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 –
1/ Ram starts investing Rs 5,000 every month when he is 25.
2/ Shyam starts investing Rs 15,000 every month when he is 35.
Both invest till they are 60 and both earn 12% per year on their investments.
At 60, Ram has invested Rs 21 lakhs and has a retirement kitty of ~2.5Cr. Shyam invested Rs 45 lakhs and has a retirement kitty of ~2Cr. Who would you want to be? This is the advantage of compound interest. Start when you have all the time in the world.
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.
YOLO
Yes, you are the 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 5 or 10 years. Prioritize savings in your budget just as you prioritize 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.
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 J Live your life on your terms – be the free individual you see yourself as.
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 SIP in a Mutual Fund provides a simple way to start investing.
This article was initially published by CNBCTV18 in the Personal Finance section.
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