The answer is simple: as soon as you can. Ideally, you’d start saving in your 20s, right from your first job because the sooner you begin saving, the more time your money has to grow. Each year’s gains will generate their own gains the following year this is because a powerful wealth-building phenomenon takes place known as compounding.
Here are a few things someone in their 20’s should know about wealth creation from the stock market.
Here’s an example of what a big difference starting young can make.
Let’s say you wish to retire at the age of 40, so you start at the age of 25 and put aside 4000 every month in a tax-exempted investment plan that provides a growth rate of 15% p.a. for 20 years. By the time you are 45, you can get returns of more than 60 lakhs.
Now let’s say you start at the age of 35 and then save the same amount that is Rs 4000 per month in the same fund at the same growth rate. By the time you reach 45, you would gain a corpus of Rs 13 lakhs. Now Rs 4000 every month doesn’t seem a huge amount for you to start off but the returns you can avail – that’s a huge difference!
To understand more about this, learn about the power of compounding!
While young age is all about enjoying life and partying, regular small amount of investments can help you generate a huge corpus you can ever imagine! This good habit of investment can ensure you enjoy your retirement just the ways you enjoy your young age without any financial constraints.