of a career set the foundation for a better economic situation in the future. Such investments get rid of future economic concerns and improve life.
Freedom to choose different investment options:
Investing from the beginning gives you the freedom to choose as many options as you can. Different investment options come with different types of risks and returns. Investing from the beginning gives you time to take risks and have a chance to overcome small aftershocks. While investing late, more safe options do not benefit much in the long term.
So better economic freedom and abundance are available to those who use their earnings wisely. Long term investment is now becoming a preferred option for the people. Artificial intelligence, using machine learning, many financial platforms are advising for app-based investments. So take advantage of the best technology and start making a career and secure your future.
Read also: Why it is not good to take a loan on PPF account: Read here
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Image credit: economictimes