“What’s the rush? I’ll start later” Yes, time is on your side. But that’s exactly why you should save and invest now. Money grows on a simple concept – compounding. And compounding takes time.

Here is a simple example. Ram starts investing Rs 5,000 every month when he is 25. Shyam starts investing Rs 15,000 every month when he is 35. Both invest until they are 60 and both earn 12 percent per year on their investments. At 60, Ram has invested Rs 21 lakh and has a retirement kitty of about Rs 2.5 crore. Shyam invested Rs 45 lakh and has a retirement kitty of about Rs 2 crore. Who would you want to be?

This is the advantage of compound interest. Ideally, one must start when you have all the time in the world. Viewed from that perspective, here are the top reasons that is holding back the young from investing.

One: “I have to buy the latest device”.

Splurging on the latest mobile phones and electronics can be very expensive. Upgrade when you need a new device, and not when you want a new device. This requires a bit of self-control and zen-mentality as the urge to show off may be high. It is bad for you and bad for mother earth - think of all the landfills we are creating of discarded electronics.

Two: “YOLO”

Yes, you are the you only live once (YOLO) generation. And true the world is your oyster and travel is a very enriching experience. But, the world is not going anywhere. All the experiences will still be there in five or ten years. Prioritise savings in your budget just as you would travel and other cultural experiences. Start small if you must but do start and keep going at it. Saving and investing, like other habits, require practice.

Three: “I have to keep up with my friends”

Keeping up with the Joneses is real and affects us all. But draw the line if you can’t afford a Guess bag or one too many nights of drinking at an expensive pub. If you have good friends, they will understand. Or you will make friends who do  Live your life on your terms – be the free individual you see yourself as.

Four: “But, what’s the rush? I’ll start later”

Yes, time is on your side. But that’s exactly why you should save and invest now. Money grows on a simple concept – compounding. And compounding takes time. Read again the Ram and Shyam example.

Everyone’s financial situation is different, and therefore not everyone is able to allocate the same percentage of his or her income towards investing. However, everyone should be investing (even a small amount) money on a regular basis. A Systematic Investment Plan (SIP) in a mutual fund provides a simple way to start investing.

Gaurav Rastogi is the CEO of Kuvera.in: a free direct mutual fund investing platform. Gaurav managed a pan-Asia quantitative portfolio for Morgan Stanley before he started Kuvera.

First Published:Jul 16, 2018 1:06 PM IST