Systematic planning and a disciplined life have proven to be the formula for success. How can it be different with your money?
For many young professionals, it is never an easy task to deal with money. While many find it difficult to generate surplus, those who have the luxury of extra earnings are too worried about its safety. In fact, it is only a small percentage that is willing to take the risk element and experiment to build a corpus.
Now, why should a young professional turn young investor when he has decades ahead of him to make money?
The answer is simple. What is begun early always ends up good. Whether it is during student life or professional life, those who plan their days and years well are likely to end up on the winning side. It is not very different with money. To begin with, young professionals who begin taking their incomes and expenses seriously are likely to end up with a bigger corpus than those who take up the task a few years later. Even a saving of Rs 1,000 a month can make an investor worth crores over a period of 30 years.
In the whole process of investing, the decision to save is probably the easiest thing to do. The choice of investment product is much more challenging as a fresh investor is driven more by the need to protect his savings. Not surprising considering that it would be difficult for the investor to look at the long-term picture. In fact, many fresh investors would hate the thought of thinking long-term when there are so many expenditure options for the earnings in the short term. More often than not, keeping the money intact without diluting its value would be the prime criteria. In a nutshell, most young investors are likely to think the 25-year-old professional.
While putting aside money in a fixed instrument like a fixed deposit is nothing new or wrong, young professionals can afford to look at aggressive options since they have the luxury of time on their hand. Property, commodities, and equity are some of those options which help in building wealth. While property requires a larger commitment (in terms of amount), commodities and equity are more volatile. While they pose the challenge of good understanding and risk-taking abilities, they have the potential to offer better returns over the long term.
In this context, you should also look at the option of saving on a regular basis as wealth creation is a long term process. If the recurring deposits and monthly contributions to public provident fund were the preferred options in the 1980s and 1990s, systematic investment plans (SIPs) have been the much talked-about options in the last decade. While the former allows wealth creation without much risk, the latter has the ability to beat inflation over the long term.
Irrespective of the choice of product, investors who think of saving and investing at an early stage in life are sure to be winners.
