The Hindu Business Line : Investing, why start young?

Investing, so soon? Well, we understand your surprise. There you are, just beginning to enjoy the freedom of your money to do as you will, and, here we are, asking you to do financial planning, make asset allocation and think of retirement (what??) planning.

No doubt you are but young once, and if you don't spend now, when will you? With few commitments at this stage, there is little to hold you back from going on a spending binge every time you get your pay-packet. But conventional wisdom offers this soberingthought: Delaying to plan for the future would mean investing more later.

So, maximising savings in the early years eases the pressure of committing larger sums as you age. Not having enough money may not be an issue when you start investing early. Even small sums put aside regularly can build a handsome corpus over a period thanks to the power of compounding. Remember, the little drops of water... .

Suppose you want to have Rs 50 lakh when you are 55. If at 25, you set apart Rs 3,500 every month (assuming a return of 8 per cent), you would be on your way to achieving this goal. But if you were to put off this investing decision by 10 years, you would have to invest as much as Rs 8,500! Setting aside a higher sum at a point where there are competing commitments may become a Herculean pressure.

All this talk of investing and tax planning does not mean that we want you to live the life of a monk. But just look at it differently: Investing from early on could give you regular, handsome sums at various stages of your life. It merely postpones your spending. Begin investing now, and you might have more money in your hand in your thirties, when you may want to spend on something substantial.

And investing early also allows you to indulge your risk. What you thought a sure-win buy may well turn out a lemon. But you can write it off to experience without too much agonising. Later in your life such a loss could be expensive, and you would also have less time to rebuild your wealth and recoup your losses.

The world of investing can give an adrenaline rush. Market talk will also win you friends at parties, and set off a cycle of more invites, more friends... So don't hesitate, jump in, the investment party has just begun.

Vidya Bala
Shanthi Venkataraman

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